Frequently examining and working to improve on the legal and ethical structures of the real estate industry is the most critical component to the growth and success of our industry. Due largely to the legal advocacy of the Virginia Association of REALTORS (VAR), the 2011 Virginia General Assembly passed House Bill 1907. The Bill amended several real estate laws, which will fundamentally affect how real estate Agency is practiced in Virginia.
The business relationship, Agency, between Licensees and consumers can take on several different forms, which makes understanding Agency extremely challenging. VAR summarized it best in the following explanation, “Agency: It’s a simple word that describes a complex set of relationships that Licensees engage in every day. Its complexity is evidenced by the volumes of books written about it, the fact that it is taught as a semester course in law school and, most importantly, the way it is misunderstood in everyday real estate practice.”
As of April 2012 the Virginia Department of Professional and Occupational Regulation (DPOR) accounted for over 44,500 active real estate licensees in Virginia. The point that VAR touches on, and partly the reason we’re here today, is that due to the increasing number of real estate licensing law violations each year, change is necessary. And so the primary focus of HB 1907 is to provide both Licensees and consumers a more defined structure regarding Agency representation laws, Duties and Disclosure. The Bill also included several other technical amendments within the same Code Section.
While it’s true, change can be scary, and perhaps briefly frustrating as we all slightly adjusts our course of doing business, these changes are step in the right direction for the real estate industry. They also help make Licensee efforts more efficient and create a more informed, and protected, consumer. I think we’ll also find that Licensees, whose ethical practices were below standard, will no longer be able to skirt the system. That being said, why wouldn’t we embrace these changes?
HB 1907 creates processes designed to inform the consumer, Clients and Customers, about the real estate services they’ll receive, to include the fees associated with those services and the nature of the relationship with the Licensee. As well as requiring that this information, the Brokerage Agency, be explicitly clear and consented to in writing within a Brokerage Agreements as opposed to permitting verbal disclosure.
How does this reduced Licensee liability? Standardizing the processes to ensure a fully informed consumer, who has also formally consented to the Agency relationship, makes huge steps towards mitigating Licensee liability. These changes are designed to protect the Licensees and will discourage opportunistic Dual Agency by making sure that Licensees are fully informing consumers about the nature of certain risks of the Dual Agency relationship.
HB 1907 Complete Update Outline:
- The new laws will further define the terms for property management and brokerage agreements and sets out certain required provision;
- Revision of Dual Agency representation;
- Revision of Designated Agency representation;
- Revision of Limited Service Agency representation;
- Revising Disclosure Forms to reflect these changes in law;
- Revising mandatory disclosures under the Virginia Residential Property Disclosure Act, moving certain disclaimers to a website maintained by the Virginia Real Estate Board (VREB);
- Amendments allowing required documents and records to be kept in electronic form;
- Educational requirements for Broker and Salesperson Licensee’s who renew or reinstate after July 1, 2012;
- Removal of the three practice tracks from VREB’s 30-hour post license education (PLE).
Effective July 2012:
- All brokerage agreements must be in writing;
- Dual Agency will be permitted only after an enhanced disclosure is given to both parties;
- Three hours of CE must be completed on the changes resulting from this bill;
Effective July 2011:
- The Residential Property Disclosure Act will be kept on a website maintained by the Real Estate Board, and purchasers will be given a form referring them to that website;
- Real estate licensees will be provided immunity from lawsuits for relaying publicly available information from localities that turns out to be inaccurate; and
- All required records can be maintained electronically according to the Uniform Electronic Transactions Act.
HB 1907 Complete Statute Reference
An Act to amend and reenact §§ 54.1-2105.01, 54.1-2105.03, 54.1-2105.1, 54.1-2130, 54.1-2131, 54.1-2133, 54.1-2135, 54.1-2137, 54.1-2139, and 55-519 of the Code of Virginia and to amend the Code of Virginia by adding sections numbered 54.1-2139.1, 54.1-2139.2, 54.1-2139.3, and 54.1-2142.1 and by adding in Article 3 of Chapter 21 of Title 54.1 a section numbered 54.1-2146, relating to the Real Estate Board; licensure and practice of real estate professionals.
For a full review of the Code of Virginia, Title 54.1, Chapter 21, which provides a complete reference for the Virginia Real Estate statues, visit Virginia’s Legislative Information System (LIS) online at http://lis.virginia.gov.
Author: Lee Gosselin, Associate Broker & Owner