2021 NMAR Winter Legal Update

January 7, 2021


Unedited Transcript:

[, Music ]. Thank you all for joining us today. Um. As danny said, i’m ashley strauss-martin. I am general counsel for the new mexico association of realtors. It’s funny because i hear all the time that i’m general counsel for gar or from for elkhart or for the santa fe association, various brokerages, specific brokers, um, i’m.

Actually, nara’s. General counsel, i’ve, served in that capacity for going on 14 years now, so it ‘ S been my honor to to do that. It’s been a lot of fun. I’ve had a wonderful time working with the brokers.

This is my disclaimer guys. This is i’m, not providing you with any legal advice today and there’s. Obviously, no attorney-client relationship that’s being created by this presentation in the event that you want uh, more legal information.

After this there’s, information about the hotline that will come at the end of this presentation. If you need legal advice, you should seek that from your own independent counsel, all right. What are we going to cover today? Well, uh: lots: lots of information um.

As danny mentioned, the new mexico real estate commission has been busy. They have some rural changes that went into effect on the first of this uh of the third of this month, um home inspector licensing.

I’m, not going to cover those in great detail, but there are some key points that i want to mention. They did finish passing those rules and those rules will become effective. On the 15th of this month, i’m, going to talk about the state legislative session, the 2021 session, that’s.

Coming up on the federal level, i’ll talk briefly about the 2021 appropriations bill. I’m. Not going to i ‘ Ve talked to you guys about ada website accessibility before and i don’t want to. I don’t want to reiterate everything i’ve said before, but i do want to hit on some high notes.

Um at nar anti-trust lawsuits against nara kind of a status update on those as danny mentioned, uh katie johnson from nar will actually be here for the board of directors meeting i’m sure she’ll talk to you about those as Well, i’ll, give you an update here, the department of justice actually sued nar, and they have already reached a settlement.

So i’ll, discuss that and some changes to the code of ethics. Mr forms, we have some significant changes to the purchase agreement, which is kind of our one of our flagship forms: form 2104 sellers property disclosure statement.

We’re, going in a really different direction with that one guys. So i’ll, be talking about that. I’m, not going to cover the independent contract agreement, but i wanted to mention it here just so that you guys know that we are updating it to kind of reflect.

Some of these new changes, the re that the real estate commission has passed because those changes impact that relationship between the um, independent contractor associate broker and the brokerage qualifying broker.

I’m, going to talk to you about some hotline topics and a little bit of case law, though there hasn’t been a ton of litigation going on lately that’s, that’s, actually, actually a Good thing, so let’s get started because there’s, a lot to talk about.

First, the new mexico real estate commission rules. They took effect on january 3rd. We have some changes to the definitions and the uh definition of agent. It the edition, addresses commercial property managers, and i just want to say that i warn you a little bit about this this language, because it says that, in the case of a commercial property management, the property manager is an agent of the owner of the property for Purposes of providing those obligations pursuant to a property management agreement, if the property management agreement specifically creates an agency relationship and that language makes me just a little bit nervous because it’s, one of those.

If you talk like a duck and you walk like a duck, you’re, probably a duck right, um and so uh. This is one of those you know quack like a duck kind of things. Even if your property management agreement, didn’t specifically call you an agent, but you’re, doing everything that an agent would do.

Um, such as entering into contracts um lease agreements, these kind of things, then you’re, likely going to be considered a an agent as far as the courts are concerned. So we have a new definition, but take that i don’t.

Think it anybody questions necessarily the fact that when we’re working as property manager in the residential or the commercial context, we are working as agents of the owner in that capacity um a new definition for a core elective course, and it explains that These are the kind of courses that improve your transactional experience and they focus on you know contractual and disclosure forms in the practice of real estate real estate title issues contracts.

It might improve your business practices and professionalism focusing on but not limited, to broker responsibilities and duties. There are also courses that improve your broker, awareness of issues that impact the public and real estate transactions, including land development, jurisdictional taxation, taxation issues and it increased the broker’s, knowledge of third party services within the transaction, so these are defined as your Core elective courses and those are important because of course, you have to have so many core elective courses um to meet your obligations under the rules.

Then they also have a new definition for elective course, so they define those a little bit differently and those are kind of a broader, a less focused, less intensive course that focuses on real estate law and practice, real estate financing mortgages and other financing techniques, materials specific To regulatory, technical and ethical practices – and you know, state and federal laws, including the ada, fair housing, lead-based paint, disclosure things like that.

It also includes these various other thing: courses in personal and property protection for clients, broker skills related and offering to the use of computers. The internet, business calculators um other skills offering offerings related to broker professional development, so these are kind of the broader category that fall under these additional elective courses that they they’ve, now defined what those are um there’s, a new Definition for property management and, and really the the interesting part about this, is that and the big part about this is the fact that it now includes management companies that manage hoas and that’s been kind of a big deal because, as you guys Know under the hoa act there is no regulatory body that manages hoas in any way, shape or form.

If there’s, a violation of that act, then the the way that uh it’s enforced, is by somebody else. In the association you know bringing suit to enforce those provisions of the act. This particular definition now says that not homeowners association, specifically they’re.

No longer they don’t have to have a a license to to do their own business, but if they’re going to contract with a third party, some third party, who’s, going to take over the management who’s, going to make arrangements for the common areas to be cleaned up, who are going to be collecting the the dues and the fees from the homeowners going to be preparing disclosure certificates and resale certificates? These type of things they have to have a broker doing those doing those things now, which is beneficial.

I think, for the consumers, because in the event that these things, don’t get done or they don’t get done properly. Then there is some kind of you know recourse you can, instead of having to bring suit to and enforce it, you can actually contact the real estate commission and have a conversation with them about the fact that you know the broker is not performing the duties they’re supposed to perform so um that’s already taken effect and that’s, going to be really something very new, especially for these big um uh homeowner associations such as you know, homeco and canyongate, and things like that.

I know that some of them already have brokers that are working with them. Others do not, and now they will be required to do so. We have a definition of residential real estate, as you can see here on the screen.

A zone for private use is a living facility by the city or county or designated by a city or county to allow for for four or less family units on a single parcel uh. The term residential real estate is used throughout the real estate commission rules in various contexts.

I’m talking about being able to qualify for your qb license. For example, you have to have so many residential transactions there’s. Also terminology and courses that they refer to, and now there’s, a definition of that residential real estate, the late renewal policy um that’s now, in effect, um.

If you have to reinstate your license, um without uh. Outside of your your one year period and uh, there’s, an exemption from the late fee penalty in the event that uh excuse me that’s within the one-year period because we talked about in a minute what it what happens after The the one-year period, but there is an exemption if you’re late, you don’t renew timely if the reason that you’re late is because of active duty, military service or due to some impairment or illness or Injury that you can’t complete the renewal requirements and in these cases the broker can make application and there’s a process by doing that.

So they define what it means to be on active military or reserve duty, and they also define what it means to have a medically related impairment or incapacity that keeps you from actually renewing timely.

Renewing your license – and it also i’ll point out here in the medical related impairment. It also deals with your spouse or a member of your immediate family in the event that they fall into this category and as a result, you’ve, not been able to timely renew your license.

You are going to have to provide some documentation to the real estate commission, explaining either the military issue or the impairment issue, and the real estate commission will consider that uh that documentation and decide whether or not you meet all of the requirements and um and your License will be considered expired and the broker may not practice real estate until the broker within the year from expiration, renews or states his license or her license.

So again you produce these documentation to the commission and they will make a determination and if you’re exempted, then they will notify you um that you’ve been exempted from the fees and if it’s not granted The broker may still submit the late renewal but be subject to the late fee penalty at the time of submission that two extra 270 dollars um and then this is the top part where it talks about renewal statement after year after the period of one year from The date of license expiration, the broker will not be able to renew or restate their license, and the broker would have to undergo all the pre-licensure requirements to become licensed.

So that’s very important. You guys. I mean it’s like starting from scratch all over again. If you don’t, get it renewed within one year after it’s expired. So then we get on to new responsibilities for the qualifying broker um and they’re, quite a few of them guys.

So you want you’re, going to be very busy. I mean these things are in a in effect right now. So you need to be working on doing these things, for example, developing a written policy manual about the duties and responsibilities of the abs or the brokers in your office um.

It is supposed to be given to each of the brokers in your office and they’re supposed to read. They’re supposed to read it. I mean, of course you can’t force them to do so, but the babies are expected to read it and they’re supposed to sign that they’ve received it um.

It has to be available for inspection. Upon request by the commission, it has to include requirement for the ab to notify the qb of any situation in which the av is unsure, untrained or concerned. So anytime, they’re dealing with a situation that they don ‘

T know how to handle there has to be provision in the written policy manual about how they need to how to deal with that and that they need to talk with the qb in that situation. It also needs to include a requirement to follow state and federal laws regarding real estate and the rules of the new mexico real estate commission.

They now have also broken down the level of supervision that’s required based on the number of years that the associate broker has so in the event that they have less than two years of experience. Then they need a higher level of supervision in the real estate commission’s, opinion, and that makes sense right, so they need to provide specific training and office policies for those brokers with less than two years experience.

They need to be. The qb needs to be reasonably available for consultation um for the abs, so that they can make sure that they’re. Not you know violating office policies and procedures or local state federal laws, those kind of things and if the qb has actual knowledge of a potential or actual violation relating to any of these things or in a transaction that’s occurring, then the qb Must timely, take action to correct or mitigate the potential of actual violations they really need to step in.

They need to be very proactive, especially with these brokers that have less than two years of experience. They have to respond. The qb has to respond to this broker within 24 hours of them, having an issue or making a request and provide assistance in preparing contracts monitor their transactions from the time they go under contract till the time they close it from a to z, review documents in Preparation for closing ensure that the employing broker or an experienced licensee attends the closing or is available for assistance and takes reasonable steps to ensure that the violations of statutes, rules and other office policies don’t occur.

So you can see here guys that there’s, a lot more uh engagement between the qb and those associate brokers with less than two years of experience, and then they have a no another category for those brokers or abs that have more than two Years of experience, so the qb is still expected to engage, maybe more than they’ve done before, but not quite the same level as those new new brokers or newer brokers.

So you do still have to provide as a qb specific training and office policies and procedures. You have to be available to advise, correct and instruct licensees to avoid violations of office policies and laws, and things like that.

You, if you don’t have uh if you have actual knowledge again of some kind of problems as existing right so or some potential problem. That’s. Coming up, you need to engage with your associate broker to try to mitigate the circumstance, those uh, the uh, the you know, mitigate the the possible outcome of that by engaging and assisting you have to maintain reasonable and timely communication with the licensees uh.

Take reasonable steps to ensure that violations of statutes and laws, don’t occur and uh, and you may require a view of all transaction documents um. I will say in regards to to this uh that um – and these are additional.

I will say that i know that some of the feedback that we’ve gotten or the commission got on this – is the concern that you know you guys are independent contractors as associate brokers, and so when qualifying brokers, start really kind of trying to Control what you do too much, obviously we’ve talked about in the past during these little updates.

How that can create problems from uh from a uh. You know from a a wage and labor standpoint, because again your independent contractors, you will notice with these responsibilities and these obligations that have been created by the commission.

Most of them are simply making things available to the associate brokers and being available to the associate brokers. So it’s, not a matter of dictating. You have to be at a particular meeting at a particular time, or you have to be at this particular session.

These kind of things again that can create some issues and we ‘ Ve talked about that, but it’s. It’s about me, making those things available and encouraging the brokers to attend those those trainings or attend those meetings.

Um, the execution and maintenance of written independent contract agreements is not a new rule. Guys and on this particular slide, the new information is in red, but i am going to be talking about that independent contractor agreement in a little bit um.

As far as you know why it is so important, and unfortunately, i’ve – had to deal with a number of uh issues lately, where, when i was when i received the question – and i say well, what does your independent contract agreement say about this? Uh the feedback i’m.

Getting is i don’t have an independent contractor or agreement, or i never received one um. So i i will emphasize again later when i speak about a particular issue: the importance of those independent contractor agreements.

Um that – and i i take a step back because i think i told you that this information in red is new. It’s, not new. I just am reiterating it um, because i get questions about it, a lot on the hotline and i think it’s worth just a moment of speaking so um.

You are, of course, as a qb required to receive and disperse all commissions, um, that the broker is owed in a timely manner and there’s, no specific time frame provided, but um it’s. One of those things where you kind of know, if it’s timely or it’s, not timely.

But the this section in red um talks about dispersing commissions to any entity entitled by law to receive the same, including the state of a deceased broker, the deceased broker, surviving spouse or any legal, legalized, legally recognized entity wholly owned by the av.

So we’re talking, you know llcs or um, or s corpse that are wholly owned by the ab um and their spouse. Those things can be, money can be dispersed to those entities as well as again to, for example, the estate or the uh spouse of a deceased broker.

Who was when your office, so that comes up sometimes – and you do have the right of the qb to disperse to those those persons and entities um there’s, some identification requirements, so you need to identify yourself under the qb responsibilities, identify yourself as A real estate broker on all phone calls texts or emails, and you have to disclose when buying selling or leasing real property on your own behalf that you hold a new mexico real estate license, and we ‘

Ll see that again, when we talk about the advertising, the advertising section of this in just a moment – and i’ll – address that just a little bit more in that section. There are some mitigating factors for qualifying brokers, so we’ve established all these things that you have to do as a qualifying broker now um.

And how can you mitigate your risk of being found in violation for not doing these things and they have specified some some things that you can do so? The qb has if the qb has implemented policies and procedures to prevent nab from violating state or federal laws.

Regarding real estate rules, as demonstrated by the following, the written policies and procedures that we talked about, if you’ve created those and they’re in place, and you also can demonstrate the a b has received training on written policies and Procedures made that available to the a b.

Again you know we we can’t make our associate brokers, attend training necessarily, but we can certainly encourage them and make it completely available. And if you’re doing these type of things, it’s a way you can mitigate your responsibility as a qualifying broker in the event that something happens also: ongoing training and education of your abs, ongoing discussions regarding real estate practices and Procedures ongoing discussions regarding completing real estate forms correctly ongoing discussions regarding changes to forms, rules and regulations.

These are all ways that you as a qb, if you can demonstrate you’ve done. These things can mitigate your responsibility under the rules. We talked about a minute ago. Any violation of license act by licensee does not necessarily mean that the qb is going to be responsible.

Okay, it shall not automatically result in your suspension as a qb or your revocation of your qb license, because your a b has failed in some way unless the qb had actual knowledge of the act or rule violation.

And when you have actual knowledge that there’s, a violation of the rule as a qb and you don’t do anything about it, then that can create a situation for suspension or revocation of your license. Um, the qb’s.

Failure to provide appropriate written company policy and procedures manual shall be caused for discipline, including suspension or revocation of the kiwis license. So going back to about four slides ago, guys where i said you have to have these policies and procedures in place and be talking to your abs about them.

If you don’t have them in place that can cause you to be disciplined as a qb, including suspension or revocation of your qb license. There are also some new responsibilities: obligations for associate brokers, so this isn’t all falling on the qb.

You, as an associate broker, have to notify your qb immediately and seek counsel of an attorney if necessary. If you have questions or concerns about a transaction or process, including, but not limited to, violations of office policies and procedurals procedures, violations of local law, state law, federal law, you need to seek help with contract creation and completion.

When you’re unsure, including consultation with an attorney, if necessary, you need to ensure your own competence and knowledge of the profession by taking ce courses in areas where you are lacking, skill or knowledge.

So if you want to do work in the commercial realm, we know there’s, no special licensure for commercial work. You can do that at any time. You decide to do it, but you wouldn’t want to take that on without having taken some ce courses in commercial work, whether it be commercial leasing or commercial sales, or working and working with somebody who has experience in that area.

So that’s, the responsibility of yours as an associate broker um, and it says that you will not undertake assisting in areas which are not trained so ago going back to the commercial example. If you’ve, never done a commercial deal in your life.

You’re, not going to take that on without either working closely with somebody who has commercial experience or getting those ce credits and these kind of things under your belt, and you know, even if with education i mean education is wonderful, but it doesn’t actually give you all the time, a a feel for how an actual transaction goes or issues that should arise during a particular transaction.

So i think, even if you’re, taking ce credits, if you’re entering into an area of real estate with which you’re, not familiar, always a good idea to associate with somebody initially. Who knows who knows that area of real estate? You need to read and understand and follow policy and procedures manuals that have been provided by the qb disclose when buying selling or leasing that you have a real estate broker’s license and identify yourself as a as a real estate broker on phone Calls texts or emails: you have an obligation as an associate broker to renew your license, timely and take all of your continuing education courses in order to renew your license and to notify your qb immediately.

If the license cannot be renewed or has expired, you also have an obligation now guys to submit all advertising not prepared by the brokerage to the qb for review and approval before you release it. That’s very important.

I don’t know how many guys are doing that as it is, or how many office policies provide for that as things stand, but all advertising has to run through the brokerage. So we’re going to assume when you see an advertisement out there, that the brokerage has signed off on that.

And that is acceptable to the brokerage. Because that’s. Now, an obligation of the a b to submit it and an obligation of the qb to review it unless the qb or the brokerage has already has actually created it um.

We have a couple of changes to broker duty disclosure, so we had this language other written agreement that showed up in the broker duty disclosure about. I don’t know three years ago and we never really knew what it meant we didn’t have a real, clear understanding of what it meant we did talk about in the context of referral fees.

If you have a referral fee and an agreement, does that require you to uh, disclose that to your your customer or client um, we talked about various types of agreements that might fall under that, but we never had any real collec really clear direction on that.

They’ve, now taken the words or any other written agreement out of the broker duties, so that’s, no longer even a requirement. We have to worry about. They also added in the language at the bottom here in yellow the broker.

Shall disclose the existence of such agreement and writing to other brokers involved in the transaction? Um the language right above that explains that you know, as a broker you have to. You have to actively participate in assisting your client to get to the trend to the closing table right, so you’re, helping them comply with the terms of the agreement, but there are brokers out there.

Sometimes we refer to them as limited service brokers. Um that enter into agreements with the customer client. That specifically says i’m, not going to be performing those duties. I’m, not going to be assisting you to get to the closing table.

I’m, doing something very limited in this in this relationship that we have and the in the contract that that broker has with their customer client, specifically uh calls out things that will not be done or the things that will be done and amends.

Our listing agreement and right now we don’t, have a. I get calls about that every once in a while. Do we have something like that in our library, a limited service type listing agreement and we do not um, but these brokers that work in that arena do have those type of listing agreements in place, and it specifically says what they will not be for the duties They will not be performing or the obligations they will not be meeting for the consumer um this provision in yellow here it used to be in there.

It disappeared in one of the reiterations of the broker duties and now it’s back again in the event that you are working as a limited service broker, you now have an obligation to disclose the existence of such agreement in writing to other brokers Involved in the transaction, so, for example, in the mls – and you often will see that the loss as it stands now, you’ll, often see something that’s in the mls.

That says that the buyer’s broker should be contacting the seller directly on this one, and it gives you an understanding that it’s, a limited service type situation, but explicit disclosure to other brokers that you are only working as a In a limited capacity for the seller is required now again uh ce requirements um, so the abce requirements are still 36 hours, but the qb ce requirements have increased to 42 hours of ce courses approved by the real estate commission during each licensing cycle and for each Licensing cycle you have to take the following: um the four hour core course, as you guys all know, has to be completed annually.

So you have to do that three times during your three year, licensing cycle um for abs. You have four hours of core elective courses to be completed during the three year cycle for qbs. You have eight hours of core elective courses to complete, be completed during the three year cycle.

Um qb’s; 42 uh, you’re. Taking those 42 hours and six of those have to be your qb refresher course, so those six hours are included in your 42 hours that you have to take four hours of ethics and then, of course, if you’re doing property management, then you’re, going to have to do additional ce requirements that are specific to property management.

All your remaining hours may be earned towards ce renewal requirement from approved courses by the commission, non-core elective category courses, which we talked about additional collective uh category courses, which we talked about um and or ethics category courses.

So, as i said before, we have definitions now of this non-core, elective and core elective, and what kind of topics will fall under those categories and you can take the rest of your hours in those categories.

If a broker fails to complete an annual course required for the first and or second year of the three year licensing renewal and is unable to complete a makeup of the missed courses with an approved core instructor prior to license expiration, the broker will be required to Successfully complete a 30-hour broker-based, of course, prior to expiration or as a condition of expired, license renewal reinstatement.

You will get credit for the renewal purpose, but you will not be given any continuing education court credit, so you’re gonna have to take this 30-hour broker basic again guys, so it’s very important that you take these courses Yearly but in the event you don’t take your core course on one year and you realize that when you go to renew your license, you can find an instructor to teach you that course that you missed uh.

If you can, then you can avoid this requirement of this 30 hour broker basic course, and if you can’t, then this is the situation you find yourself in taking this 30 hour broker basic um course for for no extra for no credit, continuing Education, credit, so uh if you broke or fails clean any one of the core course requirements for the context of the year cycle due to medical reasons, they have created some exceptions to this also for military deployment, so um it’s, something you know Similar to the license renewal, um in the event that you can prove that the reason you weren’t able to do it is because you were deployed or because you had some medical reasons that prevented you from doing so, then you can actually get An opportunity to make that up and they will require documentation again, doctor’s, affidavit or letter things like that in order to make sure that you actually did qualify for this exception, um and uh.

The continuing education course hours generally carried forward to the next this is is important because you didn’t used to be able to carry anything forward but um. What they’re saying is, if you take a core course in excess of 12-hour course, normally sufficient for the cycle.

So if the broker renews their license early with within their online renewal two-month period and they meet that 36-hour, minimum or 42-hour minimum depending if you’re a qb or you’re an ab. And then the broker takes a core course between the date of the renewal and the end of the cycle’s date of expiration.

They will allow you to take that core course and move it into your next licensing period. Okay, you can carry that forth into for the next year, so they made an exception to um those kind of carryovers that are allowed, and this is the exception.

It has to do with the core course and the ability to move that to your next licensing cycle. In the event, you should take it in that in that window um there’s, a whole section now guys on volunteer service and getting ce choir or ce credit for being a volunteer at the real estate commission – and you know i know we know That’s a terribly time consuming endeavor right, whether you’re working as a commissioner or sitting on the advisory committee or you’re doing you know some kind of special task force that’s been put Together um in any of those scenarios, it can be very time consuming, and so the commission recognizes that and they are providing for ce um credits in the event that you should um be part of any of those type things.

The commission, the advisory committee or one of those boards, so you can get up to a maximum of 16 hours during a three year licensing cycle. As a commissioner, if you’re sitting on the education advisory committee, you can get a maximum of 16 non-core elective credits in a three-year licensing cycle.

If you’re appointed as a res to the residential management advisory committee, again 16 non-core elective credits and if you are appointed to a term as a member on any other real estate, commissioner task force, you can get up to 16 during that period Of time as well um, so it encourages, i think it really encourages everybody to to volunteer right.

I mean you get ce credits now for doing so, so that’s, wonderful and and the recognition of of the work that you put in for the commission. The real estate advertising rule has uh has changed only slightly to provide that you now have to disclose the fact that you are a real estate broker in the event that you are buying a piece of property um or you um, and we talked about before in Our and the requirements of qbs and abs, if you’re leasing, a piece of property um.

So this provision is new because it used to be that in the event you’re selling. The rule says that you have to advertise the fact that you are a broker on your signs and also include that in your contracts, if you’re selling, a piece of property of your own um and uh, and it never talked about buying on The other side of the transaction, whether that disclosure was required, but now it is so you need to include the fact that you are a licensed real estate broker.

If you’re buying or leasing property going forward, a commission will conduct a background check to non-applications. I think we’re aware of that including renewal applications, and they may use that information in determining the applicant’s.

Eligibility for licensure or renewal um, so they will be double checking on those background, checks and making sure uh nothing’s had occurred since last time. You guys uh, you know, had a background check and in the event that something should come up.

It could affect the renewal status. Okay, let’s. Talk about home inspector licensing a little bit. I’m, not going into a tremendous about a detail about this, but i do want to just touch on it briefly.

They did pass the rule, so the board was convened and they did go through the rule making process and that was published in the federal and the uh. The state register that last month and the rules do take effect on january 15th, but that doesn’t necessarily mean everybody has to be licensed by the 15th um.

There are some home inspector licensing rules or you should say, law that’s in place now this actually came out of the act, not the rules – and i talked about this briefly at my last um, my last session, but i wanted you guys to Remember that this is already in in effect right now, there does have to be a pre-inspection agreement with the client that talks about the amount of compensation, the list of components and systems that will be inspected when the client’s going to get the Report based on when the inspection is done and if there’s, no date by which they have to get the report, then it’s, going to be due within five days after the inspection.

It must include this exact language, and this exact language is also going to be in the final report, and this is the exact language, and this is important for everybody to understand, including the consumers that the home inspector will not determine and the report provided upon.

Completion of the home inspection will not contain a determination of whether the home or components or the systems of the home that have been inspected conform to the local or state building code requirements.

So they’re. Not they’re, not going to be checking for code guys that’s, not their job. They’re, not even permitted to do it under the under the law and and they’re telling the consumer that not just in the final report, but also in the pre-inspection report that has to be provided.

The rules that were passed recently deals with these type of things, fees and disciplinary proceedings, insurance, the code of ethics, and they do have insurance. They are required to have insurance. We talked about that before and that’s, great news, um.

It’s, they should have already, and i think most of them did, but some of them did not. They do have to have insurance now continuing education, renewals and at reactivations. This is all covered in the rules um.

I wanted to point out that, even though these rules take effect on july 15th, obviously you know they’ve just created rules for what kind of like what kind of testing has to be done, and those people haven’t taken the Test yet they haven’t had an opportunity uh.

So that starts on the 15th. The requirement to start getting those those things done and what they’ve said is that, within six months of the effective date uh, which will take us to mid-july right july 15th, everybody should have a license by july 15th um and that that july 15 deadline for everybody to be licensed that gives them plenty of opportunity to take the required testing and fill out the applications and do what they have to do.

That may be extended in the event we have some kind of you know. You know the pandemic has created a lot of interesting issues over the last year and if there’s, some kind of emergency that occurs that requires an extension of that july 15 deadline.

The board has the power to extend that july 15 deadline, but right now that’s, the date that we’re working with um, but nothing in the rules permit any person engaged in the practice of home inspection, whether licensed or unlicensed, To violate the code of ethics or standards of conduct, as adopted by the board, that’s, one of the rules that they they have adopted, and it does not permit such person to violate any aspect of the home inspector licensing act.

So so you’re, going to see lice inspectors getting a bit very busy over the next six months, obtaining their licensure, getting their insurances in place if they don ‘ T already have that meeting the other requirements that have been set forth by the law and by the uh by the act and by the regulations um.

I want to just point out this one particular aspect of the uh of the law, because it you guys are specifically mentioned in there um you’re called realty agents here, which uh never heard that term before really with you guys, but um.

That’s, how they’re, referring to you, so it talks about conflicts of interest, um and a a a home inspector shall not um. You know evaluate inspector property for compensation in which they have or expect to have a financial interest.

So if they own a property, they can’t conduct the the inspection on it inspect a property under a contingent arrangement whereby any compensation or future referral is dependent on reported findings or on the sale of the property, direct or indirectly compensate realty agents Or other parties having a financial interest in closing or settlement of the real estate transaction for the referral of inspections or for inclusion on a list of recommended inspectors, preferred providers or similar arrangements.

So i think that’s, pretty clear guys. The home inspector cannot provide you with any kind of compensation directly or indirectly to either have you refer business to them or to get on a list that you give to your customers and clients.

They cannot receive conversation for an inspection for more than one from more than one party unless the client consents in writing to the compensation arrangement they can’t accept compensation directly or indirectly for recommending contractors, services or products to a client or other parties.

Having an interest in an inspected property, so they can’t. Do an inspection on a property, for example, find things that are wrong with. It refer the consumer to some contractor to get those things fixed and then get some kind of.

You know. Referral fee or compensation from that contractor for that referral they can’t perform or offer to perform for an additional fee, any repair to a structure on which the home inspector or home inspectors company has prepared report at any time during the 12 months.

Immediately prior to the repair or offered repair, so in the event that the home inspector also does um repairs themselves on properties, they can’t do that repair and if they’ve done a home inspection during the 12 months immediately prior.

So there’s, going to be a session that i i just learned about this um. So thank you. Um for uh jeff gorham. He’s. A real excuse me, a home inspector down in las cruces, informed me that on january 22nd, from 9 to 11, gar will be hosting a virtual session on the act in the new rules and that it can be a bit viewed.

Statewide um i’ve, talked to steve about it and we weren’t aware of it as well, but we’re, going to make sure that we get that information out to all of our members. You might want to tune in and watch that and learn more details about the home inspector licensing rules and and and the act and the implementation of those over the next six months.

Um, the license applications will be available on the home inspector board’s website on january 15th. So, while you won’t be looking for licensed home inspectors tomorrow or on the 15th. When these rules take effect, you will be seeing inspectors getting their licensures in place over the next six months and again, unless there’s, some extension based on some emergency that occurs by the 15th of july.

We should see all of our home inspectors who are doing home. Inspections should be licensed at that point um, so that’s kind of the the plan, but you’ll, get a lot more information on january, 2nd 22nd.

If you’re able to tune in to to that particular presentation and again, um gar, i’m sure, is sending something out on that to its members, but in light of the fact that it can be watched statewide where we as A state association will make sure that our members statewide get that information and can tune in okay, the legislative session 2021 um.

We are proposing some changes to the real estate disclosure act specifically dealing with the estimated property tax disclosure. I will mention that down in albuquerque, which is not specifically related to this, but there is the county: assessor’s website and there’s.

The treasurer’s website and one of the websites um lacks a component of the required estimated property tax disclosure and that’s. The current property taxes on the property gives the estimate, but it doesn’t, give the current and so um.

That website is probably not the best one to use and i believe it’s that that might be the assessor’s website and it’s. The treasurer’s website that should be used, but i think we’ve covered that in the past, and i can get that information out to you um, but i just wanted to let you know that there was a component of this Estimated property tax exposure that requires the current taxes to be disclosed as well, and so you need to make sure if you’re down in that area and whatever area you’re in that your assessors estimated property tax disclosure that they Are they are making available through their website includes that information as well, not just the the current one, along with the estimated property tax disclosure.

So take a look at those if you haven’t done so um, so the changes that we are uh proposing have to do with the definition of residential property, or in this case there is no definition of residential property under the estimated property tax Disclosure law, so, as you guys know, the whole reason that this law came into effect back in 2009 is because, when you own a property, uh residential property, your your taxes can go up no more than three percent per year.

So there’s. A cap on how much your taxes can go up. Um mine seem to go up exactly three percent every year. By coincidence, um it’s supposed to only go up current and correct right. They’re supposed to tax.

The current and correct so if your property hasn’t actually increased in value by three percent, then they shouldn’t be going up three percent, but nonetheless i think that traditionally we’re.

Seeing pretty much three percent increases every year um, but the reason that we created the law is because you have the benefit of that cap as long as you live in the property, but as soon as you transfer the property.

As soon as you sell the property that cap just disappears right, so we no longer have that cap in place and if you have people that have lived in a property for a really long time and have just gone up a little bit, you know three percent.

Every year or something less than that, then when they go to sell their property, if the values have increased incredibly and that’s, what was happening actually back in 2009 um or even a little bit before that um, then what you see is a Tremendous jump in the property tax that the buyer will be paying on the property versus what the seller was paying on the property and that could very well impact the buyers ability to to afford the new home, and so that’s.

How this law kind of you know kind of came about um, but the problem is that we in the law it in this particular law, which is not found in the taxation section of the statutes, is a whole different section.

It’s in the property law. Section um we don’t define what a residential. So we don’t know we don’t know and at the beginning, when this law first came out, tax and rev took the position that residential was one to four family dwellings and, and that was it, but somewhere along the line.

They realized hey, we really don’t have any basis for saying that’s, the definition of residential and we need to find a basis, and so they went back to using the definition of residential from the property tax code a whole Different section of the act – and that was a very different definition than the one to four it really kind of opened that up and it included now um sellers of large apartment complexes who were now bound by the disclosure requirements um.

It also included people that were ranches big ranch pieces of property that did have a dwelling on them, um and uh, and and that that’s problematic for reasons i’ll discuss in just a minute, but as far as the the Large commercial properties, such as the apartment complexes, and things like this with that we’re now in there um they were never the uh the intended.

Should i say the buyers were never the intended beneficiary of this act. They weren’t concerned um about you, know: protecting commercial buyers buying these large commercial complexes um. They were concerned about protecting kind of the people that were buying homes um and that’s, the basis of the act.

So the fact that the somehow these big commercial complexes got in there was kind of accidental, because again we had no definition of residential, and so now we’re using a definition that incorporates them um.

So we are creating a new definition of residential that actually excludes uh, the commercial type properties, and we limit it to the one to four family dwellings, and then we also exclude things like ranches or other other residential type properties, um.

That will um that the estimated property tax will not be a fair amount or or reflect a fair amount or the accurate amount of taxes that that particular buyer would have to pay. So when you’re dealing with ranches or big pieces of property that fall into one of these special evaluations, whether it be livestock or minerals – or you know things like even manufactured homes, when they’re, not permanently affixed to the foundation.

If you go and get an estimated property tax disclosure based on just the list price, which is how this real estate disclosure act works, you’re, going to be completely off from what the buyer will actually be paying in taxes, because these special methods Of evaluation that are are implemented in those type of properties, so you know, i think it’s.

Even it’s, it’s. It’s worse than not giving them anything because you’re. Actually, giving them information that’s completely off base um and and not accurate at all, leading them to believe that they will be paying something that could be.

You know significantly lower than what they actually will be paying um. So what we want to do is try to carve those out of the definition of residential, and so that’s. What we’ve done here, one to four family dwellings, uh real property and we define what dwellings are.

But we do exclude all of these properties that have special evaluations under these particular sections of the law. The other thing that we’re doing in the same exact section, is uh trying to deal with the disclosure issues that are inevitably going to arise in the event that the cannabis the cannabis bill passes.

So, as you guys know, um again because it’s, been, i think i don’t need one or maybe even two sessions, that there has been a bill introduced to legalize uh, recreational cannabis or marijuana right um in the event and And you know it looks pretty good actually that might get passed during this next legislative session, and if that should happen, um then the question i know that i’m going to get on the hotline is, if a part place, because i get it Already and we’re just dealing with medical marijuana right now, so as soon as recreational comes on the market, that’s going to impact a whole lot of a whole lot more properties and the question’s going to Come up a whole lot more often do i have to disclose the fact that this property was used for cannabis production um and it’s, amazing that a lot of the states don’t address that issue in their laws, um and But uh you know i i feel like we need to address the issue again, mainly because i’m gonna get the question um, but also just because of some studies that have been done.

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