Part 1 General Information
Section 1.1 The Commission's Purpose
The Vermont Real Estate Commission ("Commission") is
responsible for enforcing Vermont's real estate licensing laws. The purpose of
the Commission is to protect the public health, safety and welfare. The
Commission does this by, among other things, setting standards for issuing
licenses and registrations, licensing and registering only qualified
applicants, approving education and continuing education courses and regulating
license and registration holders and their practices.
Section 1.2 Business Address
Vermont Real Estate Commission
Office of Professional Regulation
89 Main Street, 3rd Floor
Montpelier, VT 05620-3402
These rules and more information about the Commission and its
requirements and procedures are available at
www.sec.state.vt.us/professional-regulation
or by contacting the office.
Section
1.3 Commission Members
The Commission is composed of seven members, including three
licensed brokers, one licensed salesperson, one attorney, and two public
members. The Governor appoints each member,
26 V.S.A. §
2251.
Section 1.4 Regular, Special and Emergency
Meetings
The Commission usually meets monthly. The chair or two of the
members may call a special or emergency meeting. A majority of the Commission
constitutes a quorum for all meetings. No formal action at any meeting is valid
unless a majority of those present and voting concur.
Meeting dates and locations can be obtained from the
Commission's website at
www.sec.state.vt.us/professional-regulation/profession/real-estate-commission.
Section 1.5 Laws That Govern the Commission
(a) The Commission is created by law, Title
26, V.S.A., Chapter 41, which establishes its responsibilities for setting
standards, issuing licenses and regulating the profession. In addition, the
Commission is subject to several other state laws such as the Administrative
Procedure Act (Title 3, V.S.A., Chapter 25), the "Law of Professional
Regulation" (Title 3, V.S.A., Sections 121-131 ), the "Right to Know Law"
(Title 1, V.S.A., Sections 311-314 ), and the "Access to Public Records Law"
(Title 1, V.S.A., Sections 315-320 ). These laws spell out the rights of
applicants, licensees, and members of the public.
(b) The Vermont Statutes Annotated contain
the complete text of these laws. They can usually be found in any Town Clerk's
office or public library. The Vermont Statutes Online are also available at
legislarure.vermont.gov. The Commission's statutes and rules maybe accessed
through the Commission's website at
sec.state.vt.us/professional-regulation/profession/real-estate-commission.
Section 1.6 Rules
(a) The Commission is authorized to make
these rules under Title 26, V.S.A., Section 2252. These rules are approved by
the Vermont Legislative Committee on Administrative Rules and have the effect
of law and govern the Commission's proceedings. Rules are made following the
Administrative Procedure Act ("APA"). The Office of Professional Regulation
("OPR") helps the Commission to comply with the Act. Rules are reviewed and
revised periodically.
(b)
Legislative changes from time to time may create inconsistencies between
statutes and administrative rules. When rules and statutes conflict, the
statutes govern.
Section
1.7 Making and Resolving Complaints
(b) The Commission follows the current
investigation and disciplinary procedure adopted from time to time by OPR,
except where the Commission's published procedures provide otherwise. Copies of
the procedure, complaint forms, and more information about the complaint
process may be found at
www.sec.state.vt.us/professional-regulation.
Section 1.8 Definitions
As used in these rules:
(a) "Advertising" includes print ads of any
type, internet, email, or electronic media, stationery, business cards,
individual "For Sale" signs and other audio, visual or print depictions or
notices of real estate offered for sale or brokerage services.
(b) "Broker in Charge" means the individual
broker responsible for a single office.
(c) "Broker Prelicensing Course" means a
course of instruction to become a broker, at least 40 hours long, which has
been approved by the Commission.
(d) "Brokerage Services" means those
activities requiring a license, specifically listed in
26 V.S.A. §
2211(a)(4).
(e) "Brokerage Firm" means a business entity
which is engaged in brokerage services.
(f) "Buyer" includes a person who buys,
offers to buy, intends to buy, or is interested in buying real
estate.
(g) "Client" means the
person(s) with whom a brokerage firm and its licensees, or designated
licensees, has an agency relationship related to the negotiation, sale,
purchase, or exchange of an interest in real estate. Licensees owe a fiduciary
duty to their clients.
(h)
"Continuing Education" means instruction approved by the Commission.
(i) "Designated Agency" means the practice by
which one or more licensees affiliated with a brokerage firm is appointed to
act as an agent of the brokerage firm's buyer or seller client. Designated
Agents owe the client the duties of a fiduciary.
(j) "Exclusive Agency Marketing Agreement"
means a seller service agreement which expressly reserves to the owner the
right to sell or market the property himself or herself without liability to
the brokerage firm for a commission or fee, and which grants the brokerage firm
the right to market the property, but which prohibits the owner from listing
the property with any other brokerage firm for the term of the
agreement.
(k) "Exclusive Buyer
Agency Agreement" means a buyer service agreement by which a buyer engages a
single brokerage firm to provide brokerage services, and by which the buyer
agrees not to obtain services from any other broker, but which expressly
reserves to the buyer the right to purchase property himself or herself without
liability to the brokerage firm for a commission or fee.
(l) "Exclusive Right to Market Agreement"
means a seller service agreement which grants to the brokerage firm the
exclusive right to market the property, and which recognizes a liability on the
part of the owner for a commission or fee to the brokerage firm, even if the
property is sold by the owner.
(m)
"Exclusive Right to Represent Buyer Agreement" means a buyer service agreement
which grants to the brokerage firm the exclusive right to act on behalf of the
buyer in a real estate purchase, and which recognizes a liability on the part
of the buyer for a commission or fee to the brokerage firm, even if a property
is purchased without assistance by the brokerage firm.
(n) "Fiduciary Duty" means the duty to act
for the benefit of the client in all matters relating to the agency
relationship. A fiduciary must put the interest of the client ahead of the
interests of the agent and any third party. Fiduciaries must disclose all
material facts the fiduciary learns about the transaction, must disclose any
knowledge gained from other parties to the client's transaction, must protect
the client's confidences and act with reasonable care, loyalty, and obedience
toward the client. Unless otherwise agreed, the duty to protect a client's
confidences continues after the brokerage service agreement expires or is
otherwise terminated.
(o)
"Licensee" means a person holding any license issued by the
Commission.
(p) "Material Fact"
means a fact that might cause a buyer or seller to make a different decision
with regards to entering into or remaining in a contract or affect the price
paid or received for real property.
(q) "Net Listing" means a brokerage service
agreement in which, at some point, the benefit of negotiating a higher price
for the seller or a lower price for the buyer accrues only to the agent or
brokerage firm and not to the client. Net listing is a prohibited practice. See
Rule 4.8(e).
(r) "Non-Designated
Agency" means the practice by which all licensees affiliated with a brokerage
firm act as the agent of the brokerage firm's clients. All licensees affiliated
with the brokerage firm owe the client the duties of a fiduciary.
(s) "Nonexclusive" or "Open" with respect to
a seller service agreement means a seller service agreement which expressly
reserves to the owner the right to list the property with other brokerage firms
or to sell the property himself or herself. It shall also mean a buyer service
agreement that allows the buyer to obtain brokerage services from other
brokerage firms or purchase a property himself or herself.
(t) "OPR" means the Office of Professional
Regulation.
(u) "Principal Broker"
means the individual broker responsible for the brokerage firm and all
associated branch offices.
(v)
"Salesperson Prelicensing Course" means a course of instruction to become a
salesperson, at least 40 hours long, which has been approved by the
Commission.
(w) "Salesperson
Post-Licensure Education" means a course of instruction, which has been
approved by the Commission, which satisfies, or counts toward satisfying, the
hours of required education after obtaining an initial salesperson
license.
(x) "Seller" includes a
person who sells, offers to sell, intends to sell, or is interested in selling
real estate.
(y) "Supervising
Licensee" in a designated agency firm means a licensee of the brokerage firm
who is selected by the brokerage firm's principal broker or broker in charge to
act in a supervisory capacity for different licensees within the brokerage firm
whose clients wish to participate in the same transaction. This individual
shall not be a licensee who represents one of the clients in the
transaction.
(z) "Vicariously
Responsible" means accountability of a principal broker or broker in charge for
unprofessional conduct by a licensee.
(aa) "V.S.A." means Vermont Statutes
Annotated.
Part
2 Information for Applicants
Section
2.1 Need for a License
(a) A
person shall not engage in the business of a real estate broker or salesperson
without a license. Broker and salesperson services are defined by statute. See
26 V.S.A. §
2211(a)(4) &
(5).
(b) Examples of activities
that require a license include: These activities, and others, require a license
when a person engages in them for others, for a fee or other compensation, as a
continuing course of conduct. This list is not exclusive.
(1) listing, offering, attempting or agreeing
to list real estate or any interest therein for sale or exchange;
(2) selling, exchanging or purchasing real
estate or any interest therein;
(3)
offering to sell, exchange or purchase real estate or any interest
therein;
(4) negotiating, offering,
attempting or agreeing to negotiate, the sale, exchange or purchase of real
estate or any interest therein;
(5)
buying, selling, offering to buy or sell, or otherwise dealing in options on
real estate or any interest therein;
(6) advertising or holding oneself out as
being engaged in the business of buying, selling or exchanging real estate or
any interest therein; or
(7)
assisting or directing in the procuring of prospects, calculated to result in
the sale or exchange of real estate or any interest therein; however, a
non-licensed employee of a licensee shall be allowed to respond to inquiries
from members of the public, so long as the employee makes it clear that he or
she is not licensed and that any information provided should be confirmed by a
licensed person.
(c)
Examples of activities which do not require a license include:
(1) offering property for lease;
and
(2) offering mobile homes or
businesses for sale or lease, without also offering real property. See
26 V.S.A. §
2211(b).
Section 2.3 Types of Licenses and
Registrations
(a) The Commission issues the
following licenses:
(1) Broker;
(2) Salesperson; and
(3) Temporary Broker (
26 V.S.A. §
2299 ).
(b) The Commission issues the following
registrations:
(1) Brokerage firm;
and
(2) Branch office.
(c) Every licensee must be
associated with a single registered brokerage firm, except that a broker who
also holds a temporary license under
26 V.S.A. §
2299 may be associated with a second
firm.
Section 2.4 How to
Become Licensed as a Salesperson
A license as a salesperson shall be granted to a person who
satisfies all of the following:
(a) is
at least 18 years old;
(b) has
completed the salesperson prelicensing course;
(c) has passed the national and state
examinations required by the Commission within the two years immediately
preceding application;
(d) has been
employed by or become associated with a brokerage firm and that firm's
principal broker;
(e) is not
precluded from licensure pursuant to
3 V.S.A. §
129a; and
(f) meets other requirements mandated by law.
The Commission may waive all or a part of the national
examination requirement for a salesperson if the applicant is a real estate
salesperson regulated under the laws of another jurisdiction, is licensed and
in good standing to practice in that jurisdiction, and in the opinion of the
Commission, the other jurisdiction's licensure requirements are substantially
equal to Vermont's. All applicants are required to complete the Vermont
examination.
Section
2.5 How to Become Licensed as a Real Estate Broker
A license as a broker shall be granted to a person who
satisfies all of the following:
(a)
has completed the broker prelicensing course;
(b) has passed the national and state
examinations as required by the Commission, within the two years immediately
preceding application;
(c) has
gained at least two years experience as a licensed salesperson, including at
least eight separate and unrelated closed transactions among buyers and sellers
bearing no familial or contemporaneous business relation to the applicant.
The Commission may waive all or a part of the national
examination requirement and experience requirement for brokers if the applicant
is a real estate broker regulated under the laws of another jurisdiction, and
is licensed and in good standing to practice in that jurisdiction, and in the
opinion of the Commission, the other jurisdiction's licensure requirements are
substantially equal to Vermont's. All applicants must complete the Vermont
examination.
Section
2.6 How to Register Real Estate Brokerage Firms
To obtain a brokerage firm or branch office registration a
person must file a written application and must:
(a) designate a principal broker for the main
office and a broker in charge for each branch office;
(b) register the firm with the Corporations
Division of the Office of the Secretary of State, if required by law;
and
(c) specifically designate the
brokerage firm name under which the firm will conduct business, register
licensees, and advertise.
Section
2.7 Examinations
All examinations for real estate broker's licenses and for
salesperson's licenses are administered through OPR and information is
available through the Commission's website at
www.sec.state.vt.us/professional-regulation/profession/real-estate-commission.
A candidate who fails one part of the exam may retake that part within the next
six months. After six months or two failures, the candidate must retake the
full exam.
Section 2.8
Display of Licenses for Brokers and Salespersons
A license issued by the Commission must be conspicuously
displayed in the office where the licensee is associated.
Section 2.9 Applicant's Right to a Written
Decision and Personal Appearance
The Commission will notify applicants in writing of all
decisions concerning the granting or denial of a license or registration. If a
license or registration is denied, the applicant will be given specific reasons
and informed of the right to request a review and personal appearance before
the Commission before the decision becomes final.
Section 2.10 Applicant's Right to Appeal
If the applicant is not satisfied with the Commission's final
decision, the applicant may appeal within 30 days of the Commission's decision,
to an appellate officer, by filing a notice of appeal with the Office of
Professional Regulation, 89 Main Street, 3rd Floor, Montpelier, Vermont
05620-3402 Attention: Appeal. The appellate process is governed by
3 V.S.A. §
130a.
Part 3 Information for Licensed Brokers and
Salespersons
Section 3.1 Renewing a License or
Registration
(a) Licenses and registrations
renew on a fixed biennial schedule and must be renewed before they expire. The
expiration date is stated on the license or registration. Before the expiration
date, OPR will provide notification for renewal to the licensee's electronic
mail address of record; however, failure to receive such notice shall not
excuse any licensee from the obligation to maintain continuous licensure.
Evidence of having completed the required hours of continuing and/or
post-licensure education must be provided with license renewal applications.
Prior to expiration, a licensee may request that the license be placed in an
inactive status by paying the fee to transfer the license to inactive status.
No continuing education is needed to become inactive. Unless a licensee
requests to be placed on inactive status prior to expiration, the license shall
be designated as "expired."
(b)
When the license of a principal broker ceases to be active for any reason, all
licensees associated with that brokerage firm shall lose authority to transact
business in the firm's name.
(c)
When the license of a broker in charge ceases to be active for any reason, all
licensees associated with that branch office shall lose authority to transact
business in the brokerage firm's name.
Section 3.2 Reinstating An Expired or
Inactive License or Registration
(a) A license
that has been expired for less than five years may be reinstated by the
licensee by paying the renewal fee and late renewal penalty, and providing
proof of the required hours of continuing and/or post-licensure education taken
within the previous 24 months.
(b)
A licensee who requested the license be inactive, and reactivates during the
same renewal period, may be reinstated by paying the reinstatement fee, renewal
fee, and providing proof of the required hours of continuing and/or
post-licensure education taken within the previous 24 months. A licensee who
does not request reactivation during the same renewal period may not renew
under this section and must qualify under 3.2(a).
(c) A brokerage firm whose registration has
expired because it was not renewed by the expiration date may be reinstated by
paying the renewal fee and late renewal penalty. When the registration of the
brokerage firm is not renewed prior to expiration, all licensees associated
with that brokerage firm shall lose authority to transact business in the
brokerage firm's name.
Section
3.3 Requests for Declaratory Rulings
(a) Requests for declaratory rulings as to
the applicability of any statutory provisions or any rule or order of the
Commission may be sent to the Commission office. Requests must be in writing,
and must show the existence of a real controversy, not just a hypothetical
question. A declaratory ruling is binding upon the parties to the ruling and
the Commission. The requests will be considered pursuant to the Administrative
Procedure Act, 3 V.S.A. Chapter 25 and the Administrative Rules of the Office
of Professional Regulation. The Commission may call witnesses in addition to
those presented by the parties.
(b)
In the absence of a real controversy, the Commission may, in its discretion,
elect to issue a non-binding advisory opinion, or may decline to address the
question presented. An advisory opinion is not binding on the requestor, other
licensees, or the Commission.
Section
3.4 Change of Name or Address
(a)
A principal broker or broker in charge must notify OPR in writing within 30
days of any change in name, address, phone number or email address of the
brokerage firm or any licensee associated with that brokerage firm.
(b) Each licensee shall notify OPR in writing
within 30 days of any change of the licensee's principal business location,
phone number or email.
Section
3.5 Modifications of Conditions and Reinstating a Suspended
License
The Commission may set forth a specific process in a
disciplinary order for modification of that order or for reinstatement after
suspension. A licensee who receives a warning, reprimand, suspension, or
condition to continued practice, shall specifically refer to the Commission's
order for the process for modification of that order or reinstatement after
suspension.
Part
4 Conduct of Licensees
Section
4.1 Offices and Branch Offices
(a) A principal broker shall be in charge of
a brokerage firm. The principal broker must maintain his or her place of
business at the brokerage firm's main office. The principal broker must notify
the Commission of the brokerage firm's main office location.
(b) A brokerage firm which desires more than
one office shall register a branch office. A branch office shall use the same
name as the main office and shall designate a broker in charge. The broker in
charge of a branch office must maintain his or her place of business at the
branch office.
(c) The firm's
licensees must have a primary place of business at one of the brokerage firm's
locations but may work out of any of the brokerage firm's offices.
(d) A principal broker or broker in charge
may not serve as principal broker or broker in charge for more than one office
or brokerage firm at any one time, except that a broker who also holds a
temporary license under
26 V.S.A. §
2299 may be associated with a second
brokerage firm.
Section
4.2 Broker Supervision
(a) A
principal broker may be vicariously responsible for the professional conduct of
licensees and employees of the brokerage firm, including all branches; a broker
in charge may be vicariously responsible for the professional conduct of all
licensees and employees of the branch office.
(b) Licensees must work under the supervision
and training of the principal broker or broker in charge.
(c) In a Designated Agency Firm, a principal
broker or broker in charge who is the designated licensee for a client has the
opportunity to create a conflict of interest if their client enters into a
transaction with another client of the brokerage firm. In these instances, the
principal broker or broker in charge must delegate their supervisory
responsibilities, for the other licensee in the transaction, to a qualified
supervising licensee.
Section
4.3 Brokerage Firms Practicing Non-Designated Agency
(a) All brokerage firms that are not under an
election to practice Designated Agency are governed by this Rule as practicing
Non-Designated Agency (see Rule 1.8 (r)). Any such brokerage firm shall be
known as a Non-Designated Agency Firm and disclosure of this status shall be
included in seller and buyer service agreements as required under Rule
4.8(c).
(b) A Non-Designated Agency
Firm is the agent of each client of the firm and on its behalf all licensees of
the firm represent all clients of the firm pursuant to written agreements for
brokerage services (see Rule 4. 8). The firm and all its licensees owe the
client the duties of a fiduciary (see Rule 1.8 (n)).
(c) A Non-Designated Agency Firm and all its
licensees shall:
(1) take ordinary and
necessary care to protect all client confidences from disclosure to third
parties, except disclosure may occur pursuant to authorization of all clients
affected thereby;
(2) until
closing, submit all offers to or from the client, with or without a deposit,
whether oral or written, whether above or below the listed price; and
(3) if true, disclose the fact that the
brokerage firm provides brokerage services to both buyers and sellers in the
market. The disclosure shall be part of any seller or buyer service agreement
executed on behalf of the brokerage firm.
(d) A Non-Designated Agency Firm and all its
licensees shall not:
(1) practice dual or
limited agency, acting as agent for both a buyer and seller in the same
transaction. The firm may act as an agent for one party in a transaction where
the other party is an unrepresented customer;
(2) practice Designated Agency; or
(3) provide or offer to provide services as
an Intermediary, a Transactional Broker, a Facilitator or any other form of
representation not involving an agency relationship for which fiduciary duties
are owed. This provision does not preclude the right to make referrals as
provided in Rule 4.13.
(e) A Non-Designated Agency Firm may retain
and compensate another brokerage firm to assist it in providing services to its
clients without thereby creating an agency relationship between the client and
the other firm. This practice shall be known as broker agency and the
relationship shall be governed by the provisions of Rule 4.11.
(f) A Non-Designated Agency Firm shall
terminate the seller service agreement prior to a licensee associated with the
brokerage firm entering into negotiations on his or her own behalf to purchase
a property listed by the brokerage firm. In addition, the brokerage firm shall
provide an opportunity for the client to seek outside representation, and
disclose in writing that a conflict of interest is automatically created due to
the competing interests of the client and the licensee. Prior to entering into
negotiations for the sale of property owned by a licensee of the Non-Designated
Agency Firm to a buyer under a buyer service agreement with the brokerage firm,
the brokerage firm must terminate the buyer service agreement to provide the
client an opportunity to seek outside representation, and disclose in writing
that a conflict of interest is automatically created due to the competing
interests of the client and the licensee. In these instances, a Non-Designated
Agency Firm cannot advance the interests of the client and provide undivided
loyalty while negotiating with a licensee associated with the brokerage firm.
The client may elect to remain an unrepresented customer of the Non-Designated
Agency Firm, and not seek outside representation, if the client provides
informed written consent. A Non-Designated Agency Firm and its associated
licensees must show affirmatively that they acted in good faith in the
transaction.
Section 4.4
Brokerage Firms Practicing Designated Agency
(a) If a brokerage firm has more than two
licensees, the brokerage firm may elect to practice Designated Agency (see Rule
1.8 (i)). Any such brokerage firm shall be known as a Designated Agency Firm
and disclosure of this status shall be included in seller and buyer service
agreements as required under Rule 4.8(c).
(b) A Designated Agency Firm shall delegate
to its individual licensees all brokerage firm agency and fiduciary
responsibilities for specific clients of the firm pursuant to written
agreements for brokerage services (see Rule 4. 8). Delegations may be made to a
single licensee or to multiple licensees associated with the brokerage firm.
The licensee(s) so delegated shall be known as designated agent(s). Only the
designated agent(s) owe the client the duties of a fiduciary (see Rule 1.8
(n)).
(c) A Designated Agency Firm
shall at all times ensure that there is a supervising licensee within the firm
to provide guidance to the designated agent(s) in the event of a conflict where
the principal broker and/or broker in charge is acting as a designated agent
for one of the parties to the transaction (e.g. "in-house
transaction").
(d) A Designated
Agency Firm and the designated agent(s) with respect to a specific client
shall:
(1) obtain written consent of the
client to the appointment of the initial and any subsequent designated agent(s)
at the time the seller or buyer service agreement is executed or
amended;
(2) take ordinary and
necessary care to protect all client confidences from disclosure to third
parties, except disclosure may occur pursuant to authorization of all clients
affected thereby;
(3) take ordinary
and necessary care to protect all client confidences from disclosure to other
licensees of the firm who are not designated agents for the client, except
disclosure may occur pursuant to authorization of all clients affected
thereby;
(4) until closing, submit
all offers to or from the client, with or without a deposit, whether oral or
written, whether above or below the listed price; and
(5) if true, disclose the fact that the firm
provides brokerage services to both buyers and sellers in the market. The
disclosure shall be part of any seller or buyer service agreement executed on
behalf of the firm.
(e)
A Designated Agency Firm and its designated agent(s) for a particular client
shall not:
(1) practice dual or limited agency
by acting as agent for both a buyer and seller in the same transaction. The
designated agent(s) may act as an agent for one party in a transaction where
the other party is an unrepresented customer;
(2) practice Non-Designated Agency;
(3) provide or offer to provide services as
an Intermediary, a Transactional Broker, a Facilitator or any other form of
representation not involving an agency relationship for which fiduciary duties
are owed. This provision does not preclude the right to make referrals as
provided in Rule 4.13.
(f) A Designated Agency Firm may retain and
compensate another brokerage firm to assist it in providing services to its
clients without thereby creating an agency relationship between the client and
the other firm. This practice shall be known as broker agency and the
relationship shall be governed by the provisions of Rule 4.11.
(g) A Designated Agency Firm may permit one
of its licensees with a customer who may be interested in buying from or
selling to a client of the firm to practice broker agency with the designated
agent(s) of the client. No written cooperation agreement is required. In such
case the licensee with a customer owes the designated agent(s), but not the
firm's client, the duties of a fiduciary.
(h) All confidential information of the
seller or buyer client may not go beyond the designated agent(s) or the
supervising licensee, except with the client's prior authorization. A
designated agent may reveal confidential information of a client to the extent
reasonably necessary to obtain proper guidance from the supervisor in charge of
such agent, as long as that supervisor is not acting as an agent for another
party in a transaction with the client. The supervisor shall protect from
further disclosure any confidential information received in a supervisory
capacity. All seller and buyer service agreements shall contain clear language
that notifies the client that this can occur.
(i) When a designated agent is appointed,
information known to or acquired by the designated agent shall not be imputed
to the brokerage firm or to other licensees within the same brokerage
firm.
(j) The principal broker and
broker in charge shall remain vicariously responsible for breach of duty in his
or her supervisory capacity as provided in Rule 4. 2, however, they do not by
virtue thereof become dual agents.
(k) A Designated Agency Firm shall terminate
the seller service agreement prior to a designated agent associated with the
brokerage firm entering into negotiations on his or her own behalf to purchase
a property in which he/she is a designated agent for the property listed by the
brokerage firm. In addition, the brokerage firm shall provide an opportunity
for the client to seek outside representation, and disclose in writing that a
conflict of interest is automatically created due to the competing interests of
the client and the licensee. Prior to entering into negotiations for the sale
of property owned by a licensee of the brokerage firm who is the designated
agent of the buyer under a buyer service agreement with the brokerage firm, the
Designated Agency Firm must terminate the buyer service agreement. In addition,
the brokerage firm shall provide an opportunity for the client to seek outside
representation, and disclose in writing that a conflict of interest is
automatically created due to the competing interests of the client and the
licensee. In these instances, a Designated Agency Firm cannot advance the
interests of the client and provide undivided loyalty while negotiating with a
licensee associated with the brokerage firm. The client may elect to remain an
unrepresented customer of the brokerage firm, and not seek outside
representation, if the client provides informed written consent. A Designated
Agency Firm and its associated licensees must show affirmatively that they
acted in good faith in the transaction.
Section 4.5 Duty to Customers and the Public
(a) A licensee working for a brokerage firm
employed by a seller or seller's agent must fully and promptly disclose to a
prospective buyer all material facts within the licensee's knowledge concerning
the property being sold. This obligation continues until the sale is closed or
has been cancelled. Some examples of material facts (See Rule 1. 8(p)) include,
but are not limited to, the following:
(1) a
defect that could significantly diminish the value of the land, structures, or
structural components such as the roof, wiring, plumbing, heating system, water
system, or sewage disposal system;
(2) a limitation in the deed that could
substantially impair the marketability or use of the property and thereby
diminish its value;
(3) a
recognized or generally accepted hazard to the health or safety of a buyer or
occupant of the property; or
(4)
facts a licensee reasonably believes may directly impact the future use or
value of the property.
(b) If the client refuses to consent to
disclosure after being informed that the licensee considers disclosure to be
necessary, then the licensee must withdraw from the agency
relationship.
(c) A licensee,
before showing real property, must disclose any known significant limitations
on the seller's ability to convey a fee simple interest in the property, such
as options, rights of first refusal, or being subject to prior
closings.
(d) A licensee buying or
selling on his or her own account shall disclose the existence of his or her
real estate license and that the property under consideration belongs to the
licensee or will be purchased for the licensee's use. These disclosures are to
be made on initial contact with the seller, buyer, or their
representatives.
(e) A licensee
shall comply with all federal, state and local requirements related to the
marketing, transfer or development of real estate.
Section 4.6 Duty to Provide Mandatory
Consumer Disclosure
(a) At the time of first
contact with a member of the public who expresses an interest in buying or
selling real property, a licensee shall give an oral or written disclosure
informing the person that there is no confidentiality between the licensee and
the person until and unless there is a signed brokerage service
agreement.
(b) A brokerage firm,
and its licensees, shall provide to any unrepresented person with whom a
licensee of the brokerage firm has substantial contact, including via
electronic communication, a true copy of the most recent consumer disclosure
form adopted by vote of the Commission. The disclosure shall occur at the first
reasonable opportunity, and it must occur before:
(1) entering into a brokerage service
agreement; or
(2) showing a
property.
(c) If it has
been more than twelve (12) months since the consumer disclosure form was given,
a new consumer disclosure form must be given.
(e) For purposes of this rule, an
unrepresented person means any person who:
(1)
is under a brokerage service agreement for representation, but is not at the
time in the presence of their agent; or
(2) is not under contract with a brokerage
firm for representation.
(f) If the person required to receive the
written disclosure form does not sign the form, the licensee shall:
(1) note that information on the
form;
(2) sign and date the form;
and
(3) provide a copy of that form
to the person.
(g) The
licensee's signature in 4. 6(f)(2) above shall constitute a certification by
the licensee that the form was provided to the person with the recommendation
to read the disclosure.
(h) The
disclosure form is not required for unrepresented persons in the following
instances:
(1) for an open house where the
host brokerage firm conspicuously displays a poster containing a replica of the
disclosure form, with copies available on request;
(2) for any Vermont broker or salesperson
licensee; or
(3) for any customer
of a cooperating firm brought to a principal firm pursuant to a cooperation
agreement between brokerage firms (see Rule 4.11) when that customer has
already received the disclosure form from the cooperating firm.
Section 4.7 Trust
Accounts
(a) Every brokerage firm shall
maintain a pooled interest-bearing trust account in a bank or other regulated
financial institution licensed in Vermont, so long as the firm holds the funds
of others in the course of its real estate business, and shall establish
individual interest-bearing trust accounts as needed to comply with these
rules. Interest on the pooled trust account shall be remitted as provided by
26 V.S.A. §
2214.
(b) All deposits in the possession of a
brokerage firm to be held as an escrow agent under a Purchase and Sale
Agreement shall be deposited in the firm's trust or escrow account not later
than five (5) banking days after the Purchase and Sale Agreement is executed by
both seller and buyer. Any licensee affiliated or associated with that
brokerage firm is required to utilize the brokerage firm's accounts in the
discharge of his or her responsibility under this rule and under
26 V.S.A. §
2214. Unless otherwise agreed to in writing,
all deposits held by any licensee shall be placed in the account of the
brokerage firm with which the seller has a seller service agreement, or, if
there is no listing broker, in the account of the buyer's brokerage firm. No
earnings of the accounts shall be made available to the brokerage firm or any
associated licensee.
(c) If a
deposit is reasonably expected to earn more than $ 100, it shall be transferred
to or placed in an individual interest-bearing trust account, if requested by
the person making the deposit, specifying the Social Security account number or
taxpayer identification number of the person who paid the money or is entitled
to receive the interest. A deposit which is not reasonably expected to earn
more than $ 100 shall be placed in the brokerage firm's pooled trust
account.
(d) Disputed
deposits--When the brokerage firm learns of a dispute concerning the proper
party to receive a deposit held in a trust account, the broker shall notify the
parties, in writing, that the deposit will remain in the trust account until
(1) the parties to the disputed deposit give written authority to the broker to
disburse the funds, or (2) a court of competent jurisdiction determines the
proper party entitled to the proceeds of the disputed deposit.
(e) Augmented deposit--When a person making a
deposit increases the amount of the deposit for any reason, it shall be
deposited in the firm's trust account not later than five (5) banking days
after receipt thereof. If the recalculated interest is reasonably expected to
exceed $ 100, the brokerage firm shall transfer the principal amount of the
total deposit to an individual interest bearing trust account, if requested by
the person making the deposit.
(f)
When a payment is made out of an individual interest bearing trust account to
the person entitled to it, any interest accrued on that account shall be paid
out simultaneously to that person or to such other person designated in the
contract.
(g) The brokerage firm
shall keep accurate records of all deposits held by it. Such records shall
include:
(1) the name(s) from whom the money
was received and to whom it was disbursed;
(2) the amount of each deposit;
(3) the amount of each
disbursement;
(4) the date each
amount was received, the date disbursed and the amount of any interest earned
on an individual interest bearing trust account; and
(5) all contracts, documents and other
records related to a trust account and all its activity, including copies of
all related brokerage service agreements, deposit receipts, withdrawal receipts
and sales agreements.
(h) The responsibility for the account and
all transactions concerning the account remains with the principal broker or
broker in charge.
(i) A brokerage
firm may deposit its own funds in the account to cover bank service charges or
meet a minimum balance to avoid bank service charges. Check printing charges,
wire transfer charges, overdraft charges, and other charges for specialized
services are a business expense of the brokerage firm. Ordinary bank service
charges may be offset against the interest in the account, but the brokerage
firm shall not permit the principal amount of the trust funds to be
depleted.
Section 4.8
Agreements for Brokerage Services
(a) Before
rendering any brokerage services, a brokerage firm must have:
(1) a written seller service agreement;
or
(2) a written buyer service
agreement; or
(3) a written
cooperation agreement between brokerage firms.
(b) Agreements for brokerage services shall
contain a specific expiration date not to exceed one (1) year from the
effective date of the agreement. A brokerage service agreement shall not
contain any provision for automatic extension or renewal. All information in a
brokerage service agreement shall be current as of the date signed, and shall
be current as of the date of the most recent extension or renewal. Any
limitation on the scope of services to be provided shall not compromise any of
the duties required under Rules
4.3,
4.5 and/or 4.6.
(c) All seller and buyer service agreements
shall contain clear language that states whether the firm is a Designated or
Non-Designated Agency Firm. If the firm elects to practice designated agency,
the designated agent(s) must be named in the seller or buyer service agreement.
Any changes to the designated agent(s) shall be in writing and approved by the
client. Brokerage service agreements must contain a provision indicating that a
designated agent may reveal confidential information of the client to the
extent reasonably necessary to obtain proper guidance from any supervising
licensee in charge of such agent, as long as that supervising licensee is not
acting as an agent for another party in a transaction with the client. The
supervising licensee shall protect from further disclosure any such
confidential information received in a supervisory capacity.
(d) Copies of all agreements for brokerage
services shall be given to all parties to the agreements at the time of
execution, or as soon as possible thereafter.
(e) Use of a net listing or any variation is
prohibited.
Section 4.9
Seller Service Agreements
(a) Each type of
seller service agreement shall be on a separate form and identified with only
one of the titles below in boldface type at the top of the agreement:
NONEXCLUSIVE (Open) AGENCY MARKETING AGREEMENT;
EXCLUSIVE AGENCY MARKETING AGREEMENT; or
EXCLUSIVE RIGHT TO MARKET AGREEMENT
(b) A seller service agreement shall contain:
(1) a clear description of the property and
its location;
(2) the price, terms
and conditions upon which the brokerage firm has authorization to market the
property;
(3) the specific
brokerage services the firm will provide, including any limitation on
services;
(4) the agreement date,
specific expiration date and the effective date if different from the agreement
date;
(5) a provision for avoiding
dual agency and other conflicts with respect to the brokerage firm's buyer
service agreements, including the requirements of subsection 4.3(e) and 4.4
applicable to representation of sellers;
(6) a statement of the amount of transaction
fee or other compensation to be paid the brokerage firm, the method of
computation and the person who will pay it;
(7) the signatures of all owners or their
authorized agents and a licensee associated with the brokerage firm;
(8) a clear description of whether, and how,
cooperating brokerage firms will be compensated; and
(9) a clear description of whether, and how,
a brokerage firm representing the buyer will be compensated.
(c) A seller service agreement may
contain a clause which provides for compensation following expiration or
termination when:
(1) a purchase and sale
agreement is signed, a closing held, or the property is otherwise conveyed,
within a specified number of months following the expiration or termination
date of the seller service agreement, but not to exceed twelve
months;
(2) the brokerage firm,
during the term of the seller service agreement, was procuring cause of the
sale;
(3) the brokerage firm
provided the name of the purchaser to the seller in writing not later than 10
days after the expiration or termination date of the seller service agreement;
and
(4) the property has not been
listed with another brokerage firm under a valid, exclusive right to market
agreement with terms and conditions similar to those contained in the expired
or terminated seller service agreement.
(d) No other provision for compensation
following expiration or termination is authorized.
Section 4.10 Buyer Service Agreements
(a) Each type of buyer service agreement
shall be on a separate form and identified with only one of the titles below in
boldface type at the top of the agreement:
NONEXCLUSIVE (Open) BUYER AGENCY AGREEMENT;
EXCLUSIVE BUYER AGENCY AGREEMENT; or
EXCLUSIVE RIGHT TO REPRESENT BUYER AGREEMENT
(b) A buyer service agreement shall contain:
(1) the agreement date, specific expiration
date, and the effective date if different from the agreement date;
(2) all terms of the agency
authorized;
(3) a description of
the services that the brokerage firm will perform under the agreement,
including any limitations on services;
(4) a provision for avoiding dual agency and
other conflicts with respect to the brokerage firm's seller service agreements,
including the requirements of subsection 4.3(e) and 4.4 applicable to
representation of buyers;
(5) a
statement of the amount of transaction fee or other compensation to be paid the
brokerage firm, the method of computation and the person who will pay
it;
(6) the signatures of all
parties to the buyer service agreement and a licensee associated with the
brokerage firm; and
(7) a clear
description of whether, and how, cooperating agents will be
compensated.
(c) A buyer
service agreement may contain a clause which provides for compensation
following expiration or termination when:
(1)
a purchase and sale agreement is signed, a closing held, or a property is
otherwise purchased, within a specified number of months following the
expiration or termination date of the buyer service agreement, but not to
exceed twelve months;
(2) the
brokerage firm, during the term of the buyer service agreement, was procuring
cause of the purchase;
(3) the
brokerage firm provided the name of the seller and identification of the
property to the buyer in writing not later than 10 days after the expiration or
termination date of the buyer service agreement; and
(4) the buyer has not retained another
brokerage firm under a valid exclusive right to represent buyer agreement with
terms and conditions similar to those contained in the expired or terminated
buyer service agreement.
(d) No other provision for compensation
following expiration or termination is authorized.
Section 4.11 Cooperation Agreements between
Brokerage Firms
(a) A cooperation agreement
between brokerage firms shall contain:
(1)
identification of the brokerage firm acting as principal and the brokerage firm
acting as agent;
(2) the agreement
date and a provision for termination, however it need not have a specific
expiration date;
(3) a description
of the services which the cooperating firm will perform under the agreement,
including any limitation on services;
(4) a statement of the amount of transaction
fee or other compensation to be paid the brokerage firm and the method of
computation;
(5) a provision for
avoiding dual agency conflicts with respect to each brokerage firm's other
brokerage service agreements; and
(6) signatures of each party.
(b) The cooperating firm under a
cooperation agreement is the agent of the principal's firm, and not the agent
of the buyer or seller for whom the principal is working.
(c) A principal firm under a cooperation
agreement shall not reveal any confidences of a client to a cooperating
firm.
(d) A cooperating firm which
has accepted an offer of broker agency with respect to a particular property
must notify the principal firm before representing a buyer with respect to the
same property.
(e) Participation
agreements in multiple listing services are an acceptable broker cooperation
agreement for creating an agency relationship between brokerage
firms.
(f) In a designated agency
firm, when a licensee is representing a client and another licensee of the
brokerage firm has a customer interested in participating in a transaction with
the client, the licensee with the customer is a broker agent for the first
agent. No cooperation agreement is required in this scenario.
Section 4.12 Advertising
(a) Every real estate advertisement shall
conspicuously display the brokerage firm's registered name. This is the name
that appears on the brokerage firm's registration issued by OPR. The brokerage
firm's registered name shall be the most prominent and largest identifier. This
means the brokerage firm's registered name shall be larger than items such as
the agent's name, phone number, team name and web address.
(b) When properly in which a licensee has an
ownership interest is marketed, all advertisements shall disclose the fact that
said owner is a Vermont licensee.
(c) Signs used in advertising must comply
with Vermont state and municipal sign laws, including but not limited to the
following:
(1) a "for sale" sign, or multiple
signs on the same premises taken together, shall not have an area of more than
six (6) square feet, including panel, frame and riders (See also
10 V.S.A. §
493(2) );
(2) signs attached to "for sale" signs which
state "sold," "sale pending," "sale under contract," or similar messages shall
not be permitted (See also
10 V.S.A. §
493(2) );
(3) a "for sale" sign may only be erected and
maintained on the same premises that is for sale and may not be erected or
maintained off-premise (See also
10 V.S.A. §
493 ); and
(4) a "for sale" sign may not be erected and
maintained along a highway and visible from the highway which is located upon a
tree, or painted or drawn upon a rock or other natural feature (See also
10 V.S.A.
§
495(a)(5)
).
(d) Advertisements of
properties listed by another brokerage firm shall also conspicuously display
that listing brokerage firm's registered name and listing agent's
name.
Section 4.13
Compensation
(a) A licensee shall not pay or
otherwise compensate an unlicensed person, either directly or indirectly, for
the performance of brokerage services. This section shall not prohibit a
licensee from reducing or sharing a portion of a commission otherwise owed to
the licensee in the transaction, to the benefit of the seller or buyer, so long
as it is not compensation for the performance of brokerage services.
(b) A referral fee may be paid or received
for referring a prospect to another brokerage firm licensed in Vermont or
another jurisdiction. A referral fee agreement must be in writing. A referral
does not create an agency relationship. A licensee making a referral is not a
sub-agent. A licensee from another jurisdiction may observe, but not perform,
brokerage services in Vermont.
(c)
A brokerage firm may only receive the compensation provided in:
(1) a written brokerage service agreement
signed by the brokerage firm and its client; or
(2) an agency agreement with a brokerage firm
that has a written agreement described in (1). A brokerage firm shall not
collect any compensation for brokerage services except as provided by these
rules.
(d) The brokerage
firm representing a seller may compensate a brokerage firm representing a buyer
out of the brokerage fee without thereby creating an agency relationship. The
brokerage firm representing a buyer may compensate a brokerage firm
representing a seller out of the brokerage fee without thereby creating an
agency relationship. Consent of the client is not required in either
case.
Section 4.14
Records
(a) A brokerage firm shall maintain
for at least seven years at its usual place of business all records (paper or
electronic) of brokerage services provided and they shall be available to the
Commission and its agents during regular business hours.
(b) The principal broker, broker in charge,
or a designee must cooperate in good faith with the Commission's agent during
any inspection, and the principal broker, broker in charge, or a designee may
remain present during any inspection. The Commission's agent may not be denied
access to the records if the principal broker, broker in charge, or a designee
is not present.
Section
4.15 Timely Response to Commission Inquiry
As soon as reasonably practicable or within 30 days, whichever
is sooner, a licensee shall respond in good faith when contacted regarding any
matter related to the regulation of the licensee's profession by the
Commission, or the Office of Professional Regulation acting on behalf of the
Commission.