INCREASE IN CONTINUING EDUCATION REQUIREMENTS GOES INTO EFFECT

On May 12, 1999 the New Hampshire Real Estate Commission will be conducting a public hearing to discuss some administrative rules/amendments that it is proposing (please see "public hearing" article in this newsletter). Also on the agenda for that hearing will be a discussion of the following additions and amendments to the license law.

If you are unable to come to the public hearing to speak for, or against any of these proposals please write to Kenneth Kerr, whose address appears in the "Public Hearings" article. If he receives your letter by May 19, 1999, he will insure that the Commission members are given a copy before they formally make their decisions.

Here is a breakdown of the changes that are being proposed:

1. Addition to RSA 331-A:2 DEFINITIONS, to include a definition of an "associate broker" in the statute to mean any broker who is employed by, and operates under the supervision of a principal broker.
   
2. Additions to RSA 331-A:4 to include two new members to the exempted classes. First, a corporate consultant who receives a fee for site searching services rendered on the basis of a written contract, rather than on the completion of any particular transaction; and secondly, an attorney in fact who is rendering services under a recorded power of attorney from the owner or lessor of real estate, if the power of attorney was not granted with the intention of circumventing the license law.
   
3. A further possible addition to the exempted classes under RSA 331:4 is a condominium association or it's regular employees with respect to property owned by members of the association.
   
4. RSA 331-A:5 – An amendment to the existing law, to allow for the temporary appointment of Commission alternates to sit whenever a quorum of current members is unable to hear a case.
   
5. RSA 331-A:10 – Several amendments, which would (1) set the age for salesperson applicants at 18, and the age for broker applicants at age 21; (2) establish prelicensing course requirements of 60 hours for salespeople and 120 hours for brokers; and (3) require only principal or managing brokers to file a surety bond with the Commission.
   
6. RSA 331-A:13 – An amendment to the escrow requirements that deposits on "fully executed contracts' need to be promptly deposited.
   
7. RSA 331-A:13 – Further changes to the statutory requirements governing escrow accounts; allowing a broker to deposit his/her own business or personal funds to service the account, or to maintain a minimum balance when required by the depository's regulations.
   
8. RSA 331-A:14 and RSA 331-A:19 – Amendments requiring only principal or managing brokers to have a surety bond.
   
9. RSA 331-A:16 – An addition to this statutory section requiring principal or managing brokers to submit a written report to the Commission whenever they have personal knowledge that a licensee under their supervision has an unannulled conviction for a serious crime.
   
10. RSA 331-A:16 – A further addition to this section requiring salespersons or associate brokers who advertise, to include the name and phone numbers of their principal broker or firm in a prominent manner, and also defines requirements when advertising on the internet.
    
11. RSA 331-A:20 II – This amendment establishes the 3 hour "core" continuing education course as a course which is separate from elective courses.
    
12. RSA 331-A:21 – This amendment to the statute extends the circumstances when a temporary license may be issued to include situations where a broker who is the sole proprietor of a business becomes totally incapacitated.
    
13. RSA 331-A:25 XI – An amendment to this section which more fully explains the continuing education requirement for active license renewal as including 6 elective hours, and requiring one 3 hour "core" course for both active and inactive renewals.
    
14. RSA 331-A:26 XI – An amendment which would require written permission from the owner of property before a licensee could accept a deposit in kind.
    
15. RSA 331-A:26 XXI – An amendment that seeks to strengthen the limitations on the practice of directing principals to specific lenders in expectation of receiving a rebate.
    
16. RSA 331-A:26 XXII – A statutory amendment requiring written disclosure and acknowledgement to be made prior to an offer to purchase, when a licensee is acting as an agent and a principal in the same transaction.
    
17. RSA 331-A:26 XXIV – This amendment to the licensing law would clearly establish the ability of out-of-state brokers to work through New Hampshire brokers and split commissions.
    
18. RSA 331-A:26 XXVII – This amendment would act to require principal brokers, as well as managing brokers, to exercise reasonable supervision over the licensees and staff members working through them.
    
19. RSA 331-A:26 XXX – This amendment would include a prohibition on guaranteeing future income from the purchase of real estate.
    
20. RSA 331-A:26 XXXVII – An amendment which would require licensees to notify the Commission when found guilty of any felony and some misdemeanors.
    
21. RSA 331-A:28 – This amendment would specify the Commission's ability to use consent decrees to impose sanctions under the license law.
    
22. RSA 331-A:28(c) – An amendment to this section which allows the Commission to require a licensee who is found guilty at a disciplinary hearing to take course in selected areas of real estate practice.
    
23. RSA 331-A:28 III – An amendment which modifies the ability of a licensee to suspend a decision of the Commission by filing an appeal. The decision can be suspended only if the action which was the basis for the decision did not involve dishonesty, fraud, or a felony conviction.
    

On Wednesday, May 12, 1999 the New Hampshire Real Estate Commission will be conducting a public hearing to discuss 19 new administrative rules/amendment proposals, as well as a number of proposed changes/additions to the license law. The hearing will be located at the New Hampshire Health and Human Services Building at 6 Hazen Drive, Concord, New Hampshire, and will begin at 9:30 a.m. Those interested persons who cannot attend this hearing may submit written material before May 19, 1999, to:

KENNETH KERR, EXECUTIVE DIRECTOR
NH REAL ESTATE COMMISSION
STATE HOUSE ANNEX
25 CAPITOL ST, RM 437
CONCORD, NH 03301
TEL: (603) 271-2701

1. Rea 202.04 ANSWER TO A COMPLAINT. This amendment to an existing rule would require a respondent to a complaint to file an answer with the Commission within 30 days of receiving the Form 11-A.
   
2. Rea 202.05 INVESTIGATION. This proposed amendment establishes that all formal complaints be investigated by RSA 331-A:29. It would bring this administrative rule into compliance with that section of the licensing statutes.
   
3. Rea 203.03 ADJUSTMENT BY CONCILIATION. This amendment proposal would bring this rule into compliance with RSA 331-A:29 I, and also establish the authority for a Commission member who is evaluating a case, to appoint a designee to initiate conciliation proceedings pursuant to the license law.
   
4. Rea 301.02(a)(b) INCREASING LICENSE FEES. This proposed amendment would increase the license fees of both brokers and salespeople by five dollars per year (42 cents per month) to help pay the costs associated with the new statutory requirement of notifying all licensees by U.S. mail whenever a new rule/amendment, or statute is proposed or created.
   
5. Rea 301.02(g) (Amendment) INCREASING THE FEE FOR RETURNED CHECKS. This proposal would increase the fee for returned checks to $25 or 5% of the face amount, whichever is greater, plus add a $5 bad check fee. This increase is the result of new administration requirements by the state treasury under RSA 6:11a.
   
6. Rea 301.02 (i) ESTABLISHING AN ADMINISTRATIVE CHARGE FOR LICENSEE VIOLATION OF RSA 331-A:17. The state loses hundred of dollars each year because licensees don't notify the Commission of address changes. This new rule would establish a $20 charge for violating RSA 331-A:17 by not reporting changes of address.
   
7. Rea 301.02 (j) ESTABLISHING A FEE FOR ISSUING REAL ESTATE LICENSES TO FIRMS, CORPORATIONS, AND OTHER BUSINESS ENTITIES. This new rule proposal would require business entities practicing real estate brokerage in New Hampshire to pay a licensure fee equal to that charged to individual brokers.
   
8. Rea 301.02 (k) ESTABLISHMENT OF A REAL ESTATE COURSE EVALUATION FEE. This proposed new rule would allow the N.H.R.E.C. to charge a fee for evaluating and accrediting proposed real estate courses. Real estate course providers would pay $30 each time a course is submitted for evaluation.
   
9. Rea 301.02 (l) ESTABLISHMENT OF A REAL ESTATE COURSE EVALUATION FEE TO BE CHARGED TO LICENSEES FOR INDIVIDUAL EVALUATIONS OF CREDIT MADE ON A CASE-BY-CASE BASIS. Renewing licensees who are submitting courses for continuing elective credit on a case-by-case basis would pay $10 for each submission under this new rule.
   
10. Rea 305.02 FIRMS, PARTNERSHIPS, ASSOCIATIONS, CORPORATIONS, AND LIMITED LIABILITY COMPANIES. This proposed amendment would add L.L.C.'s to the list of licensees who must submit a certificate of filing as required by the Secretary of State, before the N.H.R.E.C. will issue a license or license amendment.
    
11. Rea 305.04 (Amendment) PLACEMENT OF LICENSE CERTIFICATES. This proposal would allow licenses to be prominently displayed in a place other than a wall, if so desired. It requires that the alternative place be visible and accessible to any client, customer, or member of the public.
    
12. Rea 401.01 (a)(4) DISCLOSURE OF CRIMINAL CONVICTIONS WHEN RENEWING A LICENSE. This proposal would amend the existing rule to require renewing licensees to disclose information regarding criminal convictions occurring since they last applied for a license, rather than "within the last two years."
    
13. Rea 401.01 (a)(5) DISCLOSURE OF BANKRUPTCY HISTORY WHEN RENEWING A LICENSE. This proposal would amend the requirement for renewing licensees to disclose any bankruptcies since their last application, rather than "within the previous two years."
    
14. Rea 401.01 (c) RENEWAL OF LICENSEES – REGARDING BROKER'S BONDS. This proposed rule amendment would bring the administrative rules into compliance with the license law by requiring a $25,000 bond of real estate brokers.
    
15. Rea 401.04 (d) (Amendment). RENEWALS OF LICENSE REGARDING CONTINUING EDUCATION. This proposal would clarify the process necessary for New Hampshire licensees who are also licensed in another state, to receive elective continuing elective credit for courses taken in that other state of licensure.
    
    
16. Rea 404.04 (f)(4) DISCLOSING THE SOURCE OF COMMISSIONS IN BUYER-AGENT RELATIONSHIPS. This amendment proposal would help to eliminate confusion among buyers as to which party will be paying the commission fee when they are working through a buyer-agent; by requiring that information to be specified in the agency contact.
    
17. Rea 404.04(e) ELIMINATING THE TERM "BUYER-BROKER" FROM THE ADMINISTRATIVE RULES. The N.H.R.E.C. is making this proposal so that, for clarity, the term "buyer-broker" when used in connection with both brokers and salespeople under this rule would be changed to the term "Buyer-Agent."
    
18. Rea 404.05 (b) ADVERTISEMENTS. This proposal would amend the existing rule to require both salespeople and brokers to include either the name of the brokerage firm that they're working through, or the principal broker's name in real estate advertising.
    
19. Rea 701.02 (Amendment) LICENSEE'S DUTY TO A PROSPECTIVE BUYER. This disclosure proposal would define when the disclosure of a material defect, required under the existing rule, would have to be made to a buyer. It would establish that the disclosure must either be made when the licensee becomes aware of the defect or, if the defect is already known, at the time the buyer is introduced to the property.
    
20. Rea 703.01 COOPERATING AGREEMENTS. This new rule proposal would establish the required terms of cooperating agreements to be used whenever New Hampshire brokers are conducting business in New Hampshire with brokers from another jurisdiction.

None of the above rule/amendment proposals violates Part I, Article 28a of the New Hampshire Constitution. They would affect only people who hold real estate licensees, and are being proposed under the authority given to the Real Estate Commission or RSA 331-A:25.

Reports are coming back from licensees who have been accessing the New Hampshire Real Estate Commission's web site that the speed and ease of using the internet to receive Commission news, application forms, and the most recent editions of the statutes/administrative rules, is helping them to save both time and money.

The site is located on "Webster" – the New Hampshire State Government site at http://www.state.nh.us/nhrec. If you haven't visited us yet, please do so. Our site is a "work in progress," and we're putting new material on it weekly – so here's only a partial list of what you'll find:

• The most recent continuing education course list;
• Original and renewal application forms, with instructions;
• Exam information, including schedule of 1999 exams, application forms and instructions;
• The newest information on the 9 hour continuing education requirement for active licensees;
• Updated editions of the License Law (RSA 331-A), and the N.H.R.E.C. Administrative Rules;
• Current and past copies of the "Newsline" (newsletter); and more...

Brief explanations of the rules/amendments that were approved in 1998:

1. FORM OF REAL ESTATE LICENSE CERTIFICATES AND CARDS: This rule established the form of real estate license certificates and cards, in accordance with RSA 331-A:25 VII. It brought 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 is now 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 allows 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 requires 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 is 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." "Unprofessional conduct," is now defined 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 statutory 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 before renewing their inactive license. Conversely, the new law also created an "active" license status for real estate licensees. This rule administratively raised the continuing education hours.
   
7. CHANGES TO REA 701.01 AGENCY DISCLOSURE: This rule changed 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 insures that the public will be adequately informed of the agency relationships of the licensees they are working with. It further strengthened 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.

Imagine that you are trying to defend yourself before some sort of hearings committee. The charges against you are serious. If you are found guilty, something very valuable to you could be taken away.

For various reasons, no one who knows your story is there to testify in your behalf. You do have some proof of your innocence, however: your entire defense hinges on a stack of signed original contracts, reports, and letters – more than enough documentation to show, unquestionably, that you are not guilty.

The chairperson of the committee shuffles through your stack of evidence, then looks up. "Unless the people who signed these documents are here to testify to their authenticity," he says, "we can't consider them. They're hearsay…"

This is not a sequence from a George Orwell novel, but it could actually happen to New Hampshire real estate licensees if the Real Estate Commission was not permitted to consider hearsay evidence at its disciplinary hearings.

Every couple of years, the Commission comes under assault from factions in the New Hampshire real estate industry over the subject of hearsay evidence. Speeches have been made, legislation has been introduced, and many thousands of PAC dollars have been spent in various efforts to either prevent the use of hearsay in Commission hearings, or to limit the effectiveness of Commission decisions because hearsay evidence may have been considered.

Hopefully, this discussion of what hearsay evidence really is, and how it often works to protect and defend licensees at Commission hearings, will relieve many of the general concerns regarding hearsay - and may even head off the next round of expensive attacks against the Real Estate Commission.

Under Rule 801, of the New Hampshire Rules of Evidence, hearsay is defined as: ". . . a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted."

In other words, hearsay evidence includes any statement that was made outside of a hearing, and is being offered as evidence to support testimony being given at the hearing.

The "statement" can be written as well as oral. Under the common law and the Federal/State rules of evidence, hearsay could include written reports prepared outside of the hearings room, such as signed disclosure forms, property inspection reports, and appraisal reports (Rule 801A, New Hampshire Rules of Evidence, 1986).

At the beginning of this article, I asked you to imagine trying to defend yourself against a complaint, when the only people who could confirm your allegations were unavailable to testify personally. This is a situation that occurs often. Witnesses move out of state, or they die, or they are otherwise unable (or unwilling) to appear at Commission hearings. Often hearsay is not only the best evidence available, it's the only evidence available.

THE LEGAL BASIS FOR N.H.R.E.C.'S USE OF HEARSAY EVIDENCE.

It is safe to say that hearsay evidence is allowed in every hearing before every federal and state administrative agency in the United States. This is because modern American administrative law, which is the product of decades of careful legal analysis nation-wide, has been adopted by every state and the federal government as an equitable way of insuring justice for both complainants and respondents throughout the administrative process – and it specifically allows hearsay.

While all criminal courts follow the formal rules of evidence, they also allow numerous exceptions to the hearsay rule. There are often times when hearsay evidence can be, and is admitted – even in murder trials. Therefore, if hearsay was not allowed in N.H.R.E.C. hearings, those hearings would bear restrictive burdens much greater than even the restrictions borne in state and federal criminal courts.

Like most criminal trials, however, in a N.H.R.E.C. hearing without hearsay, both sides would need to be represented by attorneys to work within the very complex, very technical, formal rules of evidence. Licensees and complainants who currently come before the Commission to argue their own cases pro se, would be at a serious disadvantage – and the pain involved in going through those hearings would be greatly extended for both parties.

Happily, the New Hampshire legislature was wise enough to enact RSA 541-A, which is the legislative procedures statute, governing state agency hearings. RSA 541-A allows all New Hampshire agencies to use hearsay in order to expedite their hearings fairly, and to insure the availability of the hearings process to everyone.

By approving relaxed rules of evidence, including hearsay, however, the law assumes the burden of insuring that each party appearing before a board or commission in New Hampshire has a forum to challenge any evidence, including hearsay evidence, considered unduly prejudicial to his/her case. To address this concern, RSA 541-A has ample safeguards in place to allow objections to evidence to be made, and to be noted on the record for a later appeal. It also provides for an appeal from a licensing board to be heard before the state supreme court.

RSA 331-A, the Real Estate License law, gives real estate licensees further appeals protection, ultimately giving them more appellate rights than any other licensed professionals: real estate licensees are guaranteed that the Superior Court will consider their appeals under RSA 331-A. If they don't receive satisfaction at that level, they can still file their appeal with the Supreme Court under
RSA 541-A.

One final note: the fact that hearsay evidence is currently allowed at N.H.R.E.C. hearings does not necessitate that the Commission members automatically accept such evidence. The process is designed to allow the parties to tell their stories, and the Commissioners to reach an equitable outcome by placing appropriate weight to the evidence presented before them. As a rule, direct evidence is always accorded more weight than hearsay.