Commerce, Real Estate

Section R162-4-1

Records and Copies of Documents

Notice of Proposed Rule

(Amendment)

DAR File No.: 33563
Filed: 04/15/2010 04:06:36 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

First, the term "closing statement" is amended to "settlement statement" to reflect current industry terminology. Second, licensees are relieved of the obligation to personally attend all closings, as technology has now advanced to the point that licensees and clients can interact in virtual environments and close transactions without meeting in person.

Summary of the rule or change:

The term "closing statement" is amended to "settlement statement". Language requiring a licensee to attend all closings is deleted. Language is inserted to establish that the principal broker remains responsible for the accuracy of the settlement statement regardless of whether a licensee attends the closing.

State statutory or constitutional authorization for this rule:

• Subsection 61-2-5.5(1)(a)

Anticipated cost or savings to:

the state budget:

These amendments bring the rules into line with current industry practices. They do not require the state to implement or enforce a program or provision that would affect the state budget.

local governments:

The rule governs licensees. Local governments are not required to license with the division; the rule will have no effect on local governments.

small businesses:

This rule affects individual licensees. It does not impose or relieve small businesses of any obligations or duties. The rule will have no effect on small businesses.

persons other than small businesses, businesses, or local governmental entities:

Affected persons are relieved of the duty to personally attend all closings. Relieving them of this duty imposes no costs.

Compliance costs for affected persons:

Affected persons are relieved of the duty to personally attend all closings. No compliance is required. There are no compliance costs.

Comments by the department head on the fiscal impact the rule may have on businesses:

This filing updates the rule to reflect current industry terminology and closing practices and makes other technical amendments. No fiscal impact to businesses is anticipated from this filing.

Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Real Estate
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Jennie Jonsson at the above address, by phone at 801-530-6706, by FAX at 801-526-4387, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/31/2010

This rule may become effective on:

06/07/2010

Authorized by:

Deanna Sabey, Director

R162. Commerce, Real Estate.

R162-4. Office Procedures - Real Estate Principal Brokerage.

R162-4-1. Records and Copies of Documents.

4.1. The principal broker must maintain in his office and make available for inspection and copying by the Division all records pertaining to a real estate transaction for a period of at least three calendar years following the year in which an offer was rejected or the transaction either closed or failed.

4.1.1. Location of Records. Unless otherwise authorized by the Division in writing, the business records of the principal broker shall be maintained at his principal business location or, where applicable, at the branch office. If a brokerage closes its operation the principal broker must, within ten days after the closure, notify the Division in writing of where the records will be maintained in order to comply with R162-4.1 above. If a brokerage files for bankruptcy, the principal broker must, upon filing, notify the Division in writing of the filing and the current location of brokerage records.

4.1.2. Transaction Identification. All transactions, whether pending, closed or failed, must be numbered consecutively and identifiable in a manner that, in the opinion of the representative of the Division, the transaction can be readily followed in all pertinent documents. A sequential transaction number is to be assigned to every offer, and a separate transaction file is to be maintained for every offer, including rejected offers involving funds deposited to the brokerage trust account. A sequential transaction number need not be assigned to rejected offers which do not involve funds deposited to trust. The principal broker may, at his option, maintain a separate transaction file for each rejected offer which does not involve funds deposited to trust or keep such rejected offers in a single file.

4.1.3. Statement of Account. At the expiration of 30 days after an offer has been made by a buyer and accepted by a seller, either party may demand, and the principal broker must furnish, a detailed statement showing the current status of the transaction. On demand by either party, the principal broker must furnish an updated statement at 30-day intervals thereafter until the transaction is closed.

4.1.4. [Closing]Settlement Statements. A principal broker charged with closing a sale shall cause to be prepared and delivered to the buyer and seller, upon completion of a transaction, a detailed closing statement of all [their ]respective accounts showing receipts and disbursement.

4.1.4.1. [Closing]Settlement statements for [all ]real estate transactions in which a real estate principal broker participates must show the following: the date of [closing]settlement; the total purchase price of the property; an itemization of [all ]adjustments, money, or things of value received or paid, and to whom each item is credited or debited. The dates of the adjustments must be shown if they are not the same as the date of [the closing]settlement. Also shown must be the balances due from the respective parties to the transaction, and the names of the payees, makers, and assignees of all notes paid, made, or assumed. The statements furnished to each party to the transaction must contain an itemization of credits and debits [as]that pertain to each party.

4.1.4.2. [The principal broker or his authorized representative must attend all closings. The]Regardless of who closes a transaction, a principal broker is responsible for the content and accuracy of [all closing]settlement statements prepared for the signature of the principal broker's client[regardless of who closes the transaction].

4.1.4.3. [The]A principal broker [closing the]who closes a transaction must show proof of delivery of the [closing]settlement statement (s) to the buyer and seller. Signatures of the buyer and seller on the file copy of the [closing]settlement statement or a copy of a transmittal letter sent by certified mail, return receipt requested, when signatures are not attainable, will satisfy this requirement.

4.1.5. Death or Disability of Principal Broker: Upon the death or inability of a principal broker to act as a principal broker the following procedures shall apply:

4.1.5.1. In the case of a corporation, partnership, Limited Liability Company, association, or other legal entity the provisions of R162-2-2.3.2. shall apply.

4.1.5.2. In the case of a sole proprietor all brokerage activity must cease and a family attorney or representative shall: (1) notify the Division and all licensees affiliated with the principal broker in writing of the date of death or disability; (2) advise the Division as to the location where records will be stored; (3) notify each listing and management client in writing to the effect that the principal broker is no longer in business and that the client may enter a new listing or management agreement with the firm of [his]the client's choice; (4) notify each party and cooperating broker to any existing contracts; and (5) retain trust account monies under the control of the administrator, executor or co-signer on the account until all parties to each transaction agree in writing to the disposition or until a court of competent jurisdiction issues an order relative to the disposition.

 

KEY: real estate business

Date of Enactment or Last Substantive Amendment: [August 21, 2009]2010

Notice of Continuation: April 18, 2007

Authorizing, and Implemented or Interpreted Law: 61-2-5.5