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BREAKDOWN OF THE NEW ADMINISTRATIVE RULES AND CHANGES IN THE LICENSE LAW.

After almost a year of intensive work, the New Hampshire Real Estate Commission can announce that a large collection of administrative rule proposals have been moved completely through the rule making process to meet final approval.

The last of these seven new rules, which were part of a group of eleven proposals initially submitted, was adopted unanimously by the Commission at it’s April meeting.

A priority of the Commission throughout the process was the careful consideration of oral and written testimony taken at several public hearings. Concerned speakers at one of these hearings, held in August 1997 and attended by more than one hundred people, helped convince the Commissioners to withdraw two of the initial proposals, for instance.

Here are brief explanations of the new rules:

  1. FORM OF REAL ESTATE LICENSE CERTIFICATES AND CARDS: This rule establishes the form of real estate license certificates and cards, in accordance with RSA 331-A:25 VII. It brings the administrative rules of the Commission into compliance with the requirements of that section of the licensing statutes.

  2. ESTABLISHMENT OF LATE LICENSE RENEWAL PENALTY: Any licensee who seeks to renew a real estate license up to six months after it’s expiration will be required to pay a late penalty fee of $50.00 under this rule.

  3. REQUIRING A BROKER OF RECORD TO SIGN A CORPORATE REAL ESTATE LICENSE APPLICATION: This amendment will allow the Real Estate Commission to better enforce RSA 331-A:16 I and II, which requires that all real estate offices and the licensees and employees associated with those offices must be directed, supervised and managed by a licensed broker of record. It will require the licensee who will be acting as a principal broker for a real estate corporation to sign a Form 3RE. By so signing, the broker will be acknowledging that (s)he is the broker of record, and is assuming responsibility for the business affairs of the company.

  4. DEFINING THE TERM "UNPROFESSIONAL CONDUCT" UNDER RSA 331-A:26 XXIX: Under RSA 331-A:26 XXIX, a real estate licensee is in violation if (s)he has engaged in unprofessional conduct "as defined by statute or rule." This rule creates the required definition for the term "unprofessional conduct," as any conduct in violation of RSA 331-A:26 (The "Prohibited Conduct" section of the statute).

  5. DEVELOPMENT OF ETHICS CODE UNDER RSA 331-A:25 XXII: This rule defines a code of ethics for the New Hampshire Real Estate Commission and Commission Employees, and satisfies a stautory requirement under RSA 331-A:9.

  6. ESTABLISHING A MINIMUM 9 HOURS CONTINUING EDUCATION PROGRAM: On January 1, 1998, an amendment to the New Hampshire Real Estate License Law went into effect. This new section of the law, 331-A:12a Inactive Licensure Status created an inactive license status for brokers and salespersons, and states that inactive licensees must satisfy continuing education requirements (currently 3 hours) before renewing their inactive license. Conversely, the new law also creates an "active" license status for real estate licensees. This rule administratively raises the continuing education hours.

  7. CHANGES TO REA 701..01 AGENCY DISCLOSURE: This rule changes Rea 701.01 AGENCY DISCLOSURE to more clearly define the scope of the new agency additions to RSA 331-A, which went into effect on August 2, 1996, and to insure that the public will be adequately informed of the agency relationships of the licensees they are working with. It further strengthens the existing consumer warning form required in Rea 701.01 to notify buyers not to disclose any information which may hurt them in a real estate transaction unless they have first specifically hired the licensee to represent their interests. It protects and benefits consumers by helping to insure that real estate licensees are providing notice to their customers of the professional duties they owe to the parties they represent.

NEW CHANGES TO THE LICENSE LAW

At the 1997 legislative session, the New Hampshire lawmakers passed House Bill 340, which created an "inactive" licensing status for New Hampshire brokers and salespeople, and which also established reciprocity for licensees from other states.

The bill was introduced by Representative Cynthia Dokmo at the request of the Real Estate Commission, in response to major changes that are currently taking place within the real estate industry. It became part of RSA 331-A, the Licensing Law, on January 1, 1998.

To better understand this new law, and the impact that it will have on New Hampshire licensees, we should discuss its two main components separately.

INACTIVE/ACTIVE STATUS

 Perhaps the most important section of the new law calls for the creation of an inactive status for brokers and salespeople. The Real Estate Commission strongly supported the statutory creation of such a licensing status creation of such a licensing status because it was considered the only feasible way that the continuing education requirement for real estate licensees could be raised without imposing an unfair economic burden on the large majority of real estate licensees - those who do not, or cannot practice real estate actively.

On a practical basis, many thousands of the current 11,800 real estate licensees were already in an inactive status. They were keeping their licenses for use later by simply fulfilling the easy 3 hour continuing education requirement and sending in a renewal fee every two years. The law allows these licensees to remain inactive without imposing any further requirements on them. Only licensees who elect to be "active" will be required under the Administrative Rules of the Commission to take more than the current 3 hours of continuing education. Here’s how it will work:

  1. Licensees who chose to be in inactive status will not hold a license. Brokers licensees will not need to purchase a bond.

  1. To stay in inactive status, licensees will take the currently required 3 hour continuing education "core" course. This will insure that if they activate their licenses later, they will at least be current with the basic ("core") changes in real estate practice since they first became inactive.

  2. To activate their licenses, both brokers and salespeople must apply to the Commission. Broker licensees must show evidence of an active bond and when the 6 hour continuing education extensions requirement goes into effect, they must show a certificate that the entire 9 hour continuing education requirement has been satisfied.

  3. The new rule, which goes into effect March 1, 1999, will maintain the status quo by allowing licensees to be inactive with only a 3 hour course requirement. It does place an extra barrier (the activation process) in the path of previously inactive, inexperienced licensees before they "jump into" any windfall opportunities that they are not equipped to handle.

As a board established to protect consumers, the Real Estate Commission believes that New Hampshire citizens have a right to require that the licensees they are dealing with have the highest degree of professionalism and knowledge possible. The establishment of an "inactive status for licensees will insure that consumers are receiving up-to-date professional services, and will protect the licensees themselves by helping them to better understand the ever-changing demands of the real estate business and their increasing exposure to civil liability.

RECIPROCITY

As with the creation of an inactive status, the Commission strongly encouraged the second section of the new law, which establishes a statutory authority for New Hampshire to enter into reciprocal agreements with other states, allowing out-of-state licensees to obtain a New Hampshire real estate license by taking and passing only a new Hampshire section of the licensing exam, rather than the entire exam.

The Commission members realize that changes, like the introduction of the Internet, are creating new ways of practicing real estate, and causing state lines to become less and less important. By aggressively seeking other Commissions willing to extend the same licensing benefits to our licensees, they feel that they are taking the critical steps necessary to keep The New Hampshire Real Estate industry competitive.

THE LANGUAGE OF THE NEW LAW

Here are the new additions, or changes to the License Law which went into effect on January 1, 1998.

RECIPROCITY

New Section; Reciprocity for Licensure. Amend RSA 331-A by inserting after section 11 the following new section:

331-A:11-a Reciprocity For Licensure. If an applicant holds an active real estate license in good standing, and issued by examination in accordance with the laws of another jurisdiction, that applicant may apply for an original New Hampshire license by first taking the New Hampshire portion of the licensing examination, provided the jurisdiction that issued such nonresident license has previously entered into a licensing reciprocity agreement which has been approved by the Commission, and provided that all of the other requirements of this chapter applicable only when such applicants are applying for an original New Hampshire salesperson license.

Nonresidents and Reciprocity. Amend RSA 331-!:22 to read as follows:

331-A:22 Nonresidents and Reciprocity.

  1. A nonresident of this state may become a broker or salesperson in this state by conforming to all of the conditions of this chapter applicable to residents of this state. If an applicant already holds an active real estate license in good standing, issued by examination in accordance with the laws of another jurisdiction, that applicant need pass only the New Hampshire state portion of the licensing examination requirement for an original New Hampshire license with the state of New Hampshire, provided the jurisdiction that issued such nonresident license has previously entered into a licensing reciprocity agreement which has been approved by the Commission, and provided that all of the other requirements of this chapter applicable to residents of New Hampshire have been met.

  2. Upon making application, such nonresidents shall file an irrevocable consent and power providing that legal actions may be commenced against them in the proper court of any county of this state in which a cause of action may arise or in which the plaintiff may reside by service of process or pleading authorized by the laws of this state on a member of the commission or its executive director, the consent or power stipulating that such service of process or pleading shall be taken in all courts to be valid and binding as if personal services had been made upon the nonresident in this state.

  3. This section applies to nonresident license applicants only.

ACTIVE/INACTIVE STATUS

New Section; Inactive License Status. Amend RSA 331-A by inserting after section 12 the following new section:

331-A:12-a Inactive Licensure Status.

  1. Any licensee who does not want to perform as a broker or salesperson as defined in RSA 331-A:2, and who wants to preserve the license while not engaged in any brokerage activities, including the receiving of referral fees or any other form of compensation, may surrender that license to the commission for placement on inactive status. The commission shall place the licensee on inactive status only upon application by the licensee. While on inactive status, the licensee shall renew the license biennially by satisfying the renewal requirements under RSA 331-A:19 and the continuing education requirements adopted by the commission, but is not required to maintain a place of business, or in the case of a licensed broker, to maintain a surety bond pursuant to RSA 331-A:14.

  2. Any licensee on inactive license status may have the license reinstated to active status by demonstrating compliance in the previous biennium with the continuing education requirements adopted by the commission and applying to change status from inactive to active, and, in the case of a licensed broker, providing evidence of a surety bond as required by RSA 331-A:14.

Bonding Requirements.

Amend RSA 331-A:14 to read as follows:

331-A:14 Bonds. No active broker’s license shall be issued or renewed until the applicant gives to the commission a surety bond in the form approved by the commission in a sum of not less than $25,000, executed by the applicant and by a surety company authorized to do business in this state.

The bond shall be payable to the state of New Hampshire, for the benefit of any person aggrieved, and shall be conditioned upon the faithful accounting by the broker for all funds entrusted to the broker in the broker’s capacity as [a]an active licensed real estate broker. Any person so aggrieved may bring suit on the bond in the aggrieved person’s own name; provided, however, that the aggregate liability of the surety to all persons shall, in no event, exceed the sum of such bond. The commission may revoke the license of any active broker whenever the bond filed by the broker ceases to be in full force and effect.

"In This Issue"