(A204, R221, H4754)
AN ACT TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING ARTICLE 9 TO CHAPTER 57, TITLE 40 SO AS TO OUTLINE REQUIREMENTS FOR PROVIDERS OF PRELICENSING AND CONTINUING EDUCATION COURSES FOR REAL ESTATE BROKERS, BROKERS-IN-CHARGE, ASSOCIATES, AND PROPERTY MANAGERS; BY ADDING SECTION 40-57-725 SO AS TO ESTABLISH ADMINISTRATIVE CITATIONS AND PENALTIES AND APPEALS; BY AMENDING CHAPTER 57, TITLE 40, RELATING TO REAL ESTATE BROKERS, BROKERS-IN-CHARGE, ASSOCIATES, AND PROPERTY MANAGERS, SO AS TO, AMONG OTHER THINGS, DEFINE TERMS, MAKE CONFORMING CHANGES, DEFINE THE USE OF APPLICATION FEES, OUTLINE THE PROCEDURE FOR A LICENSE CLASSIFICATION CHANGE, ALLOW FOR RECIPROCAL AGREEMENTS WITH OTHER JURISDICTIONS, PROHIBIT BAD FAITH AGREEMENTS, REDUCE THE AMOUNT OF REQUIRED CLASSROOM INSTRUCTION FOR BROKERS-IN-CHARGE, PROHIBIT ENGAGING IN, REPRESENTING OTHERS IN, OR ASSISTING OTHERS IN THE PRACTICE OF WHOLESALING, REGULATE TEAM MARKETING, AND ADDRESS LICENSING AFTER REVOCATION; AND BY ADDING SECTION 40-57-820 SO AS TO ESTABLISH THAT LICENSEES ARE RESPONSIBLE FOR THEIR WORK PRODUCT.
Be it enacted by the General Assembly of the State of South Carolina:
Education requirements for real estate brokers, brokers-in-charge, associates, and property managers
SECTION 1. Chapter 57, Title 40 of the S.C. Code is amended by adding:
Section 40-57-910. (A) The commission may promulgate regulations standards and qualification requirements for prelicensing and continuing education providers, instructors, and courses.
(B) Prelicensing and continuing education courses are eligible for distance learning if the provider has attained certification by the Association of Real Estate License Law Officials (ARELLO), its subsidiary, the International Distance Education Certification Center (IDECC), or other national certifying entities as approved by the commission.
(C) The commission may review, approve, and regulate education courses required by this chapter and providers and instructors of these courses including, but not limited to, accredited colleges, universities, private business entities, organizations, schools, associations, and institutions.
(1) The commission shall qualify for continuing education credit designation and certification programs of nationally recognized real estate organizations and associations. The commission may qualify for continuing education credit other than courses currently approved for continuing credit including, but not limited to, courses offered by the South Carolina Bar Association, the South Carolina Forestry Board, and the South Carolina Appraisers Board.
(2) Notwithstanding another provision of law, the commission shall qualify for continuing education credit courses that are related to real estate technology, professional development, and business ethics.
(3) An approved course must be taught by an approved instructor who is qualified and has demonstrated knowledge of the subject matter to be taught as well as the ability to teach.
(D) In accordance with regulations, providers electronically shall transmit to the commission student continuing education and qualifying course records. The commission shall maintain an accurate and secure database of student records.
Section 40-57-920. (A) All providers and instructors seeking approval by the commission must submit an application and applicable fee to the commission on prescribed forms. To attain approval, applicants must meet qualification requirements as provided in regulations. Approval from the commission must be attained prior to commencement of instruction. If the commission approves an application, a notification must be issued by the commission.
(B) The commission may deny, reprimand, fine, suspend, or revoke the approval of an education provider or instructor if the commission finds violations of statutory or regulatory requirements. If an application for a provider, instructor, or course is not approved, the reason must be detailed and provided to the provider or instructor.
Section 40-57-930. (A) Providers and instructors shall renew their licenses with the commission biennially. The commission may audit providers offering distance education courses to ensure the certification from ARELLO, IDECC, or other national certifying entities as approved by the commission, is maintained. Failure to maintain certification will result in withdrawal of commission approval.
(B) As a condition of renewal, instructors shall attend instructor development workshops sponsored by the commission or provide evidence of equivalent hours of continuing education that increases their knowledge of the subject content in their area of expertise of their teaching techniques.
Penalties
SECTION 2. Article 7, Chapter 57, Title 40 of the S.C. Code is amended by adding:
Section 40-57-725. (A) The department may refer any reports of violations of this chapter and Article 1, Chapter 1 of this title or any reports of violations of regulations promulgated under this chapter directly to the commission or may issue administrative citations and cease and desist orders in person or by certified mail and may assess administrative penalties against any individual or entity, including unlicensed individuals, for violations of this chapter as specified by the commission.
(B) Administrative penalties authorized under this section are separate from and in addition to all other remedies, either civil or criminal.
(C) Administrative penalties assessed pursuant to this section may not exceed the following limits:
(1) for a first violation of a particular provision of this chapter or Article 1, Chapter 1 of this title, or any commission regulation, not more than a five-hundred-dollar penalty;
(2) for the second of two violations of the same or substantially similar provision in a five-year period, not more than a one-thousand-dollar penalty; and
(3) for the third or subsequent violation of the same or substantially similar provision in a five-year period, not more than a ten-thousand-dollar penalty.
(D) An individual or entity assessed administrative penalties may appeal those penalties to the commission within ten days of receipt of the citation. If an appeal is filed, the department shall schedule a hearing before the commission, which shall make a determination in the matter. If no appeal is filed, the citation is deemed a final order and the administrative penalties must be paid within thirty days of receipt of the citation.
General provisions for real estate brokers, brokers-in-charge, associates, and property managers
SECTION 3. Chapter 57, Title 40 of the S.C. Code is amended to read:
Section 40-57-5. Unless otherwise provided in this chapter, the provisions of Article 1, Chapter 1 apply to real estate brokers, associates, and property managers. The provisions of this chapter control when they conflict with the provisions of Article 1, Chapter 1.
Section 40-57-10. There is created the South Carolina Real Estate Commission under the administration of the Department of Labor, Licensing and Regulation. The purpose of this commission is to regulate the real estate industry so as to protect the public's interest when involved in real estate transactions.
Section 40-57-20. It is unlawful for an individual to act as a real estate broker, real estate associate, or real estate property manager or to advertise or provide services as such without an active, valid license issued by the commission.
Section 40-57-30. For purposes of this chapter:
(1) "Active license" means a license that has been issued for the current period and authorizes the licensee to practice in this State.
(2) "Agency relationship" means a legally binding relationship created in writing between a real estate brokerage firm and its client.
(3) "Agent" means one authorized and empowered by a written agency agreement to perform actions for a client. A real estate brokerage firm is the agent of a buyer, seller, landlord, or tenant, and the real estate brokerage firm's "supervised licensees" are its subagents.
(4) "Alternative name" means a first name, other than the licensee's legal first name, that is registered with the commission and used by the licensee for marketing purposes.
(5) "Associate" means a supervised licensee who:
(a) meets experience and education requirements;
(b) passes both the state and national portions of the examination for an associate license; and
(c) engages in or participates in an activity included in the definition of "broker" for a fee, salary, commission, or other valuable consideration, or with the intent or expectation of receiving compensation.
(6) "Broker" means a supervised licensee who has met the experience and education requirements and has passed both the state and national portions of the examination for a broker license and who, for a fee, salary, commission, referral fee, or other valuable consideration, or who, with the intent or expectation of receiving compensation:
(a) negotiates or attempts to negotiate the listing, sale, purchase, exchange, lease, or other disposition of real estate or the improvements to the real estate;
(b) auctions or offers to auction real estate in accordance with Section 40-6-250;
(c) for a fee or valuable consideration solicits a referral;
(d) offers services as a real estate consultant, counselor, or transaction manager;
(e) offers to act as a subagent of a real estate brokerage firm representing a client in a real estate transaction; or
(f) advertises or otherwise represents to the public as being engaged in any of the foregoing activities.
(7) "Broker-in-charge" means the sole broker designated by the commission to have responsibility over the actions of all supervised licensees. A broker-in-charge is responsible for:
(a) the day-to-day management of the brokerage firm;
(b) the control and liability for a real estate trust account; and
(c) ensuring compliance with all applicable laws and regulations.
The authority granted to the broker-in-charge cannot be assigned or designated to another licensee.
(8) "Buyer agency" means a form of agency in which a real estate brokerage firm represents the buyer in an agency capacity as defined in this chapter.
(9) "Canceled license" means a license that is invalidated, can no longer be reinstated or renewed, and requires an individual seeking to be licensed again after cancellation of his prior license to reapply and meet current licensure requirements.
(10) "Client" means a person who enters a written agreement establishing an agency relationship with a real estate brokerage firm through its broker-in-charge, a property manager-in-charge, or a supervised licensee.
(11) "Commission" means the South Carolina Real Estate Commission and its members, who are charged by law with the responsibility of licensing or otherwise regulating the practice of real estate in the State of South Carolina.
(12) "Conversion" means to use trust funds for a purpose other than the purpose for which they are held. Conversion is a breach of trust and is a crime as provided by law.
(13) "Customer" means a buyer, seller, landlord, or tenant who uses the services of a real estate licensee but does not establish an agency relationship through a written agency agreement with the licensee's real estate brokerage firm.
(14) "Department" means the Department of Labor, Licensing and Regulation.
(15) "Designated agency" means a form of agency in which two clients represented by a real estate brokerage firm in the same transaction may be given almost equivalent treatment as a single agency.
(16) "Dual agency" means a form of agency in which a real estate brokerage firm with two clients in the same transaction gives limited agency services.
(17) "Email" means a system for sending and receiving a message electronically over a computer network and a message sent or received by the system.
(18) "Formal complaint" means a formal written complaint charging misconduct by a licensee in violation of this chapter, regulations promulgated under this chapter, Chapter 1, Title 40, or any other provision of law.
(19) "Inactive license" means the official temporary cessation of a licensee's authorization to practice real estate upon the licensee providing notice to the commission that the person does not intend to practice real estate brokerage, is no longer supervised by a South Carolina-licensed broker-in-charge or property manager-in-charge, or has stepped down as the broker-in-charge or property manager-in-charge from a brokerage or property management office. (20) "Incompetency" means the failure of a licensee to demonstrate and apply the knowledge, skill, and care that is ordinarily possessed and exercised by other licensees of the same licensure status and required by the generally accepted standards of the profession. Charges of incompetence may be based upon a single act of incompetence or upon a course of conduct or series of acts or omissions that extend over a period of time and that, taken as a whole, demonstrate incompetence.
(21) "Lapsed license" means the termination of a person's authorization to practice under this chapter due to the person's failure to renew his license within the renewal period but before the license is canceled.
(22) "Letter of caution" means a written caution or warning about past or future conduct issued when it is determined that only minor misconduct not warranting discipline has been committed. The issuance of a letter of caution is not a form of discipline and does not constitute a finding of misconduct unless the letter of caution specifically states that misconduct has been committed. While nondisciplinary, the fact that a letter of caution has been issued may be considered in a subsequent disciplinary proceeding.
(23) "Licensee" means an individual currently licensed under this chapter.
(24) "Limited-function referral office" means a brokerage where the office policy allows only the placement of referrals through the broker-in-charge.
(25) "Material adverse fact" means:
(a) a condition or occurrence that is generally recognized as:
(i) significantly and adversely affecting the value of the real estate;
(ii) significantly reducing the structural integrity of improvements to real estate; or
(iii) presenting a significant health risk to occupants of the real estate; or
(b) information that indicates that a party to a transaction is not able to or does not intend to meet an obligation under a contract or agreement made concerning the transaction.
(26) "Ministerial act" means an act performed by a licensee not involving an exercise of discretion or judgment of a licensee on behalf of a person who is not a client and that assists the nonclient to consummate a real estate transaction.
(27) "Office" means the office location where a broker-in-charge or a property manager-in-charge is licensed to conduct real estate business.
(28) "Personal trust account" means an escrow account or demand deposit bank account properly designated and titled to include the words "trust" or "escrow" that is established and maintained by a licensee to safeguard funds belonging to parties to a real estate transaction when the transaction involves the licensee's personal real estate and the real estate is not managed or listed through a real estate brokerage firm.
(29) "Property manager" means a supervised licensee who meets educational requirements and passes the examination for a property manager license, and who will for a fee, salary, commission, other valuable consideration or with the intent or expectation of receiving compensation:
(a) negotiate or attempt to negotiate the rental or leasing of real estate or improvements to the real estate;
(b) list or offer to list and provide a service in connection with the leasing or rental of real estate or improvements to the real estate; or
(c) advertise or otherwise represent to the public as being engaged in an activity in subitems (a) and (b).
(30) "Property manager-in-charge" means a property manager who is designated as having the responsibility over the actions of supervised licensees and also the responsibility and control over and liability for real estate trust accounts. A property manager-in-charge is responsible for the day-to-day management of the office for which the property manager-in-charge is registered with the commission and is responsible for ensuring compliance with all applicable laws and regulations.
(31) "Real estate" means land, buildings, and other appurtenances, including all interests in land, whether corporeal, incorporeal, freehold, or nonfreehold, whether the real estate is within or outside of the boundaries of this State.
(32) "Real estate brokerage" means the aspect of the real estate business that involves activities relative to property management or a real estate sale, exchange, purchase, lease, or other disposition.
(33) "Real estate brokerage firm" means a real estate company engaged in the business of real estate brokerage.
(34) "Real estate transaction" means an activity involving the sale, purchase, exchange, lease, or other disposition of real estate.
(35) "Residential real estate" means real estate which is used primarily for personal, family, or household purposes and is improved by one to four dwelling units.
(36) "Seller agency" means a form of agency in which a real estate brokerage firm represents the seller in an agency capacity as defined in this chapter.
(37) "Subagent" means an agent of an agent. A "supervised licensee" is a subagent of the real estate brokerage firm if the firm is an agent of a buyer, seller, landlord, or tenant.
(38) "Substantive contact" means contact in which a discussion or dialogue between the consumer and the supervised licensee or broker-in-charge moves from casual introductory talk to a meaningful conversation regarding the selling or buying motives or objectives of the seller or buyer, financial qualifications, and other confidential information that if disclosed could harm the consumer's bargaining position.
(39) "Supervised licensee" means a licensee affiliated with and under the supervision of a broker-in-charge or property manager-in-charge.
(40) "Team" means two or more supervised licensees working together as a single unit within an office established with the commission and supervised by a broker-in-charge.
(41) "Trust account" means an escrow account or properly designated demand deposit bank account that is:
(a) properly designated and titled to include the word "trust" or "escrow"; and
(b) established and maintained by a broker-in-charge or a property manager-in-charge to safeguard funds belonging to parties to a real estate transaction.
(42) "Trust funds" means funds