Unit 11 Flashcards
Regulated specialties
Among the real estate specialties, other than residential real estate, in which holders of a broker’s or affiliate broker’s license may choose to concentrate are:
time-shares and vacation clubs rental location services property management commercial real estate These activities, briefly described on the following screens, are regulated by the Commission and are subject to the provisions of Licensing Act and other laws. For special licensing requirements, refer to Unit 3.
Time-shares and vacation clubs
Definitions
Time-share estate: an ownership or leasehold estate in property devoted to a time-share fee, tenants in common, time span ownership, interval ownership, and a time-share lease.
Time-share program: an arrangement for time-share intervals in a time-share project where use is subject to a schedule on a periodic basis occurring annually over any period of time in excess of one year.
Vacation club: a program in which a purchaser obtains a recurring right to use and occupy accommodations in more than one site through the mandatory use of a reservation system.
Time-share salesperson: one who sells time-share intervals under contract with or control of a licensed real estate broker in a registered time-share program.
Acquisition agent: one who solicits others to attend sales presentations for time-share programs by telephone, mail, advertisement, inducement or otherwise; must be licensed and registered with the Commission.
Time-share and vacation club registration
A time-share salesperson may only participate in a time-share transaction when the firm he or she is affiliated with is affiliated with a registered time-share project.
The time-share or vacation club developer, unless exempted, must register the project with the Commission before offering or disposing of a time-share interval.
Time-share registration is not required if:
the owner of the time-share offered for sale is other than the developer or the developer’s agent, or
the time-share project is located entirely outside Tennessee and that all contacts and the execution of the contract took place outside Tennessee
The time-share acquisition agent, sales agent, and managing agent must provide the commission with:
principal office address
telephone number
responsible managing employees
the time-share managing agent must also provide information on criminal convictions
A vacation club developer, before offering vacation club intervals, must give the Commission:
evidence of the existence of the time-share intervals that are part of the vacation club
the marketing plan
proof of ownership or a leasehold estate of the time-share intervals that are part of the vacation club
proof of compliance with requirements, including, but not limited to, a public offering statement, escrow of deposits, cancellation rights, advertising and promotional offers
Time-share estate management
The managing agent of a time-share project:
must be a licensed real estate firm or bonded agent
is responsible for the maintenance of an escrow or reserve account to contain the assessments collected for the maintenance and replacement of the capital improvements to the commonly owned areas and for the maintenance and timely replacement of the personal property commonly owned by the time-share estates
The principal broker/agent of the firm:
controls the required accounts
enters into an agreement between the Commission, the managing agent, and the depository institution, giving the Commission the right to access and inspect the account records at all times on behalf of the condominium homeowners association
Time-share public offering statement
The developer must provide the purchaser with a public offering statement no later than the date of the sales contract and obtain a signed receipt from the purchaser.
The public offering statement is not required in the case where anyone other than the developer or his agent is selling the time-share.
The public offering statement may not be used for any promotional purposes before registration and afterwards only if it is used in its entirety.
The public offering statement must include:
the name and address of the developer and the project
general description of the project, including completion schedule
the periods and types of units
management arrangements
costs, assessments and penalties
standards of conduct
project budget for the year following purchase
any special fees due at closing
description of liens
description of developer financing
statement of purchaser’s rights of rescission
No person may represent that the Commission has approved or recommended the time-share program, the disclosure statement, or any of the documents contained in the application for registration.
Time-share records
The developer must maintain the following records for a period of at least four (4) years:
names, addresses, and dates of employment of all persons (including acquisition agents and sales agents) employed by the developer for time-share sales purposes in the State of Tennessee
copies of sales contracts and documentation reflecting the disposition of all purchase money received
copies of agreements entered into with managing agents for the management of the time-share program
copies of agreements entered into with exchange agents for the affiliation of the time-share project with an exchange program
Rights of rescission– time-share contract
The purchaser may void the sales contract at any time before the offering statement has been received. A purchaser may also cancel any contract for the purchase of a time-share interval from developer: within ten (10) days from the date of the signing of the contract if the purchaser has made an on-site inspection of the time-share project prior to signing within fifteen (15) days from the date of signing of the contract if the purchaser has not made an on-site inspection of the time-share project prior to the signing of the contract of purchase
Rental location agent license
Definition:
Rental location agent: a person who provides assistance in locating real property, including apartment housing, which may be leased or rented as a private dwelling, and who receives a fee from a prospective tenant
Notice: residential property, and fee to be paid by tenant
A rental location agent must be licensed by the Real Estate Commission.
A licensed broker or affiliate broker employed by a licensed broker meets the licensing requirements for rental location agent.
An individual or firm that is not licensed as a real estate broker or real estate salesman employed by a licensed broker must obtain a special license to operate as a Rental Location Agency.
Each individual employee of a licensed rental location agency must obtain a separate license and complete a similar license application before beginning employment.
Agency license applicants or individual applicants for license are subject to a credit, criminal, and background investigation by the authorized agents of the Tennessee Real Estate Commission.
Rental location agent bonds, contracts, receipts
A rental location agent must:
Secure a bond in the amount of ten thousand dollars executed to the state of Tennessee by a surety company duly authorized to do business in this state, or two thousand five hundred dollars if employed by a corporation, partnership, firm or association which is duly licensed.
Give a prospective tenant a contract or receipt including the statement that any amount over ten dollars will be refunded if the tenant fails to obtain a rental through the listing furnished by the rental location agent.
If the information concerning rentals furnished by the rental location agent is not accurate or current, the prospective tenant is entitled to a full refund.
Must follow the Commission’s rules and regulations concerning disclosure of material information regarding the services to be provided to the prospective tenant.
Must include in the contract the language and disclaimers described in the Rules of the Real Estate Commission.
What a rental location agent must do
A rental location agent must also:
verify the availability of a property on the day that any advertising for the property is placed in any medium
verify daily the availability all advertised property for as long as the advertisements for the property continue to be published and cancel the advertising immediately if it is not available
immediately inform any person responding to an advertisement that a property is no longer available, if the agent knows that it is not available
have verified availability within the previous 72 hours before representing that an unadvertised property is available
The following must be fully disclosed with respect to any property which is represented as available:
the date of availability for occupancy of the property if not currently available
the monthly rent
information about any damage deposit, security deposit, clean-up fees, rent prepayment, or similar charges over and above the monthly rent
the number of bedrooms
whether a lease is required
restrictions on the property, except restrictions imposed by federal, state or local law
the types of housing, such as single family, duplex or trailer
the location of the rental housing
the utilities paid for, if any
the telephone number of the landlord
In the case of advertising, only the date of availability, the rent, and the location have to be disclosed.
What a rental location agent must not do
A rental location agent commits a Class C misdemeanor by:
knowingly referring a prospective tenant to:
a nonexistent address
a property which is not for lease or rent
a property which does not meet the specifications of the prospective tenant
a property which leases or rents for a different price from that quoted by the rental location agent
a property which has already been leased or rented
a property listed without the consent of the landlord
advertising without including the rental agent’s name and the fact that the person is a rental location agent
soliciting a listing from a landlord after receipt of written notice from the landlord requesting that no further solicitations be made (62-25-105)
A rental location agent may not represent that rental property meeting the needs of a prospective tenant is contained in the Rental Location Agent’s listings unless such is the fact and unless the availability of such property has been verified. (1260-3-.06)
Residential property management and landlord/tenant Law
Residential property managers, in addition to having to comply with the License Act, are subject to the requirements of the Uniform Residential Landlord and Tenant Act (Title 66, Chapter 28).
This act primarily addresses the lease contract, deposits and advances, obligations of landlord and tenant, the landlord’s rights of access, and standards for eviction.
The act aims to:
equalize and standardize rights of landlord and tenant
protect tenants from unethical practices
prevent unfair, complex leases and their enforceability
set standards for improving oral, vague, or unbalanced lease agreements
Landlord/tenant provisions
Some key provisions of the Landlord and Tenant Act:
Exemptions
The law does not apply to:
transient occupancies, such as hotel and motel rentals
condominiums and cooperatives
occupancy in a residence that is under a contract for deed
rental agreements entered into before July 1, 1975
Access
The landlord may enter the premises at any time when acting to prevent damage or destruction; to make repairs or show the property, on giving proper notice. The tenant may not refuse the landlord entry for acceptable reasons such as emergencies, repairs, inspections, and showings.
Security deposits
must be deposited in a special account
tenant may dispute landlord’s list of repairs
if tenant vacates with amounts, landlord may apply the deposit to the unpaid debt
Abandonment
after 30 days of absence and failure to pay rent on time, landlord may retake premises
if tenant is 15 days late in paying rent and appears to be absent, landlord may take premises
Landlord default
If landlord fails to provide essential services, tenant may:
deduct cost of services from rent
recover damages
procure substitute housing and not pay rent until fixed
recover cost of substitute housing
Grace period
Tenant has a 5-day grace period on rent before late fees begin.
Termination and possession
if tenant stays past termination of the agreement, the landlord may sue for possession and damages
landlord may not recover possession by diminution of services or otherwise except in case of abandonment, surrender, or as specified in the Act
Commercial Real Estate
“Commercial real estate” means any real estate other than:
real estate containing one (1) to four (4) residential units
real estate on which no buildings or structures are located and which is zoned for no more than one (1) to four (4) family residential units
The term does not include single family residential units such as condominiums, town houses, or homes in a subdivision when sold, leased, or otherwise conveyed on a unit-by-unit basis.
“Real estate” specifically includes leaseholds as well as any other estate or interest in land.
There is no special license requirement for the commercial real estate specialty. A broker’s or affiliate broker’s license is required.
The study of leases, property management, and the fine points of commercial real estate is outside the scope of this course.
The License Act does, however, have a specific regulation concerning commercial real estate commissions, summarized on the next screen.
Commission claim
A broker who, under a written contract, is owed a fee or commission, whether payable over time or in a lump sum, may enforce the contract from an owner of the commercial property who takes ownership subsequent to the owner with whom the broker had the agreement, provided the subsequent owner knew of the contract at the time of taking ownership.
A subsequent owner is subject to the same terms, conditions and defenses available to the contracting parties.
A subsequent owner is liable for fees and commissions only to the extent the subsequent owner receives rents from the leases with respect to which the broker is entitled to receive a fee or commission.
