The Minnesota Association of REALTORS recently released information about Legislative Changes to Chapter 82. We are passing this information along to your, our members, as an added member benefit.
To: All Minnesota Brokers
Subject: Legislative Changes to Chapter 82
We would like to bring to your attention several changes made to Chapter 82 during the 2014 Legislative Session (MN Session Laws Chapter 199). These changes will become effective August 1, 2014.
Prior to the 2014 Legislative Session, a Governmental Affairs Committee Working Group, made up of experienced and knowledgeable committee members, worked on reviewing Chapter 82, section-by-section, and drafted updates to the Chapter with MNAR staff. This draft legislation was discussed and negotiated with the Department of Commerce (DOC) and included in MNAR’s 2014 legislative agenda.
This new law makes numerous noncontroversial “housekeeping,” or technical, changes to Chapter 82 by deleting obsolete language or updating language to reflect current practices, often associated with electronic business practices. In addition to the technical changes in the legislation, a few more substantive changes were also made. Please review the following descriptions and reflect on how they may apply to your business:
Current law language in Minn. Stat. 82.69 regarding advertising requires a licensee to “…identify himself or herself as either a broker or an agent salesperson in any advertising…”
This requirement has been the subject of a number of recent enforcement actions taken by the DOC against licensees, which has highlighted that this particular requirement may potentially be putting many more licensees at risk of enforcement action.
New law language enacted this Session will result in an individual licensee no longer being required to identify himself or herself as either a broker or agent salesperson in all of his or her advertising.
Instead, the new law replaces the existing language with language that is meant to be more flexible and subjective and more closely aligned with what most licensees are already doing, thereby reducing the risk of an enforcement action being initiated against a licensee.
The new language is as follows:
“Any advertising by a licensee must include the real estate brokerage name more prominently displayed than the licensee’s name.”
The new law does not proscribe any specific requirements, such as a font size ratio between licensee name and brokerage name. In other words, “more prominently displayed” is a subjective standard, in contrast to the black-and-white standard in existing law, and allows a licensee more flexibility in designing his or her advertising.
Clarified that an individual coming from another jurisdictions must be licensed “in good standing” in that jurisdiction in order to qualify for license reciprocity in Minnesota.
Added language that will allow a buyer’s broker agreement to contain an override clause of up to two-years in length when used in conjunction with the purchase or sale of a business. This language parallels current law language in listing agreements.
With the introduction and growth of buyer representation and dual agency over the years, the subagency relationship option became obsolete. The new law eliminates subagency from Chapter 82.
Provides brokers with more flexibility in compensating licensees by adding language allowing a license to compensate another licensee, IF authorized in writing by the broker. An example of how brokers may use this new flexibility is a broker electing to authorize a team leader within a brokerage to distribute compensation to the other team members.
New language also clarifies existing law that a licensee shall not accept a broker price opinion fee. That fee is to be paid to the broker.
TRUST ACCOUNT REQUIREMENTS
The law has been updated so that the term “checks” has been replaced with “earnest money” to accommodate other methods (such as electronic transfers) of submitting earnest money.
Also, the existing law dates to before buyer representation became common and is vague with respect to how earnest money is often handled today--buyer provides his/her REALTOR® with the earnest money to hold until the seller accepts the offer.
All purchase agreements include language regarding earnest money so, the new law makes “…the terms of a written agreement between the parties” the default for handling earnest money. This is consistent with existing practice and current MNAR forms.
Again, these changes will become effective on August 1, 2014.
Posted at: 2:59 pm on July 2nd, 2014