Regulation Sections 8 & 10

AREC

A

R E C

R

S   

Q R G

R J 

INTRODUCTION

is is a Quick-Reference Guide to Sections

8 and 10 of the Arkansas Real Estate Commission

Regulations. Sections 8 and 10 are only a small por-

tion of the entire Arkansas Real Estate License Law

and Commission Regulations; however, these sections

address those issues which Brokers and Agents most

often face on a daily basis. For that reason, the Com-

mission assembled this Quick Reference Guide to make

the information readily available when it is needed.

Commission staff

Gary C. Isom

Executive Director

501.683.8016

Andrea S. Alford

Deputy Executive Director

501.683.8032

First Printing November 2014

Contents

SECTION 8: A D

. S  L A...............................................................

. B  L A ...............................................................

. D A.....................................................................................

. F  D A R..............................

. F  H D.....................................................

SECTION 10: B R; E R-

; T F  A; L   

A A; C C

10.1 Dealing Independently of Principal Broker..................................3

10.2 Expiration Date for Agency Agreements or Contracts...............3

10.3 Membership in Trade Organizations.............................................3

10.4 Broker Responsibilities; Executive Brokers; Part-Time Brokers.3

10.5 Advertising........................................................................................5

10.6 Knowledge of Property....................................................................5

10.7 Handling of Funds; Maintenance of Records...............................5

10.8 Trust Funds; Trust Accounts..........................................................6

10.9 Disbursement of Trust Funds.........................................................8

10.10 Agreements to Be Written............................................................9

10.11 Self Dealing.....................................................................................9

10.12 Oers and Acceptances.................................................................9

10.13 Listing Agreements; Signs.............................................................9

10.14 Reporting Violations...................................................................10

10.15 Broker’s Price Opinion................................................................10

10.16 Criminal Convictions and Disciplinary Actions.....................12

10.17 Violation of Law or Regulation..................................................12

Contents Continued

10.18 Property managment denitions...............................................12

10.19 Property management agreement.............................................12

10.20 Tenant agreement........................................................................13

10.21 Property management accounting and recordkeeping..........13

10.22 Property management owner ledgers.......................................13

10.23 Property management tenant ledgers.......................................13

10.24 Property management cash receipts.........................................14

iii

SECTION 8: Agency Disclosure

8.1 Seller or Lessor Agents

(a)(1) In any real estate transaction in which a licensee is acting

solely as agent for a seller or lessor, the licensee shall disclose to a potential

buyer or lessee, or to the buyer’s or lessee’s licensed agent, the licensee’s

agency relationship with the seller or lessor. Such disclosure shall be made

in a timely manner under the particular circumstances so as to avoid to the

extent possible eliciting or receiving from the prospective buyer or lessee

information which would reasonably be expected to remain condential

and not disclosed to the seller or lessor, such as, for example, information

concerning the real estate needs or motivations, negotiating strategies or

tactics, or the nancial situation of the potential buyer or lessee.

(2) When the disclosure is made to the licensed agent of the buyer

or lessee, it is that licensee’s duty to convey the disclosure to the buyer or

lessee in a timely manner.

(b) In all cases, disclosure shall be in writing, but may initially

be made orally and reduced to writing at a convenient time subject to

the requirements of Regulation 8.1(c). Evidence of the disclosure shall be

maintained by the licensee.

buyer or lessee signs any document related to the transaction, such as an

oer or lease or rental agreement.

8.2 Buyer or Lessee Agents

(a)(1) In any real estate transaction in which a licensee is acting

solely as agent for a buyer or lessee, the licensee shall disclose to a poten-

tial seller or lessor or to the seller’s or lessor’s licensed agent, the licensee’s

agency relationship with the buyer or lessee. Such disclosure shall be made

at the rst contact with the seller, lessor, or the agent of the seller or lessor.

(2) When the disclosure is made to the licensed agent of the seller

or lessor, it is that licensee’s duty to convey the disclosure to the seller or

lessor in a timely manner.

(b) In all cases, disclosure shall be in writing, but may initially

be made orally and reduced to writing at a convenient time subject to

the requirements of Regulation 8.2(c). Evidence of the disclosure shall be

maintained by the licensee.

(1)

(2)

seller or lessor signs any document related to the transaction, such as an

oer or lease or rental agreement.

8.3 Dual Agency

(a) A licensee who represents both the seller and buyer in a real

estate transaction, or both the lessor or tenant in a real estate lease or rent-

al transaction shall make disclosure in the time and manner required by

Regulations 8.1 and 8.2 and all parties to the transaction must have given

their written consent to such dual representation prior to or at the time of

execution of the agency contract, listing contract, property management

contract, lease, rental agreement, oer and acceptance contract or other

real estate contract.

(b) Notwithstanding Regulation 8.3(a), a licensee shall not ac-

cept a commission, rebate, prot, payment, compensation or other valuable

consideration in connection with a real estate transaction or real estate ac-

tivity from any person or entity except the licensed principal broker under

whom the licensee is licensed.

8.4 Failure to Disclose Agency Relationship

A licensee who fails to disclose the licensee’s agency relationship

in the time and manner required by these regulations shall be subject to

sanctions under Section 17 of Act 690 of 1993 (A.C.A.§ 17-42-312).

8.5 Fidelity and Honest Dealing

(a) In accepting employment as an agent, a licensee pledges to

protect and promote the interests of the client or clients. is obligation

of absolute delity to the interest of the client or clients is primary, but

does not relieve a licensee from the equally binding obligation of dealing

honestly with all parties to the transaction.

(b) A licensee shall not oer or advertise property without author-

ity and in any oering or advertisement the price quoted must not be other

than that agreed upon with the owners as the oering price.

licensee shall not accept any commission, rebate, prot, payment, compen-

sation or other valuable consideration from any source in connection with

the property without full written disclosure to the party represented by the

licensee.

(d) A licensee shall not accept compensation from more than one

party without full written disclosure to all parties to the transaction.

(3)

SECTION 10: Broker responsiBilities;

ethicAl requirements; trust FunDs AnD Accounts;

listing AnD oFFer AnD AcceptAnce Agreements;

criminAl convictions

10.1 Dealing Independently of Principal Broker

(a) If a principal broker or executive broker learns a salesperson, as-

sociate broker or executive broker licensed under such principal broker or

executive broker has, without permission of the principal broker or ex-

ecutive broker, engaged in real estate activities independently or through

some other broker, it is the duty of the principal broker or executive broker

to immediately notify the Commission in writing and forward such li-

censee’s license to the Commission.

(b) Any salesperson, associate broker or executive broker who en-

gages in real estate activities independently or through some other broker

without permission from the principal broker or executive broker shall be

presumed to be in violation of A.C.A. § 17-42-311 and subject to appro-

priate sanctions.

10.2 Expiration Date for Agency Agreements or Contracts

A licensee shall put a specic determinable duration or a specic ex-

piration date on all written agency agreements or contracts or any exten-

sions thereof. (Examples: Listing and Buyer Representation Agreements

or Contracts)

10.3 Membership in Trade Organizations

A licensee shall not use terms such as REALTOR, REALTIST or any

other trade name or insignia of membership of any real estate organization

of which the licensee is not a member.

10.4 Broker Responsibilities; Executive Brokers; Part-time

Brokers

(a)(1) A principal broker is generally responsible for all business con-

ducted by the broker’s rm and for all of the real estate activities of all of

those licensed under or associated with the principal broker, unless the li-

censee conducted real estate business independently and without permis-

sion or authority from the principal broker. If the principal broker learns

that a licensee is conducting business independently, that principal broker

must comply with Commission Regulation 10.1(a).

(2) A principal broker may delegate supervisory responsibility to

another broker by designating such broker as an “executive broker.” e

executive broker may sign oer and acceptance forms as supervising bro-

ker and can be responsible for instructing and supervising salespersons

(4)

and/or brokers for whom the executive broker is responsible. e execu-

tive broker may also be delegated responsibility by the principal broker for

administrative procedures required by the Commission, such as signing

transfer applications. For each executive broker so designated, the prin-

cipal broker must complete and le with the Commission an appropriate

designation form signed by both the principal broker and the designated

executive broker. e designation of an executive broker is eective when

led with the Commission.

(3) Designation of one or more executive brokers does not absolve

the principal broker of general responsibility for the conduct of all real

estate business conducted by the principal broker’s rm, and the principal

broker is specically responsible for the activities of all executive brokers.

(b) Principal brokers and executive brokers have the duty and re-

sponsibility to instruct those brokers and salespersons licensed under them

with regard to the fundamentals of real estate practice and the ethics of

the profession, and to keep them informed and abreast of all changes and

developments pertaining to the Arkansas Real Estate License Law and

Commission Regulations. ey shall also exercise strict supervision of the

real estate activities of all those licensed under them and for whom they

have supervisory responsibility.

charged these responsibilities for those licensed under him/her will de-

pend on various factors and circumstances, including, without limitation,

the following:

(1) Frequency and manner of contact and communication;

(2) Type and frequency of educational and instructional activities;

(3) Method and frequency of monitoring real estate activities.

(d)(1) e preparation of instruments in connection with a real estate

rental or sale and the closing of a sale by a licensee must be performed by

or under the specic supervision of the principal broker.

(2) If the principal broker or designated executive broker or their

assigned licensee closes a transaction or selects a third party to close the

transaction, it is the responsibility of the principal broker or designated ex-

ecutive broker to ensure that the real estate closing conducted on behalf of

the principal broker’s or designated executive broker’s client(s) is conduct-

ed in accordance with the agreement of the buyer and seller. If the buyer

and/or seller selects a third party to close the transaction, the principal

broker or designated executive broker, or their assigned licensee, must pro-

vide written closing instructions, on behalf of their client(s), to the third

party closing the transaction and review the client’s closing statement, if

reasonably available, to insure that the closing is conducted in accordance

with the agreement of their client. It is strongly recommended that the

principal broker, designated executive broker, or assigned licensee advise

the client to contact the closing agent or title insurer about the availability

of closing protection.

(e) No broker who is gainfully employed, or who is engaged in a non-

real estate related eld, may employ any licensee to work under the broker’s

license issued to such broker. A broker who is employed or who is engaged

in any eld other than real estate will be presumed to be gainfully em-

(5)

ployed or engaged in a non-real estate related eld. is presumption may

be overcome by proof that such employment or engagement is (1) in a real

estate related eld, and (2) conducted in the same oce as the broker’s real

estate business.

10.5 Advertising

(a) A licensee may not advertise any property, including the licensee’s

own property, for sale or rent, or display a real estate sign without including

in that advertisement or sign the name of the rm with whom that licensee

is licensed.

(b) A principal broker and any persons licensed with said principal

broker shall not advertise or otherwise conduct real estate brokerage busi-

ness under any name other than the name in which the principal broker’s

license has been issued.

to present a true picture and should not permit licensees to use individual

names or telephone numbers, unless the licensee’s connection with the

broker is obvious in the advertisement.

10.6 Knowledge of Property

A licensee shall exert reasonable eorts to ascertain those facts which

are material to the value or desirability of every property for which the

licensee accepts the agency, so that in oering the property, the licensee

will be informed about its condition and thus able to avoid intentional or

negligent misrepresentation to the public concerning such property.

10.7 Handling of Funds; Maintenance of Records

(a)(1) A licensee shall immediately deliver to the principal broker any

money or other consideration received in connection with a real estate

transaction which belongs to others, such as escrow or trust funds, clients’

moneys, earnest moneys, rents, advance fees, deposits, etc.

(2) A broker shall deposit all advance fees in the broker’s trust

account and shall disburse such funds only in accordance with the terms

of a written agreement signed by the owner of the funds. If such written

agreement is not received within a reasonable time after payment of the

advance fee, the fee shall be refunded to the owner.

(3) “Advance fee” means any fee charged for services to be paid

in advance of the rendering of such services, including, without limitation,

any fee charged for listing, advertising, or oering for sale or lease any real

property.

(b)(1) Each principal broker shall maintain complete records of all

real estate business handled by that rm. Separate les for each real estate

transaction conducted by the rm shall be maintained and shall contain

signed copies of any of the following documents which were prepared in

connection with the transaction: (i) listing contract, (ii) agency contract,

(iii) oers, (iv) oer and acceptance contracts, and (v) closing statements,

along with any additional documents as may be necessary to make a com-

plete record of each transaction.

(6)

(2) Each principal broker shall maintain complete records per-

taining to property managed for others. Such records shall include all

contracts, nancial transactions, receipts, statements, repair estimates and

other documents relating to management of the property.

(3) All records required by Regulation 10.7 shall be maintained

by the principal broker for three (3) years or such time as may be required

by law, whichever is greater, and shall be open to inspection by and made

available to the investigative sta of the Commission at the rm’s oce

or other location designated by the Commission. All records required by

Regulation 10.7 may be maintained in an electronic form provided that a

copy of the records can be produced as required by this regulation.

oce, the last principal broker remaining with the rm shall be responsible

for all records of the rm, including the rm’s real estate trust account and

transaction records, and at the time the real estate rm’s oce is closed, the

principal broker shall immediately notify the Commission of the address

and phone number of the place where those records are being maintained.

If for any reason the broker delivers custody or responsibility for those re-

cords to another person or rm, he/she shall immediately notify the Com-

mission of such transfer and furnish the name, address and phone number

of such person or rm.

10.8 Trust Funds; Trust Accounts

(a) “Trust funds” means and includes money or other things of value

not belonging to the principal broker but which are received by the prin-

cipal broker or any of the principal broker’s licensees in connection with a

real estate transaction or real estate activity, including without limitation,

clients’ moneys, earnest moneys, rents, advance fees, deposits, etc. For pur-

poses of the Arkansas Real Estate License Law and Commission Regula-

tions, any funds deposited in a broker’s trust account are presumed to be

trust funds.

(b) Except as provided in Regulation 10.8(d), a principal broker shall

not commingle trust funds with personal funds or other non-trust funds

and shall not deposit or maintain trust funds in a personal account or any

kind of business account except a specically designated trust account.

separate trust account or shall have an escrow agent for all such trust funds.

e principal broker of the rm shall be solely responsible and accountable

for any funds delivered to an escrow agent selected by the principal broker,

but shall not be responsible for funds delivered to an escrow agent selected

by the parties. Except as authorized by Regulations 10.8(i) and 12.2, the

trust account shall be non-interest bearing. e name on the account shall

include either “trust” or “escrow” and must be located in an institution

insured by either the FDIC or some other insuring agent of the federal

government.

(d) A principal broker may maintain the broker’s own funds in a des-

ignated trust account only when they are clearly identied as the broker’s

deposit and only for the following purposes:

(7)

(1) If the bank in which the account is maintained designates a

specic minimum balance that must be maintained in order to keep the

account open, the broker may maintain that amount in the account desig-

nated as the broker’s funds.

(2) If the bank in which the account is maintained requires a ser-

vice charge to be paid for the account, the broker may maintain a reason-

able amount to cover that service charge in the account in the broker’s

name, provided, however, that such amount shall not exceed the total of six

(6) months service charges.

(e) With regard to each separate trust account, the principal broker shall

submit to the Commission in writing the following:

(1) Name and number of the account.

(2) Name and address of the bank.

(3) Date the account was opened.

e principal broker shall keep the Commission informed at all times of

the foregoing details of each separate trust account.

(f) In addition to the requirements of Regulation 10.8(e), the principal

broker shall submit the same information in writing immediately upon any

of the following events or occurrences:

(1) Commission approval of real estate rm name.

(2) Change of real estate rm name.

(3) Designation of new principal broker.

(4) e account is changed in any respect or closed.

(g)(1) No later than three (3) days following the execution of a real

estate contract by both seller and buyer, all trust funds delivered to the

principal broker, shall be either deposited in the trust account, delivered to

an escrow agent, or deposited pursuant to a written agreement by the seller

and buyer. All other funds delivered to the broker pending performance of

any act shall be, no later than three (3) days, either deposited in the trust

account, delivered to an escrow agent, or deposited pursuant to a written

agreement by the seller and buyer. Should the third (3rd) day be a Satur-

day, Sunday, or legal holiday, then the third (3rd) day is extended to the

next day which is not a Saturday, Sunday, or legal holiday. e broker shall

maintain an accounting of all funds delivered to the broker and shall keep

a signed receipt for any funds the broker delivers to an escrow agent. e

broker remains responsible for the funds if the broker selected the escrow

agent, but not if the parties selected the escrow agent. A broker shall at all

times keep detailed records of all funds coming into the broker’s possession

and all disbursements made by the broker.

(2) All trust account bank statements shall be reconciled in writing

at least monthly and balanced to the total amount of trust funds deposited

in the account which have not been disbursed. Copies of such reconcilia-

tions shall be kept by the broker for at least three (3) years or for such time

as may be required by law, whichever is greater.

(3) All trust fund records, including bank reconciliations, shall be

open to inspection by and made available to the investigative sta of the

Commission at the rm’s oce or other location designated by the Com-

mission.

(h)(1) All security deposits made under a rental or lease agreement

(8)

shall be deposited in the principal broker’s trust account, including those

deposits made on property owned by any licensee licensed under the prin-

cipal broker unless the licensee who owns the property has a written agree-

ment with the tenant providing that the licensee may keep the security

deposit in the licensee’s separate account. A copy of any such agreement

shall be furnished to the principal broker by the licensee.

(2) Provided, however, that a principal broker shall not be respon-

sible for the failures of those licensed under such principal broker to com-

ply with regulation 10.8(h)(1) as long as the principal broker is in compli-

ance with Regulation 10.4.

(i) Nothing in this Regulation 10.8 shall be deemed to prohibit a broker

from maintaining certain funds or deposits in particular transactions in an

interest-bearing account when required to do so by law or valid regulation

of any governmental agency, nor shall it prohibit a broker from maintain-

ing an interest-bearing account while participating in the Interest on Real

Estate Brokers’ Trust Account program authorized by Section 24 of Act

690 of 1993 [A.C.A. § 17-42-601 et seq.] and Regulations 12.1 and 12.2.

10.9 Disbursement of Trust Funds

(a) A principal broker shall not disburse trust funds from the broker’s

designated trust account contrary to the terms of a contract for the sale

or rental of real estate or other contract pursuant to which the funds were

received, and a principal broker shall not fail to disburse trust funds ac-

cording to the terms of such contract.

(b) Except as otherwise authorized by Regulation 10.8(d), the balance

of a principal broker’s trust account shall at all times equal the total of the

trust funds received for which the broker is accountable.

trust account under the following circumstances shall be deemed by the

Commission to have fullled properly the broker’s duty to account for and

remit money which the broker is required to maintain and deposit in a

designated trust account:

(1) upon the rejection of an oer to buy, sell, rent, lease, exchange

or option real estate;

(2) upon the withdrawal of an oer not yet accepted to buy, sell,

rent, lease, exchange, or option real estate;

(3) at the closing of the transaction;

(4) upon securing a written agreement which is signed by all par-

ties having an interest in the trust funds and is separate from the contract

which directs the broker to hold the funds;

(5) upon the ling of an interpleader action in a court of compe-

tent jurisdiction;

(6) upon the order of a court of competent jurisdiction; or

(7) upon a reasonable interpretation of the contract which directed

the broker to deposit the funds.

(d) When a broker makes a disbursement to which all parties to the

contract have not expressly agreed in writing, the broker must immediately

notify all parties in writing of the disbursement.

(9)

10.10 Agreements to Be Written

(a) Except as provided in Regulation 10.10(b), a licensee, for the protec-

tion of the public and of all parties with whom the licensee deals, shall see

that the exact agreement of the parties regarding real estate is in writing. A

licensee shall also see that clients and other parties to the transaction with

whom the licensee deals receive copies of such agreements signed by all

parties. (Examples: Exclusive agency agreements or contracts, real estate

contracts, closing statements, lease agreements, management agreements,

nancial obligations and commitments, etc.) It is strongly recommended

that a licensee obtain written acknowledgement from the buyer and/or

seller that the buyer and/or seller have received signed copies. [Amended

1-1-05]

(b) It is strongly recommended that non-exclusive agency agreements

or contracts be in writing. [Amended 1-1-05]

case of Pope County Bar Association, Inc. vs. Suggs, 724 S.W. 2nd 828

(1981), real estate forms used by licensees in the regular course of business

shall be approved by a licensed Arkansas attorney prior to use. e licensee

shall be responsible for providing evidence of such approval by a licensed

Arkansas attorney upon request of the Commission.

10.11 Self Dealing

Licensees shall not buy, sell, rent or lease property for themselves or

for a corporation, partnership or association in which they have an inter-

est without rst making full disclosure to the buyer or seller, as the case

may be, of the exact facts that they are licensed as a real estate broker or

salesperson and are buying, renting or leasing the property for their own

account or have an interest in the property which they are selling, renting

or leasing. All such disclosures must be made in writing before the sales,

rental or lease contact is entered into.

10.12 Oers and Acceptances

(a) All oers received on a specic property shall promptly be presented

to the seller by the listing rm or other licensee designated by an autho-

rized representative of the listing rm.

(b) Every oer received must be signed by the licensee who receives it

and by that licensee’s supervising broker. Every acceptance must be signed

by the listing licensee and that licensee’s supervising broker. (It is desirable

for the supervising brokers of the selling licensee and listing licensee to

review and sign each real estate contract before it is submitted to the seller,

although that is not always possible. However, such supervising brokers

shall review and sign the real estate contract as soon as possible after it is

received, and, in all cases, prior to closing.)

10.13 Listing Agreements; Signs

(a) If a rm holds an exclusive listing contract on a parcel of property,

the selling licensee shall not contact the seller about showing the prop-

(10)

erty or negotiating the sale without prior permission from the listing rm

or other licensee designated by an authorized representative of the listing

rm. Any oers received by the selling licensee shall be presented to the

rm holding the exclusive listing contract not later than the close of the

next business day after receipt of the oer. Likewise, all earnest moneys

and deposits shall be forwarded to the listing rm for deposit in the list-

ing rm’s trust account. e listing rm or other licensee designated by an

authorized representative of the listing rm shall then present the oer to

the seller. e selling licensee may accompany the listing licensee with the

latter’s permission, but shall not contact the seller without prior permission

from an authorized representative of the listing rm.

(b) A licensee shall not knowingly enter into an agency agreement or

contract when there is reason to believe that there is an existing exclusive

agency agreement or contract in force without rst communicating with

the other principal broker who holds such agreement or contract to con-

rm its existence. If there is an existing exclusive agency agreement or con-

tract in force, the licensee shall not enter into another agency agreement or

contact without rst notifying the client in writing to consult with an at-

torney regarding the risk of being liable for two (2) separate commissions.

during the existence of a listing agreement, unless other authorized by the

owner.

10.14 Reporting Violations

It is the duty of each licensee to report in writing to the Commission

any information coming to the licensee’s knowledge which is or may be (1)

a violation of the Arkansas Real Estate License Law; or (2) a violation of

the Commission Regulations.

10.15 Broker’s Price Opinion

(a) A “broker’s price opinion” means an estimate prepared by a licensee

that details the probable selling price of real estate and provides a varying

level of detail about the real estate’s condition, market, and neighborhood,

and information about sales of comparable real estate. A “market analysis”

is similar to a broker price opinion but is usually limited to comparison to

other real property currently or recently in the market place; whereas, the

preparer of a broker price opinion may utilize other basis for the report. In

the preparation or issuance of a broker price opinion or market analysis,

usage of the terms “market value”, “appraised value” or “appraisal”, shall

be presumed to be in violation of Ark.Code. Ann. § 17-42-110(d) and

subject to appropriate sanctions. It is highly recommended that a licensee

avoid other general references to “value” of the property when preparing

or issuing a broker price opinion or market analysis. A report in which a

broker price opinion is prepared or issued by a real estate licensee must

include within the body of the written report or in a separate cover letter

the following:

(11)

(1) A brief description of the subject property.

(2) e basis used to determine the broker’s price opinion to include

any applicable market data and with regard to commercial properties, the

computation of capitalization, including the capitalization rate;

(3) Any assumptions or limiting conditions used to determine the bro-

ker price opinion (Examples: repairs, items to be removed from property,

zoning change, new or dierent access other than what is currently avail-

able, special nancing, hazardous waste, nuisance removal, etc.)

(4) A disclosure of any existing or contemplated interest of every licens-

ee who prepares or provides the broker price opinion, including, without

limitation, the possibility of a licensee representing the seller or lessor, or

the buyer or lessee;

(5) e names and signatures of the licensee who prepared or issued the

broker price opinion and of the principal broker or designated executive

broker with whom the licensee is associated;

(6) e name of the real estate rm with whom the licensee who pre-

pared or issued the broker price opinion is licensed; and

(7) e date of issuance of the broker price opinion;

(8) In at least 14-point bold type, the following disclaimer:

Notwithstanding any preprinted language to the contrary, this opinion

is not an appraisal of the market value of the property. If an appraisal is

desired, the services of a licensed or certied appraiser must be obtained. Pur-

suant to Ark. Code. Ann. § 17-42-110(d), a broker price opinion or market

analysis issued by a real estate licensee shall not contain the terms “market

value”, “appraised value”, or “appraisal”.

Any reference in the report to a specic marketing time period is for il-

lustrative purposes only and does not obligate the licensee or broker to sell the

property within the stated timeframe or act as a representation or guarantee

that the property will be sold within such timeframe.

Unless otherwise indicated, the broker price opinion assumes without in-

vestigation a fee simple title ownership interest without any reservation of

minerals, subsurface rights, or otherwise.

is broker price opinion report is to be used solely for purposes allowed by

state and federal law. If the report is to be used for any purpose not specically

allowed by state and federal law, legal counsel should be consulted.

(b) A licensee shall furnish to the principal broker or designated execu-

tive broker with whom the licensee is associated, copies of all broker price

opinion reports, including the cover letter described above, which shall be

maintained on le in accordance with the record keeping requirements of

this chapter.

electronically to any person entitled to receive it. A broker price opinion

that is submitted electronically is subject to any regulations relating to re-

cordkeeping as adopted pursuant to this chapter, including inclusion of the

cover letter required in (a) above.

(d) A principal broker or designated executive broker is responsible for

the preparation and issuance of a broker price opinion by any licensee who

is associated with the broker unless the broker price opinion was prepared

(12)

or issued independently and without permission or authority from the

broker. If the principal broker or designated executive broker learns that a

licensee has prepared or issued a broker price opinion independently, that

broker must comply with Commission Regulation 10.1(a) by immediately

notifying the Commission in writing and forwarding such licensee’s li-

cense to the Commission.

10.16 Criminal Convictions and Disciplinary Actions

(a) A licensee who is convicted of or pleads guilty or nolo contendere to

any crime other than a trac violation shall make written report thereof to

the Commission within thirty (30) days after the conviction or plea. e

report shall include the date of the oense and of the conviction or plea,

the name and address of the court, the specic crime for which convicted,

or to which the plea is entered, the ne, penalty and/or other sanctions im-

posed, and copies of the charging document and judgement of conviction

or other disposition, including probation or suspension of sentence. e

report shall also include the licensee’s explanation of the circumstances

which led to the charge and conviction or plea, along with any other infor-

mation which the licensee wishes to submit.

(b) A licensee who, after the initiation of an investigation, hearing or

other administrative action surrenders or who has a professional, voca-

tional or occupational license, permit, certication or registration denied,

revoked, suspended or cancelled or who is subject to any sanctions, includ-

ing probation, involving such license, permit, certication or registration or

who is the subject of sanctions for practicing a profession without a license

shall make written report thereof to the Commission within thirty (30)

days after such action. e report shall include the date of the action, the

name and address of the regulatory agency which has taken the action and

copies of documents pertaining thereto. e report shall also include the

licensee’s explanation of the circumstances which led to the action, along

with any additional information the licensee wishes to submit.

pleaded guilty or nolo contendere to any crime other than a trac viola-

tion or who, after the initiation of an investigation, hearing or other ad-

ministrative action, has surrendered or has had a professional, vocational or

occupational license, permit, certication or registration denied, revoked,

suspended or cancelled or who has been subjected to any sanctions, includ-

ing probation, involving such a license, permit certication or registration,

shall furnish the written report referred to in Regulation 10.16 (a) and/

or (b) to the Commission at the time the application is submitted if such

action has already occurred, otherwise such report shall be made immedi-

ately after the action occurs.

10.17 Violation of Law or Regulation

A licensee who violates or fails to comply with any provision of the

Arkansas Real Estate License Law or Commission Regulations is subject

to sanctions under Section 17 of Act 690 of 1993 [A.C.A.§ 17-42-312].

10.18 Property management denitions.

(a) “Audit trail” means a documented history of a nancial transaction

by which the transaction can be traced to its source.

(b) “Occupant” means a person who rents a property on a nightly basis.

nightly basis.

(d) “Property Manager” means a licensed principal broker or designated

executive broker who performs property management activities pursuant

to A. C. A. § 17-42-103(9)

(e) is section does not apply to any residential property management

program operated or regulated by a federal or state act or agency which

includes specic record keeping requirements that the commission deter-

mines are substantially equivalent to or greater than that required by this

section.

10.19 Property management agreement.

(a) A principal broker or designated executive broker must not engage

in the management of residential rental real estate without a written, cur-

rent property management agreement between the owner and the property

manager. A property management agreement must include the following:

(1) Name, address and other contact information for property owner;

(2) e address or legal description of the property to be managed;

(3) e duties and responsibilities of the property manager and owner;

(4) e authority and power given by the owner to the property man-

ager;

(5) e management fees, application fees, screening fees, rebates, dis-

counts, overrides and any other form of compensation to be received by

the property manager for management of rental real estate including when

such compensation is earned and when it will be paid;

(6) A description of the monthly statements of accounting the property

manager will provide to the owner;

(7) e duration of the agreement, rollover provisions, renewal clauses

or automatic extensions, if any;

(8) e method by which the property management agreement

can be terminated and any other terms and conditions of the agreement;

(9) Signatures of the property manager or executive broker and

property owner; and

(10) e date of the agreement.

(b) e property manager must promptly deliver a legible copy of the

fully executed property management agreement, and any addenda or

amendments, to the owner.

10.20 Tenant agreement.

(a) A property manager shall not lease property he manages without a

written agreement with the tenant.

(b) Each lease or rental agreement for residential real estate

managed by the property manager must contain the following:

(13)

(1) e name and business address of the property manager and his

rm;

(2) e name, address and other contact information of the tenant;

(3) e mailing address or unit number of property being rented or

leased;

(4) Payment conditions and amounts pertinent to the rental or lease,

and the rental or lease term;

(5) e amount of and the reason for all funds paid by the tenant

to the property manager at the outset of the agreement including funds for

rent, security deposits, and any other fees;

(6) e location where or entity by whom security deposits will be

held;

(7) Method by which tenant will be notied in the event of

termination of property manager’s property management agreement to in-

clude handling of tenant’s security deposit; and

(8) Signatures of the current property manager or current executive

broker and tenant.

noncompliance by the property manager with the terms stated herein.

(d) A property manager may not expend any tenant security deposits

for payment of any expenses or fees not otherwise allowed by the tenant’s

rental or lease agreement.

10.21 Property management accounting and recordkeeping.

(a) A property manager must retain records of all deposits in a

manner in which they are traceable to the owners’ and tenants’ ledgers. A

property manager must retain records identifying the amount of and pur-

pose of each disbursement entered into the owner’s and tenants’ ledgers.

(b) e property manager shall disclose to the owner, in writing, the

property manager’s use of any employees or a business in which the prop-

erty manager or any persons licensed under him has a pecuniary interest to

provide billable services to the owner’s property.

10.22 Property management owner ledgers.

(a) A property manager must prepare and maintain at least one

separate owner’s ledger for each property management agreement, for all

monies received and disbursed.

(b) If a property is utilized for nightly rentals, a separate ledger

account must be maintained for that property. Each occupant of the prop-

erty must be identied, including the dates of occupancy and amounts

paid.

escrow account owned or controlled by the property owner pursuant to

a property management agreement, the property manager may maintain

either a record of receipts and disbursements or check register in lieu of an

owner’s ledger.

(d) All owner ledgers must contain the property manager’s name,

identication of property being managed, and the following information

(14)

for each deposit of funds:

(1) e amount of funds received;

(2) e purpose of the funds and identity of the person who tendered

the funds;

(3) e check number, cash receipt number or a unique series of

letters and/or numbers that establish an audit trail to the receipt of funds;

(4) e date the funds were deposited; and

(5) e balance of each recorded entry.

(e) For each disbursement of funds, all owner ledgers must contain

the following information:

(1) e date the funds were disbursed;

(2) e amount of funds disbursed;

(3) e check number or bank-generated electronic tracking number;

(4) e payee of the disbursement;

(5) e purpose of the disbursement; and

(6) e balance after each recorded entry.

(f ) If more than one property is managed for a property owner, each

entry for deposit or disbursement must identify the applicable property

rather than just the owner. If a property management agreement with an

owner allows the property manager to use funds collected for one property

to apply to expenses of another property owned by the same owner, an

overall compilation/accounting shall be prepared for the owner.

(g) At a minimum, once each month, a report showing all receipts

and disbursements for the account of the owner must be provided to the

owner. A copy or electronic version of each such report must be available

through the property manager’s records system.

10.23 Property management tenant ledgers.

(a) A property manager must prepare and maintain at least one

tenant’s ledger for each unit from whom the property manager has re-

ceived any funds under a property management agreement, whether or not

the tenant has executed a written rental or lease agreement at the time of

payment of funds to the property manager.

(b) All tenant ledgers must contain the tenant’s name and the legal

description or physical address of the property sucient to distinguish that

property from other rental units, or a unique series of letters or numbers

that establishes an audit trail.

following information:

(1) e amount of funds received;

(2) e purpose of the funds and identity of the person who tendered

the funds;

(3) e check number, cash receipt number or a unique series of letters

or number that establishes an audit trail to the receipt of funds;

(4) e date the funds were received; and

(5) e balance after each recorded entry.

(d) For each disbursement of funds, all tenant ledgers must contain

the following information:

(15)

(1) e date the funds were disbursed;

(2) e amount of funds disbursed;

(3) e check number or bank-generated electronic tracking number;

(4) e payee of the disbursement;

(5) e purpose of the disbursement; and

(6) e balance after each recorded entry.

(e) In lieu of an individual tenant ledger a property manager may

prepare and maintain a separate record of the receipt of funds from pro-

spective tenants who do not become tenants after such payment.

10.24 Property management cash receipts.

(a) If a property manager chooses to accept cash, he or his designee

must prepare a legible written receipt for any cash funds received under a

property management agreement or from a prospective tenant. A copy of

the receipt must be maintained in the property manager’s records. Cash re-

ceipts must be consecutively pre-numbered, be printed in at least duplicate

form and must contain:

(1) e date of receipt of cash funds;

(2) e amount of the funds;

(3) e reason for payment or collection of the funds received;

(4) e identity of the property for which the cash funds were received;

(5) e tenant’s name;

(6) e payer of the funds if dierent than the tenant;

(7) e payee of the funds; and

(8) e name and signature of the individual who actually received

the cash and prepared the receipt.

(16)

NOTES:

____________________________________

(17)

NOTES:

____________________________________

(18)

NOTES:

____________________________________

(19)

ArkAnsAs reAl estAte Commission

612 South Summit Street

Little Rock, AR 72201-4740

Telephone: 501.683.8010

Fax: 501.683.8020

Email: [email protected]

Website: www.arec.arkansas.gov