Session of 2024
Substitute for HOUSE BILL No. 2598
By Committee on Commerce, Labor and Economic Development
2-15
AN ACT concerning real estate transactions; authorizing the Kansas real
estate commission to issue cease and desist orders; prohibiting dealing
in assignable contracts for the purchase or sale of or options on real
estate or improvements thereon for certain residential housing;
regulating contract for deed transactions; providing that such prohibited
dealing in assignable contracts and certain deceptive actions pertaining
to such contract for deed transactions are violations of the consumer
protection act; amending K.S.A. 58-3065 and K.S.A. 2023 Supp. 58-
3062 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
New Section 1. (a) Sections 1 through 4, and amendments thereto,
shall be known and may be cited as the Kansas contract for deed act.
(b) As used in sections 1 through 4, and amendments thereto:
(1) "Buyer" means a person who purchases property subject to a
contract for deed or any legal successor in interest to the buyer.
(2) "Contract for deed" means an executory agreement in which the
seller agrees to convey title to real property to the buyer and the buyer
agrees to pay the purchase price in five or more subsequent payments
exclusive of the down payment, if any, while the seller retains title to the
property as security for the buyer's obligation. Option contracts for the
purchase of real property are not contracts for deed.
(3) "Property" means real property located in this state upon which
there is located or will be located a structure designed principally for
occupancy of one to four families that is or will be occupied by the buyer
as the buyer's principal place of residence.
(4) "Seller" means any person who makes a sale of property by means
of a contract for deed or any legal successor in interest to the seller.
New Sec. 2. Any contract for deed or affidavit of equitable interest
may be recorded in the office of the county register of deeds where the
property is located by any interested person.
New Sec. 3. (a) A seller shall not execute a contract for deed with a
buyer if the seller does not hold title to the property. Except as provided
further, a seller shall maintain fee simple title to the property free from any
mortgage, lien or other encumbrance for the duration of the contract for
deed. This subsection shall not apply to a mortgage, lien or encumbrance
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placed on the property:
(1) Due to the conduct of the buyer;
(2) with the agreement of the buyer as a condition of a loan obtained
to make improvements on the property; or
(3) by the seller prior to the execution of the contract for deed if:
(A) The seller disclosed the mortgage, lien or encumbrance to the
buyer;
(B) the seller continues to make timely payments on the outstanding
mortgage, lien or other encumbrance;
(C) the seller disclosed the contract for deed to the mortgagee,
lienholder or other party of interest; and
(D) the seller satisfies and obtains a release of the mortgage, lien or
other encumbrance not later than the date the buyer makes final payment
on the contract for deed unless the buyer assumes the mortgage, lien or
other encumbrance as part of the contract for deed.
(b) Any violation of this section is a deceptive act or practice under
the provisions of the Kansas consumer protection act and shall be subject
to any and all of the enforcement provisions of the Kansas consumer
protection act.
New Sec. 4. (a) A buyer's rights under a contract for deed shall not be
forfeited or canceled except as provided in this section, notwithstanding
any provision in the contract providing for forfeiture of buyer's rights.
Nothing in this section shall be construed to limit the power of the district
court to require proceedings in equitable foreclosure.
(b) The buyer's rights under a contract for deed shall not be forfeited
until the buyer has been notified of the intent to forfeit as provided in
subsection (c) and has been given a right to cure the default, and such
buyer has failed to do so within the time period allowed. A timely tender of
cure shall reinstate the contract for deed.
(c) A notice of default and intent to forfeit shall:
(1) Reasonably identify the contract and describe the property
covered by it;
(2) specify the terms and conditions of the contract with which the
buyer has not complied; and
(3) notify the buyer that the contract will be forfeited unless the buyer
performs the terms and conditions within the following periods of time:
(A) If the buyer has paid less than 50% of the purchase price, 30 days
from completed service of notice; or
(B) if the buyer has paid 50% or more of the purchase price, 90 days
from completed service of notice.
(d) A notice of default and intent to forfeit shall be served on the
buyer in person, or by leaving a copy at the buyer's usual place of
residence with someone of suitable age and discretion who resides at such
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place of residence, or by certified mail or priority mail, return receipt
requested, addressed to the buyer at the buyer's usual place of residence.
(e) Nothing in this section shall be construed to preclude the buyer or
the seller from pursuing any other remedy at law or equity.
Sec. 5. K.S.A. 2023 Supp. 58-3062 is hereby amended to read as
follows: 58-3062. (a) No licensee, whether acting as an agent, transaction
broker or a principal, shall:
(1) Fail to account for and remit any money which comes into the
licensee's possession and which belongs to others.
(2) Misappropriate moneys required to be deposited in a trust account
pursuant to K.S.A. 58-3061, and amendments thereto, convert such
moneys to the licensee's personal use or commingle the money or other
property of the licensee's principals with the licensee's own money or
property, except that nothing herein shall prohibit a broker from having
funds in an amount not to exceed $100 in the broker's trust account to pay
expenses for the use and maintenance of such account.
(3) Accept, give or charge any rebate or undisclosed commission.
(4) Pay a referral fee to a person who is properly licensed as a broker
or salesperson in Kansas or another jurisdiction or who holds a corporate
real estate license in another jurisdiction if the licensee knows that the
payment of the referral fee will result in the payment of a rebate by the
Kansas or out-of-state licensee.
(5) Represent or attempt to represent a broker without the broker's
express knowledge and consent.
(6) Guarantee or authorize any person to guarantee future profits that
may result from the resale of real property.
(7) Place a sign on any property offering it for sale or lease without
the written consent of the owner or the owner's authorized agent.
(8) Offer real estate for sale or lease without the knowledge and
consent of the owner or the owner's authorized agent or on terms other
than those authorized by the owner or the owner's authorized agent.
(9) Induce any party to break any contract of sale or lease.
(10) Pay a commission or compensation to any person, not licensed
under this act, for performing any activity for which a license is required
under this act.
(11) Fail to see that financial obligations and commitments between
the parties to an agreement to sell, exchange or lease real estate are in
writing, expressing the exact agreement of the parties or to provide, within
a reasonable time, copies thereof to all parties involved.
(12) Procure a signature to a purchase contract which has no definite
purchase price, method of payment, description of property or method of
determining the closing date.
(13) Engage in fraud or make any substantial misrepresentation.
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(14) Represent to any lender, guaranteeing agency or any other
interested party, either verbally or through the preparation of false
documents, an amount in excess of the true and actual sale price of the real
estate or terms differing from those actually agreed upon.
(15) Fail to make known to any purchaser or lessee any interest the
licensee has in the real estate the licensee is selling or leasing or to make
known to any seller or lessor any interest the licensee will have in the real
estate the licensee is purchasing or leasing.
(16) Fail to inform both the buyer, at the time an offer is made, and
the seller, at the time an offer is presented, that certain closing costs must
be paid and the approximate amount of such costs.
(17) Fail without just cause to surrender any document or instrument
to the rightful owner.
(18) Accept anything other than cash as earnest money unless that
fact is communicated to the owner prior to the owner's acceptance of the
offer to purchase, and such fact is shown in the purchase agreement.
(19) Fail to deposit any check or cash received as an earnest money
deposit or as a deposit on the purchase of a lot within five business days
after the purchase agreement or lot reservation agreement is signed by all
parties, unless otherwise specifically provided by written agreement of all
parties to the purchase agreement or lot reservation agreement, in which
case the licensee shall deposit the check or cash received on the date
provided by such written agreement.
(20) Fail to respond in a timely manner to any request from the
commission or the commission's designee for documents or information
that concerns directly or indirectly any real estate transaction or the
licensee's real estate business.
(21) Refuse to appear or testify under oath at any hearing held by the
commission.
(22) Demonstrate incompetency to act as a broker, associate broker or
salesperson.
(23) Except as provided by K.S.A. 40-2404, and amendments thereto,
knowingly receive or accept, directly or indirectly, any rebate, reduction or
abatement of any charge, or any special favor or advantage or any
monetary consideration or inducement, involving the issuance of a title
insurance policy or contract concerning which the licensee is directly or
indirectly connected, from a title insurance company or title insurance
agent, or any officer, employee, attorney, agent or solicitor thereof.
(24) Engage in the purchase of one-, two-, three- one-family, two-
family, three-family or four-family dwellings, including condominiums and
cooperatives, or the acquisition of any right, title or interest therein,
including any equity or redemption interests, if:
(A) (i) At the time of such purchase, the dwellings are subject to a
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right of redemption pursuant to foreclosure of a mortgage on such
dwellings; (ii) the licensee fails to give written notice of the purchase,
within 20 days thereafter, to the mortgage holder or judgment creditor who
held such mortgage; and (iii) the licensee, unless otherwise required by
law or court order, fails to apply any rent proceeds from the dwellings to
the judgment lien arising from the foreclosure of such mortgage, as
payments become due under the loan, regardless of whether the licensee is
obligated to do so;
(B) (i) the dwellings are subject to a loan which is secured by a
mortgage and which is in default at the time of such purchase or in default
within one year after such purchase; (ii) the licensee fails to give written
notice of the purchase, within 20 days thereafter, to the mortgage holder;
and (iii) the licensee, unless otherwise required by law or court order, fails
to apply any rent proceeds from the dwellings to the mortgage as the
payments come due, regardless of whether the licensee is obligated on the
loan; or
(C) the licensee fails to notify, at the time of rental, any person
renting any such dwelling of the extent and nature of the licensee's interest
in such dwelling and the probable time until possession will be taken by
the mortgage holder or judgment creditor.
(25) Commit forgery or, unless authorized to do so by a duly
executed power of attorney, sign or initial any contractual agreement on
behalf of another person in a real estate transaction.
(26) Enter into contracts with persons not licensed by the commission
to perform services requiring a license under K.S.A. 58-3034 et seq., and
amendments thereto, except as provided by K.S.A. 58-3077, and
amendments thereto.
(b) No salesperson or associate broker shall:
(1) Except as provided in subparagraph (A) or (B), accept a
commission or other valuable consideration from anyone other than the
broker by whom the licensee is employed or with whom the licensee is
associated as an independent contractor.
(A) A salesperson or associate broker may accept a commission or
other valuable consideration from a licensee who employs the salesperson
or associate broker as a personal assistant provided that: (i) The licensee
and the salesperson or associate broker who is employed as a personal
assistant are licensed under the supervision of the same broker; and (ii) the
supervising broker agrees in writing that the personal assistant may be paid
by the licensee.
(B) If a salesperson or associate broker has organized as an
association, corporation, limited liability company, limited liability
partnership, partnership or professional corporation, the commission or
other valuable consideration may be paid by the licensee's broker to such
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association, corporation, limited liability company, limited liability
partnership, partnership or professional corporation. This provision shall
not alter any other provisions of this act.
(2) Fail to place, as soon after receipt as practicable, any deposit
money or other funds entrusted to the salesperson or associate broker in
the custody of the broker whom the salesperson or associate broker
represents.
(3) (A) Except as provided by subparagraph (B), be employed by or
associated with a licensee at any one time other than the supervising
broker who employs such salesperson or associate broker or with who the
salesperson or associate broker is associated as an independent contractor.
(B) An associate broker may be employed by or associated with more
than one supervising broker at any one time if each supervising broker
who employs or associates with the associate broker consents to such
multiple employment or association. Such consent shall be on a form
provided by the commission and shall not be effective until a signed copy
of the completed form has been filed with the commission.
(4) Except as provided by subsection (b), pay a commission or
compensation to any person for performing any activity for which a
license is required under this act.
(5) (A) Fail to disclose to such salesperson's or associate broker's
supervising broker or branch broker that such salesperson or associate
broker is performing any activity for which a license is required under
K.S.A. 58-3036, and amendments thereto; or (B) perform any activity for
which a license is required under K.S.A. 58-3036, and amendments
thereto, outside the supervision of the supervising broker or branch broker.
The provisions of this subsection shall not apply to any activity or person
exempted from the real estate brokers' and salespersons' license act
pursuant to K.S.A. 58-3037, and amendments thereto.
(6) Fail to submit to the supervising broker or branch broker, within
10 business days, any document that must be maintained in the supervising
broker's or branch broker's business records for each real estate
transaction. The ten-day period shall commence when the document is
executed by the client or customer or, if a signature is not required or is not
obtained, upon presentation of a document to the client or customer.
(c) No broker shall:
(1) Pay a commission or compensation to any person for performing
the services of an associate broker or salesperson unless such person is
licensed under this act and employed by or associated with the broker.
(2) Fail to deliver to the seller in every real estate transaction, at the
time the transaction is closed, a complete, detailed closing statement
showing all of the receipts and disbursements handled by the broker for
the seller, or fail to deliver to the buyer a complete statement showing all
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money received in the transaction from such buyer and how and for what
the same was disbursed, or fail to retain true copies of such statements in
the broker's files, except that the furnishing of such statements to the seller
and buyer by an escrow agent shall relieve the broker's responsibility to
the seller and the buyer.
(3) Fail to properly supervise the activities of an associated or
employed salesperson or associate broker.
(4) Lend the broker's license to a salesperson, or permit a salesperson
to operate as a broker.
(5) Fail to provide to the principal a written report every 30 days,
along with a final report, itemizing disbursements made by the broker
from advance listing fees.
(d) (1) If a purchase agreement provides that the earnest money be
held by an escrow agent other than a real estate broker, no listing broker
shall:
(A) Fail to deliver the purchase agreement and earnest money deposit
to the escrow agent named in the purchase agreement within five business
days after the purchase agreement is signed by all parties unless otherwise
specifically provided by written agreement of all parties to the purchase
agreement, in which case the broker shall deliver the purchase agreement
and earnest money deposit to the escrow agent named in the purchase
agreement on the date provided by such written agreement; or
(B) fail to obtain and keep in the transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement and
earnest money deposit.
(2) If a purchase agreement provides that the earnest money be held
by an escrow agent other than a real estate broker and the property was not
listed with a broker, no broker for the buyer shall:
(A) Fail to deliver the purchase agreement and earnest money deposit
to the escrow agent named in the purchase agreement within five business
days after the purchase agreement is signed by all parties unless otherwise
specifically provided by written agreement of all parties to the purchase
agreement, in which case the broker shall deliver the purchase agreement
and earnest money deposit to the escrow agent named in the purchase
agreement on the date provided by such written agreement; or
(B) fail to obtain and keep in the transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement and
earnest money deposit.
(3) If a purchase agreement provides that the earnest money be held
by an escrow agent other than a real estate broker and neither the seller nor
buyer is represented by a broker, no transaction broker shall:
(A) Fail to deliver the purchase agreement and earnest money deposit
to the escrow agent named in the purchase agreement within five business
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days after the purchase agreement is signed by all parties unless otherwise
specifically provided by written agreement of all parties to the purchase
agreement, in which case the broker shall deliver the purchase agreement
and earnest money deposit to the escrow agent named in the purchase
agreement on the date provided by such written agreement; or
(B) fail to obtain and keep in the transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement and
earnest money deposit.
The commission may adopt rules and regulations to require that such
purchase agreement which provides that the earnest money be held by an
escrow agent other than a real estate broker include: (1) Notification of
whether or not the escrow agent named in the purchase agreement
maintains a surety bond; and (2) notification that statutes governing the
disbursement of earnest money held in trust accounts of real estate brokers
do not apply to earnest money deposited with the escrow agent named in
the purchase agreement.
(e) No licensee shall:
(1) Threaten to engage in or engage in physical abuse or engage in
harassment towards:
(A) A client or customer or a former client or customer;
(B) another licensee;
(C) commission members or staff;
(D) staff of the office of administrative hearings;
(E) staff from any real estate trade association or multiple listing
service; or
(F) any person from another business or industry whose services are
requested or required as part of a real estate transaction;
(2) threaten to file or file a lien on residential property;
(3) conduct real estate business with impaired judgment or objectivity
as the result of mental illness or addiction to alcohol or controlled
substances;
(4) be finally adjudicated by a federal or state agency and found to be
guilty of a violation of a federal or state law regulating the real estate
industry or regulating a closely related industry whose licensees or
members are commonly involved in real estate matters;
(5) be finally adjudicated by a federal or state agency and found to be
guilty of a violation of a federal or state law prohibiting discrimination
against any client or customer on the basis of color, race, gender, religion,
national origin, age, disability or familial status; or
(6) intentionally misappropriate or misuse any personal property or
real property of a client or customer.
(f) No applicant or licensee shall:
(1) Engage in fraud or make any substantial misrepresentation to the
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commission;
(2) commit forgery in any representation or document submitted to
the commission;
(3) sign or initial, on behalf of another person, any application, for or
accompanying document submitted to the commission unless authorized to
do so by a duly executed power of attorney;
(4) interfere with any investigation, administrative proceeding, quasi-
judicial proceeding or any other disciplinary matter of the commission,
including, but not limited to:
(A) Threatening to engage in or engaging in physical abuse or
harassment toward any witness, complainant or individual listed in
subsection (e)(1);
(B) destroying evidence;
(C) refusing or failing to appear or testify under oath at any hearing;
or
(D) refusing or failing to respond in a timely manner to any request
from the commission or the commission's designee for documents or
information that concerns directly or indirectly any real estate transaction
or the licensee's real estate business;
(5) fail without just cause to surrender any document or instrument to
the rightful owner; or
(6) demonstrate incompetency to act as a broker, associate broker or
salesperson in dealings with the commission, including the repeated failure
to:
(A) Submit required forms to the commission in a timely and
complete manner;
(B) make available to the commission all records relating to the real
estate business; or
(C) comply with the provisions of this subsection.
(g) A branch broker shall not be employed by or associated with more
than one supervising broker at any one time unless each supervising broker
who employs or associates with the branch broker consents to such
multiple employment or association. Such consent shall be on a form
provided by the commission and shall not be effective until a signed copy
of the completed form has been filed with the commission.
(h) (1) No person, association, corporation, limited liability
company, limited liability partnership, partnership, professional
corporation or trust shall buy, sell, offer to buy or sell, market for sale,
exchange or otherwise deal in assignable contracts for the purchase or
sale of or options on real estate or improvements thereon for single family
residential housing and multifamily residential housing of four units or
less.
(2) Any violation of paragraph (1) constitutes a deceptive act or
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practice under the Kansas consumer protection act pursuant to K.S.A.
2023 Supp. 50-626, and amendments thereto, and shall be subject to a
civil penalty as provided in K.S.A. 50-636(a), and amendments thereto,
and any other remedy or penalty as provided by the Kansas consumer
protection act. Each unlawful transaction shall constitute a separate
violation.
(i) Nothing in this section shall be construed to grant any person a
private right of action for damages, except a violation of subsection (h), or
to eliminate any right of action pursuant to other statutes or common law.
Sec. 6. K.S.A. 58-3065 is hereby amended to read as follows: 58-
3065. (a) Willful violation of any provision of this act or the brokerage
relationships in real estate transactions act is a misdemeanor punishable by
imprisonment for not more than 12 months or a fine of not less than $100
or more than $1,000, or both, for the first offense and imprisonment for not
more than 12 months or a fine of not less than $1,000 or more than
$10,000, or both, for a second or subsequent offense.
(b) Nothing in this act or the brokerage relationships in real estate
transactions act shall be construed as requiring the commission or the
director to report minor violations of the acts for criminal prosecution
whenever the commission or the director believes that the public interest
will be adequately served by other administrative action.
(c) If the commission determines that a person has practiced without
a valid broker's or salesperson's license issued by the commission, in
addition to any other penalties imposed by law, the commission, in
accordance with the Kansas administrative procedure act, may issue a
cease and desist order against such unlicensed person or associated
association, corporation, limited liability company, limited liability
partnership, partnership, professional corporation or trust.
Sec. 7. K.S.A. 58-3065 and K.S.A. 2023 Supp. 58-3062 are hereby
repealed.
Sec. 8. This act shall take effect and be in force from and after its
publication in the statute book.
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