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2011 Legislative Update
December 06, 2011
The 2011 Oregon Legislature passed two bills that directly affect real estate license law. One establishes affirmative dutes for property management. The other authorizes the Agency to issue cease and desist orders for unlicensed activity.
New Affirmative Duties for Licensees who Act as Property Managers
Senate Bill 156 (2011 Oregon Laws Chapter 158), becomes effective January 1, 2012. It establishes affirmative duties that property managers owe to property owners. A “property manager” includes any real estate licensee who engages in the management of rental real estate. An affirmative duty is a special duty of care.
Current statutes provide that real estate brokers owe property sellers or buyers affirmative duties. The new law establishes affirmative duties for property managers parallel to the affirmative duties for brokers. It creates an agency relationship between a property manager and a property owner.
The nine affirmative duties a real estate property manager owes a property owner are:
1. To deal honestly and in good faith;
2. To disclose material facts known by the property manager and not apparent or readily ascertainable to the owner;
3. To exercise reasonable care and diligence;
4. To account in a timely manner for all funds received from or on behalf of the owner;
5. To act in a fiduciary manner in all matters relating to trust funds;
6. To be loyal to the owner by not taking action that is adverse or detrimental to the owner’s interest;
7. To disclose in a timely manner to the owner any existing or contemplated conflict of interest;
8. To advise the owner to seek expert advice on matters that are beyond the property manager’s expertise; and
9. To maintain as confidential all information from or about the owner, except under subpoena or court order, even after the agency relationship ends.
New Agency Authority to Issue Cease and Desist Order for Unlicensed Activity
Senate Bill 485 (2011 Oregon Laws Chapter 557) was sponsored by Senator Suzanne Bonamici at the request of her constituents who had lost money to an unlicensed property manager. The Agency worked with the Senator on a legislative concept that would provide the Agency with the authority to issue cease and desist orders and enjoin unlicensed individuals. The legislation passed and the law became effective on June 28, 2011.
The new law authorizes:
* the Agency to issue cease and desist orders in a contested case against unlicensed individuals engaged in professional real estate activity.
* the Agency to record a final order in a county and enforce the order in court.
* the Agency, the Attorney General or a district attorney to file an action in court to enjoin an individual who engages in unlicensed professional real estate activity.
The Agency already had cease and desist authority against licensed and unlicensed escrow agents.
The cease and desist order will be an administrative action taken by the Agency. When issuing this order, the Agency must comply with administrative procedures act under ORS chapter 183, which provides an individual notice and an opportunity for a hearing.
The new law parallels laws relating to cease and desist orders for other state agencies. Many state regulatory licensing agencies currently have authority to issue cease and desist orders. These orders are issued against unlicensed individuals who engage in activity requiring a license such as such as accountants, tax preparers, mortgage brokers, electricians, plumbers, debt management service providers, securities brokers and investment advisors.
If an individual violates an order to cease and desist from engaging in unlicensed activity, the law provides the Agency with the ability to ask a court to enforce the order. In addition to the cease and desist provisions, the law also provides the Attorney General, the county district attorney, or the Real Estate Agency may file an injunction against an unlicensed individual.
Oregon Revised Statutes
