FOR AN ACT ENTITLED, An Act to provide for the regulation of teams and team leaders regarding real estate transactions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
    Section 1. That § 36-21A-1 be amended to read:
    36-21A-1. Terms used in this chapter mean:

            (1)    "Agency," any relationship by which one person acts for or on behalf of a client subject to the client's reasonable direction and control;

            (2)    "Agency agreement," a written agreement between a broker and a client which that creates a fiduciary relationship between the broker and client. The payment or promise of payment of compensation to a responsible broker does not determine whether an agency relationship has been created between any responsible broker or licensees associated with the responsible broker and a client;

            (3)    "Auction," any public sale of real estate as defined in § 36-21A-11 or business property as defined in subdivision 36-21A-6 (3) at public offering to the highest

bidder;

            (4)    "Auctioneer," any person licensed under this chapter who auctions, offers, attempts or agrees to auction real estate or business opportunities;

            (5)    "Broker associate," any broker acting in association with or under the auspices of a responsible broker;

            (6)    "Client," any person, including a seller/landlord or a buyer/tenant, who has entered into an agency relationship with a real estate licensee;

            (7)    "Commission," the South Dakota Real Estate Commission;

            (8)    "Consumer," any person seeking or receiving services from a real estate broker;

            (9)    "Customer," any party to a real estate transaction who does not have an agency relationship with a licensee;

            (10)    "Designated broker," any broker licensee designated by a responsible broker to act for the company in the conduct of real estate brokerage;

            (11)    "In-company transaction," any transaction in which both the seller/landlord and the buyer/tenant receive real estate services from the same broker or from licensees associated with the same broker;

            (12)    "Licensee," any person holding a license issued pursuant to this chapter;

            (13)    "Limited agent," any licensee who has a written agency relationship with both the seller and the buyer in the same in-company transaction;

            (14)    "Person," any individual, corporation, limited liability company, partnership, limited partnership, association, joint venture or any other entity, foreign or domestic;

            (15)    "Purchaser," any person who acquires or attempts to acquire or succeeds to an interest in real property;

            (16)    "Responsible broker," any person holding a broker's license issued pursuant to this

chapter who is responsible for the real estate activities conducted by those licensees acting in association with or under the auspices of the responsible broker;

            (17)    "Served actively," if referring to a real estate salesman or broker associate, having the license on an active status with the commission;

            (18)    "Single agent," any licensee who represents only one party to a transaction;

            (19)    "Subdivider," a person who causes land to be subdivided into a subdivision for that person or others, or who undertakes to develop a subdivision. However, this does not include a public agency or officer authorized by law to create subdivisions;

            (20)    "Subdivision," or "subdivided land," any real estate offered for sale and which that has been registered under the Interstate Land Sales Full Disclosure Act, 82 Stat. 590 and following, 15 U.S.C. 1701 and following, as such the Act existed on January 1, 1980, or real estate located out of this state which that is divided or proposed to be divided into fifty or more lots, parcels, or units;

            (21)    "Team," any two or more persons licensed by the commission who work under the supervision of the same responsible broker, work together on real estate transactions to provide real estate brokerage services, represent themselves to the public as being part of a team or group, and are designated by a team or group name;

            (23)    "Transaction broker," a broker who assists one or more parties with a real estate transaction without being an agent or advocate for the interests of any party to the transaction. The term includes the licensees associated with the broker;

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            (22)(24)    "Transaction broker agreement," a written agreement in which the broker does not represent either the seller or the buyer in a fiduciary capacity. No brokerage relationship can be created or implied by word or action alone, but only by written agreement clarifying the brokerage relationship.
    Section 2. That chapter 36-21A be amended by adding a NEW SECTION to read:

    A team leader is responsible for supervising the real estate activities of the leader's team performed under this chapter subject to the overall supervision by the responsible broker.
    Section 3. That § 36-21A-71 be amended to read:
    36-21A-71. Unprofessional conduct includes the following:

            (1)    Violating any provisions of this chapter or any rule promulgated by the commission;

            (2)    Making a material false statement in the licensee's application for a license or in any information furnished to the commission;

            (3)    Making any substantial and willful misrepresentation with reference to a transaction which is injurious to any party;

            (4)    Making any false promise or advertisement of a character such as to influence, persuade or induce a party to a transaction to the party's injury or damage;

            (5)    Failure to account for or to remit, within a reasonable time, any moneys coming into the licensee's possession belonging to others, commingling funds of others with the licensee's own, failing to keep the funds of others in an escrow or trust account with a federally insured financial institution, or failing to keep records relative to the deposit, which shall contain any information as may be prescribed by this chapter or the rules promulgated by the commission pursuant to chapter 1-26 relative thereto;

            (6)    Being convicted, or pleading guilty or nolo contendere before a court of competent jurisdiction in this or any other state, or before any federal court, of a misdemeanor

involving moral turpitude or a felony arising under the laws of this state or under the laws of the United States or any other state that would be a misdemeanor involving moral turpitude or a felony under the laws of this state;

            (7)    Claiming or taking any secret or undisclosed amount of compensation or the failure of a licensee to reveal to the licensee's principal or employer the full amount of compensation in connection with any acts for which a license is required under this chapter;

            (8)    Failing or refusing upon demand to produce any document, book, or record in the licensee's possession or under the licensee's control, concerning a transaction under investigation by the commission;

            (9)    Offering real property for sale or lease without the knowledge and prior written consent of the owner or the owner's authorized agent or on any terms other than those authorized by the owner or the owner's authorized agent;

            (10)    Any violation of federal or state fair housing requirements;

            (11)    Failing or refusing upon demand to furnish copies including reproductions of any document pertaining to any transaction dealing with real estate to a person whose signature is affixed thereto;

            (12)    Paying compensation or commission in connection with a transaction to any person who is not licensed under this chapter;

            (13)    Failing to disclose to an owner in writing the licensee's intention or true position if the licensee directly or indirectly through a third party purchases for himself or herself or acquires or intends to acquire any interest in or any option to purchase property which has been listed with the licensee's office for sale or lease;

            (14)    Failure by a broker to deliver to the seller in every real estate transaction, at the time

the transaction is consummated, a complete, detailed closing statement, showing all of the receipts and disbursements for the seller; also failure to deliver to the buyer a complete statement showing all money received in the transaction from the buyer and how and for what the same was disbursed, and to retain true copies of the statements in the broker's files; also failure to date and sign the closing statement;

            (15)    Any other conduct which that constitutes dishonesty or fraudulent conduct, whether arising within or without the pursuit of the licensee's license privilege;

            (16)    Accepting employment or compensation for appraising real estate contingent upon reporting a predetermined value or issuing an appraisal report on real estate in which the licensee has an undisclosed interest;

            (17)    The revocation or suspension of any other license held by a person licensed under this chapter. Any other license includes being licensed as an attorney; real estate salesperson, broker or appraiser; insurance licensee; securities licensee; and other similar regulated occupation, trade or profession;

            (18)    Using, proposing the use, agreeing to the use or knowingly permitting the use of two or more contracts of sale, earnest money agreements or loan applications, one of which is not made known to the prospective lender or the loan guarantor, to enable the purchaser to obtain a larger loan than the true sales price would allow or to enable the purchaser to qualify for a loan which the purchaser otherwise could not obtain;

            (19)    Failing to promptly give a copy of an offer to purchase to the purchaser;

            (20)    Failing to promptly give the seller every written offer to purchase obtained;

            (21)    Upon obtaining an acceptance of the offer signed by the seller, failing to promptly give a copy of it to both purchaser and seller;

            (22)    Failing to make certain that all of the terms and conditions of the transaction are

included in the offer to purchase;

            (23)    Giving a title opinion upon the merchantability of the title to property in any transaction in which the licensee participated;

            (24)    Preparing any legal document, giving any legal advice, or otherwise engaging in the practice of law. Preparation of the following documents is exempt from this provision:

            (a)    Agency agreements or extensions;

            (b)    Offers to purchase;

            (c)    Offers to lease;

            (d)    Acceptances; and

            (e)    Closing statements;

            (25)    Permitting the use of a broker's license to enable licensed salespersons to establish and carry on a real estate brokerage business if the broker has only insignificant control of the affairs of the business conducted;

            (26)    Taking a net listing whereby a licensee agrees to take as compensation the proceeds of a sale over and above the selling price agreed in the listing contract;

            (27)    Failing to put in writing all guarantees of sale and other guarantees made by a licensee to the person listing the property for sale;

            (28)    Failing to put in writing any agreement to furnish or sell a warranty;

            (29)    Attempting to solicit or attempting to secure listings without first advising the owner that the licensee is a licensee and is engaged in real estate brokerage;

            (30)    Failing to protect and promote the interests of the client whom the licensee has undertaken to represent to the best of the licensee's ability;

            (31)    Failing to deal fairly with all parties to a transaction;

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            (32)    Committing any act constituting or demonstrating bad faith, incompetency or fraudulent dealings;

            (33)    Using the licensee's position to gain undue influence over a prospective buyer, seller, landlord, or tenant, using the licensee's position to coerce a buyer, seller, landlord, or tenant, or using duress on a buyer, seller, landlord, or tenant;

            (34)    Issuing an insufficient funds check;

            (35)    In a business enterprise that requires licensing by the commission, associating in any manner with another person who has had a license suspended or revoked by action of the commission while the suspension or revocation is in effect. This prohibition includes a corporation, a partnership, an association, a single proprietorship, and an employer-employee relationship. A licensee may act as an agent in a real estate transaction for a person who has had a license suspended or revoked by the commission if the transaction is one that would occur in the ordinary course of the licensee's business;

            (36)    Buying, selling, leasing, or exchanging real property under the auspices of a partnership or corporation of which the licensee owns an interest if it is indicated that the purchase or sale is being made by a private party not licensed by the real estate commission;

            (37)    Making a listing contract or any other contract with the licensee's principal which that allows the licensee to purchase or lease the listed property and charge a commission thereon without obtaining the written consent of the principal to such the provision. This written consent shall be in addition to the signing of any listing contract;

            (38)    Accepting a note or other nonnegotiable instrument or anything of value not readily negotiable as earnest money on a contract or offer to purchase without the written

permission of the licensee's principal;

            (39)    Selling, buying, exchanging or leasing real property in a manner indicating that the licensee is not licensed under this chapter; or

            (40)    Improperly influencing or attempting to influence the development, reporting, result, or review of a real estate appraisal by coercion, extortion, or bribery; withholding or threatened withholding of payment of an appraisal fee; conditioning the payment of an appraisal fee upon the opinion, conclusion, or valuation to be reached; requesting the appraiser report a predetermined opinion, conclusion, or valuation or the desired valuation of any person; or any other act or practice that impairs or attempts to impair an appraiser's independence, objectivity, and impartiality. This subdivision does not apply to the following acts:

            (a)    Requesting an appraiser to consider additional, appropriate property information;

            (b)    Providing further detail, substantiation, or explanation of the appraiser's value conclusion;

            (c)    Correcting errors in the appraisal report;

            (d)    Withholding payment of an appraisal fee based upon a bona fide dispute regarding the appraiser's compliance with the appraisal standards adopted by the Department of Labor and Regulation;

            (e)    Retaining a real estate appraiser from panels or lists on a rotating basis; or

            (f)    Supplying the appraiser with information the appraiser is required to analyze under the appraisal standards adopted by the Department of Labor and Regulation such as agreements of sale, options, or listings of the property to be valued;

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            (44)    A team leader using team advertising or a team name that would imply that the team is a separate entity from the brokerage firm with which the team brokers are licensed.
    Section 4. That § 36-21A-72 be amended to read:
    36-21A-72. A licensee who advertises shall comply with the following:

            (1)    Each advertisement shall clearly state the name of the firm with which an individual licensee is associated;

            (2)    Each team advertisement shall clearly state the name of the firm and the name of the team with which an individual licensee is associated;

            (3)    Each advertisement in which a licensee attempts to secure real estate listings or offers to purchase, sell or lease property, or perform any other act for which a license is required under this chapter, shall clearly disclose that the advertised acts or services are being offered by a licensee; and

            (3)(4)    No licensee may make any announcement in any media regarding the sale of property which gives any impression that the property sold for a price other than the actual selling price.

    Notwithstanding subdivisions (1) to (3)(4), inclusive, of this section, a licensee may advertise in the licensee's individual name an offer to sell or lease property of which the licensee is the owner. The advertisement shall disclose that the owner of the property being sold or

leased is a licensee.
    Section 5. That § 36-21A-89 be amended to read:
    36-21A-89. The commission may promulgate rules pursuant to chapter 1-26 relating to the administration and enforcement of the provisions of this chapter in the following areas:

            (1)    Procedures for conducting the commission's business;

            (2)    Procedures and qualifications for application, minimum requirements for examination, procedures for the examination and the administration of the examination, the required score for passing the examination, and procedures for replacement of a license;

            (3)    Requirements for dividing a commission with a broker in another state, requirements for application for licensure by reciprocity and the practice of a nonresident licensee in the state;

            (4)    Procedures for application to provide classroom instruction or correspondence work for prelicensing education, qualifications of the instructors and facilities, and procedures for approving classroom instruction and correspondence work and for withdrawing the approval;

            (5)    Procedures for disciplinary proceedings, including requirements for filing a complaint, dismissal of a complaint, informal and formal resolution of a complaint, formal complaint and answer requirements, final action and review, disqualification of a commission member from a hearing and authorization for per diem and mileage;

            (6)    Procedures for declaratory rulings, petitions for rules and contested cases;

            (7)    Requirements for a real estate auction and the requirements, duties and responsibilities of an auctioneer;

            (8)    Requirements for mortgage brokers, including areas such as trust accounts, record-

keeping, written contracts, full disclosure and restrictions on chargeable costs and expenses;

            (9)    Requirements for continuing education including procedures for granting a certificate of accreditation; notification of a material change in an approved course offering; suspension, revocation and denial of course approval; notice to students regarding the course and opportunity for comment; auditing; certificates of attendance; preregistration and limits on correspondence courses; and

            (10)    Requirements for property managers, including areas such as trust accounts, auditing, contracts, disclosure, disciplinary matters, financial obligations and records, and property management accounting; and

            (11)    Requirements for the duties and responsibilities of team members and team leaders.