Bill Summary – FastDemocracy

LEGISLATIVE GENERAL COUNSEL                                            H.B. 578
Approved for Filing: T. Moore 6
          6 02-20-24 7:53 AM 6
                         PROPERTY MANAGER REQUIREMENTS
                                      2024 GENERAL SESSION
                                         STATE OF UTAH
                              Chief Sponsor: Jordan D. Teuscher
                                   Senate Sponsor: ____________
 6
 LONG TITLE
 General Description:
        This bill modifies the Utah Real Estate Licensing and Practices Act.
 Highlighted Provisions:
        This bill:
        < defines terms;
        < removes provisions requiring an individual engaging in property management to
 hold a real estate license; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        None
 Utah Code Sections Affected:
 AMENDS:
        61-2f-102, as last amended by Laws of Utah 2017, Chapter 182
        61-2f-103, as last amended by Laws of Utah 2022, Chapter 204
        61-2f-201, as renumbered and amended by Laws of Utah 2010, Chapter 379
        61-2f-203, as last amended by Laws of Utah 2022, Chapter 204
                                                                                              H.B. 578
        61-2f-204, as last amended by Laws of Utah 2022, Chapter 204
        61-2f-206, as last amended by Laws of Utah 2022, Chapter 204
     *HB0578*
       H.B. 578                                                                   02-20-24 7:53 AM
         61-2f-302, as last amended by Laws of Utah 2010, Chapter 184 and renumbered and
 amended by Laws of Utah 2010, Chapter 379
30
 Be it enacted by the Legislature of the state of Utah:
         Section 1. Section 61-2f-102 is amended to read:
         61-2f-102. Definitions.
         As used in this chapter:
         (1) "Associate broker" means an individual who is:
         (a) employed or engaged as an independent contractor by or on behalf of a principal
 broker to perform an act described in Subsection [(20)] (19) for valuable consideration; and
         (b) licensed under this chapter as an associate broker.
         (2) "Branch broker" means an associate broker who manages a principal broker's
 branch office under the supervision of the principal broker.
         (3) "Branch office" means a principal broker's real estate brokerage office that is not
 the principal broker's main office.
         (4) "Business day" means a day other than:
         (a) a Saturday;
         (b) a Sunday; or
         (c) a federal or state holiday.
         (5) "Business opportunity" means the sale, lease, or exchange of any business that
 includes an interest in real estate.
         (6) "Commission" means the Real Estate Commission established under this chapter.
         (7) "Concurrence" means the entities given a concurring role must jointly agree for
 action to be taken.
         (8) "Condominium homeowners' association" means the condominium unit owners
 acting as a group in accordance with declarations and bylaws.
         (9) (a) "Condominium hotel" means one or more condominium units that are operated
 as a hotel.
         (b) "Condominium hotel" does not mean a hotel consisting of condominium units, all
 of which are owned by a single entity.
         (10) "Condominium unit" means the same as that term is defined in Section 57-8-3.
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       02-20-24 7:53 AM                                                                            H.B. 578
         (11) "Director" means the director of the Division of Real Estate.
         (12) "Division" means the Division of Real Estate.
         [(13) "Dual broker" means a principal broker of a real estate sales brokerage who
 obtains from the division a dual broker license in order to function as the principal broker of a
 property management company that is a separate entity from the real estate sales brokerage.]
         [(14)] (13) "Entity" means:
         (a) a corporation;
         (b) a partnership;
         (c) a limited liability company;
         (d) a company;
         (e) an association;
         (f) a joint venture;
         (g) a business trust;
         (h) a trust; or
         (i) any organization similar to an entity described in Subsections [(14)(a)] (13)(a)
 through (h).
         [(15)] (14) "Executive director" means the director of the Department of Commerce.
         [(16)] (15) "Foreclosure rescue" means, for compensation or with the expectation of
 receiving valuable consideration, to:
         (a) engage, or offer to engage, in an act that:
         (i) the person represents will assist a borrower in preventing a foreclosure; and
         (ii) relates to a transaction involving the transfer of title to residential real property; or
         (b) as an employee or agent of another person:
         (i) solicit, or offer that the other person will engage in an act described in Subsection
 [(16)(a)] (15)(a); or
         (ii) negotiate terms in relationship to an act described in Subsection [(16)(a)] (15)(a).
         [(17)] (16) "Loan modification assistance" means, for compensation or with the
 expectation of receiving valuable consideration, to:
         (a) act, or offer to act, on behalf of a person to:
         (i) obtain a loan term of a residential mortgage loan that is different from an existing
 loan term including:
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        H.B. 578                                                                        02-20-24 7:53 AM
         (A) an increase or decrease in an interest rate;
         (B) a change to the type of interest rate;
         (C) an increase or decrease in the principal amount of the residential mortgage loan;
         (D) a change in the number of required period payments;
         (E) an addition of collateral;
         (F) a change to, or addition of, a prepayment penalty;
         (G) an addition of a cosigner; or
         (H) a change in persons obligated under the existing residential mortgage loan; or
         (ii) substitute a new residential mortgage loan for an existing residential mortgage loan;
 or
         (b) as an employee or agent of another person:
         (i) solicit, or offer that the other person will engage in an act described in Subsection
 [(17)(a)] (16)(a); or
         (ii) negotiate terms in relationship to an act described in Subsection [(17)(a)] (16)(a).
         [(18)] (17) "Main office" means the address which a principal broker designates with
 the division as the principal broker's primary brokerage office.
         [(19)] (18) "Person" means an individual or entity.
         [(20)] (19) "Principal broker" means an individual who is licensed or required to be
 licensed as a principal broker under this chapter who:
         (a) sells or lists for sale real estate, including real estate being sold as part of a
 foreclosure rescue, or a business opportunity with the expectation of receiving valuable
 consideration;
         (b) buys, exchanges, or auctions real estate, an option on real estate, a business
 opportunity, or an improvement on real estate with the expectation of receiving valuable
 consideration;
         (c) advertises, offers, attempts, or otherwise holds the individual out to be engaged in
 the business described in Subsection [(20)(a)] (19)(a) or (b);
         (d) is employed by or on behalf of the owner of real estate or by a prospective
 purchaser of real estate and performs an act described in Subsection [(20)(a)] (19)(a), whether
 the individual's compensation is at a stated salary, a commission basis, upon a salary and
 commission basis, or otherwise;
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        02-20-24 7:53 AM                                                                          H.B. 578
         (e) with the expectation of receiving valuable consideration, manages property owned
 by another person;
         (f) advertises or otherwise holds the individual out to be engaged in property
 management;
         (g) with the expectation of receiving valuable consideration, assists or directs in the
 procurement of prospects for or the negotiation of a transaction listed in Subsections [(20)(a)]
 (19)(a) and (e);
         (h) except for a mortgage lender, title insurance producer, or an employee of a
 mortgage lender or title insurance producer, assists or directs in the closing of a real estate
 transaction with the expectation of receiving valuable consideration;
         (i) engages in foreclosure rescue; or
         (j) advertises, offers, attempts, or otherwise holds the person out as being engaged in
 foreclosure rescue.
         [(21)] (20) (a) "Property management" means engaging in, with the expectation of
 receiving valuable consideration, the management of real estate owned by another person or
 advertising or otherwise claiming to be engaged in property management by:
         (i) advertising for, arranging, negotiating, offering, or otherwise attempting or
 participating in a transaction calculated to secure the rental or leasing of real estate;
         (ii) collecting, agreeing, offering, or otherwise attempting to collect rent for the real
 estate and accounting for and disbursing the money collected; or
         (iii) authorizing expenditures for repairs to the real estate.
         (b) "Property management" does not include:
         (i) hotel or motel management;
         (ii) rental of tourist accommodations, including hotels, motels, tourist homes,
 condominiums, condominium hotels, mobile home park accommodations, campgrounds, or
 similar public accommodations for a period of less than 30 consecutive days, and the
 management activities associated with these rentals; or
         (iii) the leasing or management of surface or subsurface minerals or oil and gas
 interests, if the leasing or management is separate from a sale or lease of the surface estate.
         [(22) "Property management sales agent" means a sales agent who:]
         [(a) is affiliated with a dual broker through the dual broker's property management
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        H.B. 578                                                                  02-20-24 7:53 AM
 company; and]
        [(b) is designated by the dual broker as a property management sales agent.]
        [(23)] (21) "Property manager" means an individual who is licensed or required to be
 licensed as a property manager under this chapter who:
        (a) with the expectation of receiving valuable consideration, manages property owned
 by another person; or
        (b) advertises or otherwise holds the individual out to be engaged in property
 management.
        (22) "Real estate" includes leaseholds and business opportunities involving real
 property.
        [(24)] (23) (a) "Regular salaried employee" means an individual who performs a
 service for wages or other remuneration, whose employer withholds federal employment taxes
 under a contract of hire, written or oral, express or implied.
        (b) "Regular salaried employee" does not include an individual who performs services
 on a project-by-project basis or on a commission basis.
        [(25)] (24) "Reinstatement" means restoring a license that has expired or has been
 suspended.
        [(26)] (25) "Reissuance" means the process by which a licensee may obtain a license
 following revocation of the license.
        [(27)] (26) "Renewal" means extending a license for an additional licensing period on
 or before the date the license expires.
        [(28)] (27) "Sales agent" means an individual who is:
        (a) affiliated with a principal broker, either as an independent contractor or an
 employee as provided in Section 61-2f-303, to perform for valuable consideration an act
 described in Subsection [(20)] (19); and
        (b) licensed under this chapter as a sales agent.
        Section 2. Section 61-2f-103 is amended to read:
        61-2f-103. Real Estate Commission.
        (1) There is created within the division a Real Estate Commission.
        (2) The commission shall:
        (a) subject to concurrence by the division and in accordance with Title 63G, Chapter 3,
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        02-20-24 7:53 AM                                                                        H.B. 578
 Utah Administrative Rulemaking Act, make rules for the administration of this chapter that are
 not inconsistent with this chapter, including:
        (i) licensing of:
        (A) a principal broker;
        (B) an associate broker; [and]
        (C) a sales agent; and
        (D) a property manager;
        (ii) registration of:
        (A) an entity;
        (B) an assumed name under which a person conducts business;
        (C) a branch office; and
        (D) a property management company;
        (iii) prelicensing and postlicensing education curricula;
        (iv) examination procedures;
        (v) the certification and conduct of:
        (A) a real estate school;
        (B) a course provider; or
        (C) an instructor;
        (vi) proper handling of money received by a licensee under this chapter;
        (vii) brokerage office procedures and recordkeeping requirements;
        (viii) property management, including rules necessary to create separate regulations for
 property management activities;
        (ix) standards of conduct for a licensee under this chapter;
        (x) if the commission, with the concurrence of the division, determines necessary, a
 rule as provided in Subsection 61-2f-306(3) regarding a legal form;
        (xi) the qualification and designation of an acting principal broker in the event a
 principal broker dies, is incapacitated, or is unable to perform the duties of a principal broker,
 as described in Section 61-2f-202; and
        (xii) giving or paying an inducement gift or a closing gift to a buyer or seller in a real
 property transaction;
        (b) establish, with the concurrence of the division, a fee provided for in this chapter,
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        H.B. 578                                                                     02-20-24 7:53 AM
 except a fee imposed under Part 5, Real Estate Education, Research, and Recovery Fund Act;
        (c) conduct an administrative hearing not delegated by the commission to an
 administrative law judge or the division relating to the:
        (i) licensing of an applicant;
        (ii) conduct of a licensee;
        (iii) the certification or conduct of a real estate school, course provider, or instructor
 regulated under this chapter; or
        (iv) violation of this chapter by any person;
        (d) with the concurrence of the director, impose a sanction as provided in Section
 61-2f-404;
        (e) advise the director on the administration and enforcement of a matter affecting the
 division and the real estate sales and property management industries;
        (f) advise the director on matters affecting the division budget;
        (g) advise and assist the director in conducting real estate seminars; and
        (h) perform other duties as provided by this chapter.
        (3) (a) Except as provided in Subsection (3)(b), a state entity may not, without the
 concurrence of the commission, make a rule that changes the rights, duties, or obligations of
 buyers, sellers, or persons licensed under this chapter in relation to a real estate transaction
 between private parties.
        (b) Subsection (3)(a) does not apply to a rule made:
        (i) under Title 31A, Insurance Code, or Title 7, Financial Institutions Act; or
        (ii) by the Department of Commerce or any division or other rulemaking body within
 the Department of Commerce.
        (4) (a) The commission shall be comprised of five members appointed by the governor
 and approved by the Senate in accordance with Title 63G, Chapter 24, Part 2, Vacancies.
        (b) Four of the commission members shall:
        (i) have at least five years' experience in the real estate business; and
        (ii) hold an active principal broker, associate broker, or sales agent license.
        (c) One commission member shall be a member of the general public.
        (d) The governor may not appoint a commission member described in Subsection
 (4)(b) who, at the time of appointment, resides in the same county in the state as another
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        02-20-24 7:53 AM                                                                       H.B. 578
 commission member.
        (e) At least one commission member described in Subsection (4)(b) shall at the time of
 an appointment reside in a county that is not a county of the first or second class.
        (5) (a) Except as required by Subsection (5)(b), as terms of current commission
 members expire, the governor shall appoint each new member or reappointed member to a
 four-year term ending June 30.
        (b) Notwithsta