South Carolina amends real estate rebate law
March 28, 2005
Proposed change will allow some in-state rebates
By Glenn Roberts Jr.
The South Carolina Association of Realtors supported a law enacted this year that bans real estate brokerages from offering real estate rebates to consumers and companies lacking licenses in the state, though the association is now pushing a new language to allow rebates in some cases.
The proposed law change would still bar out-of-state companies that lack a South Carolina real estate license from accepting any referral fees or other compensation in a real estate transaction, said Jim Peters, CEO for the association.
"This is clarifying language just to ensure there wasn't any confusion in the marketplace," Peters said. The law enacted Jan. 1 states that it is grounds for disciplinary action or denial of a license if a real estate brokerage "pays a commission or compensation to an unlicensed individual."
Peters said, "We looked at that and found that the legislation in its current form perhaps was too restrictive." Situations could develop in a transaction in which a rebate could aid a home buyer or seller to meet down payment requirements and complete the real estate transaction, Peters said. Under the proposed law, "a buyer or seller in the middle of negotiations could be party to getting a rebate."
The association-backed proposal allows some "payments of commission or other compensation subject to the terms and conditions of the appropriate listing agreements, buyer agency agreements, property management agreements, sales agreements, lease agreements, referral fee agreements, or other written agreements made between real estate brokerage companies and their clients and customers."
The proposed legislation also provides that it is against the law to pay a commission or compensation "to an unlicensed individual for conducting activities requiring a license including, but not limited to payment of referral fees or other compensation that arises from a real estate transaction to individuals who are not clients or customers in that real estate transaction."
But it is OK, under this proposed law, for a real estate licensee to offer compensation to an unlicensed assistant or employee.
Peters said that an Internet company based out of the state, for example, "could not receive a referral or a portion of commission unless (the company) had a broker licensed in South Carolina. It is designed to protect the intrusion into a transaction of those who are not a party to that transaction." As another example, Peters said that a relocation company unlicensed in the state could not call up a broker after a transaction stating that it is collecting a percentage of the commission from a completed transaction. "After-the-fact referrals are not permitted," he said.
A Dec. 22 notice about the then-pending real estate rule changes by the state's Realtor association does not mention any law change relating to real estate rebates. Jay Pitts, administrator for the South Carolina Real Estate Commission, stated in this announcement, "We maintain good relationships with the associations, many of which had suggestions on ways to make licensees' jobs easier and create a positive impact on the consumer. That's how the changes originated."
A spokesman for the South Carolina Real Estate Commission referred questions about the recent real estate rebate law change and the new law proposal to the state's Realtor association.
The legislation enacted Jan. 1 has other provisions that will remain unchanged by the new proposal. The law spells out the responsibilities of real estate agents involved in a designated agency situation, which occurs when a buyer's agent and the listing agent in a transaction work at the same brokerage. Previously, the state had only provided for dual agency, sub-agency and buyer agency situations in a real estate transaction.
The law also has language relating to services performed by real estate brokers. The law requires that real estate agents present all offers and counteroffers, Peters said, though those standards "were already in place" and do not require additional services, as is the case with legislation passed or under consideration in other states, such as Illinois and Texas.
According to the text of the law, a real estate licensee must offer the following services to consumers:
- Present all offers to and from parties involving the sale, lease and exchange of property;
- Account for all money and property received by the broker on behalf of a party in a real estate transaction;
- Provide a meaningful explanation of agency relationships in real estate transactions;
- Provide an explanation of the scope of services to be provided by the licensee; and
- Be fair and honest and provide accurate information in all dealings.
The law also provides that real estate licensees may offer the following services:
- Identify and show property for sale, lease or exchange;
- Provide real estate statistics and information on property;
- Provide pre-printed real estate form contracts, leases and related exhibits and addenda;
- Act as a scribe in the preparation of real estate form contracts, leases and related exhibits and addenda;
- Locate a list of architects, engineers, surveyors, inspectors, lenders, insurance agents, attorneys and other professionals; and
- Identify schools, shopping facilities, places of worship, and other similar facilities on behalf of any of the parties in a real estate transaction.
Copyright 2005 Inman News
Contact ALTA at 202-296-3671 or email@example.com.