Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                               SB 455.1
                                                 SENATE BILL NO. 455
                                            INTRODUCED BY T. VERMEIRE
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  A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING LAWS RELATED TO REALTY
  REGULATION; REVISING THE COMPOSITION OF THE BOARD OF REALTY REGULATION;
  TRANSFERRING THE OVERSIGHT OF PROPERTY MANAGERS FROM THE BOARD OF REALTY
  REGULATION TO THE DEPARTMENT OF LABOR AND INDUSTRY; ESTABLISHING LICENSING
  REQUIREMENTS FOR PROPERTY MANAGERS; PROVIDING EXEMPTIONS; PROVIDING A PENALTY
  FOR FAILURE TO COMPLY WITH TRUST ACCOUNT REQUIREMENTS; REPEALING LICENSING AND
  REGISTRATION REQUIREMENTS FOR TIMESHARE SALES; PROVIDING RULEMAKING AUTHORITY;
  PROVIDING DEFINITIONS; AMENDING SECTIONS 2-15-1757, 37-1-401, 37-51-102, 37-51-103, 37-51-204,
  37-51-313, 37-51-321, AND 37-51-324, MCA; AND REPEALING SECTIONS 37-51-601, 37-51-602, 37-51-603,
  37-51-605, 37-51-607, 37-51-608, 37-53-101, 37-53-102, 37-53-104, 37-53-201, 37-53-202, 37-53-203, 37-53-
  204, 37-53-205, 37-53-213, 37-53-301, 37-53-302, 37-53-303, 37-53-304, 37-53-305, 37-53-306, 37-53-307,
  37-53-308, AND 37-53-506, MCA.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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             NEW SECTION. Section 1.       Definitions. As used in [sections 1 through 8], unless the context clearly
  indicates otherwise, the following definitions apply:
             (1)     "Department" means the department of labor and industry provided for in Title 2, chapter 15,
  part 17.
             (2)     "Property manager" means an individual who engages in the business of leasing, renting,
  subleasing, or other transfer of possession of real estate located in this state without transfer of the title to the
  property. The term includes but is not limited to an individual who:
             (a)     engages in negotiations for the lease or sublease of any real estate or of the improvements on
  any real estate;
             (b)     promotes the lease, rental, exchange, or other disposition of real estate;
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68th Legislature 2023                                                                                               SB 455.1
           (c)     assists in creating or completing real estate lease contracts;
           (d)     procures tenants;
           (e)     aids or offers to aid, for a fee, any person in locating or obtaining any real estate for lease;
           (f)     makes the advertising of real property for lease available by public display to potential tenants;
           (g)     shows rental or lease properties to potential tenants;
           (h)     acts as a liaison between the owners of real estate and a tenant or potential tenant;
           (i)     generally oversees the inspection, maintenance, and upkeep of leased real estate;
           (j)     collects rents or attempts to collect rents;
           (k)     pays or receives a fee, commission, or other compensation for referral of the name of a
  prospective lessor or lessee; or
           (l)     advertises or represents to the public that the individual is engaged in any of the activities
  referred to in this subsection (2).
           (3)     "Real estate" includes leaseholds as well as any other interest or estate in land, whether
  corporeal, incorporeal, freehold, or nonfreehold and whether the real estate is situated in this state or
  elsewhere.
           (4)     "Trust account" means an account for real estate trust funds maintained at a depository
  institution from which withdrawals or transfers can be made without delay, subject to any notice period that the
  depository institution is required to observe by law.
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           NEW SECTION. Section 2.           Department powers and duties -- rulemaking. (1) The department
  shall:
           (a)     license and renew the licenses of qualified applicants; and
           (b)     adopt rules related to:
           (i)     eligibility requirements and competency standards;
           (ii)    license fees; and
           (iii)   defining unprofessional conduct that is not included in 37-1-410.
           (2)     The department may:
           (a)     adopt rules necessary to implement the provisions of [sections 1 through 8]; and
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68th Legislature 2023                                                                                              SB 455.1
          (b)      establish licensure requirements and procedures as appropriate.
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          NEW SECTION. Section 3.          License required to manage property. A person may not practice as a
  property manager unless actively licensed under Title 37, chapter 1, and [sections 1 through 8].
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          NEW SECTION. Section 4.          Exemptions from requirement of property manager license. (1) The
  property manager licensing provisions of [sections 1 through 8] do not apply to:
          (a)      the spouse of the property owner;
          (b)      the child, descendant of a child, sibling, parent, niece, nephew, aunt, or uncle of either the
  property owner or the spouse of the property owner;
          (c)      a person who leases no more than four residential real estate units;
          (d)      a person acting as attorney-in-fact under a power of attorney;
          (e)      an attorney at law in the performance of duties as an attorney;
          (f)      a person acting pursuant to a court order or a trustee;
          (g)      an officer of the state or a political subdivision in the conduct of official duties;
          (h)      a person acting as a manager of a housing complex for low-income individuals subsidized by
  any government agency or political subdivision of the United States;
          (i)      a person who receives reduced rent or salary, unless that person holds signatory authority on
  the trust account;
          (j)      a person employed by the owner of the real estate if that person's property management duties
  are incidental to the person's other employment-related duties; or
          (k)      a person employed on a salaried basis by only one person.
          (2)      A broker or salesperson licensed under Title 37, chapter 51, may act as a property manager. A
  salesperson may not act as a property manager without a supervising broker.
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          NEW SECTION. Section 5.          Qualification of property manager applicants -- examination --
  issuance of license. (1) An applicant for a property manager license must:
          (a)      be at least 18 years of age;
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68th Legislature 2023                                                                                            SB 455.1
            (b)    have graduated from an accredited high school or completed an equivalent education as
  determined by the department;
            (c)    apply for licensure to the department;
            (d)    have successfully completed a course of education approved by the department; and
            (e)    have passed an examination prescribed by the department.
            (2)    The course of education must include the subjects of real estate leasing principles, real estate
  leasing law, and related topics.
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            NEW SECTION. Section 6.       Penalty for failure to comply with trust account requirements. (1) An
  employee of the department may issue a citation to a property manager responsible for maintenance of a trust
  account for failure to comply with trust account maintenance requirements as provided by rule under 37-1-
  319(4).
            (2)    The citation must include:
            (a)    the time and date on which the citation is issued;
            (b)    the name, title, mailing address, and signature of the person issuing the citation;
            (c)    reference to the statute or rule violated;
            (d)    the name, title, and mailing address of the person to whom the citation is being sent, along with
  information explaining the procedure for the person receiving the citation to follow to pay the fine or dispute the
  violation; and
            (e)    the amount of the applicable fine.
            (3)    The applicable civil fine for failure to comply with trust account maintenance requirements is
  $1,000 for each cited violation.
            (4)    The person who issues the citation is authorized to collect the fine and deposit the proceeds in
  the state special revenue account to the credit of the board.
            (5)    The person who is issued a citation may pay the fine or file a written dispute of the violation
  with the department within 5 business days of the date of issuance.
            (6)    A person who refuses to sign and accept a citation but who does not file a written dispute of the
  violation is demonstrating unprofessional conduct.
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68th Legislature 2023                                                                                          SB 455.1
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          NEW SECTION. Section 7.          Property manager's office -- notice of change of address. A property
  manager shall maintain a designated physical office. The designated address of the property manager must be
  indicated on the property manager's license. The property manager shall notify the department of a new
  address within 10 days.
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          NEW SECTION. Section 8.          Transactions with nonlicensed persons unlawful -- action for
  compensation limited to licensees. (1) It is unlawful for a licensed property manager to employ or
  compensate, directly or indirectly, a person who is not a licensed property manager for performing the acts
  regulated by [sections 1 through 8].
          (2)      A person seeking to collect compensation for the lease of real estate shall demonstrate
  licensure or exemption from licensure.
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          Section 9. Section 2-15-1757, MCA, is amended to read:
          "2-15-1757. Board of realty regulation. (1) There is a board of realty regulation.
          (2)      The board consists of seven members appointed by the governor with the consent of the
  senate. Five members must be licensed real estate brokers, or salespeople, or property managers who are
  actively engaged in the real estate business as a broker, or a salesperson, or a property manager in this state.
  Two members must be representatives of the public who are not state government officers or employees and
  who are not engaged in business as a real estate broker, or a salesperson, or a property manager. The
  members must be residents of this state.
          (3)      The members shall serve staggered terms of 4 years. A member may not serve more than two
  consecutive terms or any portion of two consecutive terms.
          (4)      The board is allocated to the department for administrative purposes only as prescribed in 2-
  15-121."
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          Section 10. Section 37-1-401, MCA, is amended to read:
          "37-1-401.   Uniform regulation for licensing programs without boards -- definitions. As used in
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68th Legislature 2023                                                                                                SB 455.1
  this part, the following definitions apply:
          (1)      "Complaint" means a written allegation filed with the department that, if true, warrants an
  injunction, disciplinary action against a licensee, or denial of an application submitted by a license applicant.
          (2)      "Department" means the department of labor and industry provided for in 2-15-1701.
          (3)      "Investigation" means the inquiry, analysis, audit, or other pursuit of information by the
  department, with respect to a complaint or other information before the department, that is carried out for the
  purpose of determining:
          (a)      whether a person has violated a provision of law justifying discipline against the person;
          (b)      the status of compliance with a stipulation or order of the department;
          (c)      whether a license should be granted, denied, or conditionally issued; or
          (d)      whether the department should seek an injunction.
          (4)      "License" means permission in the form of a license, permit, endorsement, certificate,
  recognition, or registration granted by the state of Montana to engage in a business activity or practice at a
  specific level in a profession or occupation governed by:
          (a)      Title 37, chapter 35, 72, or 73, or [sections 1 through 8]; or
          (b)      Title 50, chapter 39, 74, or 76.
          (5)      "Profession" or "occupation" means a profession or occupation regulated by the department
  under the provisions of:
          (a)      Title 37, chapter 35, 49, 72, or 73, or [sections 1 through 8]; or
          (b)      Title 50, chapter 39, 74, or 76."
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          Section 11. Section 37-51-102, MCA, is amended to read:
          "37-51-102. Definitions. Unless the context requires otherwise, in this chapter the following
  definitions apply:
          (1)      (a) "Adverse material fact" means a fact that should be recognized by a broker or salesperson
  as being of enough significance as to affect a person's decision to enter into a contract to buy or sell real
  property and may be a fact that:
          (i)      materially affects the value, affects structural integrity, or presents a documented health risk to
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68th Legislature 2023                                                                                                 SB 455.1
  occupants of the property; or
          (ii)     materially affects the buyer's ability or intent to perform the buyer's obligations under a
  proposed or existing contract.
          (b)      The term does not include the fact that an occupant of the property has or has had a
  communicable disease or that the property was the site of a suicide or felony.
          (2)      "Asset management" means management, oversight, or direct actions taken to maintain or
  transfer any real property before a foreclosure sale or in preparation for liquidation of real property owned by
  the client pursuant to a foreclosure sale. This includes any action taken to preserve, restore, or improve the
  value and to lessen the risk of damage to the property in preparation for liquidation of real property pursuant to
  a foreclosure sale.
          (3)      "Board" means the board of realty regulation provided for in 2-15-1757.
          (4)      "Broker" includes an individual who:
          (a)      for another or for valuable consideration or who with the intent or expectation of receiving
  valuable consideration negotiates or attempts to negotiate the listing, sale, purchase, rental, exchange, or lease
  of real estate or of the improvements on real estate or collects rents or attempts to collect rents;
          (b)      is employed by or on behalf of the owner or lessor of real estate to conduct the sale, leasing,
  subleasing, or other disposition of real estate for consideration;
          (c)      engages in the business of charging an advance fee or contracting for collection of a fee in
  connection with a contract by which the individual undertakes primarily to promote the sale, lease, or other
  disposition of real estate in this state through its listing in a publication issued primarily for this purpose or for
  referral of information concerning real estate to brokers;
          (d)      makes the advertising, sale, lease, or other real estate information available by public display to
  potential buyers;
          (e)      aids or attempts or offers to aid, for a fee, any person in locating or obtaining any real estate for
  purchase or lease;
          (f)      receives a fee, commission, or other compensation for referring to a licensed broker or
  salesperson the name of a prospective buyer or seller of real property;
          (g)      performs asset management services for real property in conjunction with the marketing or
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68th Legislature 2023                                                                                                SB 455.1
  transfer of the property; or
             (h)    advertises or represents to the public that the individual is engaged in any of the activities
  referred to in this subsection (4).
             (5)    "Buyer" means a person who is interested in acquiring an ownership interest in real property or
  who has entered into an agreement to acquire an interest in real property. The term includes tenants or
  potential tenants with respect to leases or rental agreements of real property.
             (6)    "Buyer agent" means a broker or salesperson who, pursuant to a written buyer broker
  agre