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(136th General Assembly)
(Amended
Senate Bill Number 155)
AN ACT
To amend sections 4735.18 and
4735.24 and to enact section 5301.95 of the Revised Code to amend the
law related to real estate wholesalers.
Be
it enacted by the General Assembly of the State of Ohio:
Section
1.
That
sections 4735.18
and
4735.24
be
amended and section 5301.95 of the Revised Code be enacted to read as
follows:
Sec.
4735.18.
(A)
Subject to section 4735.32 of the Revised Code, the superintendent of
real estate, upon the superintendent's own motion, may investigate
the conduct of any licensee. Subject to division (E) of this section
and section 4735.32 of the Revised Code, the Ohio real estate
commission shall impose disciplinary sanctions upon any licensee who,
whether or not acting in the licensee's capacity as a real estate
broker or salesperson, or in handling the licensee's own property, is
found to have been convicted of a felony or a crime of moral
turpitude, and may impose disciplinary sanctions upon any licensee
who, in the licensee's capacity as a real estate broker or
salesperson, or in handling the licensee's own property, is found
guilty of:
(1)
Knowingly making any misrepresentation;
(2)
Making any false promises with intent to influence, persuade, or
induce;
(3)
A continued course of misrepresentation or the making of false
promises through agents, salespersons, advertising, or otherwise;
(4)
Acting for more than one party in a transaction except as permitted
by and in compliance with section 4735.71 of the Revised Code;
(5)
Failure within a reasonable time to account for or to remit any money
coming into the licensee's possession which belongs to others;
(6)
Dishonest or illegal dealing, gross negligence, incompetency, or
misconduct;
(7)(a)
By final adjudication by a court, a violation of any municipal or
federal civil rights law relevant to the protection of purchasers or
sellers of real estate or, by final adjudication by a court, any
unlawful discriminatory practice pertaining to the purchase or sale
of real estate prohibited by Chapter 4112. of the Revised Code,
provided that such violation arose out of a situation wherein parties
were engaged in bona fide efforts to purchase, sell, or lease real
estate, in the licensee's practice as a licensed real estate broker
or salesperson;
(b)
A second or subsequent violation of any unlawful discriminatory
practice pertaining to the purchase or sale of real estate prohibited
by Chapter 4112. of the Revised Code or any second or subsequent
violation of municipal or federal civil rights laws relevant to
purchasing or selling real estate whether or not there has been a
final adjudication by a court, provided that such violation arose out
of a situation wherein parties were engaged in bona fide efforts to
purchase, sell, or lease real estate. For any second offense under
this division, the commission shall suspend for a minimum of two
months or revoke the license of the broker or salesperson. For any
subsequent offense, the commission shall revoke the license of the
broker or salesperson.
(8)
Procuring a license under this chapter, for the licensee or any
salesperson by fraud, misrepresentation, or deceit;
(9)
Having violated or failed to comply with any provision of sections
4735.51 to 4735.74 of the Revised Code or having willfully
disregarded or violated any other provisions of this chapter;
(10)
As a real estate broker, having demanded, without reasonable cause,
other than from a broker licensed under this chapter, a commission to
which the licensee is not entitled, or, as a real estate salesperson,
having demanded, without reasonable cause, a commission to which the
licensee is not entitled;
(11)
Except as permitted under section 4735.20 of the Revised Code, having
paid commissions or fees to, or divided commissions or fees with,
anyone not licensed as a real estate broker or salesperson under this
chapter or anyone not operating as an out-of-state commercial real
estate broker or salesperson under section 4735.022 of the Revised
Code;
(12)
Having falsely represented membership in any real estate professional
association of which the licensee is not a member;
(13)
Having accepted, given, or charged any undisclosed commission,
rebate, or direct profit on expenditures made for a principal;
(14)
Having offered anything of value other than the consideration recited
in the sales contract as an inducement to a person to enter into a
contract for the purchase or sale of real estate or having offered
real estate or the improvements on real estate as a prize in a
lottery or scheme of chance;
(15)
Having acted in the dual capacity of real estate broker and
undisclosed principal, or real estate salesperson and undisclosed
principal, in any transaction;
(16)
Having guaranteed, authorized, or permitted any person to guarantee
future profits which may result from the resale of real property;
(17)
Having advertised or placed a sign on any property offering it for
sale or for rent without the consent of the owner or the owner's
authorized agent;
(18)
Having induced any party to a contract of sale or lease to break such
contract for the purpose of substituting in lieu of it a new contract
with another principal;
(19)
Having negotiated the sale, exchange, or lease of any real property
directly with a seller, purchaser, lessor, or tenant knowing that
such seller, purchaser, lessor, or tenant is represented by another
broker under a written exclusive agency agreement, exclusive right to
sell or lease listing agreement, or exclusive purchaser agency
agreement with respect to such property except as provided for in
section 4735.75 of the Revised Code;
(20)
Having offered real property for sale or for lease without the
knowledge and consent of the owner or the owner's authorized agent,
or on any terms other than those authorized by the owner or the
owner's authorized agent;
(21)
Having published advertising, whether printed, radio, display, or of
any other nature, which was misleading or inaccurate in any material
particular, or in any way having misrepresented any properties,
terms, values, policies, or services of the business conducted;
(22)
Having knowingly withheld from or inserted in any statement of
account or invoice any statement that made it inaccurate in any
material particular;
(23)
Having published or circulated unjustified or unwarranted threats of
legal proceedings which tended to or had the effect of harassing
competitors or intimidating their customers;
(24)
Having failed to keep complete and accurate records of all
transactions for a period of three years from the date of the
transaction, such records to include copies of listing forms, earnest
money receipts, offers to purchase and acceptances of them, records
of receipts and disbursements of all funds received by the licensee
as broker and incident to the licensee's transactions as such, and
records required pursuant to divisions (C)(4) and (5) of section
4735.20 of the Revised Code, and any other instruments or papers
related to the performance of any of the acts set forth in the
definition of a real estate broker;
(25)
Failure of a real estate broker or salesperson to furnish all parties
involved in a real estate transaction true copies of all listings and
other agreements to which they are a party, at the time each party
signs them;
(26)
Failure to maintain at all times a special or trust bank account in a
depository of a state or federally chartered institution located in
this state. The account shall be noninterest-bearing, separate and
distinct from any personal or other account of the broker, and,
except as provided in division (A)(27) of this section, shall be used
for the deposit and maintenance of all escrow funds, security
deposits, and other moneys received by the broker in a fiduciary
capacity. The name, account number, if any, and location of the
depository wherein such special or trust account is maintained shall
be submitted in writing to the superintendent. Checks drawn on such
special or trust bank accounts are deemed to meet the conditions
imposed by section 1349.21 of the Revised Code. Funds deposited in
the trust or special account in connection with a purchase agreement
shall be maintained in accordance with section 4735.24 of the Revised
Code.
(27)
Failure to maintain at all times a special or trust bank account in a
depository of a state or federally chartered institution in this
state, to be used exclusively for the deposit and maintenance of all
rents, security deposits, escrow funds, and other moneys received by
the broker in a fiduciary capacity in the course of managing real
property. This account shall be separate and distinct from any other
account maintained by the broker. The name, account number, and
location of the depository shall be submitted in writing to the
superintendent. This account may earn interest, which shall be paid
to the property owners on a pro rata basis.
Division
(A)(27) of this section does not apply to brokers who are not engaged
in the management of real property on behalf of real property owners.
(28)
Having failed to put definite expiration dates in all written agency
agreements to which the broker is a party;
(29)
Having an unsatisfied final judgment or lien in any court of record
against the licensee arising out of the licensee's conduct as a
licensed broker or salesperson;
(30)
Failing to render promptly upon demand a full and complete statement
of the expenditures by the broker or salesperson of funds advanced by
or on behalf of a party to a real estate transaction to the broker or
salesperson for the purpose of performing duties as a licensee under
this chapter in conjunction with the real estate transaction;
(31)
Failure within a reasonable time, after the receipt of the commission
by the broker, to render an accounting to and pay a real estate
salesperson the salesperson's earned share of it;
(32)
Performing any service for another constituting the practice of law,
as determined by any court of law;
(33)
Having been adjudicated incompetent by a court, as provided in
section 5122.301 of the Revised Code. A license revoked or suspended
under this division shall be reactivated upon proof to the commission
of the removal of the disability.
(34)
Having authorized or permitted a person to act as an agent in the
capacity of a real estate broker, or a real estate salesperson, who
was not then licensed as a real estate broker or real estate
salesperson under this chapter or who was not then operating as an
out-of-state commercial real estate broker or salesperson under
section 4735.022 of the Revised Code;
(35)
Having knowingly inserted or participated in inserting any materially
inaccurate term in a document, including naming a false
consideration;
(36)
Having failed to inform the licensee's client of the existence of an
offer or counteroffer or having failed to present an offer or
counteroffer in a timely manner, unless otherwise instructed by the
client, provided the instruction of the client does not conflict with
any state or federal law;
(37)
Having failed to comply with section 4735.24 of the Revised Code;
(38)
Having acted as a broker without authority, impeded the ability of a
principal broker to perform any of the duties described in section
4735.081 of the Revised Code, or impeded the ability a management
level licensee to perform the licensee's duties;
(39)
Entering into a right-to-list home sale agreement
;
(40)
Having failed to comply with section 5301.95 of the Revised Code
while acting as a wholesaler of residential real property, as those
terms are defined in that section
.
(B)
Whenever the commission, pursuant to section 4735.051 of the Revised
Code, imposes disciplinary sanctions for any violation of this
section, the commission also may impose such sanctions upon the
broker with whom the salesperson is affiliated if the commission
finds that the broker had knowledge of the salesperson's actions that
violated this section.
(C)
The commission shall, pursuant to section 4735.051 of the Revised
Code, impose disciplinary sanctions upon any foreign real estate
dealer or salesperson who, in that capacity or in handling the
dealer's or salesperson's own property, is found guilty of any of the
acts or omissions specified or comprehended in division (A) of this
section insofar as the acts or omissions pertain to foreign real
estate. If the commission imposes such sanctions upon a foreign real
estate salesperson for a violation of this section, the commission
also may suspend or revoke the license of the foreign real estate
dealer with whom the salesperson is affiliated if the commission
finds that the dealer had knowledge of the salesperson's actions that
violated this section.
(D)
The commission may suspend, in whole or in part, the imposition of
the penalty of suspension of a license under this section.
(E)
A person licensed under this chapter who represents a party to a
transaction or a proposed transaction involving the sale, purchase,
exchange, lease, or management of real property that is or will be
used in the cultivation, processing, dispensing, or testing of
medical marijuana under Chapter 3796. of the Revised Code, or who
receives, holds, or disburses funds from a real estate brokerage
trust account in connection with such a transaction, shall not be
subject to disciplinary sanctions under this chapter solely because
the licensed person engaged in activities permitted under this
chapter and related to activities under Chapter 3796. of the Revised
Code.
Sec.
4735.24.
(A)
Except as otherwise provided in this section, when earnest money
connected to a real estate purchase agreement is deposited in a real
estate broker's trust or special account, the broker shall maintain
that money in the account in accordance with the terms of the
purchase agreement until one of the following occurs:
(1)
The transaction closes and the broker disburses the earnest money to
the closing or escrow agent or otherwise disburses the money pursuant
to the terms of the purchase agreement.
(2)
The parties provide the broker with separate written instructions
that both parties have signed that specify how the broker is to
disburse the earnest money and the broker acts pursuant to those
instructions.
(3)
The broker receives a copy of a final court order that specifies to
whom the earnest money is to be awarded and the broker acts pursuant
to the court order.
(4)
The
transaction is canceled by the record owner of residential property
under division (C)(1) of section 5301.95 of the Revised Code, and the
broker disburses the earnest money to the record owner pursuant to
that division.
(5)
The
earnest money becomes unclaimed funds as defined in division (M)(2)
of section 169.02 of the Revised Code and, after providing the notice
that division (E) of section 169.03 of the Revised Code requires, the
broker has reported the unclaimed funds to the director of commerce
pursuant to section 169.03 of the Revised Code and has remitted all
of the earnest money to the director.
(B)
A purchase agreement may provide that in the event of a dispute
regarding the disbursement of the earnest money, the broker will
return the money to the purchaser without notice to the parties
unless, within two years from the date the earnest money was
deposited in the broker's trust or special account, the broker has
received one of the following:
(1)
Written instructions signed by both parties specifying how the money
is to be disbursed;
(2)
Written notice that a court action to resolve the dispute has been
filed.
(C)(1)
If the parties dispute the disbursement of the earnest money and the
purchase agreement contains the provision described in division (B)
of this section, not later than the first day of September following
the two year anniversary date of the deposit of the earnest money in
the broker's account, the broker shall return the earnest money to
the purchaser unless the parties provided the broker with written
instructions or a notice of a court action as described in division
(B) of this section.
(2)
If the broker cannot locate the purchaser at the time the
disbursement is due, after providing the notice that division (E) of
section 169.03 of the Revised Code requires, the broker shall report
the earnest money as unclaimed funds to the director of commerce
pursuant to section 169.03 of the Revised Code and remit all of the
earnest money to the director.
Sec.
5301.95.
(A)
For the purposes of this section:
(1)
"Residential real property" means real property that is
improved by a building or other structure that has one to four
dwelling units.
(2)(a)
"Wholesaler" means a person or entity that for a fee,
commission, or other valuable consideration, or with the intention,
in the expectation, or upon the promise of receiving or collecting a
fee, commission, or other valuable consideration, enters into a
purchase contract for residential real property either:
(i)
As the grantee, and assigns or novates that contract to another
person or entity;
(ii)
As the grantor, and, without holding legal title to that real
property, assigns or novates that contract to another person or
entity.
(b)
"Wholesaler" does not include either of the following:
(i)
An individual who assigns or novates a contract described in division
(A)(2)(a) of this section to another individual who is related by
blood.
(ii)
A person or entity that assigns or novates such a contract to a
parent, affiliate, subsidiary, or affiliated group under common
control with the person or entity.
(B)(1)
Before entering into a binding contract that transfers an interest in
residential real property, a wholesaler acting as the grantee or the
wholesaler's representative, if applicable, shall provide to the
record owner a conspicuous written disclosure statement, separate
from the purchase contract or agreement, printed in boldface type in
a font size not less than twelve points, and in substantially the
following form:
"Ohio
law requires a wholesaler acting as a grantee, before entering into a
contract or agreement that conveys an interest in residential real
property, to provide certain information to the record owner in a
conspicuous manner printed in boldface type in a font size not less
than twelve points. Failure by a wholesaler to present or complete
this form is an unfair or deceptive act or practice. Any person who
enters into an agreement that conveys an interest in residential real
property to a wholesaler acting as a grantee without receiving this
disclosure has a cause of action against the wholesaler. A wholesaler
acting as a grantee is prohibited from entering into a binding
contract to acquire an interest in residential real property unless
this statement is signed and dated by the record owner of the
property.
The
owner acknowledges that the person presenting this document is a
wholesaler, as defined by section 5301.95 of the Revised Code, and
that all buyers and sellers of real estate are entitled to seek legal
or professional advice before entering into any agreement or contract
regarding the purchase or sale of property, including an agreement
with a wholesaler. A wholesaler is acting on the wholesaler's own
behalf and does not represent the owner in this transaction. A
wholesaler enters assignable contracts with owners and seeks to sell
or assign the wholesaler's interest for a profit. The wholesaler may
assign the wholesaler's interest in the purchase contract to a third
party without the owner's consent before closing. The wholesaler may
charge a fee to the third-party buyer separately for profit. The
agreed purchase price between the owner and wholesaler may be below
market value and is conveyed voluntarily.
The
owner acknowledges disclosure of the information provided in this
form by signing and dating below:
_______________
(Property owner signature) ______ (date)
_______________
(Wholesaler signature) _____ (date)"
(2)
A wholesaler acting as the grantee shall not enter into a binding
contract that transfers an interest in residential real property
until both the wholesaler and the record owner of the property sign
and date the disclosure statement required by this section.
(C)(1)
If a wholesaler acting as the grantee fails to make the disclosures
required by this section before entering into a binding contract that
transfers an interest in residential real property, the record owner
of the residential real property may cancel the contract at any time
prior to the close of escrow without penalty and the escrow or
closing agent, as defined in section 1349.20 of the Revised Code,
shall disburse any earnest money paid by the wholesaler to the record
owner within thirty days after such cancelation.
(2)
No provision of this section shall be modified or waived by any oral
or written agreement. Any portion of an agreement that is executed,
modified, or extended after the effective date of this section that
modifies or waives a duty under division (B) of this section or a
remedy under division (C) of this section is void ab initio and
unenforceable.
(3)
Any violation of this section is an unfair or deceptive act or
practice in violation of section 1345.02 of the Revised Code. A party
that enters into an agreement without receiving the disclosures
required in this section has a cause of action against a wholesaler
and is entitled to the same relief available to a consumer under
section 1345.09 of the Revised Code. All powers and remedies
available to the attorney general to enforce sections 1345.01 to
1345.13 of the Revised Code are available to the attorney general to
enforce this section.
Section
2.
That
existing sections 4735.18
and
4735.24
of
the Revised Code are hereby repealed.
Speaker
___________________ of the House of Representatives.
President
___________________ of the Senate.
Passed
________________________, 20____
Approved
________________________, 20____
Governor.
The section numbering of law
of a general and permanent nature is complete and in conformity with
the Revised Code.
Director, Legislative
Service Commission.
Filed
in the office of the Secretary of State at Columbus, Ohio, on the
____ day of ___________, A. D. 20____.
Secretary of State.
File
No. _________ Effective Date ___________________