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Kansas House Bill HB2598

Kansas 2023-2024 Regular Session

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11 Session of 2024
22 HOUSE BILL No. 2598
33 By Committee on Commerce, Labor and Economic Development
44 Requested by Mark Tomb on behalf of Kansas Association of Realtors
55 1-25
66 AN ACT concerning real estate; relating to brokers and salespersons and
77 real estate transactions; authorizing the Kansas real estate commission
88 to issue cease and desist orders; prohibiting dealing in assignable
99 contracts for the purchase or sale of or options on real estate or
1010 improvements thereon for certain residential housing; providing that
1111 certain violations thereof are subject to penalties and remedies under
1212 the Kansas consumer protection act; amending K.S.A. 58-3065 and
1313 K.S.A. 2023 Supp. 58-3062 and repealing the existing sections.
1414 Be it enacted by the Legislature of the State of Kansas:
1515 Section 1. K.S.A. 2023 Supp. 58-3062 is hereby amended to read as
1616 follows: 58-3062. (a) No licensee, whether acting as an agent, transaction
1717 broker or a principal, shall:
1818 (1) Fail to account for and remit any money which comes into the
1919 licensee's possession and which belongs to others.
2020 (2) Misappropriate moneys required to be deposited in a trust account
2121 pursuant to K.S.A. 58-3061, and amendments thereto, convert such
2222 moneys to the licensee's personal use or commingle the money or other
2323 property of the licensee's principals with the licensee's own money or
2424 property, except that nothing herein shall prohibit a broker from having
2525 funds in an amount not to exceed $100 in the broker's trust account to pay
2626 expenses for the use and maintenance of such account.
2727 (3) Accept, give or charge any rebate or undisclosed commission.
2828 (4) Pay a referral fee to a person who is properly licensed as a broker
2929 or salesperson in Kansas or another jurisdiction or who holds a corporate
3030 real estate license in another jurisdiction if the licensee knows that the
3131 payment of the referral fee will result in the payment of a rebate by the
3232 Kansas or out-of-state licensee.
3333 (5) Represent or attempt to represent a broker without the broker's
3434 express knowledge and consent.
3535 (6) Guarantee or authorize any person to guarantee future profits that
3636 may result from the resale of real property.
3737 (7) Place a sign on any property offering it for sale or lease without
3838 the written consent of the owner or the owner's authorized agent.
3939 (8) Offer real estate for sale or lease without the knowledge and
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7575 consent of the owner or the owner's authorized agent or on terms other
7676 than those authorized by the owner or the owner's authorized agent.
7777 (9) Induce any party to break any contract of sale or lease.
7878 (10) Pay a commission or compensation to any person, not licensed
7979 under this act, for performing any activity for which a license is required
8080 under this act.
8181 (11) Fail to see that financial obligations and commitments between
8282 the parties to an agreement to sell, exchange or lease real estate are in
8383 writing, expressing the exact agreement of the parties or to provide, within
8484 a reasonable time, copies thereof to all parties involved.
8585 (12) Procure a signature to a purchase contract which has no definite
8686 purchase price, method of payment, description of property or method of
8787 determining the closing date.
8888 (13) Engage in fraud or make any substantial misrepresentation.
8989 (14) Represent to any lender, guaranteeing agency or any other
9090 interested party, either verbally or through the preparation of false
9191 documents, an amount in excess of the true and actual sale price of the real
9292 estate or terms differing from those actually agreed upon.
9393 (15) Fail to make known to any purchaser or lessee any interest the
9494 licensee has in the real estate the licensee is selling or leasing or to make
9595 known to any seller or lessor any interest the licensee will have in the real
9696 estate the licensee is purchasing or leasing.
9797 (16) Fail to inform both the buyer, at the time an offer is made, and
9898 the seller, at the time an offer is presented, that certain closing costs must
9999 be paid and the approximate amount of such costs.
100100 (17) Fail without just cause to surrender any document or instrument
101101 to the rightful owner.
102102 (18) Accept anything other than cash as earnest money unless that
103103 fact is communicated to the owner prior to the owner's acceptance of the
104104 offer to purchase, and such fact is shown in the purchase agreement.
105105 (19) Fail to deposit any check or cash received as an earnest money
106106 deposit or as a deposit on the purchase of a lot within five business days
107107 after the purchase agreement or lot reservation agreement is signed by all
108108 parties, unless otherwise specifically provided by written agreement of all
109109 parties to the purchase agreement or lot reservation agreement, in which
110110 case the licensee shall deposit the check or cash received on the date
111111 provided by such written agreement.
112112 (20) Fail to respond in a timely manner to any request from the
113113 commission or the commission's designee for documents or information
114114 that concerns directly or indirectly any real estate transaction or the
115115 licensee's real estate business.
116116 (21) Refuse to appear or testify under oath at any hearing held by the
117117 commission.
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161161 (22) Demonstrate incompetency to act as a broker, associate broker or
162162 salesperson.
163163 (23) Except as provided by K.S.A. 40-2404, and amendments thereto,
164164 knowingly receive or accept, directly or indirectly, any rebate, reduction or
165165 abatement of any charge, or any special favor or advantage or any
166166 monetary consideration or inducement, involving the issuance of a title
167167 insurance policy or contract concerning which the licensee is directly or
168168 indirectly connected, from a title insurance company or title insurance
169169 agent, or any officer, employee, attorney, agent or solicitor thereof.
170170 (24) Engage in the purchase of one-, two-, three- or four-family
171171 dwellings, including condominiums and cooperatives, or the acquisition of
172172 any right, title or interest therein, including any equity or redemption
173173 interests, if:
174174 (A) (i) At the time of such purchase, the dwellings are subject to a
175175 right of redemption pursuant to foreclosure of a mortgage on such
176176 dwellings; (ii) the licensee fails to give written notice of the purchase,
177177 within 20 days thereafter, to the mortgage holder or judgment creditor who
178178 held such mortgage; and (iii) the licensee, unless otherwise required by
179179 law or court order, fails to apply any rent proceeds from the dwellings to
180180 the judgment lien arising from the foreclosure of such mortgage, as
181181 payments become due under the loan, regardless of whether the licensee is
182182 obligated to do so;
183183 (B) (i) the dwellings are subject to a loan which is secured by a
184184 mortgage and which is in default at the time of such purchase or in default
185185 within one year after such purchase; (ii) the licensee fails to give written
186186 notice of the purchase, within 20 days thereafter, to the mortgage holder;
187187 and (iii) the licensee, unless otherwise required by law or court order, fails
188188 to apply any rent proceeds from the dwellings to the mortgage as the
189189 payments come due, regardless of whether the licensee is obligated on the
190190 loan; or
191191 (C) the licensee fails to notify, at the time of rental, any person
192192 renting any such dwelling of the extent and nature of the licensee's interest
193193 in such dwelling and the probable time until possession will be taken by
194194 the mortgage holder or judgment creditor.
195195 (25) Commit forgery or, unless authorized to do so by a duly
196196 executed power of attorney, sign or initial any contractual agreement on
197197 behalf of another person in a real estate transaction.
198198 (26) Enter into contracts with persons not licensed by the commission
199199 to perform services requiring a license under K.S.A. 58-3034 et seq., and
200200 amendments thereto, except as provided by K.S.A. 58-3077, and
201201 amendments thereto.
202202 (b) No salesperson or associate broker shall:
203203 (1) Except as provided in subparagraph (A) or (B), accept a
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247247 commission or other valuable consideration from anyone other than the
248248 broker by whom the licensee is employed or with whom the licensee is
249249 associated as an independent contractor.
250250 (A) A salesperson or associate broker may accept a commission or
251251 other valuable consideration from a licensee who employs the salesperson
252252 or associate broker as a personal assistant provided that: (i) The licensee
253253 and the salesperson or associate broker who is employed as a personal
254254 assistant are licensed under the supervision of the same broker; and (ii) the
255255 supervising broker agrees in writing that the personal assistant may be paid
256256 by the licensee.
257257 (B) If a salesperson or associate broker has organized as an
258258 association, corporation, limited liability company, limited liability
259259 partnership, partnership or professional corporation, the commission or
260260 other valuable consideration may be paid by the licensee's broker to such
261261 association, corporation, limited liability company, limited liability
262262 partnership, partnership or professional corporation. This provision shall
263263 not alter any other provisions of this act.
264264 (2) Fail to place, as soon after receipt as practicable, any deposit
265265 money or other funds entrusted to the salesperson or associate broker in
266266 the custody of the broker whom the salesperson or associate broker
267267 represents.
268268 (3) (A) Except as provided by subparagraph (B), be employed by or
269269 associated with a licensee at any one time other than the supervising
270270 broker who employs such salesperson or associate broker or with who the
271271 salesperson or associate broker is associated as an independent contractor.
272272 (B) An associate broker may be employed by or associated with more
273273 than one supervising broker at any one time if each supervising broker
274274 who employs or associates with the associate broker consents to such
275275 multiple employment or association. Such consent shall be on a form
276276 provided by the commission and shall not be effective until a signed copy
277277 of the completed form has been filed with the commission.
278278 (4) Except as provided by subsection (b), pay a commission or
279279 compensation to any person for performing any activity for which a
280280 license is required under this act.
281281 (5) (A) Fail to disclose to such salesperson's or associate broker's
282282 supervising broker or branch broker that such salesperson or associate
283283 broker is performing any activity for which a license is required under
284284 K.S.A. 58-3036, and amendments thereto; or (B) perform any activity for
285285 which a license is required under K.S.A. 58-3036, and amendments
286286 thereto, outside the supervision of the supervising broker or branch broker.
287287 The provisions of this subsection shall not apply to any activity or person
288288 exempted from the real estate brokers' and salespersons' license act
289289 pursuant to K.S.A. 58-3037, and amendments thereto.
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333333 (6) Fail to submit to the supervising broker or branch broker, within
334334 10 business days, any document that must be maintained in the supervising
335335 broker's or branch broker's business records for each real estate
336336 transaction. The ten-day period shall commence when the document is
337337 executed by the client or customer or, if a signature is not required or is not
338338 obtained, upon presentation of a document to the client or customer.
339339 (c) No broker shall:
340340 (1) Pay a commission or compensation to any person for performing
341341 the services of an associate broker or salesperson unless such person is
342342 licensed under this act and employed by or associated with the broker.
343343 (2) Fail to deliver to the seller in every real estate transaction, at the
344344 time the transaction is closed, a complete, detailed closing statement
345345 showing all of the receipts and disbursements handled by the broker for
346346 the seller, or fail to deliver to the buyer a complete statement showing all
347347 money received in the transaction from such buyer and how and for what
348348 the same was disbursed, or fail to retain true copies of such statements in
349349 the broker's files, except that the furnishing of such statements to the seller
350350 and buyer by an escrow agent shall relieve the broker's responsibility to
351351 the seller and the buyer.
352352 (3) Fail to properly supervise the activities of an associated or
353353 employed salesperson or associate broker.
354354 (4) Lend the broker's license to a salesperson, or permit a salesperson
355355 to operate as a broker.
356356 (5) Fail to provide to the principal a written report every 30 days,
357357 along with a final report, itemizing disbursements made by the broker
358358 from advance listing fees.
359359 (d) (1) If a purchase agreement provides that the earnest money be
360360 held by an escrow agent other than a real estate broker, no listing broker
361361 shall:
362362 (A) Fail to deliver the purchase agreement and earnest money deposit
363363 to the escrow agent named in the purchase agreement within five business
364364 days after the purchase agreement is signed by all parties unless otherwise
365365 specifically provided by written agreement of all parties to the purchase
366366 agreement, in which case the broker shall deliver the purchase agreement
367367 and earnest money deposit to the escrow agent named in the purchase
368368 agreement on the date provided by such written agreement; or
369369 (B) fail to obtain and keep in the transaction file a receipt from the
370370 escrow agent showing date of delivery of the purchase agreement and
371371 earnest money deposit.
372372 (2) If a purchase agreement provides that the earnest money be held
373373 by an escrow agent other than a real estate broker and the property was not
374374 listed with a broker, no broker for the buyer shall:
375375 (A) Fail to deliver the purchase agreement and earnest money deposit
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419419 to the escrow agent named in the purchase agreement within five business
420420 days after the purchase agreement is signed by all parties unless otherwise
421421 specifically provided by written agreement of all parties to the purchase
422422 agreement, in which case the broker shall deliver the purchase agreement
423423 and earnest money deposit to the escrow agent named in the purchase
424424 agreement on the date provided by such written agreement; or
425425 (B) fail to obtain and keep in the transaction file a receipt from the
426426 escrow agent showing date of delivery of the purchase agreement and
427427 earnest money deposit.
428428 (3) If a purchase agreement provides that the earnest money be held
429429 by an escrow agent other than a real estate broker and neither the seller nor
430430 buyer is represented by a broker, no transaction broker shall:
431431 (A) Fail to deliver the purchase agreement and earnest money deposit
432432 to the escrow agent named in the purchase agreement within five business
433433 days after the purchase agreement is signed by all parties unless otherwise
434434 specifically provided by written agreement of all parties to the purchase
435435 agreement, in which case the broker shall deliver the purchase agreement
436436 and earnest money deposit to the escrow agent named in the purchase
437437 agreement on the date provided by such written agreement; or
438438 (B) fail to obtain and keep in the transaction file a receipt from the
439439 escrow agent showing date of delivery of the purchase agreement and
440440 earnest money deposit.
441441 The commission may adopt rules and regulations to require that such
442442 purchase agreement which provides that the earnest money be held by an
443443 escrow agent other than a real estate broker include: (1) Notification of
444444 whether or not the escrow agent named in the purchase agreement
445445 maintains a surety bond; and (2) notification that statutes governing the
446446 disbursement of earnest money held in trust accounts of real estate brokers
447447 do not apply to earnest money deposited with the escrow agent named in
448448 the purchase agreement.
449449 (e) No licensee shall:
450450 (1) Threaten to engage in or engage in physical abuse or engage in
451451 harassment towards:
452452 (A) A client or customer or a former client or customer;
453453 (B) another licensee;
454454 (C) commission members or staff;
455455 (D) staff of the office of administrative hearings;
456456 (E) staff from any real estate trade association or multiple listing
457457 service; or
458458 (F) any person from another business or industry whose services are
459459 requested or required as part of a real estate transaction;
460460 (2) threaten to file or file a lien on residential property;
461461 (3) conduct real estate business with impaired judgment or objectivity
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505505 as the result of mental illness or addiction to alcohol or controlled
506506 substances;
507507 (4) be finally adjudicated by a federal or state agency and found to be
508508 guilty of a violation of a federal or state law regulating the real estate
509509 industry or regulating a closely related industry whose licensees or
510510 members are commonly involved in real estate matters;
511511 (5) be finally adjudicated by a federal or state agency and found to be
512512 guilty of a violation of a federal or state law prohibiting discrimination
513513 against any client or customer on the basis of color, race, gender, religion,
514514 national origin, age, disability or familial status; or
515515 (6) intentionally misappropriate or misuse any personal property or
516516 real property of a client or customer.
517517 (f) No applicant or licensee shall:
518518 (1) Engage in fraud or make any substantial misrepresentation to the
519519 commission;
520520 (2) commit forgery in any representation or document submitted to
521521 the commission;
522522 (3) sign or initial, on behalf of another person, any application, for or
523523 accompanying document submitted to the commission unless authorized to
524524 do so by a duly executed power of attorney;
525525 (4) interfere with any investigation, administrative proceeding, quasi-
526526 judicial proceeding or any other disciplinary matter of the commission,
527527 including, but not limited to:
528528 (A) Threatening to engage in or engaging in physical abuse or
529529 harassment toward any witness, complainant or individual listed in
530530 subsection (e)(1);
531531 (B) destroying evidence;
532532 (C) refusing or failing to appear or testify under oath at any hearing;
533533 or
534534 (D) refusing or failing to respond in a timely manner to any request
535535 from the commission or the commission's designee for documents or
536536 information that concerns directly or indirectly any real estate transaction
537537 or the licensee's real estate business;
538538 (5) fail without just cause to surrender any document or instrument to
539539 the rightful owner; or
540540 (6) demonstrate incompetency to act as a broker, associate broker or
541541 salesperson in dealings with the commission, including the repeated failure
542542 to:
543543 (A) Submit required forms to the commission in a timely and
544544 complete manner;
545545 (B) make available to the commission all records relating to the real
546546 estate business; or
547547 (C) comply with the provisions of this subsection.
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591591 (g) A branch broker shall not be employed by or associated with more
592592 than one supervising broker at any one time unless each supervising broker
593593 who employs or associates with the branch broker consents to such
594594 multiple employment or association. Such consent shall be on a form
595595 provided by the commission and shall not be effective until a signed copy
596596 of the completed form has been filed with the commission.
597597 (h) (1) No person, association, corporation, limited liability
598598 company, limited liability partnership, partnership, professional
599599 corporation or trust shall buy, sell, offer to buy or sell, market for sale,
600600 exchange or otherwise deal in assignable contracts for the purchase or
601601 sale of or options on real estate or improvements thereon for single family
602602 residential housing and multifamily residential housing of four units or
603603 less.
604604 (2) Any violation of paragraph (1) constitutes a deceptive act or
605605 practice under the Kansas consumer protection act pursuant to K.S.A.
606606 2023 Supp. 50-626, and amendments thereto, and shall be subject to a
607607 civil penalty as provided in K.S.A. 50-636(a), and amendments thereto,
608608 and any other remedy or penalty as provided by the Kansas consumer
609609 protection act. Each unlawful transaction shall constitute a separate
610610 violation.
611611 (i) Nothing in this section shall be construed to grant any person a
612612 private right of action for damages, except a violation of subsection (h), or
613613 to eliminate any right of action pursuant to other statutes or common law.
614614 Sec. 2. K.S.A. 58-3065 is hereby amended to read as follows: 58-
615615 3065. (a) Willful violation of any provision of this act or the brokerage
616616 relationships in real estate transactions act is a misdemeanor punishable by
617617 imprisonment for not more than 12 months or a fine of not less than $100
618618 or more than $1,000, or both, for the first offense and imprisonment for not
619619 more than 12 months or a fine of not less than $1,000 or more than
620620 $10,000, or both, for a second or subsequent offense.
621621 (b) Nothing in this act or the brokerage relationships in real estate
622622 transactions act shall be construed as requiring the commission or the
623623 director to report minor violations of the acts for criminal prosecution
624624 whenever the commission or the director believes that the public interest
625625 will be adequately served by other administrative action.
626626 (c) If the commission determines that a person has practiced without
627627 a valid broker's or salesperson's license issued by the commission, in
628628 addition to any other penalties imposed by law, the commission, in
629629 accordance with the Kansas administrative procedure act, may issue a
630630 cease and desist order against such unlicensed person or associated
631631 association, corporation, limited liability company, limited liability
632632 partnership, partnership, professional corporation or trust.
633633 Sec. 3. K.S.A. 58-3065 and K.S.A. 2023 Supp. 58-3062 are hereby
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677677 repealed.
678678 Sec. 4. This act shall take effect and be in force from and after its
679679 publication in the statute book.
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