Bill Text: MI HB4160 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Occupations; real estate; certain licensure requirements for employees or agents of a real estate broker hired to perform duties relating to property management; modify. Amends secs. 2501, 2503 & 2505 of 1980 PA 299 (MCL 339.2501 et seq.).

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2019-02-13 - Bill Electronically Reproduced 02/07/2019 [HB4160 Detail]

Download: Michigan-2019-HB4160-Introduced.html

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HOUSE BILL No. 4160

 

 

February 7, 2019, Introduced by Reps. Hoitenga and Frederick and referred to the Committee on Regulatory Reform.

 

     A bill to amend 1980 PA 299, entitled

 

"Occupational code,"

 

by amending sections 2501, 2503, and 2505 (MCL 339.2501, 339.2503,

 

and 339.2505), as amended by 2016 PA 502.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2501. As used in this article:

 

     (a) "Associate broker" or "associate real estate broker" means

 

an individual who meets the requirements for licensure as a real

 

estate broker under this article and who is licensed as an

 

associate real estate broker under section 2505 to provide real

 

estate brokerage services as an employee or independent contractor

 

of a real estate broker.

 

     (b) "Business entity" means a person described in section

 

105(5)(b) or (c), except a sole proprietorship.

     (c) "Classroom course" means an educational course of

 

instruction that is provided at either of the following:

 

     (i) A physical location where instruction is offered and

 

students and an instructor are present.

 

     (ii) A location where a student receives instruction provided

 

by distance learning.

 

     (d) "Clock hour" means either of the following:

 

     (i) For a classroom course at a location described in

 

subdivision (c)(i), a period of 50 to 60 minutes of actual

 

classroom instruction, not including outside assignments and

 

reading.

 

     (ii) For a classroom course at a location described in

 

subdivision (c)(ii), the period required for a student to process

 

the amount of material provided in 50 minutes of distance learning

 

instruction.

 

     (e) "Control person" means an individual who is a sole

 

proprietor, is a partner in a partnership or limited partnership,

 

is an officer, director, or shareholder in a corporation, is a

 

member or manager in a limited liability company, or holds a

 

responsible position in any other form of business entity

 

authorized under the laws of this state or the state in which the

 

entity is organized or formed.

 

     (f) "Distance learning" means the technology and educational

 

process used to provide instruction to a student when the student

 

and the instructor are not necessarily physically present at the

 

same time or place. The term includes, but is not limited to,

 

instruction provided through an interactive classroom, computer

conferencing, or an interactive computer system.

 

     (g) "Employ" or "employment" means the relationship between a

 

real estate broker and an associate real estate broker or a real

 

estate salesperson which may include an independent contractor

 

relationship. The existence of an independent contractor

 

relationship between a real estate broker and an individual

 

licensed to the real estate broker does not relieve the real estate

 

broker of the responsibility to supervise acts of the licensee that

 

are regulated under this article.

 

     (h) "Independent contractor relationship" means a relationship

 

between a real estate broker and an associate real estate broker or

 

real estate salesperson that satisfies both of the following

 

conditions:

 

     (i) A written agreement exists in which the real estate broker

 

does not consider the associate real estate broker or real estate

 

salesperson as an employee for federal and state income tax

 

purposes.

 

     (ii) At least 75% of the annual compensation paid by the real

 

estate broker to the associate real estate broker or real estate

 

salesperson is from commissions from the sale of real estate.

 

     (i) "License cycle" means the term of a license issued under

 

this article.

 

     (j) "Limited service agreement" means a written service

 

provision agreement by which a real estate broker and client

 

establish an agency relationship in which certain enumerated

 

services, as set forth in section 2512d(3)(b), (c), and (d), are

 

knowingly waived in whole or part by the client.

     (k) "Negotiate the mortgage of real estate" means engaging in

 

activity in connection with a mortgage that is not regulated under

 

the mortgage brokers, lenders, and servicers licensing act, 1987 PA

 

173, MCL 445.1651 to 445.1684, the secondary mortgage loan act,

 

1981 PA 125, MCL 493.51 to MCL 493.81, or the mortgage loan

 

originator licensing act, 2009 PA 75, MCL 493.131 to 493.171.

 

     (l) A "nonprincipal" of a real estate broker means a control

 

person who is licensed as an associate real estate broker under

 

this article, but is not designated as a principal under section

 

2505(1).

 

     (m) "Place of business" means a physical location that a real

 

estate broker, by advertisement, signage, or otherwise, represents

 

to the public is a place where clients and customers may consult or

 

do business with a licensee.

 

     (n) "Pocket card" means the pocket card that contains

 

information about the license that the department provides under

 

section 2506 when it issues a license under this article.

 

     (o) "Prelicensure course" means a course that is represented

 

to the public as fulfilling, in whole or in part, the requirements

 

of section 2504.

 

     (p) A "principal" of a real estate broker means a control

 

person who is licensed as an associate real estate broker and is

 

designated as a principal under section 2505(1).

 

     (q) "Professional designation" means a certification from a

 

real estate professional association that demonstrates that an

 

individual has attained proven skills or education in a real estate

 

occupational area and may include the right to use a title or

letters after the licensee's name that represent the designation

 

awarded by the certifying entity.

 

     (r) "Property management" means leasing or renting, or

 

offering to lease or rent, real property of others for a fee,

 

commission, compensation, or other valuable consideration pursuant

 

to under a property management employment contract.

 

     (s) "Property management account" means an interest-bearing or

 

noninterest-bearing account or instrument used in the operation of

 

property management.

 

     (t) "Property management employment contract" means a written

 

agreement that is entered into between a real estate broker and

 

client concerning the real estate broker's employment as a property

 

manager for the client; that describes the real estate broker's

 

duties, responsibilities, and activities as a property manager; and

 

that describes the handling, management, safekeeping, investment,

 

disbursement, and use of property management money, funds, and

 

accounts.

 

     (u) "Real estate broker" means an individual or business

 

entity that, with intent to collect or receive a fee, compensation,

 

or valuable consideration, sells or offers for sale, buys or offers

 

to buy, provides or offers to provide market analyses of, lists or

 

offers or attempts to list, or negotiates the purchase, sale, or

 

exchange of real estate; that negotiates the mortgage of real

 

estate; that negotiates for the construction of a building on real

 

estate; that leases or offers or rents or offers for rent real

 

estate or the improvements on the real estate for others, as a

 

whole or partial vocation; that engages in property management as a

whole or partial vocation; that sells or offers for sale, buys or

 

offers to buy, leases or offers to lease, or negotiates the

 

purchase or sale or exchange of a business, business opportunity,

 

or the goodwill of an existing business for others; or that, as

 

owner or otherwise, engages in the sale of real estate as a

 

principal vocation.

 

     (v) "Real estate salesperson" means an individual who for

 

compensation or valuable consideration is employed either directly

 

or indirectly by a licensed real estate broker to sell or offer to

 

sell, buy or offer to buy, provide or offer to provide market

 

analyses of, list or offer or attempt to list, or negotiate the

 

purchase, sale, or exchange of real estate; to negotiate the

 

mortgage of real estate; to negotiate for the construction of a

 

building on real estate, or to lease or offer to lease, or rent or

 

offer for rent, nonresidential real estate; who is employed by a

 

real estate broker to engage in nonresidential property management;

 

or who sells or offers for sale, buys or offers to buy, leases or

 

offers to lease, or negotiates the purchase or sale or exchange of

 

a business, business opportunity, or the goodwill of an existing

 

business for others, as a whole or partial vocation.

 

     (w) "Service provision agreement" means a buyer agency

 

agreement or listing agreement that is executed by a real estate

 

broker and a client and establishes an agency relationship.

 

     (x) "Sponsor" means a person that represents to the public

 

that the courses it conducts for purposes of this article fulfill

 

the requirements of section 2504a for continuing education.

 

     Sec. 2503. (1) This article does not apply to a person that,

as owner, sells or offers for sale a detached, single family

 

dwelling, duplex, triplex, or quadruplex, that has never been

 

occupied and that was built by the person while licensed under

 

article 24. This article does not apply to an owner or lessor, an

 

attorney-in-fact acting under a duly executed and recorded power of

 

attorney from the owner or lessor, or a person appointed by a

 

court, that performs an act as a real estate broker or real estate

 

salesperson with reference to property owned by it, unless

 

performed as a principal vocation not through a licensed real

 

estate broker.

 

     (2) This article does not apply to an employee or agent of a

 

real estate broker who is hired under a property management

 

employment contract to perform duties relating to property

 

management.

 

     (3) (2) This article does not apply to an attorney-at-law who

 

is rendering performing services as an attorney-at-law; to a

 

receiver, trustee in bankruptcy, administrator, executor, a person

 

selling real estate under order of a court; or to a trustee selling

 

under a deed of trust, unless the trustee makes repeated or

 

successive sales of real estate not through a licensed real estate

 

broker.

 

     (4) (3) This article does not apply to a person that is

 

regulated under the mortgage brokers, lenders, and servicers

 

licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, and that does

 

not perform any other act requiring a license as a real estate

 

broker, associate broker, or real estate salesperson.

 

     Sec. 2505. (1) An individual or business entity that is

applying for a real estate broker's license shall file an

 

application with the department. All of the following apply to an

 

application for a real estate broker's license:

 

     (a) The application must include the applicant's current

 

business address; if the applicant is an individual, the address of

 

his or her residence; and the complete address of each former place

 

where the applicant resided or was engaged in business, or acted as

 

a real estate salesperson, for a period of 60 days or more, during

 

the 5 years immediately preceding the date of application.

 

     (b) The application must include the name of the individual or

 

business entity that is the proposed licensee; the location of the

 

place for which the license is sought; and the period of time in

 

which the applicant has been engaged in the business.

 

     (c) The application must be executed by the applicant, if the

 

applicant is an individual, or by a principal of the applicant if

 

the applicant is a business entity.

 

     (d) If the applicant is a business entity, the application

 

shall designate which individuals who are control persons of the

 

entity will be performing acts regulated by this article as

 

principals. An applicant shall not designate a control person as a

 

principal unless that control person is licensed as an associate

 

real estate broker under this article.

 

     (2) The department shall not issue a real estate broker's

 

license to an individual who has been convicted of embezzlement or

 

misappropriation of funds.

 

     (3) A real estate broker shall maintain a place of business in

 

this state. If a real estate broker maintains more than 1 place of

business in this state, the real estate broker must obtain a branch

 

office license for each of those additional places of business. If

 

a branch office is located more than 25 miles from the nearest

 

boundary of the municipality in which the main office of the real

 

estate broker is located, the broker shall ensure that the branch

 

office is under the direct supervision of an associate broker. This

 

subsection does not apply to an additional place of business

 

maintained by a real estate broker solely to engage in property

 

management. As used in this subsection, "direct supervision" means

 

that an associate broker is physically present at the branch office

 

on a regular basis to supervise and manage the business during

 

ordinary business hours.

 

     (4) An application for a real estate salesperson's license

 

shall be signed by the real estate broker that will employ the

 

applicant. The department shall only issue a real estate

 

salesperson's license to an individual.

 

     (5) Before issuing a license, the department may require and

 

procure satisfactory proof of the business experience, competence,

 

and good moral character of an applicant for a license under this

 

article if the applicant is an individual or of each principal if

 

the applicant is a business entity. Subject to subsection (6), the

 

department shall require that each of those individuals pass an

 

examination developed by the department or contracted for with a

 

recognized outside testing agency that establishes, in a manner

 

satisfactory to the department, that he or she has a fair knowledge

 

of the English language, including reading, writing, spelling, and

 

elementary arithmetic; a satisfactory understanding of the

fundamentals of real estate practice and of the laws and principles

 

of real estate conveyancing, deeds, mortgages, land contracts, and

 

leases; the obligations of a broker to the public and a principal;

 

and the law defining, regulating, and licensing real estate brokers

 

and salespersons. The department may require written examination or

 

written reexamination of an individual described in this

 

subsection, and if the department does require a written

 

examination or reexamination under this subsection, the department

 

shall not issue a license unless the individual taking the

 

examination or reexamination achieves a passing score satisfactory

 

to the department.

 

     (6) All of the following apply to the written examination

 

requirement described in subsection (5):

 

     (a) The department may relicense without examination an

 

individual who is applying for a real estate broker's or associate

 

real estate broker's license; has previously held a real estate

 

broker's or associate real estate broker's license that has lapsed;

 

and has been continuously licensed as a real estate salesperson

 

since the lapse of the previous license.

 

     (b) A passing score on an examination, or on a portion of an

 

examination if the examination is given in separate parts, is valid

 

for 1 year from the date of the examination.

 

     (7) The department shall require proof that each applicant for

 

a real estate broker's license, if the applicant is an individual,

 

or each principal if the applicant is a business entity, has the

 

equivalent of 3 years of full-time experience in the business of

 

real estate. All of the following apply in determining whether an

individual meets this experience requirement:

 

     (a) If state law requires that a person hold a license to be

 

licensed to perform an activity that is considered the business of

 

real estate, an individual shall not receive credit for experience

 

performing that activity without proper licensure.

 

     (b) For purposes of calculating whether an individual has the

 

equivalent of 3 years of experience, the department shall grant the

 

following credit or credits toward that 3-year requirement:

 

     (i) If the individual is a real estate salesperson, 1 year of

 

credit for each 12-month period of licensure in which he or she

 

closed 5 or more real estate transactions.

 

     (ii) If the individual is a builder, 1 year of credit for each

 

12-month period in which he or she built and personally sold or

 

leased at least 5 residential units, commercial units, or

 

industrial units or a combination of those types of units.

 

     (iii) If the individual is a real estate investor, 6 months of

 

credit for each 5 real property transactions personally negotiated

 

for a purchase or sale by the individual for his or her own

 

account, with a maximum of 1 year of credit allowed. However, an

 

individual shall not receive credit under this subdivision if he or

 

she engaged in more than 5 sales in any 12-month period in

 

violation of section 2502b.

 

     (iv) If the individual is a land or condominium developer, 1

 

year of credit for each 2 developments or subdivisions that contain

 

at least 10 units or parcels that he or she bought, subdivided, and

 

improved for sale as lots or dwellings.

 

     (v) If the individual is an attorney, 1 year of credit for

each year in which he or she acted as the attorney for at least 6

 

real estate transactions.

 

     (vi) If the individual is a real estate appraiser who is

 

licensed under article 26, 1 year of credit for each period

 

equivalent to at least 40 hours per week, and at least 48 weeks per

 

year, in which he or she acted as a real estate appraiser.

 

     (vii) One year of credit for each period equivalent to at

 

least 40 hours per week, and at least 48 weeks per year, in which

 

the individual worked in a capacity directly related to the

 

acquisition, financing, or conveyance of real estate, or in a

 

position in which the individual was directly involved in a real

 

estate business, including serving as the decision-making authority

 

in any of the following positions:

 

     (A) A loan or trust officer of a federal or state-regulated

 

depository institution.

 

     (B) A loan or trust officer of a mortgage company.

 

     (C) A real estate officer of a corporation, and who is not a

 

licensed real estate broker.

 

     (D) A title insurance company officer engaged in the closing

 

of escrow accounts and real estate closings.

 

     (viii) Credit for any other experience that is approved by the

 

department by rule, in consultation with the board, as equivalent

 

to the experience described in this subsection.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.