Chapter 17. Real Estate Brokers’ Duties.
Subchapter I. General.
§ 42–1701. Purposes.
The purposes of this subchapter are to protect the public against incompetence, fraud and deception in real estate transactions; to establish a Real Estate Guaranty and Educational Fund to compensate victims of unlawful real estate practices; and for other purposes.
§ 42–1702. Definitions.
For purposes of this subchapter:
(1) The term “advance fee” means any fee, commission, or other valuable consideration contracted for, claimed, demanded, charged, received, or collected prior to the listing, advertisement, or offer to sell or lease real estate, paid or offered to be paid for the purpose of promoting the sale or lease of real estate, or for referral to any real estate broker, salesperson, or both, other than by newspaper of general circulation.
(1A) The term “agency” means every relationship in which a real estate licensee acts for or represents a person by such person’s express authority in a real estate transaction, unless a different legal relationship is intended and is agreed to as part of the brokerage relationship. Nothing in this subchapter shall prohibit a licensee and a client from agreeing in writing to a brokerage relationship under which the licensee acts as an independent contractor or which imposes on a licensee obligations in addition to those provided in this subchapter. If a licensee agrees to additional obligations, however, the licensee shall be responsible for the additional obligations agreed to with the client in the brokerage relationship. A real estate licensee who enters into a brokerage relationship based upon a written contract which specifically states that the real estate licensee is acting as an independent contractor and not as an agent shall have the obligations agreed to by the parties in the contract, and such real estate licensee and its employees shall have no obligations under § 42-1703(a) through (e).
(1B) Repealed.
(2) Repealed.
(2A) The term “brokerage relationship” means the contractual relationship between a client and a real estate licensee who has been engaged by such client for the purpose of procuring a seller, buyer, option, tenant, or landlord ready, able, and willing to sell, buy, option, exchange, or rent real estate on behalf of a client, or for the purposes of managing real estate on behalf of a client.
(3) Repealed.
(3A) The term “client” means a person who has entered into a brokerage relationship with a licensee.
(4) The term “Board” means the Board of Real Estate established by the Non-Health Related Occupations and Professions Licensure Act of 1998 [Title I of D.C. Law 12-261, codified as § 47-2853.01 et seq.].
(4A) The term “common source information company” means any person, firm, or corporation that is a source, compiler, or supplier of information regarding real estate for sale or lease and other data and includes, but is not limited to, multiple listing services.
(5) The term “Council” means the Council of the District of Columbia.
(5A) The term “customer” means a person who has not entered into a brokerage relationship with a licensee, but for whom a licensee performs ministerial acts in a real estate transaction. Unless a licensee enters into a brokerage relationship with such person, it shall be presumed that such person is a customer of the licensee rather than a client.
(5B) The term “designated agent” or “designated representative” means a licensee who has been assigned by a principal or supervising broker to represent a client when a different client is also represented by such principal or broker in the same transaction.
(6) The term “District” means the District of Columbia.
(6A) The term “dual agent” or “dual representative” means a licensee who has a brokerage relationship with both seller and buyer, or both landlord and tenant, in the same real estate transaction.
(6B) The term “escrow funds” means earnest money deposits for purchase of residential and commercial property and security deposits for rental of residential and commercial property.
(7) The term “Fund” means the Real Estate Guaranty and Education Fund established by § 42-1706.
(7A) The term “licensee” means, respectively, real estate brokers, salespersons and property managers, as defined in paragraphs (10) (property manager) [repealed], (12) (real estate broker) [repealed], and (13) (real estate salesperson) [repealed] of this section, provided that nothing in § 42-1703 shall be deemed to modify the licensure requirements otherwise set forth in this subchapter.
(7B) The term “material fact” means information that, if known, would be likely to induce a reasonable person to enter into or not enter into or consummate a real estate transaction.
(8) The term “Mayor” means the Mayor of the District of Columbia or the Mayor’s authorized representative.
(8A) The term “ministerial acts” means those routine acts which a licensee can perform for a person which do not involve discretion or the exercise of the licensee’s own judgment.
(9) The term “person” means any individual, partnership, association, unincorporated business, firm, business trust, or corporation.
(10) Repealed.
(10A) Repealed.
(10B) The term “property management” means leasing, renting or offering to lease or rent, managing, marketing, and the overall operation and maintenance of real estate. The term “property management” includes the physical, administrative, and fiscal management of any real property serviced by a licensee, or his or her employee or agent.
(10C) The term “psychological impact” means any fact or suspicion with respect to circumstances, other than the physical condition of the property, that creates a fear, belief, or mental condition.
(11) The term “real estate” means condominiums, leaseholds, time sharing and any other interest or estate in land, whether corporeal, incorporeal, freehold, or nonfreehold, and whether located in the District or elsewhere. The term “real estate” includes any share or membership in a cooperative organized pursuant to Chapter 9 of Title 29, to engage in activities relating to real estate, even though the shares or membership may be deemed to be securities or personal property for purposes of such chapter.
(12) Repealed.
(12A) The term “real estate franchise” means any real estate franchise brokerage firm practicing in the District which does not own or operate individual offices directly, but licenses its trade name, reputation, operation procedure, and referral services to independently owned and operated brokerage firms.
(13) Repealed.
(13A) Repealed.
(13B) The term “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 this section.
(14) The term “written listing contract” means a contract between a broker and an owner in which the owner grants to the broker the right to find a purchaser for a designated property at the price and terms the owner agrees to accept, and the broker, for a fee, commission, or other valuable consideration, promises to make a reasonable effort to obtain a purchaser for the term of the contract.
§ 42–1703. Duties of real estate brokers, salespersons, and property managers.
(a) Licensees engaged by sellers. —
(1) A licensee engaged by a seller shall:
(A) Perform in accordance with the terms of the brokerage relationship;
(B) Promote the interests of the seller by:
(i) Seeking a sale at the price and terms agreed upon in the brokerage relationship or at a price and terms acceptable to the seller; however, the licensee shall not be obligated to seek additional offers to purchase the property while the property is subject to a contract of sale, unless agreed to as part of the brokerage relationship or as the contract of sale so provides;
(ii) Presenting in a timely manner all written offers or counteroffers to and from the seller, even when the property is already subject to a contract of sale;
(iii) Disclosing to the seller material facts related to the property or concerning the transaction of which the licensee has actual knowledge; and
(iv) Accounting for in a timely manner all money and property received in which the seller has or may have an interest;
(C) Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential, unless otherwise provided by law or the seller consents in writing to the release of such information;
(D) Exercise ordinary care; and
(E) Comply with all requirements of this section, all applicable fair housing statutes and regulations, and all other applicable statutes and regulations which are not in conflict with this section.
(2) Licensees shall treat all prospective buyers honestly and shall not knowingly give them false information. A licensee engaged by a seller shall disclose to prospective buyers all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee. A licensee shall not be liable to a buyer for providing false information to the buyer if the false information was provided to the licensee by the seller and the licensee did not have actual knowledge that the information was false or act in reckless disregard of the truth. No cause of action shall arise against any licensee for revealing information as required by this section or applicable law. Nothing in this section shall modify or limit in any way the provisions of § 42-1755(f) [repealed].
(3) A licensee engaged by a seller in a real estate transaction may, unless prohibited by law or the brokerage relationship, provide assistance to a buyer or potential buyer by performing ministerial acts. Performing such ministerial acts that are not inconsistent with this subsection (a) of this section shall not be construed to violate the licensee’s brokerage relationship with the seller unless expressly prohibited by the terms of the brokerage relationship, nor shall performing such ministerial acts be construed to form a brokerage relationship with such buyer or potential buyer.
(4) A licensee engaged by a seller does not breach any duty or obligation owed to the seller by showing alternative properties to prospective buyers, whether as clients or customers, or by representing other sellers who have other properties for sale.
(5) Licensees shall disclose brokerage relationships pursuant to the provisions of this section.
(b) Licensees engaged by buyers. —
(1) A licensee engaged by a buyer shall:
(A) Perform in accordance with the terms of the brokerage relationship;
(B) Promote the interests of the buyer by:
(i) Seeking a property at a price and with terms acceptable to the buyer; however, the licensee shall not be obligated to seek other properties for the buyer while the buyer is a party to a contract to purchase property unless agreed to as part of the brokerage relationship;
(ii) Presenting in a timely manner all written offers or counteroffers to and from the buyer, even when the buyer is already a party to a contract to purchase property;
(iii) Disclosing to the buyer material facts related to the property or concerning the transaction of which the licensee has actual knowledge, provided that nothing in this section shall modify or limit in any way the provisions of § 42-1755(f) [repealed]; and
(iv) Accounting for in a timely manner all money and property received in which the buyer has or may have an interest;
(C) Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the buyer consents in writing to the release of such information;
(D) Exercise ordinary care; and
(E) Comply with all requirements of this section, all applicable fair housing statutes and regulations, and all other applicable statutes and regulations which are not in conflict with this section.
(2) Licensees shall treat all prospective sellers honestly and shall not knowingly give them false information. No cause of action shall arise against any licensee for revealing information as required by this section or applicable law. In the case of a residential transaction, a licensee engaged by a buyer shall disclose to a seller the buyer’s intent to occupy the property as a principal residence.
(3) A licensee engaged by a buyer in a real estate transaction may, unless prohibited by law or the brokerage relationship, provide assistance to the seller, or prospective seller, by performing ministerial acts. Performing such ministerial acts that are not inconsistent with subsection (a) of this section shall not be construed to violate the licensee’s brokerage relationship with the buyer unless expressly prohibited by the terms of the brokerage relationship, nor shall performing such ministerial acts be construed to form a brokerage relationship with the seller.
(4) A licensee engaged by a buyer does not breach any duty or obligation to the buyer by showing properties in which the buyer is interested to other prospective buyers, whether as clients or customers, by representing other buyers looking at the same or other properties, or by representing sellers relative to other properties.
(5) Licensees shall disclose brokerage relationships pursuant to the provisions of this section.
(c) Licensees engaged by landlords to lease property. —
(1) A licensee engaged by a landlord shall:
(A) Perform in accordance with the terms of the brokerage relationship;
(B) Promote the interests of the landlord by:
(i) Seeking a tenant at the price and terms agreed in the brokerage relationship or at a price and terms acceptable to the landlord; however, the licensee shall not be obligated to seek additional offers to lease the property while the property is subject to a lease or a letter of intent to lease under which the tenant has not yet taken possession, unless agreed as part of the brokerage relationship, or unless the lease or the letter of intent to lease so provides;
(ii) Presenting in a timely manner all written offers or counteroffers to and from the landlord, even when the property is already subject to a lease or a letter of intent to lease;
(iii) Disclosing to the landlord material facts related to the property or concerning the transaction of which the licensee has actual knowledge; and
(iv) Accounting for in a timely manner all money and property received in which the landlord has or may have an interest;
(C) Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential, unless otherwise provided by law or the landlord consents in writing to the release of such information;
(D) Exercise ordinary care; and
(E) Comply with all requirements of this section, fair housing statutes and regulations, and all other applicable statutes and regulations which are not in conflict with this section.
(2) Licensees shall treat all prospective tenants honestly and shall not knowingly give them false information. A licensee engaged by a landlord shall disclose to prospective tenants all material adverse facts pertaining to the physical condition of the property which are actually known by the licensee. A licensee shall not be liable to a tenant for providing false information to the tenant if the false information was provided to the licensee by the landlord and the licensee did not have actual knowledge that the information was false or act in reckless disregard of the truth. No cause of action shall arise against any licensee for revealing information as required by this section or applicable law. Nothing in this subsection shall limit the right of a prospective tenant to inspect the physical condition of the property. Nothing in this section shall modify or limit in any way the provisions of § 42-1755(f) [repealed].
(3) A licensee engaged by a landlord in a real estate transaction may, unless prohibited by law or the brokerage relationship, provide assistance to a tenant, or potential tenant, by performing ministerial acts. Performing such ministerial acts that are not inconsistent with subsection (a) of this section shall not be construed to violate the licensee’s brokerage relationship with the landlord unless expressly prohibited by the terms of the brokerage relationship, nor shall performing such ministerial acts be construed to form a brokerage relationship with such tenant or potential tenant.
(4) A licensee engaged by a landlord does not breach any duty or obligation owed to the landlord by showing alternative properties to prospective tenants, whether as clients or customers, or by representing other landlords who have other properties for lease.
(5) Licensees shall disclose brokerage relationships pursuant to the provisions of this section.
(d) Licensees engaged by tenants. —
(1) A licensee engaged by a tenant shall:
(A) Perform in accordance with the terms of the brokerage relationship;
(B) Promote the interests of the tenant by:
(i) Seeking a lease at a price and with terms acceptable to the tenant; however, the licensee shall not be obligated to seek other properties for the tenant while the tenant is a party to a lease or a letter of intent to lease exists under which the tenant has not yet taken possession, unless agreed to as part of the brokerage relationship, or unless the lease or the letter of intent to lease so provides;
(ii) Presenting in a timely fashion all written offers or counteroffers to and from the tenant, even when the tenant is already a party to a lease or a letter of intent to lease;
(iii) Disclosing to the tenant material facts related to the property or concerning the transaction of which the licensee has actual knowledge, provided that nothing in this section shall amend or limit in any way the provisions of § 42-1755(f) [repealed]; and
(iv) Accounting for in a timely manner all money and property received in which the tenant has or may have an interest;
(C) Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the tenant consents in writing to the release of such information;
(D) Exercise ordinary care; and
(E) Comply with all requirements of this section, fair housing statutes and regulations, and all other applicable statutes and regulations which are not in conflict with this section.
(2) Licensees shall treat all prospective landlords honestly and shall not knowingly give them false information. No cause of action shall arise against any licensee for revealing information as required by this section or applicable law.
(3) A licensee engaged by a tenant in a real estate transaction may provide assistance to the landlord or prospective landlord by performing ministerial acts. Performing such ministerial acts that are not inconsistent with subsection (a) of this section shall not be construed to violate the licensee’s brokerage relationship with the tenant unless expressly prohibited by the terms of the brokerage relationship, nor shall performing such ministerial acts be construed to form a brokerage relationship with the landlord or prospective landlord.
(4) A licensee engaged by a tenant does not breach any duty or obligation to the tenant by showing properties in which the tenant is interested to other prospective tenants, whether as clients or customers, by representing other tenants looking for the same or other properties to lease, or by representing landlords relative to other properties.
(5) Licensees shall disclose brokerage relationships pursuant to the provisions of this section.
(e) Licensees engaged to manage real estate. —
(1) A licensee engaged to manage real estate shall:
(A) Perform in accordance with the terms of the property management agreement;
(B) Exercise ordinary care;
(C) Disclose in a timely manner to the owner material facts of which the licensee has actual knowledge concerning the property;
(D) Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential unless otherwise provided by law or the owner consents in writing to the release of such information;
(E) Account for, in a timely manner, all money and property received in which the owner has or may have an interest; and
(F) Comply with all requirements of this section, fair housing statutes and regulations, and all other applicable statutes and regulations which are not in conflict with this section.
(2) Except as provided in the property management agreement, a licensee engaged to manage real estate does not breach any duty or obligation to the owner by representing other owners in the management of other properties.
(3) A licensee may also represent the owner as seller or landlord if they enter into a brokerage relationship that so provides; in which case, the licensee shall disclose such brokerage relationships pursuant to the provisions of this section.
(f) Preconditions to brokerage relationship. — Prior to entering into any brokerage relationship provided for in this section, a licensee shall advise the prospective client of the type of brokerage relationship proposed by the broker, and the broker’s compensation, and whether the broker will share such salary or compensation with another broker who may have a brokerage relationship with another party to the transaction.
(g) Commencement and termination of brokerage relationships. —
(1) The brokerage relationships set forth in this section shall commence at the time that a client engages a licensee and shall continue until (A) completion of performance in accordance with the brokerage relationship, or (B) the earlier of (i) any date of expiration agreed upon by the parties as part of the brokerage relationship or in any amendments thereto, (ii) any mutually agreed upon termination of the relationship, (iii) a default by any party under the terms of the brokerage relationship, or (iv) a termination as set forth in subsection (i)(4) of this section.
(2) Brokerage relationships shall have a definite termination date; however, if a brokerage relationship does not specify a definite termination date, the brokerage relationship shall terminate 90 days after the date the brokerage relationship was entered into.
(3) Except as otherwise agreed to in writing, a licensee owes no further duties to a client after termination, expiration, or completion of performance of the brokerage relationship, except to account for all moneys and property relating to the brokerage relationship, and keep confidential all personal and financial information received from the client during the course of the brokerage relationship and any other information that the client requests during the brokerage relationship be maintained confidential, unless otherwise provided by law or the client consents in writing to the release of such information.
(h) Disclosure of brokerage relationship. —
(1) Upon having a substantive discussion about a specific property or properties with an actual or prospective buyer or seller who is not the client of the licensee, a licensee shall disclose any broker relationship the licensee has with another party to the transaction. Further, except as provided in subsection (i) of this section, such disclosure shall be made in writing at the earliest practical time, but in no event later than the time when specific real estate assistance is first provided. Such disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. Disclosure which complies substantially in effect with the following shall be deemed in compliance with this disclosure requirement:
“The undersigned do hereby acknowledge disclosure that:
“The licensee _________________________
represents the following party in a real estate transaction:
_____ Seller(s) or _____ Buyer(s)
_____ Landlord(s) or _____ Tenant(s)
__________ __________
Date Name
__________ __________
Date Name”.
(2) A licensee shall disclose to an actual or prospective landlord or tenant, who is not the client of the licensee, that the licensee has a brokerage relationship with another party or parties to the transaction. Such disclosure shall be in writing and included in all applications for lease or in the lease itself, whichever occurs first. If the terms of the lease do not provide for such disclosure, disclosure shall be made in writing no later than the signing of lease. Such disclosure requirement shall not apply to lessors or lessees in single or multifamily residential units for lease terms of less than 2 months.
(3) If a licensee’s relationship to a client or customer changes, the licensee shall disclose that fact in writing to all clients and customers already involved in the specific contemplated transaction.
(4) Copies of any disclosures relative to fully executed purchase contracts shall be kept by the licensee for a period of 3 years as proof of having such disclosure, whether or not such disclosure is acknowledged in writing by the party to whom such disclosure was shown or given.
(i) Disclosed dual or designated representation authorized. —
(1) A licensee may act as a dual representative only with the written consent of all clients to the transaction. Such written consent and disclosure of the brokerage relationship as required by this section shall be presumed to have been given as against any client who signs a disclosure as provided in this section.
(2) Such disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. Any disclosure which complies substantially in effect with the following shall be deemed in compliance with this disclosure requirement:
“The undersigned do hereby acknowledge disclosure that:
“The licensee _______________
(Name of Broker, Firm, Salesperson or Property Manager as applicable) represents more than one party in this real estate transaction as indicated below:
_____ Seller(s) and Buyer(s)
_____ Landlord(s) and Tenant(s).
“The undersigned understands that the foregoing dual representative may not disclose to either client or such client’s designated representative any information that has been given to the dual representative by the other client within the confidence and trust of the brokerage relationship except for that information which is otherwise required or permitted by § 42-1755(f), to be disclosed. The undersigned by signing this notice do hereby acknowledge their informed consent to the disclosed dual representation by the licensee.
____________ _______________
Date Name (One Party)
____________ _______________
Date Name (One Party)
____________ _______________
Date Name (Other Party)
____________ _______________
Date Name (Other Party)”.
(3) No cause of action shall arise against a dual representative for making disclosures of brokerage relationships as provided by this section. A dual representative does not terminate any brokerage relationship by the making of any such allowed or required disclosures of dual representation.
(4) In any real estate transaction, a licensee may withdraw, without liability, from representing a client who refuses to consent to a disclosed dual representation, thereby terminating the brokerage relationship with such client. Such withdrawal shall not prejudice the ability of the licensee to continue to represent the other client in the transaction nor to limit the licensee from representing the client who refused the dual representation in other transactions not involving dual representation.
(5) A principal or supervising broker may assign different licensees affiliated with the broker as designated representatives to represent different clients in the same transaction to the exclusion of all other licensees in the firm. Use of such designated representatives shall not constitute dual representation if a designated representative is not representing more than one client in a particular real estate transaction; however, the principal or broker who is supervising the transaction shall be considered a dual representative as provided in this article. Designated representatives may not disclose, except to the affiliated licensee’s broker, personal or financial information received from the clients during the brokerage relationship and any other information that the client requests during the brokerage relationship be kept confidential, unless otherwise provided for by law or the client consents in writing to the release of such information.
(6) Use of designated representatives in a real estate transaction shall be disclosed in accordance with the provisions of this section. Such disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. Any disclosure which complies substantially in effect with the following shall be deemed in compliance with such disclosure requirement:
“The undersigned do hereby acknowledge disclosure that:
“The licensee _______________
(Name of Broker and Firm)
represents more than one party in this real estate transaction as indicated below:
_____ Seller(s) and Buyer(s)
_____ Landlord(s) and Tenant(s).
“The undersigned understands that the foregoing dual representative may not disclose to either client or such client’s designated representative any information that has been given to the dual representative by the other client within the confidence and trust of the brokerage relationship except for that information which is otherwise required or permitted by the Real Estate Licensure Amendment Act of 1996 to be disclosed. The undersigned by signing this notice do hereby acknowledge their informed consent to the disclosed dual representation by the licensee.
“The principal or supervising broker has assigned __________ to act as Designated Representative (Licensee/Sales Associate) for the one party as indicated below:
_____ Seller(s) or _____ Buyer(s)
_____ Landlord(s) or _____ Tenant(s).
__________ to act as Designated Representative (Licensee/Sales Associate) for the one party as indicated below:
_____ Seller(s) or _____ Buyer(s)
_____ Landlord(s) or _____ Tenant(s)
____________ ____________
Date Name (Other Party)
____________ ____________
Date Name (Other Party)
____________ ____________
Date Name (Other Party)
____________ ____________
Date Name (Other Party)”.
(j) Compensation shall not imply brokerage relationship. — The payment or promise of payment or compensation to a real estate broker or property manager does not create a brokerage relationship between any broker, seller, landlord, buyer or tenant.
(k) Brokerage relationship not created by using common source information company. — No licensee representing a buyer or tenant shall be deemed to have a brokerage relationship with a seller, landlord, or other licensee solely by reason of using a common source information company.
(l) Liability; knowledge not to be imputed. —
(1) A client is not liable for a misrepresentation made by a licensee in connection with a brokerage relationship, unless the client knew or should have known of the misrepresentation and failed to take reasonable steps to correct the misrepresentation in a timely manner, or the negligence, gross negligence, or intentional acts of any property manager, broker, or broker’s licensee.
(2) A licensee who has a brokerage relationship with a client and who engages another licensee to assist in providing brokerage services to such client shall not be liable for a misrepresentation made by the other licensee, unless the licensee knew or should have known of the other licensee’s misrepresentation and failed to take reasonable steps to correct the misrepresentation in a timely manner, or the negligence, gross negligence, or intentional acts of the assisting licensee or assisting licensee’s licensee.
(3) Clients and licensees shall be deemed to possess actual knowledge and information only. Knowledge or information between or among clients and licensees shall not be imputed.
(4) Nothing in this section shall limit the liability between or among clients and licensees in all matters involving unlawful discriminatory housing practices.
(5) Except as expressly set forth in this section, nothing in this section shall affect a person’s right to rescind a real estate transaction or limit the liability of a client for the misrepresentation, negligence, gross negligence, or intentional acts of such client in connection with a real estate transaction, or a licensee for the misrepresentation, negligence, gross negligence, or intentional acts of such licensee in connection with a real estate transaction.
(m) Commission regulations to be consistent. — Any regulations adopted by the Commission shall be consistent with this section, and any such regulations existing as of April 9, 1997 [shall] be modified to comply with the provisions of this section.
(n) Common law abrogated. — The common law of agency relative to brokerage relationships in real estate transactions to the extent inconsistent with this section shall be expressly abrogated.
(o) Applicability of criminal penalties. — The criminal penalties provided in § 42-1763 [repealed], shall not be applicable to violations of this section, which shall be civil and regulatory in nature, provided that the provisions in §§ 42-1708 and 42-1753 through 42-1762 [repealed], shall be applicable to such violations.
§ 42–1704. Escrow accounts.
(a) In any real estate transaction in which any person is entrusted, receives, and accepts, or otherwise holds or deposits monies or other trust instruments, of whatever kind or nature, pending consummation or termination of the transaction involved, whether or not the person is required to be licensed under this subchapter, the monies, in the absence of written instructions to the contrary signed by all parties to the transaction, shall be:
(1) Deposited within 7 days in an account in a financial institution located within the District whose deposits are insured either by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or their successors;
(2) Maintained by the escrow holder or trustee as a separate account for monies belonging to others; and
(3)(A) Retained in an account until the transaction involved is consummated or terminated, or until proper written instructions have been received by the escrow holder or trustee directing the withdrawal and disposition of the monies, at which time, all the monies shall be promptly and fully accounted for by the escrow holder or trustee. In no event shall any escrow holder or trustee commingle any of the monies with his or her own funds or use any of the monies for any purpose other than the purpose for which the monies were entrusted to him or her.
(B) The escrow holder or trustee may keep a nominal amount of his or her personal funds in an escrow or trustee account for the purpose of keeping active the escrow or trustee account.
(b)(1) Each escrow holder or trustee shall notify the Commission within 14 calendar days of the name and post office address of the financial institution in which an escrow or trust account has been established and also the name and number of the account.
(2) All escrow holders or trustees shall notify the Commission of all escrow in trust accounts existing on March 10, 1983, and within 30 calendar days after March 10, 1983.
(c) Each escrow holder or trustee shall give written authorization to the Commission to examine escrow or trust accounts maintained by him or her and shall permit the Commission to examine all books, records, and contracts relating to the escrow accounts. The examinations shall be made at any time the Commission may direct.
(d) An escrow holder or trustee shall not be entitled to any part of the earnest money or other money paid to, or held by, the escrow holder or trustee in connection with any real estate or business transaction as a part or all of his or her commission or fee or for any other purpose until the transaction has been consummated or terminated.
(e) If an escrow or trust is held for 90 days or more, it shall earn interest from the 91st day to the date the transaction is consummated or terminated, at the highest of the following interest rates:
(1) The legal maximum rate under federal law for interest on ordinary savings deposits in commercial banks;
(2) The rate on the account in which the escrow is deposited; or
(3) The rate on the certificate of deposit or other security given as the escrow or trust.
(f) A service fee of not more than $15 may be subtracted from the interest by the financial institution into which the escrow or trust funds are deposited.
(g) Nothing in this section shall be interpreted to supercede the Security Deposit Act (D.C. Law 1-48; 22 DCR 2825).
§ 42–1705. Written listing contract required.
A written listing contract is required in the District for the sale of all real property. A licensee shall not receive payment of a commission in the absence of a written listing agreement.
§ 42–1706. Establishment of Real Estate Guaranty and Education Fund; Mayor to determine sum for deposit into Fund.
(a) There is established a Real Estate Guaranty and Education Fund (“Fund”).
(b)(1) Except as provided in § 42-1707(k), on or after March 10, 1983, every real estate broker, real estate salesperson and property manager licensed under this subchapter shall, as a condition for renewing his or her license, pay in addition to any other fees required under this subchapter, the sum to be established by the Mayor for deposit into the Fund. On or after March 10, 1983, any person, before receiving an original real estate broker, real estate salesperson, or property manager license, shall pay, in addition to any other fees required under this subchapter, a sum to be established by the Mayor for deposit into the Fund.
(2) Such amounts as may be appropriated to the Fund shall be deposited into the Fund.
(3) In Fiscal Year 2020, $600,000 shall be deposited into the Fund from Fiscal Year 2019 local fund resources.
(c) Money in the Fund shall be used for purposes consistent with § 42-1707.
(d)(1) The money deposited into the Fund but not expended in a fiscal year shall not revert to the unassigned fund balance of the General Fund of the District of Columbia at the end of a fiscal year, or at any other time.
(2) Subject to authorization in an approved budget and financial plan, any funds appropriated in the Fund shall be continually available without regard to fiscal year limitation.
§ 42–1707. Applications for payments from Fund; maximum payment; management of Fund.
(a) Any person who: (1) obtains a final judgment, including a settlement reduced to a final judgment, in any court of competent jurisdiction in the District against any other person on the grounds of fraud, misrepresentation, deceit, embezzlement, false pretenses, forgery, failure to account for or conversion of trust funds, or violation of the provisions of this subchapter, arising directly out of any transaction which occurred when the other person was licensed under this subchapter, during the course of which the licensee performed acts for which a license is required under this subchapter, and which transaction occurred on or after March 10, 1983; and (2) meets the requirements of subsection (b) of this section; may, upon termination of all proceedings, including reviews and appeals in connection with the judgment, file a written application, under oath, with the Mayor for an order directing payment from the Fund of the amount of actual and direct loss in the transaction (excluding the amount of any interest, attorney’s fees, court costs, or punitive or exemplary damages) which remains unpaid upon the judgment. The application shall be filed no later than 12 months after the date on which the judgment became final.
(b) A person filing an application meets the requirements of this subsection if:
(1) The person is not a licensee or the personal representative of a licensee and is not the spouse or child of the licensee against whom the final judgment was awarded, or the personal representative of the spouse or child;
(2) The person has made the investigation as is reasonably necessary to determine whether the judgment debtor possesses real or personal property or other assets which are liable to be sold or applied in satisfaction of the final judgment and has filed with the Board an affidavit which states that the investigation has been made; and
(3) The investigation required by paragraph (2) of this subsection has not disclosed the existence of any real or personal property or other assets, or, if the investigation has disclosed the existence of real or personal property or other assets (which shall be described in the affidavit) the person has taken all action necessary for the sale or application, and the amount so realized is insufficient to satisfy the judgment (which amount shall have been stated in the affidavit together with the balance remaining due on the judgment after the sale or application).
(c) Notwithstanding any other provision of this section, the maximum amount that may be paid from the Fund to satisfy in whole or in part a final judgment against a licensee as provided for herein shall be as follows:
Amount
$10,000 ...... Judgment is final during the first year following March 10, 1983;
$20,000 ...... Judgment is final during the second year following March 10, 1983;
$30,000 ...... Judgment is final during the third year following March 10, 1983;
$40,000 ...... Judgment is final during the fourth year following March 10, 1983; and
$50,000 ...... Judgment is final during the fifth year following March 10, 1983, and thereafter.
(d) The aggregate of claims by judgment creditors against the Fund based upon an unpaid final judgment arising out of the acts of the licensee in connection with a single transaction shall be $50,000 regardless of the number of claimants. If the aggregate of claims exceeds $50,000, the Board shall pay $50,000 to the claimants in proportion to the amounts of their final judgments against the Fund which remain unpaid. If the Mayor has reason to believe that there may be additional claims against the Fund arising out of the same transaction, the Mayor may withhold payment from the Fund involving the licensee for a period of not more than 1 year.
(e) Any person who commences an action for a judgment which could be the basis for an order of the Mayor directing payment from the Fund shall notify the Mayor in writing within 30 days after the date of the commencement of the action. Any failure to notify the Mayor as required under this subsection shall be grounds for the Mayor to deny an application of the person for payment from the Fund. The Mayor may waive this requirement if good cause is shown for failure to notify. The Mayor may, in accordance with the provisions of this subchapter, commence an investigation of the complaint and hold a hearing to determine whether any license issued pursuant to this subchapter should be suspended or revoked.
(f) Whenever an aggrieved person who has become a judgment creditor as provided in this section files an application for an order directing payment from the Fund, the Mayor shall cause a copy of the application to be served on the licensee alleged to be the judgment debtor, by certified mail, return receipt requested, to the address of record of the licensee, and the matter shall be set for hearing before the Board. Whenever the Mayor determines that the applicant is entitled to payment from the Fund, the Mayor shall issue an order directing payment from the Fund in an amount consistent with this subchapter.
(g) If the Mayor issues an order directing payment from the Fund of any amount towards satisfaction of a judgment against a licensed real estate broker, real estate salesperson, or property manager, the license of the person shall be automatically suspended upon the issuance of the order. No real estate broker, real estate salesperson, or property manager shall be eligible to have his or her license restored until he or she has repaid in full the amount ordered paid from the Fund, plus interest at an annual rate established by the Mayor from the date of payment of the amount from the Fund, and has satisfied all rules governing licensure as set forth in this subchapter.
(h) Whenever amounts deposited in the Fund are insufficient to satisfy any duly authorized claim or portion thereof, the Mayor shall, when sufficient money has been deposited or portions thereof, satisfy the unpaid claims in the order that the applications relating thereto were originally filed with the Mayor, including accumulated interest at an annual rate established by the Mayor for a period not to exceed 1 year in duration.
(i) In addition to the requirements of this subchapter, if the Mayor determines that it is necessary to require the bonding requirements of licensees, the Mayor shall by rule establish bonding requirements as are deemed necessary to protect the public.
(j) All sums paid pursuant to § 42-1706 and subsection (c) of this section shall be deposited with the D.C. Treasurer and shall be credited to the Fund. Any interest earned from any deposits and investments of the Fund also shall be credited to the Fund. The interest to be credited to the Fund may be determined, consistent with the financial management procedures of the District and may be revised from time to time, as a pro-rata share of the interest earned on pooled cash, deposits, and investments.
(k) The Mayor shall, by rule, establish minimum and maximum balances for the Fund.
(l) Should the Office of the Chief Financial Officer project that the year-end Fund balance for any fiscal year will be less than the minimum balance established pursuant to subsection (k) of this section, the Mayor shall assess each licensee an amount, not to exceed $50 during any license year, within 30 calendar days, which is sufficient, when combined with similar assessments of other licensees, to bring the balance of the Fund up to the minimum established. Whenever the amount deposited in the Fund is more than the maximum balance established, the Mayor shall waive contributions to the Fund required by this subchapter.
(m) Notice of an assessment required pursuant to subsection (l) of this section shall be sent, by certified mail, to each licensee at his or her address of record. The Board may waive the certified mail requirement to licensees only when the Board is doing a mass mailing, the cost of which makes the application of such fee an undue financial burden on the Board and may, in such circumstances, send notice of the assessment by regular mail to each licensee at his or her address of record. The Board shall also post notice of the assessment in at least two trade publications distributed within the metropolitan area and in a local newspaper in the real estate section. Payment of the assessment shall be made within 30 calendar days after the receipt by the licensee of the notice.
(n) A failure by any licensee to pay an assessment required pursuant to subsection (l) of this section within 30 days after the licensee has received notice of the assessment shall result in the automatic suspension of the license of the licensee. The Board shall send a notice of the suspension, by certified mail, to the address of record of the licensee within 5 days after the suspension. The license shall be restored only upon the actual receipt by the Mayor of the delinquent assessment, plus any interest and penalties as the Mayor may prescribe by rule.
(o) The Board may expend a sum not to exceed 20% of the amounts deposited in the Fund, on October 1 of each year, for the establishment and maintenance of educational programs for improving the competency of licensees and applicants for licensure so as to further protect the public interest, and for conferences, workshops, and educational programs for real estate license officials. The cost of administering the Fund shall be paid out of the Fund.
(p) When the Mayor has ordered a sum from the Fund to be paid to a judgment creditor, the Mayor shall be subrogated to all of the rights of the judgment creditor up to the amount paid and the judgment creditor shall assign to the Mayor all rights, title, and interest in the judgment up to the amount paid from the Fund. Any amount and interest so recovered by the Mayor or the judgment creditor on the judgment up to the amount paid shall be deposited in the Fund.
§ 42–1708. Additional criminal penalties.
(a) Any person who knowingly files with the Mayor any application, notice, or other document required to be filed under this subchapter or any rule issued thereunder, which is false or fraudulent or contains any material misstatement of fact, shall, upon conviction, be punished by a fine of no more than $3,000 or by imprisonment for no more than 1 year, or both.
(b) The Corporation Counsel of the District may enter an appearance, file an answer, appear at court hearings, defend the action, or take whatever other action he or she deems appropriate on behalf of any party to a court proceeding in the District in which the Mayor may be interested, and may take recourse through any appropriate method of review on behalf and in the name of any party to a court action.
(c) Nothing contained in this subchapter shall be construed as limiting the authority of the Mayor to take disciplinary action against any licensee pursuant to this subchapter for any violation of this subchapter or any rules promulgated under this subchapter, nor shall repayment in full of the amount paid from the Fund on the licensee’s account nullify or modify the effect of any other disciplinary proceeding brought against the licensee pursuant to this subchapter for any violation.
§ 42–1709. Savings clause.
(a) The repeal of any provision of §§ 42-1721 to 42-1738 [repealed], or any rule issued pursuant to this subchapter, shall not affect any act done, or any right accruing or accrued on any liability arising, or any suit or proceeding had or commenced in any civil cause under §§ 42-1721 to 42-1738 [repealed] before repeal, but all rights and liabilities under §§ 42-1721 to 42-1738 [repealed] shall continue and may be enforced in the same manner and to the same extent as if this subchapter had not been enacted.
(b) Any violation of any provision of §§ 42-1721 to 42-1738 [repealed] or any liability arising under the provision, shall, if the violation occurred prior to repeal, be prosecuted and punished in the same manner and with the same effect as if this subchapter had not been enacted.
Subchapter II. Repealed Provisions.
§ 42–1721. Acting as broker or salesman without license unlawful [Repealed]
Repealed.
§ 42–1722. Definitions --exceptions to license requirements [Repealed]
Repealed.
§ 42–1723. Real Estate Commission; creation; membership; seal; records; compensation [Repealed]
Repealed.
§ 42–1724. Qualifications for license [Repealed]
Repealed.
§ 42–1725. Application for license [Repealed]
Repealed.
§ 42–1726. Procedure when license refused [Repealed]
Repealed.
§ 42–1727. Details relating to license [Repealed]
Repealed.
§ 42–1728. Suspension or revocation of license [Repealed]
Repealed.
§ 42–1729. Hearing before suspension [Repealed]
Repealed.
§ 42–1730. Provisions applicable to nonresident brokers and salesmen [Repealed]
Repealed.
§ 42–1731. Powers to obtain evidence [Repealed]
Repealed.
§ 42–1732. Further exemptions [Repealed]
Repealed.
§ 42–1733. List of licensees to be published [Repealed]
Repealed.
§ 42–1734. Fraudulent transfers or loans [Repealed]
Repealed.
§ 42–1735. License revoked on conviction of crime [Repealed]
Repealed.
§ 42–1736. Penalties; prosecutions [Repealed]
Repealed.
§ 42–1737. Bond required for renewal of licenses [Repealed]
Repealed.
§ 42–1738. Separability [Repealed]
Repealed.
§ 42–1739. Real Estate Commission of the District of Columbia. [Repealed]
Repealed.
§ 42–1740. Powers and duties of Mayor; evidentiary use of copies of Commission documents; record of Commission proceedings. [Repealed]
Repealed.
§ 42–1741. Fees. [Repealed]
Repealed.
§ 42–1742. Licensure of real estate brokers, real estate salespersons, and property managers. [Repealed]
Repealed.
§ 42–1743. Qualifications for licensure. [Repealed]
Repealed.
§ 42–1744. Status of person previously licensed. [Repealed]
Repealed.
§ 42–1745. Licensure required for property managers. [Repealed]
Repealed.
§ 42–1746. Registration and certification required for resident managers. [Repealed]
Repealed.
§ 42–1747. Qualifications for licensure of property managers. [Repealed]
Repealed.
§ 42–1748. Waiver of examination and education requirements for property managers. [Repealed]
Repealed.
§ 42–1749. Exemptions. [Repealed]
Repealed.
§ 42–1750. Transfer of license; change of status; brokerage firms. [Repealed]
Repealed.
§ 42–1751. Licensure of legal entities. [Repealed]
Repealed.
§ 42–1752. Place of business. [Repealed]
Repealed.
§ 42–1753. Prohibited names. [Repealed]
Repealed.
§ 42–1754. Injunctions. [Repealed]
Repealed.
§ 42–1755. Investigation of conduct; suspension or revocation of license; grounds; penalty in lieu of suspension; probationary period; reinstatement. [Repealed]
Repealed.
§ 42–1756. Procedural requirements. [Repealed]
Repealed.
§ 42–1757. Automatic suspension of license through affiliation; discharge or termination of employment or affiliation. [Repealed]
Repealed.
§ 42–1758. Prohibited acts. [Repealed]
Repealed.
§ 42–1759. License suspended upon criminal conviction. [Repealed]
Repealed.
§ 42–1760. Effect of criminal conviction upon license application. [Repealed]
Repealed.
§ 42–1761. Effect of license revocation or suspension upon partnership, association, or corporation. [Repealed]
Repealed.
§ 42–1762. Suspension or revocation of property manager license; code of ethics applicable to all licensees. [Repealed]
Repealed.
§ 42–1763. Criminal penalties; prosecutions. [Repealed]
Repealed.
§ 42–1764. Duties of Corporation Counsel. [Repealed]
Repealed.
