Several real estate industry related issues were considered during the 2004 legislative session. Copies of the new legislation may be obtained from the State of Kansas web site at www.accesskansas.org. Click on “Kansas Legislature.” On the right side of the page, search under the bill number to retrieve a copy of the bill text.

The following legislation became effective July 1, 2004:
HB 2675 is a budget appropriations bill for fiscal year 2005. The legislation sweeps $508,496 from KREC’s fee fund and transfers it to the State General Fund. The transfer is scheduled to occur on June 30, 2005. Without legislative action during the 2005 session to reverse the fee fund sweep, it will be necessary for KREC to seek a fee increase effective July 1, 2005.

SB 404 is a KREC request to clarify its authority with respect to licensing and disciplinary action taken against a licensee. The changes are primarily clean up in nature, with one exception. SB 404 also repeals the limited prohibition on licensees offering gifts and gratuities.

Kansas is part of a small number of states that either prohibit or strictly limit a licensee’s ability to offer gifts and gratuities. K.S.A. 58-3062(a)(11) originally prohibited licensees from offering any type of gift or gratuity contingent on an agency agreement or the sale, purchase or lease of real property. The statute was amended several years ago to exclude from the definition of a gift or gratuity products or services offered pursuant to a licensee carrying out his or her duties as a seller’s agent, buyer’s agent or transaction broker. The amendment partially opened the door and made it very difficult for KREC staff to interpret what qualified as a permitted service. By far, the vast majority of complaints received by KREC concerning gifts and gratuities are lodged by licensees rather than consumers. States that have lifted the prohibition on gifts and gratuities viewed the change as consumer-friendly and have not reported significant problems.

Please keep in mind that even after SB 404 takes effect July 1, 2004, Kansas law still prohibits licensees from providing rebates to principals in a transaction. Any payment or compensation to unlicensed persons continues to be prohibited. Licensees should consult their broker and an attorney to ensure that an offer or gift at or prior to the time of closing will not constitute loan fraud or misrepresentation to a lender or other interested party.

SB 534 permits a salesperson or broker who is licensed in another jurisdiction to perform services related to commercial real estate in Kansas without obtaining a Kansas license providing specific requirements are satisfied. For purposes of SB 534, the term “commercial real estate” is defined as any real estate for which the present use is other than one to four residential units or for agricultural purposes. The Kansas Association of Realtors requested introduction of the legislation.

A foreign licensee must be licensed in Kansas unless the following provisions of SB 534 are met: (1) The commercial real estate is not improved with a single-family residence. (2) The foreign licensee enters into a broker cooperation agreement with a Kansas supervising broker or branch broker.

SB 534 only applies to commercial real estate transactions. Furthermore, a Kansas salesperson or associate broker is not permitted to enter into a co-brokerage agreement with a foreign licensee.

At a minimum, SB 534 requires that the co-brokerage agreement include the following provisions:

(a) The foreign licensee agrees to comply with Kansas law.

(b) The foreign licensee agrees to submit to the jurisdiction of Kansas courts and KREC.

(c) The foreign licensee agrees to accept service of legal process by service upon the Kansas Secretary of State or service upon the Secretary of State of the jurisdiction where the foreign salesperson or broker is licensed.

(d) All escrow funds concerning the commercial real estate must be held in the trust account of the Kansas supervising broker or branch broker.

(e) The agreement contains a description of how compensation earned on any real estate transaction will be shared between the foreign licensee and the Kansas supervising broker or branch broker.

(f) The foreign licensee and the Kansas supervising broker or branch broker agree to keep each other informed of all showings and negotiations for commercial real estate.

(g) The foreign licensee and the Kansas supervising broker or branch broker agree to furnish to each other copies of all documents related to the commercial real estate transaction required by law to be retained in the broker’s file.

PLEASE NOTE: Copies of all co-brokerage agreements must be filed with the Commission within five (5) business days of the date the agreement is signed.

SB 66 prohibits a title insurer or a title agent from accepting an order for title insurance if 70 percent or more of their closed title orders over the preceding twelve (12) months is derived from controlled business. The prohibition does not apply to real estate transactions located in counties with populations of 10,000 or fewer. The SB 66 provisions are the result of a compromise reached between the Kansas Association of Realtors and the Kansas Land Title Association.