230-RICR-30-20-2
230-RICR-30-20-2. Real Estate Brokers and Salespersons (version Amendment, 05/01/2021 to 01/04/2022)
2.1 Authority and Purpose
A. Authority: This Regulation
is promulgated pursuant to R.I. Gen. Laws §§ 5-20.5-6,
5-20.5-12, 5-20.5-19, 5-20.5-20, 5-20.5-26(a)(1)(v), 5-20.6-12, and
42-14-17.
B. Purpose: The purpose of
this Regulation is to promote the general welfare of the citizens of
Rhode Island by the implementation of R.I. Gen. Laws Chapters 5-20.5
and 5-20.6, so that the provisions thereunder may be best
effectuated, and the public interest be most effectively served.
2.2 Definitions
A. In addition to the terms
defined in R.I. Gen. Laws §§ 5-20.5-1 and 5-20.6-2, when
used in this Part the following terms shall have the following
meanings:
1. “Appraisal” or
“real estate appraisal” means an analysis, opinion, or
conclusion relating to the nature, quality, value or utility of
specified interests in, or aspects of, identified real estate
prepared by a person licensed under R.I. Gen. Laws Chapter 5-20.7 and
Part 1
of this Subchapter, that conforms to the standards adopted by the
Uniform Standards of Professional Appraisal Practice (“USPAP”)
in accordance with R.I. Gen. Laws § 5-20.7-19.
2. “Broker price
opinion” or “BPO” means an analysis, opinion, or
conclusion prepared by a person licensed under R.I. Gen. Laws Chapter
5-20.5 in the ordinary course of his or her business relating to the
price of specified interests in or aspects of identified real estate
or identified real property for the purpose of listing, purchase, or
sale.
3. “Classroom”
means either a physical classroom in which classes are taught by an
instructor appearing in-person or a live-virtual classroom with
interactive instruction between instructor and students.
4. “Clock hour”
means a period of at least fifty (50) minutes of classroom
instruction.
5. “Comparative market
analysis” or “CMA” means an analysis, opinion, or
conclusion prepared by a person licensed under R.I. Gen. Laws Chapter
5-20.5 in the ordinary course of his or her business relating to the
price of specified interests in or aspects of identified real estate
or identified real property by comparison to other real property
currently or recently sold in the marketplace for the purpose of
listing, purchase, or sale.
6. “Department”
means the Department of Business Regulation.
7. “License” means
a real estate salesperson or broker license issued by the Department.
8. “Net listing”
means an agreement in which a prospective seller lists Real Estate
for sale with an authorization to a Broker to sell at a specified net
dollar return to the seller and which provides that the Broker may
retain as Commission the difference between the specified dollar
return to the seller and the actual sales price.
9. “Promptly”
means not more than ten (10) calendar days.
10. “Real Estate
Commission” means the Commission created pursuant to R.I. Gen.
Laws § 5-20.5-12.
2.3 Licensee’s Name and
Address
Upon initial licensure and at
all times thereafter, every licensee shall ensure that the Department
has on record the licensee’s current personal name, firm
affiliation, trade name, residence address and firm address. Every
licensee shall notify the Department in writing of each change of
personal name, firm affiliation, trade name, residence address and
firm address within ten (10) days of the change. All addresses shall
be sufficiently descriptive to enable the Department to correspond
with and locate the licensee.
2.4 Principal Brokers and
Brokerages
A. The principal broker shall
act in a supervisory capacity for every real estate transaction in
which an affiliated licensee participates.
B. The principal broker shall
be responsible for the compliance of his or her affiliated licensees
with the Rhode Island General Laws pertaining to real estate
licensure and this Regulation.
C. The principal broker shall
be responsible for the compliance of his or her non-licensed
employees with the Rhode Island General Laws pertaining to real
estate licensure and this Regulation.
D. The principal broker shall
maintain an escrow account for the funds of others and shall make
certain that no funds of others are disbursed or utilized without his
or her express authorization and knowledge.
E. The principal broker shall
assume responsibility for:
1. The adequate supervision of
each affiliated licensee and each office of the brokerage at which
real estate activities requiring licensure are conducted;
2. The filing of any change of
business address or trade name of the brokerage and the registration
of any assumed business name adopted by the brokerage for its use
with the Department;
3. The notification in writing
of any change of his or her status as principal broker to the
Department within ten (10) days following the change;
4. The proper display of all
licenses;
5. The verification that each
licensee affiliated with the brokerage has a license in good standing
with the Department at the beginning of each renewal term;
6. The proper retention and
maintenance of records relating to transactions conducted by or on
behalf of the brokerage at such office; and
7. The preservation and
safekeeping of the transaction and escrow account records upon
termination of his or her status as principal broker until a new
principal broker has been designated.
F. If a principal broker, in
his capacity as an insurance licensee of the Department, is
authorized to place or procure insurance on the property being sold
in a contract provided by the principal broker, he or she shall
obtain written reaffirmation of such provision by the prospective
insured within five (5) days prior to the closing of title.
2.5 Salespersons
A licensed real estate
salesperson must be affiliated with a licensed principal broker in
order to engage in any real estate activity requiring licensure. A
licensed salesperson shall not operate, supervise, or manage a real
estate brokerage.
2.6 Examinations
A. Examinations may be written
or oral. Requests for an oral examination or time extension may be
made to and granted at the discretion of the Department.
B. There shall be a one (1)
year time limit for reexamination with regard to failure of any
section of the Broker or Salesperson examination. If an applicant
fails to pass any particular section, he or she may retake that
section within the one (1) year time limit. If the one (1) year time
limit for reexamination expires, he or she must retake the entire
examination.
C. If a license has expired
for more than one (1) year, the former licensee must complete a new
application and retake the examination in accordance with R.I. Gen.
Laws § 5-20.5-11(b).
2.7 Pre-Licensing Education
Requirements
A. Applicants for a real
estate salesperson’s license, including former licensees whose
salesperson’s license has expired for more than one (1) year,
must submit satisfactory evidence of completion of a minimum of
forty-five (45) classroom hours pursuant to R.I. Gen. Laws §
5-20.5-4(b). Classroom hours completed more than two (2) years from
the date of the application will not be considered in meeting the
forty-five (45) hour requirement.
B. Applicants for a real
estate broker’s license, including former licensees whose
broker’s license has expired for more than four (4) years, must
submit satisfactory evidence of completion of a minimum of ninety
(90) classroom hours, unless exempted pursuant to R.I. Gen. Laws §
5-20.5-4(b).
C. At no time shall the
forty-five (45) classroom hours used to qualify for a salesperson’s
license be used to qualify for the ninety (90) hours required for a
broker’s license. In addition, classroom hours completed more
than four (4) years from the date the application will not be
considered in meeting the ninety (90) hour requirement.
D. All pre-licensing courses
must be taken in a classroom as defined in § 2.2(A)(3) of this
Part, and must comply with the following requirements:
1. In-person classroom –
The real estate school shall:
a. Verify each student’s
identity prior to the beginning of each course and take attendance at
each session;
b. Implement policies to
monitor student attendance and participation for the duration of each
instructional session; and
c. Keep an attendance record
for each course and for each instructional session of that course.
All such attendance records must be maintained for three (3) years.
2. Live-virtual classroom –
The real estate school shall:
a. Ensure that all remotely
delivered instruction is live and interactive.
(1) For pre-licensing courses,
on-demand and pre-recorded instruction is prohibited. However, this
requirement shall not be interpreted to prohibit students from
viewing videos or other multimedia presentations as part of a course
so long as most of the course is a real-time collaboration between
instructor and students.
b. Verify each student’s
identity prior to the beginning of the course and take attendance at
each session.
c. Implement policies to
monitor student attendance, participation and engagement for the
duration of each instructional session, including:
(1) Requiring students to be
on video and visible to the instructor and other students at all
times; and
(2) Ensuring that instructors
and students in a live-virtual classroom are able to see, hear, and
communicate with each other in real time throughout each session.
d. Implement a Code of Conduct
for students while participating in each class session (including,
but not limited to, prohibiting taking the course or any session
while driving a motor vehicle, consuming alcohol, wearing
inappropriate attire, etc.).
e. Keep an attendance record
for each course and for each instructional session of that course.
All such attendance records must be maintained for three (3) years.
E. The Department’s
representative may attend any pre-licensing course at no charge to
evaluate compliance. Each school teaching through a live-virtual
classroom shall provide login credentials to the Department for
auditing purposes.
2.8 Fees
A. Before the Department
issues an original license, the applicant shall pay a fee of
twenty-five dollars ($25.00) that shall be deposited into the Real
Estate Recovery Fund Account.
B. Any fees prescribed by
statute shall be paid by check or money order made payable to the
Rhode Island General Treasurer.
C. If a check is not honored
for payment by the endorser’s financial institution, subsequent
attempts to make payment must be in the form of a money order or
cashier’s check. Returned checks may subject licensees to
disciplinary action pursuant to R.I. Gen. Laws § 5-20.5-14.
2.9 License Renewal Term
A. Every real estate broker or
salesperson who desires to renew a License shall apply for renewal by
submitting a complete renewal application and paying the appropriate
fee in accordance with R.I. Gen. Laws § 5-20.5-11.
B. Licenses issued before
January 1, 2020 shall be renewed every two (2) years on May 1 of each
even numbered year.
C. Licenses issued after
January 1, 2020 shall be renewed every two (2) years on the
anniversary of the date the license was issued.
D. Licensees are responsible
for the timely renewal of their license. The Department may provide
notice of the license renewal requirement as a courtesy, but the
absence of such notice shall not be construed as relieving licensees
from their responsibility for timely license renewal.
E. Failure to renew prior to
the expiration date of an issued license shall result in the
institution of administrative disciplinary proceedings in accordance
with the Administrative Procedures Act, R.I. Gen. Laws Chapter 42-35,
and the Department's Rules of Procedure for Administrative Hearings,
Part 10-00-2
of this Title.
F. The Department may impose
administrative penalties as a condition of reinstatement of a
license, taking into account any aggravating or mitigating facts and
circumstances.
2.10 Disaffiliation of License
A. When a licensee
disaffiliates from a brokerage, the principal broker must send
written notice to the Real Estate Section of the Department of the
disaffiliation of the licensee. The principal broker of the
licensee’s new brokerage must sign and submit a transfer of
license form to the Department.
B. Licensees are not required
to return their license to the Department unless it has been revoked
or they wish to surrender the license.
2.11 Dissolution of Brokerage
The principal broker shall
notify the Department in writing of the dissolution of the brokerage
and return his or her license to the Department within ten (10) days.
Upon the dissolution of a brokerage, all licensees affiliated with
that brokerage must transfer their license to another brokerage or
return it to the Department within ten (10) days for cancellation.
2.12 Property
Management Companies
A. Any person who performs any
of the acts within the meaning of “real estate broker”
pursuant to R.I. Gen. Laws § 5-20.5-1(5) in the regular course
of, or as an incident to, the management of another person’s
real property are required to be licensed as a real estate broker
pursuant to R.I. Gen. Laws Chapter 5-20.5 .
B. This section does not apply
to a bona fide owner, lessor, or lessee of the real property
being managed, or the regular employees thereof.
2.13 Reporting Convictions and
Disciplinary Actions
Any licensee convicted of, or
otherwise pleads guilty or nolo contendere to, any felony or
misdemeanor, or is disciplined by any governmental agency in
connection with any other occupational license, shall file with the
Department a written report of such conviction or disciplinary action
within sixty (60) days of the final judgment or final order in the
case.
2.14 Discriminatory
Practices Prohibited
A. No licensee shall solicit
the sale, lease, the listing for sale, or the lease of residential
property due to the presence or prospective entry into the
neighborhood of an individual or individuals of any protected class
designated in the Rhode Island Fair Housing Practices Act, R.I. Gen.
Laws Chapter 34-37; nor shall licensees distribute material or make
statements designed to induce a residential property owner to sell or
lease his or her property due to such change in the neighborhood.
B. No licensee shall violate
the Fair Housing Practices Act, R.I. Gen. Laws Chapter 34-37, the
Civil Rights Act of 1866, 42 U.S.C. §§ 1981-1982, or the
Civil Rights Act of 1968, Title VIII and Title IX, 42 U.S.C. §§
3601-19, and 3631, to the extent that such violation constitutes a
violation of the Rhode Island General Laws pertaining to real estate
licensure and this Regulation.
C. No licensee or brokerage
shall advertise or use any form of application or make any inquiry
that expresses directly or indirectly any limitation, specification,
or discrimination as to individuals of any protected class designated
in the Rhode Island Fair Housing Practices Act, R.I. Gen. Laws
Chapter 34-37.
2.15 Additional
Grounds for Disciplinary Action
A. No person shall engage in
the business of licensed real estate activity while his or her
license is expired, revoked, suspended, or otherwise not valid.
B. A licensee who fraudulently
certifies to the Department completion of the continuing education
requirement described in § 2.30 of this Part may be subject to
the suspension of his or her license following notice and an
opportunity for a hearing until such time that the requirements of §
2.30 of this Part are satisfied.
2.16 Conduct
of Contested Cases
A. Powers and Proceedings. The
Administrative Procedures Act, R.I. Gen. Laws Chapter 42-35, and the
Department’s Rules of Procedure for Administrative Hearings,
Part 10-00-2
of this Title, shall govern all complaint and enforcement proceedings
pursuant to R.I. Gen. Laws Chapters 5-20.5 and 5-20.6 and this Part.
B. Complaints. Any person may
file a complaint against any licensee or any person who is required
to be licensed but is not licensed by the Department. Such complaint
shall be in writing, signed by the Complainant, and on a form
provided by the Department. The Department shall make an initial
determination whether or not the complaint is within the Department’s
jurisdiction. If no jurisdiction exists, the Department shall notify
the complainant in writing. If jurisdiction exists, the Department
shall conduct whatever investigation it deems appropriate, including
forwarding a copy of the complaint to the Respondent. If instructed
to do so by the Department, the Respondent shall file a response to
the complaint within fifteen (15) business days or such other time
frame specified by the Department.
C. Upon completion of its
investigation, the Department shall take one (1) of the following
actions:
1. If the Department
determines that the complaint fails to establish probable cause of a
violation of the Rhode Island General Laws pertaining to real estate
licensure or this Regulation, the Department shall take no action on
the complaint and shall advise the Complainant and Respondent in
writing of the determination; or
2. If the Department
determines that the complaint establishes probable cause, the
Department shall take such action as it deems appropriate under
applicable law and the Rules and Regulations adopted pursuant
thereto.
D. Department Investigations.
The Department on its own authority may initiate an investigation and
take action:
1. Against a licensee;
2. Against an applicant for a
license or for renewal of a license;
3. Against any person who is
required to be licensed but is not licensed; and
4. Against any person who is
subject to the regulatory authority of the Department.
5. All such actions shall be
upon such terms and conditions as are permitted under applicable law
and the Rules and Regulations adopted pursuant thereto.
2.17 License
Restoration
A. Following the revocation or
suspension of a license in accordance with any disciplinary action,
the Director may impose certain conditions to any future license
restoration.
B. Such conditions for future
license restoration may include, but are not limited to, the
following:
1. Successful completion of a
written examination of the same type normally given to applicants for
initial licenses;
2. Successful completion of
certain continuing education courses;
3. Providing an updated
criminal background check from the Attorney General’s Bureau of
Criminal Information (BCI);
4. Sufficient evidence of
rehabilitation where the nature of the offense so warrants; and/or
5. Payment of an
administrative penalty with consideration given to any aggravating or
mitigating circumstances.
2.18 Client
Funds
A. Escrow Accounts
1. The principal broker shall
be responsible for each and every escrow account maintained on behalf
of the brokerage and its offices.
2. Escrow accounts shall be so
designated by the financial institution in which the account is
located, and on all deposit tickets and checks drawn on the account.
In addition, the monthly bank statement for the account shall bear
the words, “Trust Account” or “Escrow Account.”
3. Funds designated for escrow
shall be deposited in the escrow account of the principal broker of
the seller or landlord, unless otherwise agreed to in writing by the
parties to the real estate transaction.
4. Funds designated for escrow
shall be deposited in the escrow account promptly after the execution
of the purchase and sales agreement or, in the case of a rental,
promptly after receipt of the funds.
5. Funds held in escrow may be
applied to the commission when earned by the respective licensees
only at the time of, or subsequent to, the closing of the real estate
transaction.
6. A licensee shall not
convert the money or property of others to his or her own use, apply
such money or property to a purpose other than that for which it was
paid or entrusted to him or her, or permit or assist any other person
in the conversion or misapplication of such money or property.
7. The maintenance of nominal
amounts of the licensee’s funds in escrow accounts solely to
provide continuity in such accounts or to meet bank service charges
shall not be construed to be commingling.
8. In the absence of any
agreement to the contrary, the interest on monies placed in an
interest-bearing escrow account shall accrue to the licensee.
9. If a statute or Regulation
compels the maintenance of a fixed amount of funds in a licensee’s
escrow account in addition to client or consumer funds, the
maintenance of such fixed amount shall not be construed to be
commingling.
B. Salespersons Prohibited
from Holding Client Funds. An affiliated licensee shall turn over all
deposit monies received promptly to his or her principal broker or,
at the direction of the principal broker, deposit the funds in the
principal broker’s escrow account.
C. Sellers and Deposits
1. A licensee may permit a
buyer to draft a deposit check payable to seller only if:
a. The listing agreement so
provides; and
b. The seller’s
designated client representative or the neutral transaction
facilitator informs the buyer in writing that the seller does not
have any obligation to place the deposit monies in an escrow account.
2. When the listing agreement
requires that the seller retain the deposit, the deposit check shall
not be made payable to anyone but the seller.
3. Except as provided herein,
a licensee who receives deposit funds payable directly to him or her
shall not turn the funds over to a seller.
D. Dual activities
1. In real estate transactions
in which a principal broker and/or his or her affiliated licensees
participate in additional capacities (e.g., seller, builder,
contractor, or insurance agent), all deposit monies received by the
principal broker must be placed in his or her real estate escrow
account, unless there is a contractual agreement between the
principals to the contrary.
2. Any contractual agreement
that provides for the deposit funds to be placed in an account other
than the principal broker’s escrow account must comport with
the following:
a. The agreement must be in
writing;
b. The agreement must include
language that informs the buyer or renter that he or she forfeits the
protections for monies placed in an escrow account in the event of a
dispute over the real estate transaction; and
c. All parties to the real
estate transaction must sign the agreement.
E. Security Deposits Relating
to a Lease or Rental Agreement. Security deposits held by a landlord
following the execution of a lease are governed by R.I. Gen. Laws §
34-18-19. The requirements of this Regulation apply only to deposit
funds held by a licensee prior to the execution of the lease or
rental agreement.
2.19 Release of Deposits
A. Forfeiture of Deposit. A
principal broker may release a deposit to a seller or landlord only
after the following steps have been taken:
1. The principal broker makes
a good faith determination that the buyer or renter forfeited his or
her rights to the deposit’s return;
2. The principal broker
provides written notice to the buyer or renter by certified mail,
return receipt requested, of his or her intent to release the deposit
to the seller or landlord sixty (60) days from the date of receipt of
the written notice; and
3. The buyer or renter fails
to notify the principal broker in writing within the sixty (60) day
period that he or she disputes the ownership of the deposit.
B. Return of Deposit. A
principal broker may return a deposit to a buyer or renter only
after:
1. The principal broker makes
a good faith determination that the seller or landlord has forfeited
his or her rights to the deposit;
2. The principal broker
provides written notice to the seller or landlord by certified mail,
return receipt requested, of his or her intent to return the deposit
to the buyer or renter twenty-one (21) days from the date of receipt
of the written notice; and
3. The seller or landlord
fails to notify the principal broker in writing within the twenty-one
(21) day period that he or she disputes the ownership of the deposit.
C. Disputed Deposit. Whenever
the parties to a real estate transaction dispute the ownership of any
deposit monies received by a principal broker pursuant to R.I. Gen.
Laws § 5-20.5-26, the following procedures shall apply:
1. The principal broker shall
deposit the monies with the General Treasurer no later than one
hundred eighty (180) days of the date of the original deposit. The
form, entitled “Escrow Deposit Transmittal Form,”
available on the Department’s website or by contacting the
Department, shall accompany the transmittal.
2. As soon as the principal
broker determines that an unresolved dispute over ownership of the
deposit funds exists, and at least thirty (30) days prior to
transmittal of the funds, he or she shall by written letter inform
the parties to the real estate transaction of the statutory
requirements regarding disputed deposits. The letter shall contain
the following language:
a. "I have yet to receive
notice of a resolution allowing me to disburse the deposit monies
being held in escrow pursuant to a purchase and sales agreement for
real property located at [insert address]. In accordance with R.I.
Gen. Laws § 5-20.5-26, I will transmit the deposit to the
General Treasurer thirty (30) days from [insert date] unless I
receive a written release signed by both the parties directing me to
disburse the deposit monies. If I do not receive this release within
thirty (30) days of [insert date], I will forward the deposit to the
General Treasurer where it will be held in trust until the dispute is
mediated, arbitrated, litigated, or otherwise resolved.
b. The parties may extend the
time by which the deposit must be deposited with the General
Treasurer by written agreement. If I do not receive a copy of any
such agreement within thirty (30) days of [insert date], I will
forward the deposit as required by R.I. Gen. Laws § 5-20.5-26.”
3. If the parties resolve the
matter after the deposit has been forwarded to the General Treasurer,
the parties must provide written proof in the form of a mutual
written release, mediation agreement, arbitration award, or court
order to the principal broker who then must promptly act to obtain
the deposit by forwarding to the General Treasurer the form entitled
“Claim for Return of Property,” which is available on the
Department’s website or by contacting the Department. Upon
receipt of the deposit, the principal broker must disburse it to the
parties according to the terms established in the written release,
mediation agreement, arbitration award, or court order. If no time
period for payment is stated, payment shall be made within seven (7)
calendar days from the date such release, agreement or order is
executed by all parties.
4. If the principal broker
retires or dies after the deposit money has been transmitted to the
General Treasurer but before the issue of ownership of the deposit is
resolved, the “Claim for Return of Property” shall be
submitted to the General Treasurer by the successor principal broker
of the retired or deceased principal broker. If no successor
principal broker exists, the parties shall provide written proof to
the General Treasurer in the form of a mutual written release,
mediation agreement, arbitration award, or court order with the
direction of payment.
2.20 Records
A. Every principal broker
shall ensure that his or her affiliated licensees keep records of all
funds and property of others received by him or her for not less than
three (3) years from the date of receipt of any such funds or
property.
B. A licensee shall maintain
and retain records sufficient to identify the ownership of all funds
belonging to others and the property associated with those funds.
Such records shall be sufficient to show proper deposit of such funds
in an escrow account and to verify the accuracy and proper use of the
escrow account. The required records shall include:
1. Bank statements
2. Canceled checks. Checks
shall conspicuously identify the payee and shall bear a notation
identifying the purpose of the disbursement. When a check is used to
disburse funds for more than one (1) sales transaction, owner, or
property, the check shall bear a notation identifying each sales
transaction, owner, or property for which disbursement is made,
including the amount disbursed for each, and the corresponding sales
transaction, property, or owner ledger entries. In lieu of retaining
canceled checks, a licensee may retain digitally imaged copies of the
canceled checks or substitute checks provided that such images are
legible reproductions of the front and back of such instruments with
no smaller images than 1.1875 x 3.0 inches and provided that the
licensee’s bank retains for a period of at least six (6) years
the original checks, or the capacity to provide substitute checks and
makes the original or substitute checks available to the licensee and
the Department upon request.
3. Journal or check stubs. A
journal or check stubs shall identify in chronological sequence each
bank deposit and disbursement of monies to and from the escrow
account, including the amount and date of each deposit and a
reference to the corresponding deposit ticket and any supplemental
deposit worksheet, and the amount, date, check number, and purpose of
disbursements and to whom paid. The journal or check stubs shall also
show a running balance for all funds in the account.
4. Copies of contracts, leases
and management agreements
5. Closing statements and
property management statements
6. Other documents. Invoices,
bills, and contracts paid from the escrow account, and any documents
not otherwise described herein necessary and sufficient to verify and
explain record entries. Records of all receipts and disbursements of
escrow monies shall be maintained in such a manner as to create an
audit trail from deposit tickets and canceled checks to check stubs
or journals and to the ledger sheets. Ledger sheets and journals or
check stubs must be reconciled to the escrow account bank statements
on a monthly basis. To be sufficient, records of escrow monies must
include a worksheet for each such monthly reconciliation showing the
ledger sheets, journals or check stubs, and bank statements to be in
agreement and balance.
C. Inspection of Records.
Every principal broker and his or her affiliated licensees shall make
available for inspection by the Department all records of
transactions, books of account, instruments, documents and forms
utilized or maintained in the conduct of the licensed business
activity. All records pertaining to escrow accounts shall be made
available upon demand. All other records shall be open for inspection
during regular business hours.
2.21 Commissions
A. Unless otherwise expressly
provided by written agreement between the principal broker and an
affiliated licensee and cooperating broker and referring broker, all
commissions due to a licensee from the principal broker shall be
subject to an accounting and payment to the affiliated licensee and
cooperating broker and referring broker no later than ten (10)
calendar days from the receipt of such commission by the principal
broker.
B. Every principal broker must
promulgate a written policy for the payment of commissions to
affiliated licensees upon their termination. Such policy must
prescribe the rate of commission to be paid, if any, on termination.
The principal broker must obtain the written signature of each
affiliated licensee under such principal broker as soon as such
affiliation is established to indicate that the affiliated licensee
agrees to the policy. The policy shall include, but not be limited
to, the following:
1. Upon termination of
affiliation or employment, the principal broker shall make a complete
accounting in writing of all commissions due to licensee;
2. In the event any commission
so accounted for is not in accord with the established commission
schedule, the principal broker shall give a complete written
explanation of any difference; and
3. Such accounting shall be
made within thirty (30) days after the termination of affiliation or
employment of the licensee.
C. In the event the seller
offers an incentive payment beyond the agreed listing fee to the
procuring licensee, the principal broker and the seller must have a
written agreement describing the incentive payment and recognizing
that if the sale is a cooperative sale, the incentive payment must be
in conformity with R.I. Gen. Laws § 5-20.5-14(12) and must be
distributed to the licensee by the principal broker with whom he or
she is affiliated.
D. An affiliated licensee of a
principal broker may create a wholly owned corporation or limited
liability company for the purpose of receiving commission payments
from the principal broker. A corporation or limited liability company
created for the purposes of § 2.21(D) of this Part may not be
licensed or conduct licensed real estate activity in its own name. In
addition, it may not have more than one (1) shareholder in the case
of a corporation or one (1) member in the case of a limited liability
company.
E. A principal broker may pay
the earned commission of an affiliated licensee to that person’s
wholly owned corporation or limited liability company. To do so, the
affiliated licensee must submit written instructions to the principal
broker directing him or her to pay the affiliated licensee’s
share of the commission to the wholly owned corporation or limited
liability company. It is the principal broker’s obligation to
assure that the corporation or limited liability company is solely
owned by the affiliated licensee.
F. In any real estate
transaction, a licensee shall at the first (1 st ) point of
personal contact, but no later than making an offer to purchase,
disclose in writing whether the licensee has any of the following
interests in the transaction:
1. An ownership interest in
the property being sold (regardless of the percentage or type of
ownership, i.e. individual, corporate, trust, etc.);
2. Will be purchasing any
portion of the property being sold (regardless of the percentage of
potential ownership, i.e. individual, corporate, trust, etc.);
3. A business interest
(ownership or otherwise) in a business entity that is a buyer or
seller;
4. Is a representative of a
family member, which includes any person who is related to the
licensee, whether by blood, marriage or adoption, as any of the
following: spouse, father, step-father, father-in-law, mother,
step-mother, mother-in-law, son, step-son, son-in-law, daughter,
step-daughter, daughter-in-law, brother, step-brother,
brother-in-law, sister, step-sister, sister-in-law, grandfather,
step-grandfather, grandfather-in-law, grandmother, step-grandmother,
grandmother-in-law, grandson, step-grandson, grandson-in-law,
granddaughter, step-granddaughter, granddaughter-in-law, uncle,
step-uncle, uncle-in-law, aunt, step-aunt, aunt-in-law, niece,
step-niece, niece-in-law, nephew, step-nephew, nephew-in-law, first
cousin, step-first cousin and first-cousin-in-law; or
5. Is a representative of a
household member, which includes any person having legal residence or
living in a licensee’s place of residence.
2.22 General
Obligations of Licensees
A. All licensees shall deal
fairly with all parties to a real estate transaction.
B. Every licensee shall make a
diligent effort to ascertain all pertinent information and facts,
including but not limited to lot size, zoning, presence or absence of
town water or sewer connection, and in the course of a new dwelling,
municipal acceptance of the plat and certificate of occupancy,
concerning every property in a real estate transaction in which he or
she acts as a client representative. The client representative shall
reveal, in writing, all information and facts material to any
transaction to his or her client and when appropriate to any other
party. This information shall include any actual or potential
conflicts of interest that the licensee may reasonably anticipate.
2.23 Advance
Fees
A. Any principal broker who
charges or collects an advance fee for services to be rendered,
including but not limited to, advertising costs under an advance fee
agreement, shall at the time of accepting the advance fee furnish his
or her buyer or seller with a list of services to be rendered.
B. This section shall not
apply to advance fees charged by a principal broker for the purpose
of performing a market analysis of real property.
2.24 Prohibition
Against Lending Name
A. No licensee shall enter
into an arrangement, either directly or indirectly, to lend his or
her name or license for the benefit of another person, or for the
purpose of circumventing the Rhode Island General Laws pertaining to
real estate licensure and this Regulation.
B. Any arrangement where a
licensee affiliates with a principal broker not actively involved in
real estate activity requiring licensure to circumvent the Rhode
Island General Laws pertaining to real estate licensure and this
Regulation shall be grounds for disciplinary action.
2.25 Advertising
A. Unless otherwise stated
herein, categories of advertising include but are not limited to any
publication, radio or television broadcasts, business stationary,
business cards, business and legal forms, electronic mail, web sites,
twitter messaging, and other internet media, or documents.
B. A licensee shall not
advertise in any way that is false or misleading.
C. All advertising shall
include the name of the brokerage or principal broker under which the
licensee is licensed to do business.
D. When the name of a licensee
is contained in any advertising, except on business cards, it shall
be in print smaller and less conspicuous than that of the brokerage.
E. The business card of any
licensed salesperson shall clearly indicate that his or her license
is as a Salesperson or an Associate Broker.
F. Any advertisement shall
contain the words “to a qualified buyer” if it refers to
the amounts of down payment or the monthly payment carrying charges
or indicates that a mortgage is obtainable (where the mortgage
referred to is not already a lien against the premises advertised).
G. Any advertisement that sets
forth amounts of down payment, monthly payment, carrying charges,
taxes or mortgage money obtainable shall contain appropriate
qualifying words such as “approximate” or “estimated.”
The qualifying words shall be clearly associated with the amounts set
forth. If such amounts are mentioned without qualification, the
licensee shall maintain written proof of the validity of such
statements in his or her files. Such written proof shall be
maintained for a period of three (3) years from the date upon which
an advertisement containing such unqualified references shall have
last appeared in any publication.
H. With the exception of
magazine or newspaper advertisements published under municipality
headings, any advertisement for the sale, exchange, or rental of
residential real property placed by a licensee, shall designate the
municipality containing the property.
I. Any use of an insignia,
emblem, logo, trade name or other form of identification in any
advertising or other public utterance, either by a single licensee or
group of licensees, that suggests or otherwise implies common
ownership or common management among such licensees, shall be
prohibited. The use, advertising, or display of any insignia, emblem,
logo, or trade name of any bona fide trade association by any
licensee provided that the licensee is a member of such trade
association is permitted.
J. Any licensee advertising
the trade name of an affiliated franchisor shall include in such
advertising in a conspicuous manner the operating name of the
brokerage that owns the franchise. Any licensee, including the
franchisee using the trade name of a franchisor in any advertising,
shall also include in a conspicuous manner the statement, “Each
office independently owned and operated,” except for the
following categories of advertising:
1. “For Sale”
signs located on the premises of specific properties for sale; and
2. Small “spot”
classified advertising by a single franchised licensee.
K. Advertising by a licensee
referring generally to membership in any real estate multiple listing
service operation shall specify the complete name of the listing
service in which membership is held, except in the following
categories of advertising:
1. “For Sale”
signs located on the premises of specific properties for sale;
2. Small “spot”
classified advertising by a single licensee;
3. Business cards; and
4. Business signs.
L. Any advertising that
contains an offer for a home warranty contract shall specify the
essential terms of the home warranty contract offer and shall also
indicate whether the warranty offer is mandatory. Essential home
warranty terms are limited to components/structure in an inspection
warranty and to components only in the case of a non-inspection
warranty. Advertising shall comply with all Federal and State
warranty legislation, including the Magnuson-Moss Warranty Act, Pub.
Law 93-637, and 15 U.S.C. § 2301, et seq .
M. A licensee may not
advertise or distribute promotional material offering rebates or
discounts including, but not limited to, discount plans or coupons
redeemable for the discounted purchase of goods or services, if such
advertisement or promotional material creates a likelihood of
confusion or misunderstanding, or is false, deceptive or misleading
to the reasonable person. Every advertisement or piece of promotional
material shall clearly and completely disclose to the consumer all
material terms and conditions of the offering.
N. All licensees shall adhere
to truth in lending requirements and shall not participate in paying
of seller’s costs or any payments to reduce interest costs.
2.26 Agreements
A. No listing agreement or
contract for the sale of real property, or any interest therein,
shall contain a pre-printed fee, commission rate or commission
amount.
B. Upon request, the principal
broker shall advise the seller of the rate or amount of any
commission split or distribution.
C. All listing agreements that
list property with a real estate multiple listing service operation
shall specify the complete name of that listing service.
D. No licensee shall enter
into a “net listing” contract for the sale of real
property, or any interest therein.
E. A listing agreement that
provides for the principal broker’s retention of any portion of
the deposit monies upon default by the buyer shall specifically state
such in large type or bold print in such a manner as to inform the
seller of this contingency.
2.27 Appraisals
Prohibited
A. Licensed real estate
brokers and real estate salespersons not certified or licensed as an
appraiser pursuant to R.I. Gen. Laws Chapter 5-20.7 are prohibited
from describing or referring to any valuation of real estate as an
appraisal.
B. A real estate salesperson
or real estate broker licensed under R.I. Gen. Laws Chapter 5-20.5
may provide his or her client with a Broker Price Opinion (“BPO”)
or a Comparative Market Analysis (“CMA”) if he or she
discloses that the BPO or CMA is not an appraisal that conforms to
the standards adopted by USPAP and includes on the BPO or CMA the
following disclaimer:
1. “This opinion or
analysis is not a certified appraisal or an appraisal that conforms
to the Uniform Standards of Professional Appraisal Practice (USPAP).
It is intended only for the benefit of the addressee for the purpose
of assisting buyers or sellers or prospective buyers or sellers in
deciding the listing offering, or sale price of the real property and
not for any other purpose, including but not limited to, lending
purpose excepting that specifically provided under R.I. Gen. Laws §
5-20.7-3.”
C. No person, other than
persons licensed or certified in accordance with the provisions of
R.I. Gen. Laws Chapter 5-20.7, shall assume or use a title,
designation, or abbreviation likely to create the impression of
certification as a real estate appraiser by this State.
D. This section shall not
apply to appraisals of real property carried out for the purpose of
municipal valuation.
2.28 Errors
and Omission Insurance
A. In accordance with R.I.
Gen. Laws § 5-20.5-25, the Department establishes the following
minimum requirements for coverage contained in a licensee’s
errors and omissions insurance policy:
1. In the case of an
individual licensee, the insurance shall be in an amount for each
claim of at least fifty thousand dollars ($50,000.00) and in an
aggregate amount of at least one hundred fifty thousand dollars
($150,000.00).
2. In the case of a principal
broker’s blanket policy for his or her licensees, a brokerage,
the minimum coverage shall be:
a. In an amount for each claim
of at least fifty thousand dollars ($50,000.00) multiplied by the
number of individual licensees employed by or associated with the
principal broker, and in an aggregate amount of at least one hundred
fifty thousand dollars ($150,000.00) multiplied by the number of
individual licensees employed by or associated with the principal
broker; or
b. In an amount sufficient to
provide coverage at a level of at least three hundred thousand
dollars ($300,000.00) for each claim with an aggregate top limit of
liability for all claims of at least one million dollars
($1,000,000.00) during any one (1) year.
3. The insurance shall cover
negligence, wrongful acts, and errors and omissions committed by the
licensee. Where a principal broker’s policy applies, the
insurance shall only cover negligence, wrongful acts, and errors and
omissions committed by the licensee while affiliated with the
principal broker.
4. The insurance required by
R.I. Gen. Laws § 5-20.5-25 may provide that it does not apply to
any dishonest, fraudulent, criminal, or malicious act or omission of
the insured licensee.
B. Cancellation or any other
interruption in required insurance coverage shall require the
licensee to cease any real estate activities requiring licensure
immediately until such time as the licensee is in compliance with
R.I. Gen. Laws § 5-20.5-25.
C. A licensee must notify the
Department within five (5) business days if his or her insurance
coverage is canceled or otherwise interrupted. Failure to provide the
required notice to the Department shall subject the licensee to
disciplinary action pursuant to R.I. Gen. Laws § 5-20.5-14.
2.29 Real
Estate Schools and Instructors
A. All real estate school
permits are valid for one (1) year and expire annually on August 31.
B. Courses are approved for a
three (3) year period. Re-submission is required for re-approval for
additional three (3) year periods.
C. Each authorized school must
designate one (1) individual as an authorized agent. The authorized
agent shall:
1. Maintain records
documenting the entrance qualifications for students, attendance of
students including their name, the dates on which they attended the
school and the date on which they completed the curriculum for
licensure as a real estate broker or salesperson, the continuing
education curriculum for licensed brokers and salespeople or the
instructor curriculum;
2. Notify the Board of any
change in the address or telephone number of the authorized school or
any change of the authorized agent within seven (7) days of such
change; and
3. Ensure that only qualified
instructors are permitted to teach the curriculum that contributes
toward certification for licensure or continuing education.
D. Each authorized school
shall provide to the Department a list of all directors and owners of
the school, including their names, addresses and license numbers, if
applicable and shall maintain the record of each individual for at
least three (3) years.
E. The Department may suspend,
revoke, fine, or refuse to renew the permit of any school that fails
to adhere to the laws pertaining to real estate licensure, this
Regulation, or a directive of the Department, including:
1. Failure to maintain records
as required by § 2.29 of this Part;
2. Failure to notify the
Department of any change of address or telephone number of the
authorized agent;
3. Failure to provide the
Department with copies of or access to requested information;
4. Failure to use the exact
name of the authorized school on any postings, advertisements,
solicitations, or any other medium of communication;
5. Failure to have a qualified
instructor, in accordance with § 2.29(F) of this Part, in the
classroom with the individuals taking the course during the time that
the course is provided;
6. Obtaining a school permit
by false pretenses or substantial misrepresentation or omission;
7. Any misleading or
untruthful advertising;
8. Discriminating against an
individual based on any protected class designated in the Rhode
Island Fair Housing Practices Act, R.I. Gen. Laws Chapter 34-37;
9. Failing to provide the
appropriate certification of completion to an individual completing
the curriculum for licensure as a broker or salesperson or for
continuing education;
10. Providing certification of
completion to an individual who has not completed such curriculum;
11. Combining any part of the
broker, salesperson, instructor, or continuing education curriculum
into a single curriculum or offering; and
12. Failure to offer the
curriculum for licensure and renewal established by the Department.
F. Instructor Qualification
1. No person may act as an
instructor of the salesperson or broker curriculum in any authorized
real estate school unless such person:
a. Holds a real estate
broker’s license or salesperson’s license in good
standing in this State; and
b. Attests that he or she has
worked as a licensed real estate broker or salesperson for a minimum
of five (5) years at least twenty-five (25) hours per week.
2. The Department may
authorize any person to act as an instructor notwithstanding the
requirements of § 2.29 of this Part if he or she demonstrates
that he or she has the equivalent qualifications to those required by
this Section. Equivalent qualifications may include, but are not
limited to, the following:
a. Demonstrated knowledge in a
particular subject matter (e.g., law, home inspection, accounting,
lending, environmental issues);
b. Appointment to the faculty
of an accredited college or university; or
c. Current teaching
certificate with demonstrated real estate industry knowledge or
experience.
3. Instructors may employ
specialists to teach particular portions of the salesperson or broker
curriculum and such specialists need not obtain authorization from
the Department. Specialists may not be employed to teach the entire
curriculum.
4. Current or prior real
estate licensees whose licenses have been suspended or revoked as a
result of disciplinary action by the Department, or the regulatory
authority in another State, shall not qualify for approval as an
instructor.
G. Requirements for Course
Approval
1. Courses must consist of at
least one (1) hour of instruction.
2. Courses must be taught by
an instructor pre-qualified by the Department in accordance with §
2.29(F) of this Part.
3. Courses must substantially
relate to the sale, purchase, or leasing of real estate.
4. Courses submitted in the
area of Ethics must comply with the standards established by the
National Association of Realtors or its equivalent to qualify for
approval by the Department.
5. Course materials and the
instructor’s resume must accompany the application for approval
along with a written Request for Instructor Approval.
6. For each course, the school
must submit an application to the Department for approval which
includes the following:
a. A detailed course outline
with hours spent in each subject area;
b. Texts and materials
utilized in the course;
c. Tests, examinations or
other materials used to evaluate student performance;
d. A list of instructors for
the course;
e. Summaries of student
evaluations of the course; and
f. For pre-licensing courses,
the school must submit evidence of compliance with all requirements
in § 2.7(D) of this Part, including how the school will ensure
student attendance and participation during live-virtual instruction.
7. New or additional
instructors for previously approved courses must be approved by the
Department in accordance with § 2.29(F) of this Part.
2.30 Continuing
Education
A. Prior to the renewal of any
license, all licensees not specifically exempted shall make a
positive affirmation, either in writing or electronically, certifying
under penalty of perjury to the Department that the licensee has
attended and successfully completed during the preceding two (2) year
period, twenty-four (24) clock hours of real estate oriented
educational sessions or courses of instruction.
B. Only those courses
previously approved by the Department in accordance with §
2.29(G) of this Part may be taken to fulfill the requirements of this
section.
C. Attorneys licensed by the
Rhode Island Supreme Court, who obtained a real estate broker’s
license or real estate salesperson’s license without
examination pursuant to R.I. Gen. Laws § 5-20.5-4(d):
1. Shall receive full credit
for all Mandatory Continuing Legal Education (“MCLE”)
courses approved by the Rhode Island Supreme Court
2. May apply MCLE courses to
the twenty-four (24) clock hours required by § 2.30 of this Part
3. Must obtain four (4) clock
hours of credits from the subject areas listed in § 2.30(D) of
this Part. MCLE courses are eligible for this requirement provided
that they fall under the categories listed in § 2.30(D) of this
Part.
D. At least six (6) of the
twenty-four (24) clock hours must come from the following subject
areas
1. Rhode Island law defining
relationships between licensees and consumers;
2. Rhode Island law pertaining
to real estate licensure;
3. Rhode Island
landlord-tenant law;
4. The law of contracts;
5. Federal, Rhode Island, and
local law pertaining to fair housing and the treatment of any
individual in a protected class as designated in the Rhode Island
Fair Housing Practices Act, R.I. Gen. Laws Chapter 34-37;
6. Lead hazard mitigation or
other environmental issues pertaining to real property;
7. Local ordinances and
Regulations pertaining to residential real estate;
8. Financing the purchase of
real estate;
9. Ethical considerations in
real estate transactions; or
10. Coastal real estate,
wetlands, flood plains and sea-rise.
E. Completion of the
requirements of this section is a condition precedent to the renewal
of a license. A licensee’s misrepresentation or false
certification as to course attendance and completion shall subject
the licensee to disciplinary action.
F. Licensees who hold a valid
license originally issued prior to December 12, 1984, are not
required to take continuing education courses for purposes of license
renewal.
G. Remotely-Delivered Online
Continuing Education Courses (Not Pre-Licensing)
1. Remotely-delivered online
courses may be presented either as a live/synchronous course or as an
on-demand/pre-recorded/asynchronous course.
2. All remotely-delivered
online courses must be structured to fill the allotted time. Students
shall not be able to “fast forward” to the end of a
presentation. The course technology must provide built-in parameters
to prevent such “skipping.”
3. In a live/synchronous
course, the instructor must be able to interact with each student in
real time during each class presented.
4. In an
on-demand/pre-recorded/asynchronous course, the school must be able
to assess the understanding and comprehension of the students by
quizzes, exams or other assessment tools at the end of the allocated
time.
2.31 Subsequent
Statutory Changes
Any changes in the Rhode
Island General Laws pertaining to real estate licensure that affect
the content, language or intent of this Regulation will be deemed
adopted by the Department on the date of implementation of the
statutory change.
2.32 Severability
If any section, term, or
provision of this Regulation is adjudged invalid for any reason, all
remaining sections, terms, and provisions shall remain in full force
and effect.