REPORT TITLE:
Real Estate
DESCRIPTION:
Consolidates provisions relating to continuing education
requirements. Provides greater flexibility in real estate laws
relating to license application and restoration, prelicensing and
examination requirements, and fidelity bond coverage. Eliminates
site office registration requirement. (CD1)
238
THE SENATE S.B. NO. S.D. 1
TWENTIETH LEGISLATURE, 1999 H.D. 2
STATE OF HAWAII C.D. 1
________________________________________________________________
________________________________________________________________
A BILL FOR AN ACT
RELATING TO REAL ESTATE BROKERS AND SALESPERSONS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
1 SECTION 1. The purpose of this Act is to:
2 (1) Facilitate review and understanding of the laws
3 relating to the continuing education requirements for
4 real estate license renewal;
5 (2) Provide an option to expending time and funds for
6 prelicensing education and examination requirements for
7 a candidate who may have a questionable background
8 experience that may cause a denial of licensure;
9 (3) Simplify and clarify prelicensing broker requirements
10 including updating to present standards among the other
11 states and providing more fairness to specialty areas;
12 (4) Provide candidates and licensees with additional real
13 estate prelicensing examination options that include
14 the auditor-recommended option of providing equivalency
15 to out-of-state licensees for passage of the other
16 state's uniform section of the examination;
17 (5) Ensure that real estate licensees, who renew licenses
18 on time, will receive notice of relicensure and their
19 new license by the start of the new licensing period;
Page 2 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 (6) Simplify, decrease, and clarify the procedures for
2 restoration of forfeited licenses including adding
3 options and expanding the restoration periods;
4 (7) Deregulate the displaying of the licenses of associated
5 real estate salespersons;
6 (8) Require the registration, rather than the licensure, of
7 real estate brokers' branch offices;
8 (9) Repeal the requirement that real estate site offices be
9 registered;
10 (10) Ensure that real estate recovery fund requirements do
11 not conflict with bankruptcy laws; and
12 (11) Simplify and clarify registration requirements
13 applicable to condominium hotel operators.
14 SECTION 2. Chapter 467, Hawaii Revised Statutes, is amended
15 by adding a new section to be appropriately designated and to
16 read as follows:
17 "�7- Continuing education. (a) The commission shall
18 have the authority to:
19 (1) Set content and other requirements for continuing
20 education courses, providers, and instructors;
21 (2) Determine whether requirements have been met;
22 (3) Specify a mandatory core course, courses, or
23 equivalencies for a licensing biennium;
Page 3 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 (4) Determine how many hours of a continuing education
2 course will be credited toward continuing education
3 requirements for real estate licensees;
4 (5) Develop its own continuing education courses or approve
5 courses developed by others; and
6 (6) Authorize the provision of courses taught by
7 alternative delivery methods with interactive
8 instructional techniques. Interactive instructional
9 techniques may include but are not limited to:
10 (A) The opportunity for immediate exchange with an
11 instructor; and
12 (B) Assessment and remediation through the assistance
13 of computer, electronic, audio, or audiovisual
14 interactive instruction designed to internally
15 measure and evaluate whether students have
16 mastered stated learning objectives.
17 (b) Continuing education providers shall:
18 (1) Certify that instructors have met the commission
19 requirements;
20 (2) Ensure that instructors are competent in the subject
21 matter of the course and are current in their knowledge
22 of the subject matter; and
23 (3) Ensure that the course is based on current information,
Page 4 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 laws, and rules.
2 (c) Continuing education instructors shall ensure that
3 their courses are based on current information, laws, and rules.
4 (d) Continuing education courses shall be designed to
5 improve a licensee's competency, or professional standards and
6 practice and shall:
7 (1) Be offered by a provider approved by the commission and
8 either be:
9 (A) Approved by the commission and delivered by an
10 instructor certified by a commission-approved
11 continuing education provider;
12 (B) A national course delivered by an instructor
13 certified by the National Association of Realtors
14 or its affiliates;
15 (C) A national course delivered by an instructor
16 certified by the Building Owners and Managers
17 Association, the Community Associations Institute,
18 or any other national organization approved by the
19 commission; or
20 (D) Certified by the Association of Real Estate
21 License Law Officials;
22 (2) Be designed to allow students to exceed minimal entry
23 level competency in the subject matter of the course
Page 5 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 including consumer protection in real estate
2 transactions; and
3 (3) Not require an examination."
4 SECTION 3. Section 467-8, Hawaii Revised Statutes, is
5 amended to read as follows:
6 "�7-8 Prerequisites for license, registration, or
7 certificate. (a) No license, registration, or certificate under
8 this chapter shall be issued to:
9 (1) Any individual applying for a real estate broker or
10 salesperson license who does not satisfy the
11 requirements set forth in section 467-9.5;
12 (2) Any individual applying for a real estate broker or
13 salesperson license unless the individual has
14 demonstrated by passing with a grade satisfactory to
15 the commission an examination appropriate to the
16 license sought that the individual has a reasonable
17 knowledge of:
18 (A) Estates, interests, and rights in real property;
19 (B) The documents or acts or occurrences by which
20 property is transferred or otherwise affected;
21 (C) The rights and duties of an agent;
22 (D) The laws of the State relating to real estate
23 brokers and salespersons; and
Page 6 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 (E) Other subjects that the commission determines to
2 be essential for the protection of the general
3 public in its real estate transactions;
4 (3) Any person who does not possess a reputation for or
5 record of competency, honesty, truthfulness, financial
6 integrity, and fair dealing;
7 (4) Any partnership unless the real estate brokerage
8 business thereof is under the direct management of a
9 principal broker who is a general partner or employee
10 thereof and holds a current active real estate broker's
11 license;
12 (5) Any corporation unless the real estate brokerage
13 business thereof is under the direct management of a
14 principal broker who is an officer or employee thereof
15 and holds a current active real estate broker's
16 license;
17 (6) Any individual applying for a real estate broker's
18 license who does not have a current [active or
19 inactive] Hawaii real estate salesperson's license;
20 [or]
21 (7) Any person with a trade name, partnership, limited
22 liability company, or corporation that is not currently
23 registered with the business registration division of
Page 7 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 the department of commerce and consumer affairs;
2 provided that no real estate salesperson's license
3 shall be approved or issued with a trade name[.]; or
4 (8) Any limited liability company unless the real estate
5 brokerage business is under the direct management of a
6 principal broker who is a member of a member-managed
7 limited liability company or a manager of a manager-
8 managed limited liability company or employee and holds
9 a current active real estate broker's license.
10 (b) Prior to submitting to prelicensing education or
11 examination requirements, an individual candidate may request
12 that the commission consider a preliminary decision as to whether
13 the individual candidate for a real estate license will be denied
14 a real estate license pursuant to section 467-8(a)(3). The
15 individual candidate shall submit a completed application, all
16 information requested by the commission, and the nonrefundable
17 application fee as provided in rules adopted by the director
18 pursuant to chapter 91. The preliminary decision shall provide
19 advisory guidance, shall not be construed as binding, and shall
20 not be subject to appeal. The individual candidate seeking a
21 preliminary decision shall not be considered an applicant for
22 licensure. A preliminary decision that is unfavorable to the
23 individual shall not prevent the individual from submitting a
Page 8 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 complete license application and fees after successful completion
2 of the prelicensing requirements."
3 SECTION 4. Section 467-9.5, Hawaii Revised Statutes, is
4 amended to read as follows:
5 "�7-9.5 Prerequisites for examination. (a) No
6 individual shall be eligible for the licensing examination
7 unless[:] the individual is:
8 (1) [The individual is a] A citizen of the United States,
9 or an alien who is authorized to work in the United
10 States, and of the age of majority;
11 (2) [The individual applying] Applying for the real estate
12 salesperson examination and has satisfactorily
13 completed a commission-approved prelicensing course for
14 real estate salesperson candidates, which includes real
15 estate principles[,] or [its] their equivalent[,
16 approved or accredited] as determined by the
17 commission;
18 (3) [The individual applying] Applying for the real estate
19 broker examination [has satisfactorily completed a
20 prelicensing course for real estate broker candidates,
21 or its equivalent, approved or accredited by the
22 commission;
23 (4) The individual applying for the real estate broker
Page 9 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 examination] and:
2 (A) Is currently licensed as [an active or inactive] a
3 Hawaii real estate salesperson; [and
4 (B) Has been engaged in the real estate business as a
5 licensed Hawaii real estate salesperson as
6 determined by the commission for not less than a
7 period of two years on a full-time basis and has
8 practical experience in the real estate field as
9 determined by the commission.
10 The commission may waive a portion of the required
11 experience, if the individual has had other experience
12 or education in real estate, which, in the opinion of
13 the commission, is equivalent to the required
14 experience, to be established by detailed explanatory
15 affidavit or in any other manner as may be determined
16 by the commission; or
17 (5)] (B) Has satisfactorily completed a commission-approved
18 prelicensing course for real estate broker
19 candidates, or its equivalent as determined by the
20 commission; and
21 (C) Has experience as a full-time state-licensed real
22 estate salesperson associated with a Hawaii-
23 licensed real estate broker for the three-year
Page 10 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 period immediately prior to the licensing
2 examination and has practical real estate
3 salesperson experience, as certified by the
4 principal broker or principal brokers during the
5 subject period. The candidate shall secure
6 commission approval of the candidate's experience
7 certification application prior to the date of the
8 examination. Subject to commission approval, a
9 candidate may request equivalency for a portion of
10 the experience requirement based on real estate
11 license experience in another state, as determined
12 by the commission; or
13 (4) [Unless specifically] Specifically authorized by
14 the commission.
15 (b) Each individual shall certify on the application for
16 examination that the prerequisites set forth in this section have
17 been or will be satisfied prior to the date of examination. The
18 examination score of any individual who has taken the examination
19 without having satisfied the prerequisites set forth in this
20 section prior to the date of examination shall be voided."
21 SECTION 5. Section 467-9.6, Hawaii Revised Statutes, is
22 amended to read as follows:
23 "�7-9.6 Examination. (a) Every applicant for a real
Page 11 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 estate examination shall file an application with either the
2 commission or the testing service agency designated by the
3 commission pursuant to rules of the commission to provide the
4 testing service. The application shall be in a form prescribed
5 by the commission and shall include a certification statement
6 that the applicant has fulfilled or will fulfill by the date of
7 the examination, the prerequisites for examination. Every
8 application shall be accompanied by an examination fee as
9 determined by the commission by rules adopted pursuant to
10 chapters 26 and 91. Applicants shall apply for real estate
11 licenses in the manner prescribed by the commission.
12 (b) The commission may prescribe the passage of a specific
13 section or sections of the examination for different purposes,
14 including the following:
15 (1) A current out-of-state licensee requesting an
16 equivalency to the uniform part of the state
17 prelicensing examination based on previously passing
18 the uniform portion of another state's licensing
19 examination or equivalent as determined by the
20 commission. The approved equivalency will be for the
21 respective examination passed in the other state;
22 (2) Equivalency to continuing education requirements as
23 determined by the commission;
Page 12 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 (3) Restoration of forfeited license; and
2 (4) Reinstatement of license due to disciplinary action, as
3 determined by the commission;
4 subject to the contract with the testing service and submission
5 of application and approval prior to application for the
6 examination."
7 SECTION 6. Section 467-11, Hawaii Revised Statutes, is
8 amended by amending subsections (b) and (c) to read as follows:
9 "(b) The biennial renewal fee [shall be paid to] and
10 completed renewal application shall be submitted to the
11 department of commerce and consumer affairs on or before
12 [December 31 of each even-numbered year.] the commission
13 prescribed deadline prior to the expiration date of the license.
14 All real estate licenses expire on December 31 of an even-
15 numbered year. Failure, neglect, or refusal of any duly licensed
16 real estate broker or real estate salesperson to pay the biennial
17 renewal fee and to submit a completed renewal application shall
18 constitute a forfeiture of the license [of the broker or
19 salesperson.] as of January 1 of the subsequent odd-numbered
20 year. The forfeited license [of the broker or salesperson] may
21 be restored upon [written] approval of a completed application
22 [therefor,]; payment of the delinquent fees and the penalty fees
23 as provided in the rules adopted by the director of commerce and
Page 13 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 consumer affairs pursuant to chapter 91[, and]; satisfaction of
2 the applicable requirements in sections 467-8, 467-9, 467-9.5,
3 and 467-11.5; and prior to submission of the completed
4 application; and satisfaction of [such other requirements as the
5 commission may impose as a condition to restoration.] the
6 following as applicable:
7 (1) For a license forfeited for more than one year but less
8 than four years, the successful completion of the
9 commission-approved course or courses or passage of the
10 commission-approved examination; or
11 (2) For a license forfeited for more than four years, the
12 successful passage of the commission-approved
13 examination.
14 (c) A real estate broker or real estate salesperson may
15 place [that broker's or salesperson's] that person's license on
16 an inactive status by filing an application and setting forth
17 such information as may be prescribed or required by the
18 commission, and such license [may] shall be renewed [biennially]
19 on or before [December 31 of each even-numbered year] the
20 commission prescribed deadline prior to the expiration date of
21 the license by payment of the [proper] biennial renewal fee[.]
22 and submission of a completed renewal application. A real estate
23 broker or real estate salesperson may reactivate that person's
Page 14 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 inactive license by satisfying section 467-11.5, filing an
2 application, and setting forth such information as may be
3 prescribed or required by the commission, and [payment of] paying
4 the proper fee."
5 SECTION 7. Section 467-12, Hawaii Revised Statutes, is
6 amended to read as follows:
7 "�7-12 Place of business and posting of license.(a) A
8 licensed real estate broker shall have and maintain a definite
9 place of business in the State, in compliance with this chapter
10 and the rules of the commission, and shall display therein the
11 real estate broker's license and upon request make available any
12 associating real estate salesperson's license.
13 (b) No real estate broker's branch office shall operate
14 without a [license] registration previously obtained under and in
15 compliance with this chapter and the rules of the commission.
16 [(c) A real estate broker's site office shall be registered
17 with the commission and in compliance with this chapter and the
18 rules of the commission.]"
19 SECTION 8. Section 467-18, Hawaii Revised Statutes, is
20 amended as follows:
21 1. By amending subsection (c) to read:
22 "(c) The court shall proceed upon the application in a
23 summary manner[,] and, upon the hearing thereof, the aggrieved
Page 15 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 person shall be required to show:
2 (1) The person is not a spouse of debtor, or the personal
3 representative of such spouse[.];
4 (2) The person has complied with all the requirements of
5 this section[.];
6 (3) The person has obtained a judgment as set out in
7 subsection (b) of this section, stating the amount
8 thereof and the amount owing thereon at the date of the
9 application[.];
10 (4) The person has made all reasonable searches and
11 inquiries to ascertain whether the judgment debtor is
12 possessed of real or personal property or other assets,
13 liable to be sold or applied in satisfaction of the
14 judgment[.];
15 (5) That by such search the person has discovered no
16 personal or real property or other assets liable to be
17 sold or applied, or that the person has discovered
18 certain of them, describing them, owned by the judgment
19 debtor and liable to be so applied, and that the person
20 has taken all necessary action and proceedings for the
21 realization thereof, and that the amount thereby
22 realized was insufficient to satisfy the judgment,
23 stating the amount so realized and the balance
Page 16 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 remaining due on the judgment after application of the
2 amount realized[.]; and
3 (6) That where the real estate broker or real estate
4 salesperson is a debtor in a bankruptcy proceeding, the
5 aggrieved person has obtained an order from the
6 bankruptcy court declaring the judgment against the
7 real estate broker or real estate salesperson to be
8 non-dischargeable."
9 2. By amending subsection (e) to read:
10 "(e) Should the commission pay from the real estate
11 recovery fund any amount in settlement of a claim or toward
12 satisfaction of a judgment against a licensed real estate broker
13 or real estate salesperson, the license of the real estate broker
14 or real estate salesperson shall be automatically terminated upon
15 the issuance of a court order authorizing payment from the real
16 estate recovery fund. No real estate broker or real estate
17 salesperson shall be eligible to receive a new license until the
18 expiration of at least five years from the effective date of the
19 termination of the license and until the terminated real estate
20 broker or real estate salesperson has repaid in full, plus
21 interest at the rate provided for in section 478-3, the amount
22 paid from the real estate recovery fund on the terminated real
23 estate broker's or real estate salesperson's account. [A
Page 17 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 discharge in bankruptcy shall not relieve a person from the
2 penalties and disabilities provided in this subsection.]"
3 SECTION 9. Section 467-30, Hawaii Revised Statutes, is
4 amended by amending subsection (b) to read as follows:
5 "(b) All condominium hotel operators shall register with
6 the commission as a sole proprietor, partnership, limited
7 liability company, or corporation and shall:
8 (1) Obtain a license as a real estate broker in compliance
9 with this chapter and the rules of the commission;
10 (2) Register [on an annual basis on or before December 31
11 of each year as a condominium hotel operator with the
12 commission; provided that after December 31, 1996,
13 registration shall be on a biennial basis] by
14 submitting a completed commission application form with
15 the commission requested information prior to
16 conducting condominium hotel activity, and reregister
17 on or before [December 31 of each even-numbered year.]
18 the commission prescribed deadline prior to the
19 registration expiration date. The registration and
20 re-registration shall expire on December 31 of an
21 even-numbered year. Registration information shall
22 include but not be limited to the number of apartments
23 managed for others as well as the number of apartments
Page 18 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 owned by the condominium hotel operator. Any operator
2 failing to register with the commission shall be
3 subject to a fine not exceeding an amount equal to $25
4 multiplied by the aggregate number of apartments being
5 utilized as a condominium hotel. Each month or
6 fraction of a month of noncompliance shall be deemed a
7 new and separate violation;
8 (3) [Provide evidence of a current] Obtain and keep current
9 a fidelity bond [or a certification statement from an
10 insurance representative of an] from an insurance
11 company registered with the insurance division of the
12 department of commerce and consumer affairs [to the
13 commission certifying that the bond is in effect and
14 meets the requirement of this section and the rules
15 adopted by the commission, and that the]. The fidelity
16 bond [is] shall be in an amount equal to $500
17 multiplied by the aggregate number of apartments in the
18 condominium hotel operation; provided that the minimum
19 amount of the fidelity bond required by this paragraph
20 shall not be less than $20,000 nor greater than
21 $100,000. The aggregate number of apartments excludes
22 the number of apartments owned by the condominium hotel
23 operator either as a sole proprietor, partnership,
Page 19 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 limited liability company, or corporation or those
2 apartments included in a registered time share plan
3 managed by a registered time share plan manager. The
4 bond shall cover all of the condominium hotel
5 operator's employees handling or having custody and
6 control of either the condominium hotel operator's or
7 the apartment owner's funds, or both. Upon request by
8 the commission, the condominium hotel operator shall
9 provide evidence of a current fidelity bond or a
10 certification statement from an insurance
11 representative of an insurance company registered with
12 the insurance division of the department of commerce
13 and consumer affairs certifying that the fidelity bond
14 is in effect and meets the requirements of this section
15 and the rules adopted by the commission. The
16 commission may adopt rules establishing conditions and
17 terms by which it may grant an exemption or bond
18 alternative, or permit deductibles. No fidelity bond
19 exemption shall be granted to a condominium hotel
20 operator who is exempt from paragraph (1); and
21 (4) Pay an application fee and an initial registration or a
22 re-registration fee as provided in rules adopted by the
23 director of commerce and consumer affairs pursuant to
Page 20 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 chapter 91, which fees shall be deposited with the
2 director of commerce and consumer affairs to the credit
3 of the compliance resolution fund established pursuant
4 to section 26-9(o);
5 provided that this subsection shall not apply to persons who are
6 subject to section 467-2."
7 SECTION 10. Section 467-1, Hawaii Revised Statutes, is
8 amended by deleting the definition of "continuing education".
9 [""Continuing education" means a course:
10 (1) With a curriculum level above the current minimal
11 competency entry level in any of the following areas:
12 (A) Protection of the general public in its real
13 estate transactions;
14 (B) Consumer protection; or
15 (C) Improvement of the licensee's competency and
16 professional standards and practice; and
17 (2) That is:
18 (A) Approved by the commission and delivered by an
19 approved continuing education instructor;
20 (B) A national course taught by a nationally certified
21 instructor certified by the National Association
22 of Realtors or its affiliates; or
23 (C) A national course taught by a nationally certified
Page 21 238
S.B. NO. S.D. 1
H.D. 2
C.D. 1
1 instructor certified by, including but not limited
2 to, the Building Owners and Managers Association,
3 the Community Associations Institute, or other
4 national organization approved by the commission;
5 provided that the continuing education course is offered by an
6 approved continuing education provider. Continuing education
7 courses shall not require an examination."]
8 SECTION 11. Until such time as new or revised fees are
9 adopted by the director of commerce and consumer affairs pursuant
10 to chapter 91, Hawaii Revised Statutes, the fee assessed for any
11 application:
12 (1) Filed after the effective date of this Act, shall be
13 the lowest non-renewable application fee assessed at
14 the time of the effective date of this Act; and
15 (2) Existing on the effective date of this Act, shall be
16 assessed fees pursuant to the Hawaii Administrative
17 Rules applicable to that application prior to the
18 effective date of this Act.
19 SECTION 12. Statutory material to be repealed is bracketed.
20 New statutory material is underscored.
21 SECTION 13. This Act shall take effect upon its approval.