It’s official! Beginning on May 1, 2008, Rhode Island law will have a new and improved agency law.

Why do we need this law? The way that consumers choose to buy, sell, and lease real estate has changed significantly since last century due to the Internet and new business models but our laws in Rhode Island haven’t kept pace. Rhode Island is the only state in the country that favors sellers by presuming that at all real estate licensees represent the seller unless there is an agreement in writing to the contrary. Massachusetts and Connecticut have made changes to their laws. The Rhode Island Association of REALTORS believed that it was time to update and improve our agency laws as Connecticut, Massachusetts, New Hampshire, and Maine have done in recent years.

How will this new law change how I work with consumers? The new law will do the following:

• Eliminates subagency.
• Adds a new category to allows real estate licensees to work with consumers as a neutral transaction facilitator who provides basic level services, such as handling paperwork and showings, without representing the consumer as a buyer’s agent or seller’s agent.
• Replaces existing legal presumption that all real estate licensees represent the seller with the presumption that real estate licensees are acting as a neutral transaction facilitators unless otherwise agreed.
• Replaces company dual agency with “designated representation” (which Massachusetts and Connecticut have also adopted), which allows a seller or buyer to choose to receive full representation and help with negotiations and advice from a designated licensee even when his or her representative and the listing broker work for the same company. The new law will allow the listing broker to represent the seller; a buyer’s agent affiliated with the same company to represent the buyer without creating dual agency in the same transaction; further, any licensee who is not specifically designated by the principal will act as a neutral transaction coordinator.
• An individual licensee who represents both a buyer client and seller client in the same transaction must obtain consent from both parties to act as a “neutral dual facilitator”, similar to a disclosed dual agent under existing law. Abrogates the common law of agency by replacing court decisions with statutorily-defined concepts.
• Eliminates the current law that requires consumers to sign a separate agency disclosure form for each property that he or she views. Requires real estate licensees to provide a disclosure form to all consumers earlier in the process. The disclosure will be updated by the Rhode Island Department of Business Regulation to make it consistent with the new law.

How can I learn more about this legislation? The Department of Business Regulation and the Real Estate Commission will create a new agency disclosure form and new agency regulations. RIAR will work to develop a class about the new law for continuing education credit that will be offered during the license renewal cycle in 2008 prior to May 1. RIAR plans to offer a “train the trainer” program to make sure that instructors will explain the law consistently. RIAR and MLS will update forms to make them consistent with the new law and prepare a compliance handbook for members.

Where can I read the full text of the law? The Rhode Island General Assembly adopted the legislation in the final week of the legislative session and transferred it to the Governor’s Office on June 28. The Governor took no action on the legislation, which means that it will go into effect. The official “public law” is not yet available on-line but here are links to the most current version:

http://www.rilin.state.ri.us//BillText07/SenateText07/S0370A.pdf
http://www.rilin.state.ri.us/BillText07/HouseText07/H5432A.pdf

Remember: the law will not go into effect until May 1, 2008.

Who wrote this new law? The legislation was the result of two years of hard work by the members of the RIAR Agency Task Force which was chaired by Bruce Allen. Other members of the task force include Marc Archambault, Kevin Dumont, Alyce Kleczek, Bob Martin, Michael Plante, John Silvia, Ed Stachurski, Sharon Steele. It was unanimously approved by the RIAR Board of Directors.

The Rhode Island Department of Business Regulation, the Real Estate Commission, which is chaired by David Iannucilli, and Rhode Island Association of REALTORS worked together to revise this legislation, Michael Jolin, Deputy Chief of Legal Services for DBR, took the lead role in redrafting this legislation to ensure that it adequately protected consumers. Attorney Bob McCauley assisted with this process as well. The Anti-Trust Division of the U.S. Justice Department reviewed the revised version and had no objection it.

Rep. Roger Picard (D-Woonsocket) and Senator William Walaska (D-Warwick) filed the legislation on behalf of the Rhode Island Association of REALTORS.

Questions? Please contact the RIAR Legal Department at 401-785-3650 x 5.