KS
Kansas House Bill HB2562

Kansas 2023-2024 Regular Session

Kansas House Bill HB2562 Compare Versions

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1+Session of 2024
12 HOUSE BILL No. 2562
2-AN ACT concerning consumer protection; relating to financial exploitation, real estate
3-transactions and housing discrimination; enacting the protect vulnerable adults from
4-financial exploitation act; requiring reporting of instances of suspected financial
5-exploitation under certain circumstances; providing civil and administrative
6-immunity to individuals who report such instances; authorizing the Kansas real estate
7-commission to issue cease and desist orders; regulating contract for deed
8-transactions; providing for certain penalties related thereto; making certain deceptive
9-actions violations of the consumer protection act; prohibiting the recording of
10-unlawful restrictive covenants; authorizing the removal of unlawful restrictive
11-covenants; amending K.S.A. 17-12a412, 44-1017a and 58-3065 and repealing the
12-existing sections.
3+By Committee on Financial Institutions and Pensions
4+Requested by Eric Turek on behalf of the Kansas Insurance Department
5+1-22
6+AN ACT concerning securities; enacting the protect vulnerable adults from
7+financial exploitation act; requiring reporting of instances of suspected
8+financial exploitation under certain circumstances; providing civil and
9+administrative immunity to individuals who report such instances;
10+amending K.S.A. 17-12a412 and repealing the existing section.
1311 Be it enacted by the Legislature of the State of Kansas:
14-New Section 1. Sections 1 through 9, and amendments thereto,
15-shall be known and may be cited as the protect vulnerable adults from
16-financial exploitation act.
17-New Sec. 2. As used in the protect vulnerable adults from
18-financial exploitation act:
12+New Section 1. Sections 1 through 9, and amendments thereto, shall
13+be known and may be cited as the protect vulnerable adults from financial
14+exploitation act.
15+New Sec. 2. As used in the protect vulnerable adults from financial
16+exploitation act:
1917 (a) "Act" means the protect vulnerable adults from financial
2018 exploitation act.
2119 (b) "Agent" means the same as defined in K.S.A. 17-12a102, and
2220 amendments thereto.
23-(c) "Broker-dealer" means the same as defined in K.S.A. 17-
24-12a102, and amendments thereto.
21+(c) "Broker-dealer" means the same as defined in K.S.A. 17-12a102,
22+and amendments thereto.
2523 (d) "Commissioner" means the securities commissioner of Kansas.
2624 (e) "Eligible adult" means an elder person or dependent adult as
2725 defined in K.S.A. 21-5417, and amendments thereto.
2826 (f) "Financial exploitation" means the unlawful or improper use,
29-control or withholding of an eligible adult's property, income, resources
30-or trust funds by any other person or entity in a manner that is not for
31-the profit of or to the advantage of the eligible adult. "Financial
32-exploitation" includes, but is not limited to, the:
27+control or withholding of an eligible adult's property, income, resources or
28+trust funds by any other person or entity in a manner that is not for the
29+profit of or to the advantage of the eligible adult. "Financial exploitation"
30+includes, but is not limited to, the:
3331 (1) Use of deception, intimidation, coercion, extortion or undue
34-influence by a person or entity to obtain or use an eligible adult's
35-property, income, resources or trust funds in a manner for the profit of
36-or to the advantage of such person or entity;
32+influence by a person or entity to obtain or use an eligible adult's property,
33+income, resources or trust funds in a manner for the profit of or to the
34+advantage of such person or entity;
3735 (2) breach of a fiduciary duty, including, but not limited to, the
38-misuse of a power of attorney, trust or a guardianship or
39-conservatorship appointment, as it relates to the property, income,
40-resources or trust funds of the eligible adult; or
36+misuse of a power of attorney, trust or a guardianship or conservatorship
37+appointment, as it relates to the property, income, resources or trust funds
38+of the eligible adult; or
4139 (3) obtainment or use of an eligible adult's property, income,
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4275 resources or trust funds, without lawful authority, by a person or entity
4376 who knows or clearly should know that the eligible adult lacks the
44-capacity to consent to the release or use of such eligible adult's
45-property, income, resources or trust funds.
77+capacity to consent to the release or use of such eligible adult's property,
78+income, resources or trust funds.
4679 (g) "Investment adviser" means the same as defined in K.S.A. 17-
4780 12a102, and amendments thereto.
48-(h) "Investment adviser representative" means the same as defined
49-in K.S.A. 17-12a102, and amendments thereto.
81+(h) "Investment adviser representative" means the same as defined in
82+K.S.A. 17-12a102, and amendments thereto.
5083 (i) "Person reasonably associated with the eligible adult" means:
5184 (1) A person authorized to transact business on the account of the
5285 eligible adult;
5386 (2) an eligible adult's spouse, child, parent or sibling;
54-(3) a person who was previously designated by the eligible adult
55-to receive information under a customer agreement;
87+(3) a person who was previously designated by the eligible adult to
88+receive information under a customer agreement;
5689 (4) a legal guardian or conservator of the eligible adult;
5790 (5) a trustee, co-trustee or successor trustee of the account of the
5891 eligible adult;
5992 (6) a person named as a beneficiary on an account of the eligible
6093 adult;
6194 (7) an agent under a power of attorney of the eligible adult; or
62-(8) any other person permitted to be notified under existing state
63-or federal law, regulation or the rules of a self-regulatory organization,
64-as defined in K.S.A. 17-12a102, and amendments thereto.
95+(8) any other person permitted to be notified under existing state or
96+federal law, regulation or the rules of a self-regulatory organization, as
97+defined in K.S.A. 17-12a102, and amendments thereto.
6598 (j) "Protective agencies" means the commissioner and the Kansas
66-department for children and families. HOUSE BILL No. 2562—page 2
99+department for children and families.
67100 (k) "Qualified person" means any agent, broker-dealer, investment
68101 adviser, investment adviser representative or person who serves in a
69-supervisory, compliance or legal capacity for a broker-dealer or
70-investment adviser.
71-New Sec. 3. If a qualified person reasonably believes that
72-financial exploitation of an eligible adult may have occurred, may have
73-been attempted or is being attempted, the broker-dealer or investment
74-adviser shall promptly report the matter to the protective agencies,
75-which may further report the matter as permitted or required by law. 
102+supervisory, compliance or legal capacity for a broker-dealer or investment
103+adviser.
104+New Sec. 3. If a qualified person reasonably believes that financial
105+exploitation of an eligible adult may have occurred, may have been
106+attempted or is being attempted, the broker-dealer or investment adviser
107+shall promptly report the matter to the protective agencies, which may
108+further report the matter as permitted or required by law. 
76109 New Sec. 4. A qualified person who, in good faith and exercising
77-reasonable care, makes a disclosure of information pursuant to section
78-3, and amendments thereto, shall be immune from administrative and
79-civil liability that might otherwise arise from such disclosure or for any
80-failure to notify the eligible adult of such disclosure.
110+reasonable care, makes a disclosure of information pursuant to section 3,
111+and amendments thereto, shall be immune from administrative and civil
112+liability that might otherwise arise from such disclosure or for any failure
113+to notify the eligible adult of such disclosure.
81114 New Sec. 5. A qualified person who, in good faith and exercising
82-reasonable care, makes a disclosure of information pursuant to section
83-3, and amendments thereto, may notify any person reasonably
84-associated with the eligible adult of the disclosure, unless the qualified
85-person suspects that such person reasonably associated with the eligible
86-adult has committed or attempted financial exploitation of such eligible
87-adult.
115+reasonable care, makes a disclosure of information pursuant to section 3,
116+and amendments thereto, may notify any person reasonably associated
117+with the eligible adult of the disclosure, unless the qualified person
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161+suspects that such person reasonably associated with the eligible adult has
162+committed or attempted financial exploitation of such eligible adult.
88163 New Sec. 6. A qualified person who, in good faith and exercising
89164 reasonable care, complies with the provisions of section 5, and
90165 amendments thereto, shall be immune from any administrative and civil
91166 liability that might otherwise arise from such disclosure.
92167 New Sec. 7. (a) A broker-dealer or investment adviser may delay a
93-transaction associated with or disbursement from an account of an
94-eligible adult or an account on which an eligible adult is a beneficiary
95-if:
96-(1) A qualified person reasonably believes, after initiating an
97-internal review of the requested transaction or disbursement and the
98-suspected financial exploitation, that the requested transaction or
99-disbursement may further financial exploitation of an eligible adult; and
168+transaction associated with or disbursement from an account of an eligible
169+adult or an account on which an eligible adult is a beneficiary if:
170+(1) A qualified person reasonably believes, after initiating an internal
171+review of the requested transaction or disbursement and the suspected
172+financial exploitation, that the requested transaction or disbursement may
173+further financial exploitation of an eligible adult; and
100174 (2) the broker-dealer or investment adviser:
101-(A) Immediately, and in no event more than two business days
102-after the date that a requested transaction or disbursement is delayed,
103-provides written notification of the delay and the reason for such delay
104-to all parties authorized to transact business on the account, unless such
105-qualified person reasonably believes that any such party is engaged in
106-suspected or attempted financial exploitation of the eligible adult;
107-(B) immediately, and in no event more than two business days
108-after the requested transaction or disbursement is delayed, notifies the
175+(A) Immediately, and in no event more than two business days after
176+the date that a requested transaction or disbursement is delayed, provides
177+written notification of the delay and the reason for such delay to all parties
178+authorized to transact business on the account, unless such qualified
179+person reasonably believes that any such party is engaged in suspected or
180+attempted financial exploitation of the eligible adult;
181+(B) immediately, and in no event more than two business days after
182+the requested transaction or disbursement is delayed, notifies the
109183 protective agencies; and
110184 (C) continues such internal review of the suspected or attempted
111185 financial exploitation of the eligible adult, as necessary and reports the
112186 results of such investigation to the protective agencies upon request.
113187 (b) Any delay of a transaction or disbursement authorized by this
114188 section shall expire upon the soonest of:
115-(1) A determination by the broker-dealer or investment adviser
116-that the transaction or disbursement will not result in financial
117-exploitation of the eligible adult; or
118-(2) 15 business days following the date on which the broker-dealer
119-or investment adviser first delayed the transaction or disbursement,
120-unless either of the protective agencies requests that the broker-dealer
121-or investment adviser extend the delay, in which case the delay shall
122-expire not more than 25 business days after the date on which the
123-broker-dealer or investment adviser first delayed the transaction or
124-disbursement if not terminated sooner or further extended by either of
125-the protective agencies or an order of a court of competent jurisdiction. HOUSE BILL No. 2562—page 3
189+(1) A determination by the broker-dealer or investment adviser that
190+the transaction or disbursement will not result in financial exploitation of
191+the eligible adult; or
192+(2) 15 business days following the date on which the broker-dealer or
193+investment adviser first delayed the transaction or disbursement, unless
194+either of the protective agencies requests that the broker-dealer or
195+investment adviser extend the delay, in which case the delay shall expire
196+not more than 25 business days after the date on which the broker-dealer
197+or investment adviser first delayed the transaction or disbursement if not
198+terminated sooner or further extended by either of the protective agencies
199+or an order of a court of competent jurisdiction.
126200 (c) A court of competent jurisdiction may enter an order extending
127-the delay of the transaction or disbursement or may order other
128-protective relief based on the petition of either of the protective
129-agencies, the broker-dealer or investment adviser that initiated the
130-delay under this section or another interested party.
131-New Sec. 8. A broker-dealer or investment adviser that, in good
132-faith and exercising reasonable care, complies with the provisions of
133-section 7, and amendments thereto, shall be immune from any
134-administrative and civil liability that might otherwise arise from such
135-delay of a transaction or disbursement in accordance with this act.
136-New Sec. 9. (a) A broker-dealer or investment adviser shall
137-provide access to or copies of records that are relevant to the suspected
138-or attempted financial exploitation of an eligible adult to the protective
139-agencies and to law enforcement agencies, either as part of a referral to
140-the protective agencies or to law enforcement agencies or upon request
141-of either protective agency or law enforcement agency pursuant to an
201+the delay of the transaction or disbursement or may order other protective
202+relief based on the petition of either of the protective agencies, the broker-
203+dealer or investment adviser that initiated the delay under this section or
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247+another interested party.
248+New Sec. 8. A broker-dealer or investment adviser that, in good faith
249+and exercising reasonable care, complies with the provisions of section 7,
250+and amendments thereto, shall be immune from any administrative and
251+civil liability that might otherwise arise from such delay of a transaction or
252+disbursement in accordance with this act.
253+New Sec. 9. (a) A broker-dealer or investment adviser shall provide
254+access to or copies of records that are relevant to the suspected or
255+attempted financial exploitation of an eligible adult to the protective
256+agencies and to law enforcement agencies, either as part of a referral to the
257+protective agencies or to law enforcement agencies or upon request of
258+either protective agency or law enforcement agency pursuant to an
142259 investigation. The records may include historical records and records
143-relating to the most recent transaction or transactions that may
144-constitute financial exploitation of an eligible adult.
145-(b) No record made available to the commissioner or other
146-agencies under this act shall be considered a public record under the
147-open records act, K.S.A. 45-215 et seq., and amendments thereto. The
148-provisions of this subsection providing for the confidentiality of public
149-records shall expire on July 1, 2029, unless the legislature reviews and
150-acts to continue such provisions in accordance with K.S.A. 45-229, and
151-amendments thereto, prior to July 1, 2029.
260+relating to the most recent transaction or transactions that may constitute
261+financial exploitation of an eligible adult.
262+(b) No record made available to the commissioner or other agencies
263+under this act shall be considered a public record under the open records
264+act, K.S.A. 45-215 et seq., and amendments thereto. The provisions of this
265+subsection providing for the confidentiality of public records shall expire
266+on July 1, 2029, unless the legislature reviews and acts to continue such
267+provisions in accordance with K.S.A. 45-229, and amendments thereto,
268+prior to July 1, 2029.
152269 (c) Notwithstanding any provision of law to the contrary, the
153270 protective agencies shall respond to reasonable inquiries from the
154271 notifying qualified person and may disclose to the notifying qualified
155-person the general status or final disposition of any investigation that
156-arose from a report made by such qualified person.
157-(d) Nothing in this act shall limit or otherwise impede the
158-authority of the commissioner to access or examine the books and
159-records of broker-dealers and investment advisers as otherwise
160-provided by law.
161-New Sec. 10. (a) Sections 10 through 13, and amendments thereto,
162-shall be known and may be cited as the Kansas contract for deed act.
163-(b) As used in sections 10 through 13, and amendments thereto:
164-(1) "Buyer" means a person who purchases property subject to a
165-contract for deed or any legal successor in interest to the buyer.
166-(2) "Contract for deed" means an executory agreement in which
167-the seller agrees to convey title to real property to the buyer and the
168-buyer agrees to pay the purchase price in five or more subsequent
169-payments exclusive of the down payment, if any, while the seller
170-retains title to the property as security for the buyer's obligation. Option
171-contracts for the purchase of real property are not contracts for deed.
172-(3) "Property" means real property located in this state upon
173-which there is located or will be located a structure designed principally
174-for occupancy of one to four families that is or will be occupied by the
175-buyer as the buyer's principal place of residence.
176-(4) "Seller" means any person who makes a sale of property by
177-means of a contract for deed or any legal successor in interest to the
178-seller.
179-New Sec. 11. (a) Any contract for deed or affidavit of equitable
180-interest may be recorded in the office of the county register of deeds
181-where the property is located by any interested person.
182-(b) Following the notice and opportunity to cure provided for in
183-section 13(c), and amendments thereto, the buyer shall have 15 days to:
184-(1) Record a record of release of affidavit of equitable interest or HOUSE BILL No. 2562—page 4
185-contract for deed, if such affidavit or contract were recorded; and
186-(2) vacate the premises, if applicable.
187-(c) If the buyer fails to satisfy the conditions under subsection (b),
188-then such buyer shall be responsible for the seller's reasonable attorney
189-fees, costs and expenses for the removal of the affidavit of equitable
190-interest or contract for deed from the title and eviction of the buyer
191-from the premises, if applicable.
192-New Sec. 12. (a) A seller shall not execute a contract for deed with
193-a buyer if the seller does not hold title to the property. Except as
194-provided further, a seller shall maintain fee simple title to the property
195-free from any mortgage, lien or other encumbrance for the duration of
196-the contract for deed. This subsection shall not apply to a mortgage,
197-lien or encumbrance placed on the property:
198-(1) Due to the conduct of the buyer;
199-(2) with the agreement of the buyer as a condition of a loan
200-obtained to make improvements on the property; or
201-(3) by the seller prior to the execution of the contract for deed if:
202-(A) The seller disclosed the mortgage, lien or encumbrance to the
203-buyer;
204-(B) the seller continues to make timely payments on the
205-outstanding mortgage, lien or other encumbrance;
206-(C) the seller disclosed the contract for deed to the mortgagee,
207-lienholder or other party of interest; and
208-(D) the seller satisfies and obtains a release of the mortgage, lien
209-or other encumbrance not later than the date the buyer makes final
210-payment on the contract for deed unless the buyer assumes the
211-mortgage, lien or other encumbrance as part of the contract for deed.
212-(b) Any violation of this section is a deceptive act or practice
213-under the provisions of the Kansas consumer protection act and shall be
214-subject to any and all of the enforcement provisions of the Kansas
215-consumer protection act.
216-New Sec. 13. (a) A buyer's rights under a contract for deed shall
217-not be forfeited or canceled except as provided in this section,
218-notwithstanding any provision in the contract providing for forfeiture
219-of buyer's rights. Nothing in this section shall be construed to limit the
220-power of the district court to require proceedings in equitable
221-foreclosure.
222-(b) The buyer's rights under a contract for deed shall not be
223-forfeited until the buyer has been notified of the intent to forfeit as
224-provided in subsection (c) and has been given a right to cure the
225-default, and such buyer has failed to do so within the time period
226-allowed. A timely tender of cure shall reinstate the contract for deed.
227-(c) A notice of default and intent to forfeit shall:
228-(1) Reasonably identify the contract and describe the property
229-covered by it;
230-(2) specify the terms and conditions of the contract with which the
231-buyer has not complied; and
232-(3) notify the buyer that the contract will be forfeited unless the
233-buyer performs the terms and conditions within the following periods
234-of time:
235-(A) If the buyer has paid less than 50% of the purchase price, 30
236-days from completed service of notice; or
237-(B) if the buyer has paid 50% or more of the purchase price, 90
238-days from completed service of notice.
239-(d) A notice of default and intent to forfeit shall be served on the
240-buyer in person, or by leaving a copy at the buyer's usual place of
241-residence with someone of suitable age and discretion who resides at
242-such place of residence, or by certified mail or priority mail, return
243-receipt requested, addressed to the buyer at the buyer's usual place of HOUSE BILL No. 2562—page 5
244-residence.
245-(e) Nothing in this section shall be construed to preclude the buyer
246-or the seller from pursuing any other remedy at law or equity.
247-New Sec. 14. (a) Any restrictive covenant recitals on real property
248-contained in any deed, plat, declaration, restriction, covenant or other
249-conveyance filed at any time in the office of the register of deeds in any
250-county in violation of K.S.A. 44-1016 or 44-1017, and amendments
251-thereto, shall be void and unenforceable.
252-(b) A restrictive covenant that violates K.S.A. 44-1016 or 44-
253-1017, and amendments thereto, may be released by the owner of the
254-real property subject to such covenant by recording a certificate of
255-release of prohibited covenants. Such certificate may be recorded prior
256-to recording of a document conveying any interest in such real property
257-or at such other time as the owner discovers that such prohibited
258-covenant exists. Any certificate recorded with the register of deeds shall
259-be subject to recording fees pursuant to K.S.A. 28-115, and
260-amendments thereto. A certificate of release of prohibited covenants
261-shall contain:
262-(1) The name of the current owner of the real property;
263-(2) a legal description of the real property;
264-(3) the volume and page or the document number in which the
265-original document containing the restrictive covenant is recorded;
266-(4) a brief description of the restrictive covenant; and
267-(5) the citation to the location of the restrictive covenant in the
268-original document.
269-Sec. 15. K.S.A. 17-12a412 is hereby amended to read as follows:
270-17-12a412. (a) Disciplinary conditions — applicants. An order issued
271-under this act may deny an application, or may condition or limit
272-registration of an applicant to be a broker-dealer, agent, investment
273-adviser, or investment adviser representative if the administrator finds
274-that the order is in the public interest and that there is a ground for
275-discipline under subsection (d) against the applicant or, if the applicant
276-is a broker-dealer or investment adviser, against any partner, officer,
277-director, person having a similar status or performing similar functions,
278-or person directly or indirectly controlling the broker-dealer or
279-investment adviser.
280-(b) Disciplinary conditions — registrants. An order issued under
281-this act may revoke, suspend, condition, or limit the registration of a
282-registrant if the administrator finds that the order is in the public
283-interest and that there is a ground for discipline under subsection (d)
284-against the registrant or, if the registrant is a broker-dealer or
285-investment adviser, against any partner, officer, or director, any person
286-having a similar status or performing similar functions, or any person
287-directly or indirectly controlling the broker-dealer or investment
288-adviser. However, the administrator:
272+person the general status or final disposition of any investigation that arose
273+from a report made by such qualified person.
274+(d) Nothing in this act shall limit or otherwise impede the authority of
275+the commissioner to access or examine the books and records of broker-
276+dealers and investment advisers as otherwise provided by law.
277+Sec. 10. K.S.A. 17-12a412 is hereby amended to read as follows: 17-
278+12a412. (a) Disciplinary conditions — applicants. An order issued under
279+this act may deny an application, or may condition or limit registration of
280+an applicant to be a broker-dealer, agent, investment adviser, or investment
281+adviser representative if the administrator finds that the order is in the
282+public interest and that there is a ground for discipline under subsection (d)
283+against the applicant or, if the applicant is a broker-dealer or investment
284+adviser, against any partner, officer, director, person having a similar status
285+or performing similar functions, or person directly or indirectly controlling
286+the broker-dealer or investment adviser.
287+(b) Disciplinary conditions — registrants. An order issued under this
288+act may revoke, suspend, condition, or limit the registration of a registrant
289+if the administrator finds that the order is in the public interest and that
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333+there is a ground for discipline under subsection (d) against the registrant
334+or, if the registrant is a broker-dealer or investment adviser, against any
335+partner, officer, or director, any person having a similar status or
336+performing similar functions, or any person directly or indirectly
337+controlling the broker-dealer or investment adviser. However, the
338+administrator:
289339 (1) May not institute a revocation or suspension proceeding under
290-this subsection based on an order issued by another state that is
291-reported to the administrator or designee later than one year after the
292-date of the order on which it is based; and
293-(2) under subsection (d)(5)(A) and (B), may not issue an order on
294-the basis of an order under the state securities act of another state unless
295-the other order was based on conduct for which subsection (d) would
340+this subsection based on an order issued by another state that is reported to
341+the administrator or designee later than one year after the date of the order
342+on which it is based; and
343+(2) under subsection (d)(5)(A) and (B), may not issue an order on the
344+basis of an order under the state securities act of another state unless the
345+other order was based on conduct for which subsection (d) would
296346 authorize the action had the conduct occurred in this state.
297347 (c) Disciplinary penalties — registrants. If the administrator finds
298348 that the order is in the public interest and that there is a ground for
299-discipline under subsection (d)(1) through (6), (8), (9), (10), (12) or
300-(13) against a registrant or, if the registrant is a broker-dealer or
301-investment adviser, against any partner, officer, or director, any person
302-having similar functions, or any person directly or indirectly controlling HOUSE BILL No. 2562—page 6
303-the broker-dealer or investment adviser, then the administrator may
304-enter an order against the registrant containing one or more of the
305-following sanctions or remedies:
349+discipline under subsection (d)(1) through (6), (8), (9), (10), (12) or (13)
350+against a registrant or, if the registrant is a broker-dealer or investment
351+adviser, against any partner, officer, or director, any person having similar
352+functions, or any person directly or indirectly controlling the broker-dealer
353+or investment adviser, then the administrator may enter an order against
354+the registrant containing one or more of the following sanctions or
355+remedies:
306356 (1) A censure;
307357 (2) a bar or suspension from association with a broker-dealer or
308358 investment adviser registered in this state;
309-(3) a civil penalty up to $25,000 for each violation. If any person
310-is found to have violated any provision of this act, and such violation is
311-committed against elder or disabled persons, as defined in K.S.A. 50-
312-676, and amendments thereto, in addition to any civil penalty otherwise
313-provided by law, the administrator may impose an additional penalty
314-not to exceed $15,000 for each such violation. The total penalty against
315-a person shall not exceed $1,000,000;
316-(4) an order requiring the registrant to pay restitution for any loss
317-or disgorge any profits arising from a violation, including, in the
318-administrator's discretion, the assessment of interest from the date of
319-the violation at the rate provided for interest on judgments by K.S.A.
320-16-204, and amendments thereto;
359+(3) a civil penalty up to $25,000 for each violation. If any person is
360+found to have violated any provision of this act, and such violation is
361+committed against elder or disabled persons, as defined in K.S.A. 50-676,
362+and amendments thereto, in addition to any civil penalty otherwise
363+provided by law, the administrator may impose an additional penalty not to
364+exceed $15,000 for each such violation. The total penalty against a person
365+shall not exceed $1,000,000;
366+(4) an order requiring the registrant to pay restitution for any loss or
367+disgorge any profits arising from a violation, including, in the
368+administrator's discretion, the assessment of interest from the date of the
369+violation at the rate provided for interest on judgments by K.S.A. 16-204,
370+and amendments thereto;
321371 (5) an order charging the registrant with the actual cost of an
322372 investigation or proceeding; or
323373 (6) an order requiring the registrant to cease and desist from any
324374 action that constitutes a ground for discipline, or to take other action
325375 necessary or appropriate to comply with this act.
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326419 (d) Grounds for discipline. A person may be disciplined under
327420 subsections (a) through (c) if the person:
328-(1) Has filed an application for registration in this state under this
329-act or the predecessor act within the previous 10 years, which, as of the
330-effective date of registration or as of any date after filing in the case of
331-an order denying effectiveness, was incomplete in any material respect
332-or contained a statement that, in light of the circumstances under which
333-it was made, was false or misleading with respect to a material fact;
334-(2) willfully violated or willfully failed to comply with this act or
335-the predecessor act or a rule adopted or order issued under this act or
336-the predecessor act within the previous 10 years;
337-(3) has been convicted of a felony or within the previous 10 years
338-has been convicted of a misdemeanor involving a security, a
339-commodity future or option contract, or an aspect of a business
340-involving securities, commodities, investments, franchises, insurance,
341-banking, or finance;
342-(4) is enjoined or restrained by a court of competent jurisdiction in
343-an action instituted by the administrator under this act or the
344-predecessor act, a state, the securities and exchange commission, or the
345-United States from engaging in or continuing an act, practice, or course
346-of business involving an aspect of a business involving securities,
421+(1) Has filed an application for registration in this state under this act
422+or the predecessor act within the previous 10 years, which, as of the
423+effective date of registration or as of any date after filing in the case of an
424+order denying effectiveness, was incomplete in any material respect or
425+contained a statement that, in light of the circumstances under which it was
426+made, was false or misleading with respect to a material fact;
427+(2) willfully violated or willfully failed to comply with this act or the
428+predecessor act or a rule adopted or order issued under this act or the
429+predecessor act within the previous 10 years;
430+(3) has been convicted of a felony or within the previous 10 years has
431+been convicted of a misdemeanor involving a security, a commodity future
432+or option contract, or an aspect of a business involving securities,
347433 commodities, investments, franchises, insurance, banking, or finance;
348-(5) is the subject of an order, issued after notice and opportunity
349-for hearing by:
350-(A) The securities, depository institution, insurance, or other
351-financial services regulator of a state or by the securities and exchange
352-commission or other federal agency denying, revoking, barring, or
353-suspending registration as a broker-dealer, agent, investment adviser,
354-federal covered investment adviser, or investment adviser
355-representative;
434+(4) is enjoined or restrained by a court of competent jurisdiction in an
435+action instituted by the administrator under this act or the predecessor act,
436+a state, the securities and exchange commission, or the United States from
437+engaging in or continuing an act, practice, or course of business involving
438+an aspect of a business involving securities, commodities, investments,
439+franchises, insurance, banking, or finance;
440+(5) is the subject of an order, issued after notice and opportunity for
441+hearing by:
442+(A) The securities, depository institution, insurance, or other financial
443+services regulator of a state or by the securities and exchange commission
444+or other federal agency denying, revoking, barring, or suspending
445+registration as a broker-dealer, agent, investment adviser, federal covered
446+investment adviser, or investment adviser representative;
356447 (B) the securities regulator of a state or by the securities and
357-exchange commission against a broker-dealer, agent, investment
358-adviser, investment adviser representative, or federal covered
359-investment adviser;
360-(C) the securities and exchange commission or by a self-
361-regulatory organization suspending or expelling the registrant from HOUSE BILL No. 2562—page 7
362-membership in the self-regulatory organization;
448+exchange commission against a broker-dealer, agent, investment adviser,
449+investment adviser representative, or federal covered investment adviser;
450+(C) the securities and exchange commission or by a self-regulatory
451+organization suspending or expelling the registrant from membership in
452+the self-regulatory organization;
363453 (D) a court adjudicating a United States postal service fraud order;
364454 (E) the insurance regulator of a state denying, suspending, or
365455 revoking the registration of an insurance agent; or
366-(F) a depository institution regulator suspending or barring a
367-person from the depository institution business;
368-(6) is the subject of an adjudication or determination, after notice
369-and opportunity for hearing, by the securities and exchange
370-commission, the commodity futures trading commission, the federal
371-trade commission, a federal depository institution regulator, or a
372-depository institution, insurance, or other financial services regulator of
373-a state that the person willfully violated the securities act of 1933, the
374-securities exchange act of 1934, the investment advisers act of 1940,
375-the investment company act of 1940, or the commodity exchange act,
376-the securities or commodities law of a state, or a federal or state law
377-under which a business involving investments, franchises, insurance,
378-banking, or finance is regulated;
456+(F) a depository institution regulator suspending or barring a person
457+from the depository institution business;
458+(6) is the subject of an adjudication or determination, after notice and
459+opportunity for hearing, by the securities and exchange commission, the
460+commodity futures trading commission, the federal trade commission, a
461+federal depository institution regulator, or a depository institution,
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505+insurance, or other financial services regulator of a state that the person
506+willfully violated the securities act of 1933, the securities exchange act of
507+1934, the investment advisers act of 1940, the investment company act of
508+1940, or the commodity exchange act, the securities or commodities law of
509+a state, or a federal or state law under which a business involving
510+investments, franchises, insurance, banking, or finance is regulated;
379511 (7) is insolvent, either because the person's liabilities exceed the
380-person's assets or because the person cannot meet the person's
381-obligations as they mature, but the administrator may not enter an order
382-against an applicant or registrant under this paragraph without a finding
383-of insolvency as to the applicant or registrant;
512+person's assets or because the person cannot meet the person's obligations
513+as they mature, but the administrator may not enter an order against an
514+applicant or registrant under this paragraph without a finding of insolvency
515+as to the applicant or registrant;
384516 (8) refuses to allow or otherwise impedes the administrator from
385517 conducting an audit or inspection under K.S.A. 17-12a411(d), and
386518 amendments thereto, refuses access to a registrant's office to conduct an
387-audit or inspection under K.S.A. 17-12a411(d), and amendments
388-thereto, fails to keep or maintain sufficient records to permit an audit
389-disclosing the condition of the registrant's business, or fails willfully
390-and without cause to comply with a request for information by the
391-administrator or person designated by the administrator in conducting
392-investigations or examinations under this act;
519+audit or inspection under K.S.A. 17-12a411(d), and amendments thereto,
520+fails to keep or maintain sufficient records to permit an audit disclosing the
521+condition of the registrant's business, or fails willfully and without cause to
522+comply with a request for information by the administrator or person
523+designated by the administrator in conducting investigations or
524+examinations under this act;
393525 (9) has failed to reasonably supervise an agent, investment adviser
394526 representative, or other individual, if the agent, investment adviser
395-representative, or other individual was subject to the person's
396-supervision and committed a violation of this act or the predecessor act
397-or a rule adopted or order issued under this act or the predecessor act
398-within the previous 10 years;
527+representative, or other individual was subject to the person's supervision
528+and committed a violation of this act or the predecessor act or a rule
529+adopted or order issued under this act or the predecessor act within the
530+previous 10 years;
399531 (10) has not paid the proper filing fee within 30 days after having
400532 been notified by the administrator of a deficiency, but the administrator
401533 shall vacate an order under this paragraph when the deficiency is
402534 corrected;
403-(11) after notice and opportunity for a hearing, has been found
404-within the previous 10 years:
405-(A) By a court of competent jurisdiction to have willfully violated
406-the laws of a foreign jurisdiction under which the business of securities,
535+(11) after notice and opportunity for a hearing, has been found within
536+the previous 10 years:
537+(A) By a court of competent jurisdiction to have willfully violated the
538+laws of a foreign jurisdiction under which the business of securities,
407539 commodities, investment, franchises, insurance, banking, or finance is
408540 regulated;
409-(B) to have been the subject of an order of a securities regulator of
410-a foreign jurisdiction denying, revoking, or suspending the right to
411-engage in the business of securities as a broker-dealer, agent,
412-investment adviser, investment adviser representative, or similar
413-person; or
541+(B) to have been the subject of an order of a securities regulator of a
542+foreign jurisdiction denying, revoking, or suspending the right to engage in
543+the business of securities as a broker-dealer, agent, investment adviser,
544+investment adviser representative, or similar person; or
414545 (C) to have been suspended or expelled from membership by or
415546 participation in a securities exchange or securities association operating
416547 under the securities laws of a foreign jurisdiction;
417-(12) is the subject of a cease and desist order issued by the
418-securities and exchange commission or issued under the securities,
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591+(12) is the subject of a cease and desist order issued by the securities
592+and exchange commission or issued under the securities, commodities,
593+investment, franchise, banking, finance, or insurance laws of a state;
594+(13) has engaged in dishonest or unethical practices in the securities,
419595 commodities, investment, franchise, banking, finance, or insurance
420-laws of a state; HOUSE BILL No. 2562—page 8
421-(13) has engaged in dishonest or unethical practices in the
422-securities, commodities, investment, franchise, banking, finance, or
423-insurance business within the previous 10 years;
596+business within the previous 10 years;
424597 (14) is not qualified on the basis of factors such as training,
425-experience, and knowledge of the securities business. However, in the
426-case of an application by an agent for a broker-dealer that is a member
427-of a self-regulatory organization or by an individual for registration as
428-an investment adviser representative, a denial order may not be based
429-on this paragraph if the individual has successfully completed all
430-examinations required by subsection (e). The administrator may require
431-an applicant for registration under K.S.A. 17-12a402 or 17-12a404, and
432-amendments thereto, who has not been registered in a state within the
433-two years preceding the filing of an application in this state to
434-successfully complete an examination; or
598+experience, and knowledge of the securities business. However, in the case
599+of an application by an agent for a broker-dealer that is a member of a self-
600+regulatory organization or by an individual for registration as an
601+investment adviser representative, a denial order may not be based on this
602+paragraph if the individual has successfully completed all examinations
603+required by subsection (e). The administrator may require an applicant for
604+registration under K.S.A. 17-12a402 or 17-12a404, and amendments
605+thereto, who has not been registered in a state within the two years
606+preceding the filing of an application in this state to successfully complete
607+an examination; or
435608 (15) lacks sufficient character or reputation to warrant the public
436609 trust; or
437-(16) was required to report information under the protect
438-vulnerable adults from financial exploitation act and knowingly failed
439-to make such a report or knowingly caused such report not to be made
440-within the previous 10 years.
441-(e) Examinations. A rule adopted or order issued under this act
442-may require that an examination, including an examination developed
443-or approved by an organization of securities regulators, be successfully
610+(16) was required to report information under the protect vulnerable
611+adults from financial exploitation act and knowingly failed to make such a
612+report or knowingly caused such report not to be made within the previous
613+10 years.
614+(e) Examinations. A rule adopted or order issued under this act may
615+require that an examination, including an examination developed or
616+approved by an organization of securities regulators, be successfully
444617 completed by a class of individuals or all individuals. An order issued
445618 under this act may waive, in whole or in part, an examination as to an
446-individual and a rule adopted under this act may waive, in whole or in
447-part, an examination as to a class of individuals if the administrator
448-determines that the examination is not necessary or appropriate in the
449-public interest and for the protection of investors.
450-(f) Summary process. In accordance with the Kansas
451-administrative procedures procedure act, the administrator may use
452-summary or emergency proceedings to suspend or deny an application;
453-restrict, condition, limit, or suspend a registration; or censure, bar, or
454-impose a civil penalty or cease and desist order on a registrant before
455-final determination of an administrative proceeding. If a hearing is not
456-requested and none is ordered by the administrator within 30 days after
457-the date of service of the order, the order becomes final by operation of
458-law. If a hearing is requested or ordered, the administrator, after notice
459-of and opportunity for hearing to each person subject to the order, may
460-modify or vacate the order or extend the order until final determination.
461-(g) Procedural requirements. (1) An order issued may not be
462-issued under this section, except under subsection (f), without:
619+individual and a rule adopted under this act may waive, in whole or in part,
620+an examination as to a class of individuals if the administrator determines
621+that the examination is not necessary or appropriate in the public interest
622+and for the protection of investors.
623+(f) Summary process. In accordance with the Kansas administrative
624+procedures procedure act, the administrator may use summary or
625+emergency proceedings to suspend or deny an application; restrict,
626+condition, limit, or suspend a registration; or censure, bar, or impose a civil
627+penalty or cease and desist order on a registrant before final determination
628+of an administrative proceeding. If a hearing is not requested and none is
629+ordered by the administrator within 30 days after the date of service of the
630+order, the order becomes final by operation of law. If a hearing is requested
631+or ordered, the administrator, after notice of and opportunity for hearing to
632+each person subject to the order, may modify or vacate the order or extend
633+the order until final determination.
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677+(g) Procedural requirements. (1) An order issued may not be issued
678+under this section, except under subsection (f), without:
463679 (A) Appropriate notice to the applicant or registrant;
464680 (B) opportunity for hearing; and
465681 (C) findings of fact and conclusions of law in a record.
466682 (2) Proceedings under this subsection shall be conducted in
467683 accordance with the Kansas administrative procedures procedure act.
468684 (h) Control person liability. A person that controls, directly or
469-indirectly, a person not in compliance with this section may be
470-disciplined by order of the administrator under subsections (a) through
471-(c) to the same extent as the noncomplying person, unless the
472-controlling person did not know, and in the exercise of reasonable care
473-could not have known, of the existence of conduct that is a ground for
474-discipline under this section.
475-(i) Limit on investigation or proceeding. The administrator may
476-not institute a proceeding under subsection (a), (b), or (c) based solely
477-on material facts actually known by the administrator unless an
478-investigation or the proceeding is instituted within one year after the
479-administrator actually acquires knowledge of the material facts. HOUSE BILL No. 2562—page 9
480-Sec. 16. K.S.A. 44-1017a is hereby amended to read as follows:
481-44-1017a. (a) No declaration or other governing document of an
482-association shall include a restrictive covenant in violation of K.S.A.
483-44-1016 and 44-1017, and amendments thereto.
484-(b) Within 60 days of the effective date of this act, the board of
485-directors of an association shall amend any declaration or other
486-governing document that includes a restrictive covenant in violation of
487-K.S.A. 44-1016 and 44-1017, and amendments thereto, by removing
488-such restrictive covenant. Such amendment shall not require the
489-approval of the members of the association. No other change shall be
490-required to be made to the declaration or other governing document of
491-the association pursuant to this section. Within 10 days of the adoption
492-of the amendment, the amended declaration or other governing
493-document shall be recorded in the same manner as the original
494-declaration or other governing document and shall be subject to
495-recording fees pursuant to K.S.A. 28-115, and amendments thereto. No
496-fee shall be charged for such recording.
497-(c) If the commission, a city or county in which where the
498-association is located provides written notice to an association
499-requesting that the association delete a restrictive covenant in violation
500-of K.S.A. 44-1016 and 44-1017, and amendments thereto, the
501-association shall delete the restrictive covenant within 30 days of
502-receiving the notice. If the association fails to delete the restrictive
503-covenant in violation of K.S.A. 44-1016 and 44-1017, and amendments
504-thereto, the commission, a city or county in which where the
505-association is located, or any person adversely affected by such
506-restrictive covenant may bring an action against the homeowners
507-association for injunctive relief to enforce the provisions of subsections
508-(a) and (b) of this section. The court may award attorney's fees to the
509-prevailing party.
510-(d) If a city or county determines that the association is no longer
511-active such that the written notice described in subsection (c) cannot be
512-provided to the association, then the city or county, upon adoption of a
513-resolution by the governing body of such city or county, may remove
514-such restrictive covenant that is in violation of K.S.A. 44-1016 or 44-
515-1017, and amendments thereto, by recording a certificate of release of
516-prohibited covenants in accordance with section 14, and amendments
517-thereto. A resolution may authorize the removal of more than one
518-restrictive covenant that is in violation of K.S.A. 44-1016 or 44-1017,
519-and amendments thereto. No signature or other consent of any property
520-owner affected by such recording shall be required to record any
521-certificate of release of prohibited covenants pursuant to this
522-subsection. Any such certificate recorded pursuant to this subsection
523-shall not affect the validity of any property interest recorded within the
524-original or redacted plat. No city or county shall incur any liability
525-arising from the recording of any certificate of release of prohibited
526-covenants pursuant to this subsection. No fee shall be charged for any
527-recording filed pursuant to this subsection. Any such recording shall be
528-exempt from the survey requirements of K.S.A. 58-2001 et seq., and
529-amendments thereto.
530-(e) For the purposes of this section:
531-(1) "Association" means a non-profit homeowners association as
532-defined in K.S.A. 60-3611, and amendments thereto.
533-(2) "Commission" means the Kansas human rights commission as
534-defined in K.S.A. 44-1002, and amendments thereto.
535-(e)(f) This section shall be a part of and supplemental to and a part
536-of the Kansas act against discrimination.
537-Sec. 17. K.S.A. 58-3065 is hereby amended to read as follows: 58-
538-3065. (a) Willful violation of any provision of this act or the brokerage HOUSE BILL No. 2562—page 10
539-relationships in real estate transactions act is a misdemeanor punishable
540-by imprisonment for not more than 12 months or a fine of not less than
541-$100 or more than $1,000, or both, for the first offense and
542-imprisonment for not more than 12 months or a fine of not less than
543-$1,000 or more than $10,000, or both, for a second or subsequent
544-offense.
545-(b) Nothing in this act or the brokerage relationships in real estate
546-transactions act shall be construed as requiring the commission or the
547-director to report minor violations of the acts for criminal prosecution
548-whenever the commission or the director believes that the public
549-interest will be adequately served by other administrative action.
550-(c) If the commission determines that a person or associated
551-association, corporation, limited liability company, limited liability
552-partnership, partnership, professional corporation or trust has
553-practiced without a valid broker's or salesperson's license issued by the
554-commission, in addition to any other penalties imposed by law, the
555-commission, in accordance with the Kansas administrative procedure
556-act, may issue a cease and desist order against the unlicensed person.
557-Sec. 18. K.S.A. 17-12a412, 44-1017a and 58-3065 are hereby
558-repealed.
559-Sec. 19. This act shall take effect and be in force from and after its
685+indirectly, a person not in compliance with this section may be disciplined
686+by order of the administrator under subsections (a) through (c) to the same
687+extent as the noncomplying person, unless the controlling person did not
688+know, and in the exercise of reasonable care could not have known, of the
689+existence of conduct that is a ground for discipline under this section.
690+(i) Limit on investigation or proceeding. The administrator may not
691+institute a proceeding under subsection (a), (b), or (c) based solely on
692+material facts actually known by the administrator unless an investigation
693+or the proceeding is instituted within one year after the administrator
694+actually acquires knowledge of the material facts.
695+Sec. 11. K.S.A. 17-12a412 is hereby repealed.
696+Sec. 12. This act shall take effect and be in force from and after its
560697 publication in the statute book.
561-I hereby certify that the above BILL originated in the HOUSE, and was
562-adopted by that body
563-
564-HOUSE adopted
565-Conference Committee Report
566-
567-Speaker of the House.
568-
569-Chief Clerk of the House.
570-Passed the SENATE
571- as amended
572-SENATE adopted
573-Conference Committee Report
574-
575-President of the Senate.
576-
577-Secretary of the Senate.
578-APPROVED
579-
580-
581-Governor.
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