Chapter 13 PA Real Estate Licensing Law

  1. PA Real Estate Licensing and Registration Act
    ARELLO--Association of Real Estate License Laws--administers and enforces state licensing laws
  2. Purpose of License Laws
    • Protect the public by ensuring a standard of competence and professionalism on the real estate industry.  They are achieved by the following:
    • 1.  establishing requirements for obtaining license, and in many cases, requiring continuing education to keep a license.
    • 2.  Defining Activities for which a a license is required
    • 3.  Describing acceptable standards if conduct and practices for licensees; and 
    • 4.  Enforcing those standards through a disciplinarian system.

    • Main objective is to ensure that the rights of purchasers, seller, tenants and landlords are protected from unscrupulous or sloppy practices.
    • The laws can make the marketplace more honest.
  3. Real Estate Licensing and Registration Act RELRA, (The Act)
    • Adopted on February 19, 1980
    • Statutory Law, enacted by the state legislature and signed into law by the governor.  
    • The state real estate commission does not have authority to amend or modify the Act
    • Modification can only be done by state legislature.
  4. State Real Estate Commission
    • Establised to administer the ACT and supervise the activities of licensees in PA
    • The commission is authorized to promulgate RULES AND REGULATIONS that implement and further define the statutory law.
    • Title 49, (Professional and Vocational Standards of the Department of State), of the PA Code.
    • The regulations have the same force and effect of the law.
    • Both the law and the Regulations are enforced through fines and the denial, suspension or revocation of licenses.
    • Civil and criminal actions can be brought against violators in serious cases.

    • Functions under the Bureau of Professional and Occupational Affairs, within the PA Department of State.
    • The Commission is composed of 11 members that include--the commissioner of the Bureau of Professional and Occupational Affairs, the director of Bureau of Consumer Protection, or a designee, thier members who represent t public at large, known as the public members, five members lecensed as real estate brokers, in the real estate business for at least 10 years and one member licensed as a broker or cemetery broker, having been licensed at least five years and sole cemetery lots for at least 10 years.
    • The Commission annually elects a chairman from it's members.
    • The commissioners are appointed by the governor and confirmed by the senate for five-year staggered terms.
    • Compensated on a per Diem basis as stipulated in the Act
    • Meets in Harrisburg and its regularly scheduled business meetings are open to the public.
    • Conducts formal and informal  hearings relating to complaints against licensees.
    • Required to hold public meetings to solicit suggestions, comments and objections about real estate practices from members of the public.
    • Meetings are held in Philly, Harrisburg, Pittsburgh and elsewhere in the state.
  5. Licensed Activities
    • The RELRA defines activities relating to real estate foe which licensure is required and the procedures for obtaining the licenses
    • REAL ESTATE is defined as any interest in estate or land, whether corporeal, incorporeal and freehold or non freehold, situated in this Commonwealth or elsewhere, including leasehold interests, time-share and similarly designated interests.
    • The sale of mobile homes is considered a transfer of a real estate interest if the sale is accompanied by the assignments of a lease of sale of the land on which the mobile home is situated
    • The real estate commission also requires that applicants include a criminal record check completed by the PA state police with their license application.  The criminal record check must be dated within 90 days of submission.
  6. Broker
    • Individual or entity, corporation, partnership or association, who, for another and for a fee, commission or other valuable consideration, performs one or more of the following acts--
    • 1.  Negotiates with or aids a person in locating or obtaining for purchase, lease or acquisition any interest in real estate.
    • 2.  Negotiates the listing, sale. purchase, exchange, lease, time-share, financing or option for real estate.
    • 3.  Manages Real Estate
    • 4.  Acts a real estate consultant, counselor, agent or house finder
    • 5.  Undertakes to promote the sale, exchange, purchase or rental of real estate.
    • Undertakes to perform a competitive market analysis
    • Attempts to perform any of these acts.
  7. Licensure Requirements for a Broker
    • Must be the following:
    • 21 years of age
    • high school graduate or equivalent
    • have completed 240 hours, 16 credits, of real estate instruction as prescribed by the Commission.  Salesperson instruction does not qualify for broker licensure.
    • Have been engaged as a licensed real estate salesperson for at least three years or have experience and/or education that the Commission considers equivalent.  The Commission uses a "point System" as a guide for evaluating  the experience of the applicant
    • pass both portions of a written examination within three years of the date of the license application.  Examinations consist of two portions:  the national exam, which is general real estate information relating to the licenses practice, and the state exam, which covers the Act and the Commissions regulations and
    • Submit a written application including the name and address under which the applicant will do business and recommendations attesting to the applicants reputation for honesty, trustworthiness and integrity
  8. Broker of Record
    • Individual broker responsible for the real estate transactions of a partnership, association or corporation licensed as broker
    • Only one individual my recognized as the broker of record, regardless of the number of offices the firm operates.
    • The broker of record is also known as the employing broker
    • Within 15 days of death or incapacitation of a broker of record, an authorized party must notify the Commission and appoint another qualified person to serve as the broker, or broker of record.
  9. Associate  Broker
    • Individual has met the broker license requirements but who is employed by a broker of record.
    • May not employ other licensees or engage in the real estate business in their own name or from their own place of business.
    • An associate broker's license is required to manage a branch on behalf of a licensed broker of record.
  10. Salesperson
    • An individual who is employed by a licensed broker of record to do one of the following:
    • 1.  Sell or offer to sell real estate, or list real estate for sale
    • 2.  Buy or offer to buy real estate
    • 3.  Negotiate the purchase, sale or exchange of real estate
    • 4.  Negotiate a loan on the real estate
    • 5.  Lease or rent real estate or offer to lease or rent real estate
    • 6.  Collect, offer, or attempt rent for those who use real estate
    • 7.  Assist a broker in managing property
    • 8.  Perform a competitive market analysis

    • Activities involving the public that are customary in selling real estate must be performed by licensees, including
    • 1.  Showing properties
    • 2.  Preparing and presenting offers
    • 3.  Preparing listing information
    • 4.  Soliciting listings
    • 5.  Hosting Open Houses for the public and 
    • 6.  Disseminating any real estate information to the public.

    Unlicensed people may host open houses that are not open to the public and communicate, not interpret or explain property to the licensees.

    • A  salesperson must be 18 years of age
    • Complete 60 hours of real estate as superscribed by the Commission and pass both portions of the examinations, prior to being issued a license
  11. Supervised Property Management Activities
    • Any real estate licensee involved in property management activities must be directly supervised and controlled by the employing broker.
    • Licensee, salesperson or broker is not permitted to independently negotiate the terms of a lease or execute a lease on behalf of the lessor
  12. Qualified Assocation
    • Real Estate licensees who work for the same broker to form qualified association for the purpose of receiving compensation from their broker.  The broker of record may pay commissions or compensation to this association.  This formation must be reported to the Commission.
    • May consist of a corporation. LLP, limited partnership or llc.
  13. Cemetery Broker
    • an individual or entity who engages in the business in the capacity of a broker, exclusively withing the limited field of business that applies to cemetery lots, plots and mausoleum spaces or openings.
    • Must obtain 60 hours of instruction as approved by the Commission
    • Be engaged for three years or equivalent as a salesperson or cemetery salesperson as determined by the Commission and pass a written examination prior to licensure
  14. Cemetery Associate Broker
    • An individual cemetery broker who is employed by another cemetery broker or broker
    • Has the same relationship with the employing broker as an associate broker.
  15. Cemetery Sales Person
    • Individual who is employed by a broker or cemetery broker for the exclusive purpose of engaging in the specialized field of cemetery sales, as described for the cemetery broker.
    • Must be at least 18 years
  16. Builder-Owner Salesperson
    • Individual who is a full-tom employer of a builder-owner single family and multifamily dwellings and who performs one or more of the following activities--
    • 1.  Lists for sale, sells or offers for sale real estate if the builder-owner
    • 2.  Negotiates the sale or exchange of real estate of the builder-owner
    • 3.  Leases or rents real estate for the builder-owner
    • 4.  Collects of offers or attempts to collect rent for the real estate of the builder-owner.

    Must be 18 years of age., be employed by the builder-owner, who is not licensed, and complete a written examination prior to licensure.  THERE IS NO EDUCATION REQUIREMENT
  17. Rental Listing Referral Agent
    • Individual or Entity that owns or manages a a business that collects rental information for the purpose of referring prospective tenants to rental units
    • Licensee does not lease or show property, but rather sells lists of available rentals.
    • Requirements for compiling the list of rentals and verifying their availability for a prospective tenant
    • Must satisfy licensing requirements that are similar to those for a salesperson licensee, however, the rental listing referral agent is not affiliated with a broker.
    • Is responsible for maintaing an office under the same requirements as a broker and a cemetery broker.
  18. Campground Membership Salesperson
    • An individual who either as an employee or independent contractor, sells campground memberships under the supervision of a broker.
    • Campground memberships are interests, other than fee simple or by lease, the give the purchaser the right to use a unit of real property for the purpose of locating a recreational vehicle, trailer, tent, tent trailer, pickup camper, or other similar device on a periodic basis.
    • Right is conveyed by a membership contract
    • Must be 18 years of age
    • Complete 15 hours of instruction in specific topics
    • Complete no less than 30 days on on-site training at a campground membership facility prior to licensure
    • The broker is responsible for the further training and supervising the licensee.
    • Licensed salespersons, brokers and time-share salespersons do not need a separate license to sell campground memberships.
  19. Time-Share Salesperson
    • individual who, either as an employee or independent contractor, sells time-shares under the supervision of a broker.
    • Time-Share is the right, however evidenced or documented, to use or occupy one or more units on a periodic basis according to an arrangement allocating use and occupancy rights of that unity or units between other similar users.
    • Salesperson must be at least 18 years old
    • Complete 30 hours of instruction on specific topics, and complete no less than 30 days of on-site training at a time-share facility prior to licensure.
    • The Broker is responsible for further training and supervising the licensee.
    • Licensed salespeople and brokers do not need a separate license to sell time shares
  20. Unlicensed Activity
    • It is unlawful for an unlicensed individual or entity to engage in any activity for which licensure is required
    • It is unlawful for unlicensed person to advertise or in other activity for which licensure is required.
    • A current license must be held at the time a service is offered as well as at the time the service is rendered
    • Unlicensed persons are not entitled to compensation and are prohibited from entering into a civil suit to recover payment
    • Any person who engage in activity for which licensure is required or employs an individual is subject to criminal penalties.
    • This includes situations in which a license has been suspended or revoked.
  21. Maximum Penalty for Engaging in Unlicensed Activity
    First Offense--fine of up to $500 and/or imprisonment, not to exceed 3 months

    Second or subsequent offenses--fine of $2000 to $5000 and/or imprisonment of one to three years
  22. Exclusions--
    • 1.  Owners of real estate performing activities associates with the ownership, lease or sale of their own property.  To prevent this exclusion from being used to circumvent licensure, the exclusion does not extend to more than five partners in a partnership or officers of a corporation or to to other employees.
    • 2.  Employees of a public utility acting in the ordinary course of the utility related business under the provisions of Title 66 of the PA Consolidated Statutes, with respect to negotiating the purchase, sale, or lease of property.
    • 3.  Officers or employees of a partnership or corporation whose principal business involves the discovery, extraction, distribution, or transmission of energy or mineral resources.  This exclusion applies to the purchase, sale or energy lease of real estate during the conduct of this business 
    • 4.  An attorney-in-fact who renders services under a properly executed power of attorney from the owner or lessor of real estate.  The POA can not be used to circumvent licensure, the Commission has determined that granting a POA to an undisclosed licensed person to manage property circumvents the intend of the act.  Also excluded are attorneys-at-law who receive a fee, but to not represent themselves as brokers for rendering services within the scope of the attorney-client privilege
    • 5.  A trustee in bankruptcy, administrator, executor, trustee or guardian who is acting under the authority of a court order, will or trust company operating under federal or state laws involving only the property owned by these institutions.
    • 6.  The elected officer or director of any banking institution, savings institution, savings bank, credit union or trust company operating under federal or state laws involving only the property owned by these institutions.
    • 7.  An officer or employee of a cemetery company who, as incidental to principal duties, shows cemetery lots without compensation
    • 8.  A cemetery company or cemetery owned by a bonafide church, religious congregation or fraternal organization.  This applies to the requirement for registration
    • 9.  An auctioneer. licensed under the Auctioneer's License Act, while preforming duties at a bonafide auction
    • 10.  Any person employed by an owner of real estate for the purposes managing or maintaining multi family residential property as lons as this person is not authorized to enter into leases on behalf of the owneer, negotiate terms or conditions of leases or hold money belonging to tenants on behalf of the owner.    As long as the owner retains authority to make all such decisions, the employees may show apartments and provide information about rental rates, building rules and regulations and leasing qualifications.
    • 11.  The elceted officer, director or employee of any banking insititution, savings bank, credit union or trust company operating under federal or state laws, when acting on behalf of the institution in performing appraisals or other evaluations of real estate in connection with a loan transaction.
  23. Licensing Procedures
    • Department of State issues licenses and registration certificates to individuals who meet requirements established by the Act
    • State Real Estate Commission approves proprieatory real estate schools, sets fees subject to review under applicable PA las.
    • Dept of State contracts with an independent testing agency to oversee the adminsitration of licensing examinations
    • THe COmmission presectibes the form for license applications and is authorized to investigate the accuracy of the information submitted.  Inaccurate or untruthful information could result in denial of application or disciplinary action agains any license the individual currently possesses
    • The license period for all real estate licenses currently begins June 1 and ends the last day of May in each even numbered year, a two year license period.  When a license is first issued, it expires the last day of May of the current license period.  A license is considered active once the license is issued and remains properly renewed.
  24. License Renewal
    • Before the end of the license period, the COmmission established procedures for submitting documentation and fees to renew a license
    • Licensees are notified by mail approximately 90 days prior to expiriation
    • Applications for renewal can be found on the COmmisions website and mailed or faxed to the Commission or can be renewed on line.
  25. Continuing Education
    • Brokers and Salesperson are required to satify a 14 hour continuing ed requirement during each two year period in order to renew the license.
    • Purpose is to maintain and increase competency to engage in licensed activites.  Keep licensees abreast of changes in laws, regulations and proctices & procedures that affect the business and better ensure  that the public is protected from incompetent licensees
    • Only applies to brokers and salespersons. 
    • Can satisfy requirements in classroom or distance learning
    • Distance education providers and the course offerings are approved and regulated by the commission.
    • Licensees are required to keep documentaion oa apporved coursework they have completed during the license period to satify the renewal requirement.
    • Not nesessacry to send paper transcripts or records to the Commission
    • They may be requested to provide documentation as evidence of completion of the continuing education requirement as part of the post renewal audit program.
    • Penalties are imposed on individuals who attempt to renew without completing the required education.
  26. Inactive Licenses
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Chapter 13 PA Real Estate Licensing Law
Chapter 13 PA Real Estate Licensing Law