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KREC common violations

Example 5 (September 2019)

On September 1, 2019, Mr. Ross contacted Salesperson Tony to set up a showing for the single- family home located at 100 Main Street in Wichita, Kansas.  Salesperson Tony provided Mr. Ross with the brokerage relationship brochure and explains the different relationship options available.  Mr. Ross does not want to sign a buyer agency agreement and verbally agrees to have Salesperson Tony serve as his transaction broker.

 

Salesperson Tony works at ABC Realty and the property is listed with Broker Bryan at XYZ Real Estate.  After viewing the property, Salesperson Tony assists Mr. Ross with writing an offer and submits it to Broker Bryan.  The sellers decide to counter and Broker Bryan contacts Salesperson Tony to let him know a counteroffer will be submitted by the end of the day.  During the conversation, Salesperson Tony learns the seller is being transferred with her job at the end of the month.

 

Upon receipt, Salesperson Tony submits the counteroffer to Mr. Ross, but does not share the information regarding the seller being transferred.  Mr. Ross accepts the counteroffer.  After the transaction closed, Mr. Ross finds out Salesperson Tony did not disclose the seller’s job transfer and is upset.

 

Mr. Ross submits a complaint to the Kansas Real Estate Commission claiming misrepresentation due to not being informed of the seller’s job transfer.  In his statement, Mr. Ross claims the misrepresentation cost him money because he would have negotiated differently had he known the information. 

No, Salesperson Tony did not violate Kansas law. 

 

K.S.A. 58-30,113(f) prohibits a transaction broker from disclosing motivating factors for any party or providing information which places one party at an advantage over the other party without permission from all parties.   In this scenario, Salesperson Tony did not violate Kansas law.

 

For more information about requirements for a transaction broker, see K.S.A. 58-30,113.

Example 4 (July 2019)

According to The Kansas Real Estate Brokers’ and Salespersons’ License Act, are each of the following statements about advertising true or false?

 

  1. A licensee may advertise a property listed for sale through another brokerage with permission from the listing agent.
  2. A licensee conducting advertising is solely responsible for compliance with Kansas law.
  3. Licensees must include any information the broker considers necessary in their advertising.
  4. Social media advertising has different requirements than print advertising.
  1. True.  A licensee from a different company may offer a property for sale with permission from the listing agent.  The advertising must be conducted according to the terms authorized and cannot be misleading or inaccurate.  K.S.A. 58-3062(a)(8) and K.S.A. 58-3086.
  2. False.  All advertising must be conducted under the direct supervision of the supervising broker.  The licensee conducting the advertising and their supervising broker are both responsible for compliance.
  3. True.  The supervising broker may require affiliated licensees to included certain information in advertising.
  4. False.  All advertising has the same requirements.  For example, advertising must include the broker’s trade or business name in a prominent and conspicuous manner and cannot misrepresent any property, terms, values, policies or services of the business conducted.  For more requirements, see K.S.A. 58-3086.

Social media is the most common form of non-compliant advertising.  If you are posting about real estate, real estate services or anything related to a real estate license on social media, it most likely falls under the advertising requirements.  If you are not sure, consult your broker.

Example 3 (April 2019)

Ms. Rogers owns a single-family home on two acres in Kansas. For the last three years, Ms. Rogers has rented the property to Mr. Kim. Mr. Kim wants to purchase the property and makes a verbal cash offer to Ms. Rogers. Ms. Rogers accepts the offer and wants her friend, Salesperson Joe, to draft the paperwork. 

Salesperson Joe, with approval from the supervising broker, agrees to draft the purchase contract.  He includes the sale price, closing date, and the inspections to be completed.  The contract includes a disclosure that both buyer and seller are unrepresented. No agency agreements were signed between Salesperson Joe’s supervising broker and Ms. Rogers or Mr. Kim.  No other services were provided. Ms. Rogers paid a nominal fee to Salesperson Joe’s supervising broker for assisting in the transaction. 

Mr. Kim and Ms. Rogers negotiated a few repairs as a result of the inspections. The transaction closed after the repairs were completed.

YES.    Salesperson Joe violated K.S.A. 58-30,103(a) and Salesperson Joe’s supervising broker violated 86-3-31(a)(6). Unless a licensee is acting solely as a seller, buyer, landlord, or tenant in a real estate transaction, Kansas law requires the licensee to act as a transaction broker or an agent.

Neither Ms. Rogers nor Mr. Kim signed an agency agreement with Salesperson Joe’s supervising broker and Salesperson Joe was not a principal in the transaction.  Therefore, Salesperson Joe and his supervising broker were required to act as transaction brokers.  A transaction broker has certain statutory obligations and responsibilities, such as assisting the parties in complying with the terms and conditions of any contract including closing the transaction.  A licensee cannot waive their statutory obligations. 

Except when acting as a transaction broker or solely as a seller, buyer, landlord or tenant, a broker shall act only as a statutory agent in any real estate transaction. A licensee shall not act as a dual agent or in a dual capacity of agent and undisclosed principal in any transaction

K.A.R. 86-3-31(a) Failure of a supervising broker or branch broker to properly supervise the activities of an associated or employed salesperson or associate broker shall include the following: (6) failing to timely take action to correct or mitigate a violation of the real estate brokers’ and salespersons’ license act, the brokerage relationships in real estate transactions act, or any commission regulations by an associated or employed salesperson or associate broker, if the supervising broker or branch broker has actual knowledge of the violation; For information regarding requirements of seller’s agents, buyer’s agents, and transaction brokers, see K.S.A. 58-30,106, 58-30,107, and 58-30,113. 

Example 2 (March 2019)

Mr. and Mrs. Smith  work with Salesperson Terry.  The Smiths do not want to sign a buyer agency agreement until they enter into an agreement to purchase a new home.  Salesperson Terry shows the Smiths several properties over a six-week period.  On January 1, 2019, the Smiths find the home of their dreams.  After Salesperson Terry and the Smiths discuss how to get the best deal, the Smiths sign an offer with Salesperson Terry identified as a buyer’s agent.

On January 3, 2019, the sellers accept the Smiths’ offer.  Later that day, Salesperson Terry presents the Smiths with a buyer agency agreement with a start date of January 1, 2019.  Mr. and Mrs. Smith sign the buyer agency agreement and Salesperson Terry signs the agreement on behalf of the broker.

No.  Kansas law requires a buyer’s agent to enter into a written buyer agency agreement with a client no later than the signing of an offer to purchase.

In the scenario above, Salesperson Terry should not have assisted the Smiths as a buyer’s agent because the buyer agency agreement was not in writing prior to the signing of the offer.  Since the Smiths refused to sign a buyer agency agreement prior to signing the offer, Salesperson Terry should have assisted the Smiths as a transaction broker in the real estate transaction.  As a transaction broker, Salesperson Terry would not advocate for the Smiths’ interests.

Salesperson Terry violated K.S.A. 58-30,103(e).

K.S.A. 58-30,103(e) states, “To establish an agency relationship with a buyer or tenant, a broker shall enter into a written agency agreement with the party to be represented no later than the signing of an offer to purchase or lease.”

For more information regarding requirements of seller’s agents, buyer’s agents, and transaction brokers, see K.S.A. 58-30,106, 58-30,107, and 58-30,113.

Example 1

On January 1, 2019, Salesperson A with XYZ Realty listed a property at 123 Main Street as a designated seller’s agent.  Salesperson B with Brokerage Real Estate submitted an offer for a buyer.  The buyer and seller came to an agreement and the purchase contract was signed by all parties on January 3, 2019. 

A week later, the buyer had a whole house inspection completed on the property and the inspector recommended a foundation inspection.  A foundation inspection revealed three issues and repairs were estimated at $15,000.  Salesperson B discussed the three issues discovered by the foundation inspector with Salesperson A and relayed the buyer’s request for the seller to pay for the repairs.  The seller refused to pay for the repairs and the purchase contract was cancelled.

The seller had a second foundation inspection on the home because the seller did not agree with the findings of the buyer’s inspector.  The second inspection company found only two issues that were included in the first foundation inspection. The second foundation inspection estimated repairs at $2,100.  The foundation company made the two repairs and the seller paid the invoice.

On February 1, 2019, the seller entered into a purchase contract with a new buyer.  Under the seller’s direction, Salesperson A provided the buyer with the whole house inspection, the second foundation inspection and the paid invoice for foundation repairs.  The buyer accepted the condition of the property and the transaction closed.

Yes. Under BRRETA, licensees are required to disclose material defects the licensee is aware of AND any facts known by the licensee that were omitted from or contradict any information included in a written report.  These disclosures are required whether acting as a seller’s agent, buyer’s agent, designated agent, or transaction broker.

Salesperson A knew of the additional issue in the first foundation inspection and knew it was not included in the second foundation inspection report provided to the buyer.  Salesperson A failed to inform the buyer of the additional issue found in the first foundation inspection. 

The reason Salesperson A did not provide the buyer with the first foundation report because it was protected for the use of the purchaser of the report only.  The requirement to disclose known information does not require a licensee to release a copy of a report.  Kansas law does require disclosure of the material facts.

As a designated seller’s agent, Salesperson A specifically violated K.S.A. 58-30,106(d)(1) & (4).

K.S.A. 58-30,106(d)(1) A seller’s or landlord’s agent owes no duty or obligation to a customer, except that a licensee shall disclose to any customer all adverse material facts actually known by the licensee…

K.S.A. 58-30,106(d)(4) A seller’s or landlord’s agent shall disclose to the client or customer any facts actually known by the licensee that were omitted from or contradict any information included in a written report described in subsection (d)(3).

For more information regarding requirements of seller’s agents, buyer’s agents, and transaction brokers, see K.S.A. 58-30,106, 58-30,107, and 58-30,113.