Title of Regulation: 18VAC135-20. Virginia Real Estate Board Licensing Regulations (amending 18VAC135-20-10, 18VAC135-20-101, 18VAC135-20-165).

Statutory Authority: §§ 54.1-201 and 54.1-2105 of the Code of Virginia.

Effective Date: June 1, 2019.

Agency Contact: Christine Martine, Executive Director, Real Estate Board, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone (804) 367-8552, FAX (804) 527-4299, or email reboard@dpor.virginia.gov.

Summary:

Pursuant to Chapters 60, 86, 223, and 224 of the 2018 Acts of Assembly, the amendments (i) include broker supervision requirements as part of continuing education, (ii) add real estate teams to the definition of "supervising broker," and (iii) add supervising real estate teams to the duties of supervising brokers.

Part I
General

18VAC135-20-10. Definitions.

The following words and terms when used in this chapter unless a different meaning is provided or is plainly required by the context shall have the following meanings:

"Active" means any broker or salesperson who is under the supervision of a principal or supervising broker of a firm or sole proprietor and who is performing those activities defined in §§ 54.1-2100 and 54.1-2101 of the Code of Virginia.

"Actively engaged" means active licensure with a licensed real estate firm or sole proprietorship in performing those activities as defined in §§ 54.1-2100 and 54.1-2101 of the Code of Virginia for an average of at least 40 hours per week. This requirement may be waived at the discretion of the board in accordance with § 54.1-2105 of the Code of Virginia.

"Actively engaged in the brokerage business" means anyone who holds an active real estate license.

"Associate broker" means any individual licensee of the board holding a broker's license other than one who has been designated as the principal broker.

"Client" means a person who has entered into a brokerage relationship with a licensee as defined by § 54.1-2130 of the Code of Virginia.

"Firm" means any sole proprietorship (nonbroker owner), partnership, association, limited liability company, or corporation, other than a sole proprietorship (principal broker owner), which is required by 18VAC135-20-20 B to obtain a separate brokerage firm license. The firm's licensed name may be any assumed or fictitious name properly filed with the board.

"Inactive status" refers to means any broker or salesperson who is not under the supervision of a principal broker or supervising broker, who is not active with a firm or sole proprietorship, and who is not performing any of the activities defined in §§ 54.1-2100 and 54.1-2101 of the Code of Virginia.

"Independent contractor" means a licensee who acts for or represents a client other than as a standard agent and whose duties and obligations are governed by a written contract between the licensee and the client.

"Licensee" means real estate brokers and salespersons as defined in Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia or real estate firms.

"Principal broker" means the individual broker who shall be designated by each firm to assure compliance with Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia, and this chapter, and to receive communications and notices from the board which that may affect the firm or any licensee active with the firm. In the case of a sole proprietorship, the licensed broker who is the sole proprietor shall have the responsibilities of the principal broker. The principal broker shall have responsibility for the activities of the firm and all its licensees. The principal broker shall have signatory authority on all escrow accounts maintained by the firm.

"Principal to a transaction" means a party to a real estate transaction including without limitation a seller or buyer, landlord or tenant, optionor or optionee, licensor or licensee. For the purposes of this chapter, the listing or selling broker, or both, are not by virtue of their brokerage relationship, principals to the transaction.

"Sole proprietor" means any individual, not a corporation, limited liability company, partnership, or association, who is trading under the individual's name, or under an assumed or fictitious name pursuant to the provisions of Chapter 5 (§ 59.1-69 et seq.) of Title 59.1 of the Code of Virginia.

"Standard agent" means a licensee who acts for or represents a client in an agency relationship. A standard agent shall have the obligations as provided in Article 3 (§ 54.1-2130 et seq.) of Chapter 21 of Title 54.1 of the Code of Virginia.

"Supervising broker" means (i) the individual broker who shall be designated by the principal broker to supervise the provision of real estate brokerage services by the associate brokers and salespersons assigned to branch offices or real estate teams or (ii) the broker, who may be the principal broker, designated by the principal broker to supervise a designated agent as stated in § 54.1-2130 of the Code of Virginia.

18VAC135-20-101. Qualification for renewal; continuing education requirements.

As a condition of renewal, and pursuant to § 54.1-2105.03 of the Code of Virginia, all active salespersons, resident or nonresident, except those called to active duty in the Armed Forces of the United States, shall be required to satisfactorily complete a course or courses of not less than a total of 16 classroom, correspondence, or other distance learning instruction hours during each licensing term, except for salespersons who are renewing for the first time and are required to complete 30 hours of post-license education regardless of whether their licenses are active or inactive. All active brokers, resident or nonresident, except those called to active duty in the Armed Forces of the United States, shall be required to satisfactorily complete a course or courses of not less than a total of 24 classroom, correspondence, or other distance learning instruction hours during each licensing term. Active licensees called to active duty in the Armed Forces of the United States may complete these courses within six months of their release from active duty. Inactive brokers and salespersons are not required to complete the continuing education course as a condition of renewal (see 18VAC135-20-70, Activation or transfer of license).

1. Providers shall be those as defined in 18VAC135-20-350;

2.  Effective until January 1, 2016, for salespersons, eight of the required 16 hours shall include two hours in fair housing laws, three hours in ethics and standards of conduct and a minimum of one hour each in legal updates and emerging trends, real estate agency and real estate contracts. For brokers, 16 of the 24 required hours shall include eight hours in supervision and management of real estate agents and the management of real estate brokerage firms, two hours in fair housing laws, three hours in ethics and standards of conduct and a minimum of one hour each in legal updates and emerging trends, real estate agency and real estate contracts. Effective January 1, 2016, for For salespersons, eight of the required 16 hours shall include two hours in fair housing laws,; three hours in ethics and standards of conduct,; and a minimum of one hour each in legal updates and emerging trends, to include flood zone areas and the National Flood Insurance Program, real estate agency, and real estate contracts. For brokers, 16 of the 24 required hours shall include eight hours in supervision and management of real estate agents and the management of real estate brokerage firms, two hours of which shall include an overview of the broker supervision requirements under this chapter and Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia; two hours in fair housing laws,; three hours in ethics and standards of conduct,; and a minimum of one hour each in legal updates and emerging trends, to include flood zone areas and the National Flood Insurance Program, real estate agency, and real estate contracts. If the licensee submits a notarized affidavit to the board that certifies that he does not practice residential real estate brokerage, residential management, or residential leasing and shall not do so during the licensing term, training in fair housing shall not be required; instead such licensee shall receive training in other applicable federal and state discrimination laws and regulations. The remaining hours shall be on subjects from the following list:

a. Property rights;

b. Contracts;

c. Deeds;

d. Mortgages and deeds of trust;

e. Types of mortgages;

f. Leases;

g. Liens;

h. Real property and title insurance;

i. Investment;

j. Taxes in real estate;

k. Real estate financing;

l. Brokerage and agency contract responsibilities;

m. Real property management;

n. Search, examination and registration of title;

o. Title closing;

p. Appraisal of real property;

q. Planning subdivision developments and condominiums;

r. Regulatory statutes;

s. Housing legislation;

t. Fair housing;

u. Real Estate Board regulations;

v. Land use;

w. Business law;

x. Real estate economics;

y. Real estate investments;

z. Federal real estate law;

aa. Commercial real estate;

bb. Americans With Disabilities Act;

cc. Environmental issues impacting real estate;

dd. Building codes and design;

ee. Local laws and zoning;

ff. Escrow requirements;

gg. Ethics and standards of conduct; and

hh. Common interest ownership.

3. Effective until January 1, 2016, salespersons holding licenses in other jurisdictions must complete eight hours, which shall include fair housing laws, legal updates and emerging trends, ethics and standards of conduct, and real estate agency and real estate contracts and may substitute education completed in their jurisdiction for the remaining hours required by subdivision 2 of this section. Brokers holding licenses in other jurisdictions must complete 16 hours that shall include supervision and management of real estate agents and the management of real estate brokerage firms, fair housing laws, legal updates and emerging trends, ethics and standards of conduct, and real estate agency and real estate contracts and may substitute education completed in their jurisdiction for the remaining hours required by subdivision 2 of this section. Effective January 1, 2016, salespersons Salespersons holding licenses in other jurisdictions must complete eight hours, which that shall include fair housing laws, and legal updates and emerging trends, to include flood zone areas and the National Flood Insurance Program, ethics and standards of conduct, and real estate agency, and real estate contracts and may substitute education completed in their jurisdiction for the remaining hours required by subdivision 2 of this section. Brokers holding licenses in other jurisdictions must complete 16 hours that shall include supervision and management of real estate agents and the management of real estate brokerage firms, two hours of which shall include an overview of the broker supervision requirements under this chapter and Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia; fair housing laws,; legal updates and emerging trends, to include flood zone areas and the National Flood Insurance Program,; ethics and standards of conduct,; and real estate agency and real estate contracts and may substitute education completed in their jurisdiction for the remaining hours required by subdivision 2 of this section.

4. The board may approve additional subjects at its discretion and in accordance with § 54.1-2105.03 of the Code of Virginia.

5. Credit for continuing education course completion is given for each class hour/clock hour as defined in 18VAC135-20-350.

6. Licensees are responsible for retaining for three years and providing proof of continuing education. Proof of course completion shall be made on a form prescribed by the board. Failure to provide documentation of completion as directed by the board will may result in the license not being renewed and/or, disciplinary action pursuant to this chapter, or both.

7. Instructors who are also licensees of the board may earn continuing education credit for teaching continuing education courses.

8. Any continuing education credits completed by the licensee in excess of that required in the current license term that are obtained in the six months immediately prior to the license expiration date shall carry over into the next two-year renewal period.

18VAC135-20-165. Duties of supervising broker.

Each place of business and, each branch office, and each real estate team shall be supervised by a supervising broker. The supervising broker shall exercise reasonable and adequate supervision of the provision of real estate brokerage services by associate brokers and salespersons assigned to the branch office or real estate team. The supervising broker may designate another broker to assist in administering the provisions of required by this section. The supervising broker does not relinquish overall responsibility, but such designation does not relieve the supervising broker of responsibility for the supervision of the acts of all licensees assigned to the branch office or real estate team. Factors to be considered in determining whether the supervision is reasonable and adequate include but are not limited to the following:

1. The availability of the supervising broker to all licensees under the supervision of the broker to review and approve all documents, including but not limited to leases, contracts affecting the firm's clients, brokerage agreements, and advertising;

2. The availability of training and written procedures and policies that provide, without limitation, clear guidance in the following areas:

a. Proper handling of escrow deposits;

b. Compliance with federal and state fair housing laws and regulations if the firm engages in residential brokerage, residential leasing, or residential property management;

c. Advertising;

d. Negotiating and drafting of contracts, leases, and brokerage agreements;

e. Use of unlicensed individuals;

f. Agency or independent contractor relationships;

g. Distribution of information on new or changed statutory or regulatory requirements;

h. Disclosure of matters relating to the condition of the property; and

i. Such other matters as necessary to assure the competence of licensees to comply with this chapter and Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia.

3. The availability of the supervising broker in a timely manner to supervise the management of the brokerage services;

4. The supervising broker ensures the brokerage services are carried out competently and in accordance with the provisions of this chapter and Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia;

5. The supervising broker undertakes reasonable steps to ensure compliance by all licensees assigned to the branch office, including but not limited to ensuring the licensees have an active, current license;

6. The supervising broker undertakes reasonable steps to ensure only licensees undertake activities requiring a license, including but are not limited to:

a. Show property;

b. Hold an open house;

c. Answer questions on listings, title, financing, closing, contracts, brokerage agreements, and legal documents;

d. Discuss, explain, interpret, or negotiate a contract, listing, lease agreement, or property management agreement with anyone outside the firm; and

e. Negotiate or agree to any commission, commission split, management fee, or referral fee.

7. The supervising broker shall provide adequate supervision over the unlicensed employees or assistants under the supervision of a broker as they perform the following permitted activities:

a. Perform general clerical duties, including answering the phones, responding by electronic media, and providing information shown on the listing;

b. Submit listings and changes to MLS;

c. Follow up on loan commitments after contracts have been ratified;

d. Have keys made for listings;

e. Compute commission checks;

f. Place signs on properties;

g. Act as a courier service;

h. Schedule appointments;

i. Record and deposit earnest money deposits, security deposits, and advance rents;

j. Prepare contract forms for approval of the licensee and supervising broker;

k. Prepare promotional materials and advertisements for approval of the licensee and supervising broker;

l. Assemble closing documents;

m. Obtain required public information from governmental entities;

n. Monitor license and personnel files;

o. Order routine repairs as directed by licensee;

p. Are compensated Receive compensation for their work at a predetermined rate that is not contingent upon the occurrence of a real estate transaction; and

q. Perform any other activities undertaken in the regular course of business for which a license is not required.

8. If a supervising broker is located more than 50 miles from the place of business or the branch office and there are licensees who regularly conduct business assigned to the branch office or at the place of business, the supervising broker must certify in writing on a quarterly basis on a form provided by the board that the supervising broker complied with the requirements of this section; and

9. The supervising broker must maintain the records required in this section for three years. The records must be furnished to the board's agent upon request;

10. The supervising broker ensures that affiliated real estate teams or business entities are operating in accordance with the provisions of this chapter and Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia; and

11. The supervising broker ensures that all brokerage agreements include the name and contact information of the supervising broker.