Licensee’s Interest in Transactions; Relationship with Parties

PURPOSE: This rule makes very clear the licensee’s responsibility and relationship as an agent. It demands the licensee make declaration of any personal involvement in a transaction in which the licensee might have an interest. It prohibits his/her requiring the parties in a transaction to use the service of any lending, title insurance or other groups. It forbids any forms of related or direct profit on expenditures made for a party in a transaction. The licensee must disclose all material facts regarding the condition of property which s/he is offering for sale or lease. (1) A licensee shall not acquire an interest in, sell, buy, exchange, rent or lease any real estate, directly or indirectly, without first making the licensee’s status as a licensee known in writing to the other parties in the transaction. (2) Before buying, exchanging, selling or leasing real estate for another party, the licensee shall disclose in writing any ownership which a licensee has or will have and the licensee’s status as a licensee to all parties to the transaction. (3) A licensee shall not advise against or discourage the use of the services of an attorney by any party in any real estate transaction. (4) Directed or Controlled Business. (A) Definitions. 1. The term settlement service includes any service provided in connection with a real estate sale, lease, trade, exchange or settlement including, but not limited to, the following: mortgage or other financing, title searches, title examinations, the provision of title certificates, title insurance, hazard insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest, fungus, mechanical or other inspections, services rendered by a real estate agent or broker, and the handling of the processing and closing or settlement. 2. The term controlled business arrangement means an arrangement in which a real estate licensee, or an associate of a real estate licensee, has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent (1%) in a provider of settlement services. 3. The term associate means one who has one (1) or more of the following relationships with a real estate licensee: A. A spouse, parent or child of a real estate licensee; B. A corporation or business entity that controls, is controlled by or is under common control with a real estate licensee; C. An employer, officer, director, partner, franchisor or franchisee of a real estate licensee; or D. Anyone who has an agreement, arrangement or understanding with a real estate licensee, the purpose or substantial effect of which is to enable the real estate licensee to refer settlement business to benefit financially from the referrals of that business. (B) A licensee who has a controlled business arrangement with a provider of settlement services and who, directly or indirectly, refers business to that provider or affirmatively influences the selection of that provider shall disclose the arrangement to the person whose business is referred or influenced. This disclosure shall be given on a separate form and shall be signed by the person whose business is referred or influenced. The disclosure shall be given and signed before or at substantially the same time that the business is referred or the provider is selected. The licensee shall retain a copy of the signed form. The form shall be in at least ten (10)-point type and shall contain the following language: DISCLOSURE OF REFERRAL OF BUSINESS I understand that (Name of Real Estate Licensee) has an affiliate relationship with or owns an interest in (Name of Company to Which Business is Being Referred) and is also recommending that I employ this company for (Type of Service). I realize that (Name of Real Estate Licensee) may earn financial benefits from my use of this company. I understand that I am not obligated to use this company, and may select a different company if I wish to do so. This form has been fully explained to me. ________________________________________________________ (Date) ________________________________________________________ (Signature of Person Whose Business is Being Referred) The form may be modified to describe more accurately the nature of the service, the referring entity and the entity receiving the referral, provided that its content and meaning are not changed in substance. (C) A licensee, directly or indirectly, shall not require a party to a real estate sale or lease to use and shall not condition the performance of real estate brokerage services on the use by a party of any particular provider of settlement services. (5) A licensee shall comply in all respects with the requirements of the federal Real Estate Settlement Procedures Act and corresponding regulations, in transactions governed by the law and regulations. AND INSURANCE (6) An “as is clause” written into a contract for the sale of real estate does not relieve a licensee of the requirements of section 339.100.2(2), RSMo. AUTHORITY: section 339.120, RSMo Supp. 1997.* This rule originally filed as 4 CSR 250-8.110. Original rule filed Nov. 14, 1978, effective Feb. 11, 1979. Amended: Filed March 12, 1982, effective June 11, 1982. Amended: Filed Aug. 12, 1982, effective Nov. 11, 1982. Amended: Filed Sept. 7, 1984, effective Dec. 13, 1984. Amended: Filed Oct. 5, 1985, effective Dec. 26, 1985. Amended: Filed Dec. 15, 1986, effective March 26, 1987. Amended: Filed Sept. 18, 1990, effective June 10, 1991. Amended: Filed Nov. 15, 1991, effective June 25, 1992. Amended: Filed Feb. 2, 1994, effective Aug. 28, 1994. Amended: Filed Dec. 1, 1997, effective Sept. 1, 1998. Moved to 20 CSR 2250-8.110, effective Aug. 28, 2006. *Original authority: 339.120, RSMo 1941, amended 1963, 1967, 1981, 1988, 1993, 1995.