The Oregon Legislature recently ended what has been characterized as a whirlwind legislative session. As with any other session, a number of bills were passed that may impact real estate brokers. This article will summarize several key pieces of legislation and how brokers may be impacted by their passage.

In the past, we wrote about a change in construction contractor licensing laws which required homeowners who intended to improve and “flip” properties to have a contractor’s license, even if hiring licensed contractors to complete the improvements. Many brokers we spoke with expressed concern over this statutory requirement, particularly considering the widespread practice of home improvements and immediate sales of improved homes. House Bill 2498 amends Oregon Revised Statutes 701.010, allowing homeowners to improve and “flip” up to three properties per year without having a contractor’s license. House Bill 2498 added the following exemption from contractor licensure to ORS 701.010:

(6) An owner who contracts for one or more licensed contractors to perform work wholly or partially within the same calendar year on not more than three existing residential structures of the owner. This subsection does not apply to an owner contracting for work that requires a building permit unless the work that requires a permit is performed by, or under the direction of, a general contractor.

It is important to note that homeowners may still be required to maintain a contractor’s license if they hire a licensed contractor to improve four or more residences in one calendar year, provided the homeowner does not occupy the homes after completion of the improvements.

Oregon Revised Statutes 696.582 specifies the form of commission demand which real estate licensees must submit to escrow in order to be paid. Senate Bill 482 amends ORS 696.582, requiring a slightly altered form of commission demand. Specific changes to the form include replacement of all instances of the term “commission” with the term “compensation.” In addition, Senate Bill 482 amendments to ORS 696.582 require an escrow agent to provide a copy of a notice of compensation to the principal identified in the notice if the notice is filed within 10 days of the scheduled closing date. However, if the notice is filed more than 10 days before the closing date, the real estate licensee must provide notice to the principal.

Senate Bill 482 helps to clarify compensation to real estate licensees, and serves as a housekeeping measure. Licensees should familiarize themselves with the new statutory form that replaces the previous commission demand form so that they comply with the new law and receive their compensation promptly.

House Bill 3540 significantly alters the impact of Measure 37 claims filed by property owners. Although the bill does not single handedly amend Measure 37, it proposes changes to Measure 37 to Oregon voters, who will then vote in November 2007 on whether the changes should be instituted.

We recently wrote about Senate Bill 484 and the potential impact it would have on real estate licensees. In its original form, the bill stated that an individual or contract which required disputes to be resolved through binding arbitration would constitute an unlawful trade practice. In essence, this bill would have held real estate brokers potentially liable for requiring buyers and sellers to arbitrate all disputes against the broker and/or the other party to the transaction. The effect on the real estate industry could have been significant. However, due in part to strong lobbying by various real estate professionals and organizations, the bill was changed so that only consumer contracts for goods and services under $15,000 were referenced.

The Real Estate Agency recently adopted a permanent advertising rule that will be codified in Oregon Administrative Rule 863-015-0125. Most significantly, the rule states that a licensee’s name may not be larger in type size in advertising than the name of the brokerage with which the licensee holds its license. This change will take place on March 1, 2008. In addition, the rule requires principal brokers to be responsible for all advertising which names the principal broker’s licensed name or registered business name.

New advertising rules will change how a licensee advertises his or her services to the public. Licensees must adhere to the new type size requirement in less than one year, and would be well advised to start determining how to comply with the new rule.

In total, the bills passed in the Oregon Legislature during the regular 2007 session do not significantly or negatively impact real estate licensees. In fact, changes such as those to contractor licensing laws may place brokers in a more favorable position, as they do not potentially jeopardize their real estate licenses when representing clients who are knowingly violating contractor licensing law. In addition, because many licensees are also property owners, licensees will enjoy the same benefits as consumers – the ability to improve and sell up to three properties per calendar year.

Licensees will benefit from familiarizing themselves with new legislation and rules so they may comply with statutory requirements and understand their rights and obligations.

 
This column contains general information only and must not be construed as legal advice. Questions may be submitted directly to Maylie & Grayson by fax at (503) 775-1765, by email at or by mail at 7959 SE Foster Road, Portland, Oregon 97206.