Welcome to your first session in preparation for the Real Estate Broker and Salesperson bar examination. If you are enrolled in this course, it means you completed the registration and enrollment process.
You should have activated your account to access this platform and read our institutional rules. During the next 10 (Salespersons) or 15 (Brokers) weeks, Real Estate Bar Exam candidates will take on the task of continuously entering the course platform, reading the materials, completing assigned tasks per session and participating in required synchronous sessions.
For this first week, you should have read "History and Evolution of Real Estate in Puerto Rico" presented herein. You will be responsible of studying assigned materials and completing assigned tasks. It is our sincere hope that this is the beginning of a successful career. We strive to motivate the achievement of goals and contribute to your personal and professional development.
Our mission statement is "Educating to change lives" and we view The Learning Zone Institute as an instrument of educational progress.
As you complete this first session you will:
Get acquainted with the educational portal (new students).
Define "broker", "salesperson" and "company", within the Real Estate scope.
Identify differences between the three.
Identify historic moments that where pivotal in the evolution of Real Estate in Puerto Rico.
Recognize and understand the need for creating the Examining Board for Real Estate Brokers, Salespersons and Companies.
This is paragraph text. Double click here to edit and add your own text.
This is paragraph text. Double click here to edit and add your own text.
For more than 500 years, (before Christ) and humans fought over the land. In history itself, we see how the Spaniards conquered the lands and appropriated them. Also from our ancestors and in our times there have been real estate negotiations.
The field of brokerage took hold and began as an informal profession, without regulations in the industrial age in P.R. and USA and with the advent of the development movements (Construction), became a prestigious profession and one of great importance to the consumer and the economy in many countries.
In the absence of regulations and an impetuous growth in the profession, in the US, a group of "runners" not yet formally established, decided to found the National Association of Realtors® (NAR), in Chicago, in 1908. This association intended and its main purpose was to ensure that both the selling owners and the prospective buyers received a competent and professional service from the representatives or intermediaries of the real estate, becoming the "precursors" of the real estate business. Giving a first definition of what are now known as brokers, and that until then were intervenors (intermediaries) in the transactions of BR (the lands, everything under them, and what grows or is attached to them).
NOTE: As an important point lets take a moment to state the difference between Realtors® and runners (Real Estate Broker). Realtors® can be lawyers, appraisers, engineers, brokers, sellers or owners of companies related to the real estate industry. This prestigious association is governed by a strict Code of Ethics and offers excellent benefits to members and especially brokers and sellers of real estate. However, you do not have to be a member of the association (Realtor®) to be a license broker, license obtain by complying with the requirement of the Department of Estate for which you prepare through this course. Once you obtain it, you can voluntarily become a member of the NAR.
How they did it? They developed a strict Code of Ethics, in 1908, which several years later, in 1913, was adopted in PR and by 1924 it became the mandatory Code of Ethics for anyone who acted as an intermediary in a real estate transaction.
The functions of this improvised "corredor" were to put in contact the seller (owner) and the prospect buyer and serve as an intermediary in purchasing processes (mortgages) of new properties, without knowing anything about it.
Boldly, the real estate business was proliferating to such an extent that the Justice Department had to create a first Law, # 77 of June 25, 1964 to protect consumers from anti-ethical behavior of some brokers, in addition to the first regulations for the industry. This law and its subsequent regulations 4 and 5 tried to regulate transactions involving real estate located in and outside of PR. Establishing regulatory measures that outlaw (prohibit) certain unfair and deceptive practices that had arisen from the operation of the business, as explained below:
Even with these regulations, it was not enough. Therefore other laws were passed related to the real estate industry and the role of the broker.It was not until June 14, 1980, that the real estate business is given greater formality, with the approval of Law # 139. It established that every natural person wishing to have a "Corredor" (Real Estate Broker) license should take a bar test, and those who were already registered in Monopolistic Affairs, would receive their license (Grandfather Clause) which would have to be renewed every two years without taking the bar test. The banned acts were not established in this law, so four days later the Law 145 was approved that listed the proscribed acts.
Other matters of importance brought Law 139, as shown below:
Finally, on April 26, 1994, Law # 10 was approved, entering in effect on July 24 of the same year. This law repeals and amends paragraph (d) of article two (2) of law # 130 of July 13, 1967, regulations 4 and 5 and laws 139 and 145 and brings a structure and organization to industry of real estate, adding the figure of the seller and the license of Real Estate Companies. This law is currently the one that governs and regulates the profession, although substitute projects have been written, to work with significant changes in the area of continuing education and the preparatory course.
As part of this evolutionary process, Law 10 has undergone amendments and changes that we will be studying. Since March 2009, and until the end of 2010, we worked and still work with a new regulation of academic matters and a possible substitute project for this law.
Both Realtors® as brokers and sellers, businessmen, lawyers, appraisers, landlords, banking and experts of residential and commercial real estate have been summoned to public hearings, to make their presentations regarding the project under development.
On June 26, 2009, a Committee of seven Real Estate Schools of P.R., chaired by Prof. Esther Rubio, was appointed to develop the Regulation of Academic Affairs for real estate. It was completed and delivered to the attorneys of the Board of Brokers, Sellers and Real Estate Companies, for the necessary legal adjustments and drafting and submitted to the legislative branch, after editing for approval in May 2010. It was also created a committee of experts, lawyers, brokers, landlords, Realtors® for the development of a project that replaces the law # 10.
Among the possible changes were: higher number of hours of continuing education; establish a certification for the instructors of the preparatory real estate courses; authorize distance education according to established parameters; create the practical post-license as a mandatory element; establish a minimum or maximum number of brokers in charge of another broker, so that it has to be a Real Estate Company; establish other requirements for renewal and / or for new vendors or brokers; establish a commission in charge of real estate research and inspections of Real Estate Companies and Schools.
1) Out of all the legislative attempts at regulating the Real Estate business, before Act 10, which one regulated the business with more control and authority? In other words, which was the most rigorous?
2) Explain the importance of Act #139. What was it called and when was it enacted?
3) After completing the assigned readings, what would you say was the biggest problem, that existed by the beginning of last century, related to the Real Estate?
ANSWERS:
This is a two-part exercise: (1) As we discussed during our first session, please explain the differences between a Realtor and a Real Estate Broker. (2) Are there any benefits to being a Realtor®? Answer yes or no. If yes, please describe them.
For this assignment you can do a search on Google, consult your Candidate Manual or go to www.realtor.org for more information. You should also search Act 10 to read relevant definitions.
NOTE: You are allowed freedom for research, so we expect professional and complete answers.
Answer:
Realtors as defined in this course, “can be lawyers, appraisers, engineers, brokers, sellers or owners of companies related to the real estate industry.” A Realtor is trademarked as they are required to be active members of NAR (National Association of Realtors). They are licensed to help people buy and sell their properties only after completing 30-90 hours of classroom education (depending on the state) and passing a licensing exam. A Realtor is then required to renew their license every year or two (depending on the state); and may be required to continue their education before renewing. A Realtor can specialize in a particular part of home buying or selling processes; for example, inspection. Real Estate Brokers are much more experienced and have a higher level of education, partly due to the fact that they have stricter licensing requirements. Brokers can work independently, but Law 10 requires other brokers to be in charge of other brokers to ensure they are operating under a Real Estate Company. Brokers can open their own brokerage and will typically hire a Realtor or Real Estate agent who specializes in a particular area of expertise.
Watch Intro Video: https://youtu.be/D_zqzBFYsZM
Title: REAL ESTATE ACT TO REGULATE THE REAL ESTATE BUSINESS AND THE REAL ESTATE BROKER, SALESPERSON AND COMPANY PROFESSIONS
Act No. 10 of April 26, 1994: effective 90 days from its enactment.
Hereinafter we will dissect Act 10, which was approved in 1994 and has suffered many changes since. We have incorporated the amendments and will discuss the Act as a whole, but said amendments correspond to the following legislation:
Act No. 180 of August 12, 1995
Act No. 271 of October 6, 1998
Act No. 172 of July 30,1999
Act No. 118 of September 26, 2005
Act No. 93 of May 16, 2006
Act No. 231 of Dec 16, 2011 (NEW) (not for test)
Art. 1 Title. - This Act will be know and may be cited as "Act to Regulate the Real Estate Business and the Real Estate Broker, Salesperson and Company professions in Puerto Rico".
Art. 2 Definitions. (20 L.P.R.A. sec. 3025) Instructor's NOTE: Article 2 was amended by Act 118, to arrange definitions in alphabetical order. (see Act 118 web link below)
Law No. 118 of September 26, 2005 (copy/paste link) https://edu.educatepr.com/files/130428/Law%20No.%20118%20of%20September%2026,%202005%20(Enmienda%20la%20Ley%2010).pdf?lmsauth=305dcfe0c4af0a9ef63b357e83812c775c1572a6
Definitions
(a) Real estate broker - A natural person who holds a license to practice the profession of real estate broker issued by the Board and acts as intermediary, through the payment or the promise of payment of any compensation previously and mutually agreed upon between the parties that contract to execute in Puerto Rico a sales transaction, promise of sale, purchase or sale option, exchange, lease, auction, property management, or in the offering, promotion, or negotiation of the terms of all sales, sales options, promise of sale, lease management, or exchange of real property located in or outside of the Commonwealth of Puerto Rico. However, for the purposes of this chapter, any type of transaction related to the purchase, sale, lease, exchange, action or management of real property by a broker in which he/she is the owner of said real property and acts in his/her own interest and not as the intermediary between two (2) clients, shall not be deemed as practicing the profession of real estate broker.
Instructor's NOTE: Bar Exam Question
(b) Real estate salesperson. The natural person who holds a license to practice the profession of real estate salesperson issued by the Board, and is employed or contracted as independent contractor, directly or indirectly, through the payment of any compensation, by a real estate broker to perform under his/her direction, control, supervision, and responsibility any of the activities authorized by this chapter to a real estate broker. The real estate salesperson shall be bound to comply and keep the Board informed of his/her place of business at all times in order to comply with this provision.
Instructor's NOTE: Bar Exam Question
(c) Real estate company. Any partnership or corporation which holds a license as a real estate company issued by the Board and is engaged in any of the activities that a real estate broker is authorized to perform under this chapter.
(d) Board. The Puerto Rico Board of Real Estate Brokers, Salespersons, and Companies.
Instructor's NOTE: Bar Exam Question: It was called "Examining Board as per Act 139, but Act 10 changed its name to the above.
(e) License. The official authorization issued by the Board to practice the profession of real estate broker, salesperson, or company in the Commonwealth of Puerto Rico.
(f) Proprietor. Any person who owns real property located in or outside of the Commonwealth of Puerto Rico, who solicits and contracts the services of a real estate broker, salesperson, or company to carry out a transaction with regard to said real property.
(g) Buyer. Any person who is the acquiring party in a real estate transaction of real property located in or outside of the Commonwealth of Puerto Rico.
(h) Deposit. The sum of money that a buyer delivers to a real estate broker, salesperson or company before executing a real estate transaction, with regard to the real property located in or outside the Commonwealth of Puerto Rico, so that the real estate broker, salesperson, or company may initiate the necessary steps for said transaction to be achieved.
Instructor's NOTE: Bar Exam Question (good faith deposit)
(i) Real estate transaction. Any sales contract, promise to sell, option to buy or sell, exchange, leasing, auction, property management contract, or the offer, promotion or negotiation of the terms of a real estate sale, purchase-sale option, sales promise, lease, management or exchange located in or outside the Commonwealth of Puerto Rico, in which a real estate broker, salesperson, or company serves as intermediary.
(j) Initial registration. The first registration in the Department of Consumer Affairs of information and promotional material related to the sale of real property located outside the Commonwealth of Puerto Rico.
(k) Subsequent registration. Any registration made at the Department of Consumer Affairs, of information or promotional or sales material related to the offer for sale or sale of real property located outside the Commonwealth of Puerto Rico, which has been preceded by an initial registration; or any modification of the information or promotional material related to the sale of said real property.
(l) Promise of sales contract. Any direct or indirect, immediate or deferred bilateral contract which binds the parties to convey title of real property located in or outside the Commonwealth of Puerto Rico.
(m) Multiple listing service program. Any type of program implemented by a group of brokers, salespersons, or companies that are members of the same business entity or private body in the real estates business, through which real estate brokers, salespersons and companies belonging thereto may include properties on a list, thus making it possible for every property thus included to be subject to a real estate transaction by any other participating real estate broker, salesperson or company.
(n) Real estate company license. The license issued to a partnership or corporation to engage in the real estate business in the Commonwealth of Puerto Rico.
Instructor's NOTE: Bar Exam Question (license must be visible to the public and you should carry a wallet-size copy)
(o) Brokerage contract. The agreement whereby a person is bound to render services as an intermediary with a third party in exchange for payment to perform a real estate transaction, as defined in this chapter.
(p) Non-profit real estate business corporations or associations. Any non-profit private association or corporation whose members are engaged in the real estate business, whether as brokers, salespersons, or companies and whose purpose is to set norms and programs for the subsequent development of said business.
(q) Person. Any natural or juridical person.
Power point link: (copy this and paste it in your browser)
Instructor's NOTE: Again... The name of the Board is Bar Exam Question material, because it was called the Examining Board as per Act 139, but Act 10 changed it to the name which appears as title to this section.
Articles 3 through 9 of Act 10 are dedicated to the creation and establishment of the Board, its responsibilities and duties, as presented below:
Art. 3 - Board -- Creation (20 L.P.R.A. sec. 3026)
The Puerto Rico Board of Real Estate Brokers, Salespersons and Companies is hereby created, which shall be attached to the Department of State.
Art. 4 - Board -- Members (20 L.P.R.A. sec. 3027)
The Board shall be composed of five (5) members appointed by the Governor of the Commonwealth of Puerto Rico, with the advice and consent of the Senate of Puerto Rico. The members of the Board shall be persons of proven moral probity, over twenty-one (21) years of age, and residents of the Commonwealth of Puerto Rico. Three of the members shall be duly-licensed real estate brokers of recognized professional qualifications who shall have actively pursued the profession of real estate broker for a term of not less than three (3) years. With regard to the remaining two (2) members, one, who shall represent the consumers, may be engaged in any trade or profession and have some knowledge of real estate; and the other, who shall represent the public interest, shall be a lawyer. The Board shall elect a president from among its members who are real estate brokers. No member of the Board shall hold or engage in teaching or academic positions, nor shall be a proprietor, shareholder, administrator, or belong to the board of trustees or directors of an institution, college or school with educational programs for real estate brokers or salespersons.
Art. 5 - Board -- Terms of Office (20 L.P.R.A. sec. 3028)
The members of the Board shall each hold office for a term of four (4) years and until their successors are appointed and take office. No Board member shall be appointed for more than two (2) consecutive terms.
Art. 6 - Board -- Vacancies and Removal (20 L.P.R.A. sec. 3029)
Any vacancy occurring on the Board before the expiration of the term of office of the member who causes it shall be filled in the same way as the original member was appointed, for the unexpired portion thereof.
The Governor of Puerto Rico may remove any Board member from office after filing charges and due notice and hearing, for immoral conduct, inefficiency or negligence in the performance of his/her duties, for lack of professional ethics, for conviction of a felony or misdemeanor which implies moral turpitude, or because his/her license has been suspended, revoked or cancelled, or for any other just cause.
Art. 7 - Board -- Quorum, bylaws, meetings (20 L.P.R.A. sec. 3030)
Three members of the Board shall constitute a quorum. The Board's decisions shall be approved by the majority vote of those present.
The Board shall adopt bylaws for its internal operation and shall hold at least one (1) meeting in each quarter of the calendar year to consider and resolve its business. It may also hold as many meetings as may be needed for the prompt handling of its affairs and duties
Art. 8 - Board -- Per diem and expenses (20 L.P.R.A. sec. 3031)
Instructor Notes: Exam question: This article was amended by Law 172 of July 30, 1999.
The members of the Board shall be entitled to a minimum per diem as established for the members of the Legislature established by Act No. 97 of June 19, 1968. for each day or portion thereof they attend Board meetings or sessions.
They shall also be entitled to reimbursement of the travel expenses they necessarily must incur to perform their official duties, pursuant to the applicable regulations of the Department of the Treasury.
Art. 9 - Board -- Powers and Duties (20 L.P.R.A. sec. 3032)
The Board shall have the following powers and duties, in addition to any others provided in this chapter:
Articles 10, 11 and 12, refer to the requirements to obtain board issued licenses corresponding to Real Estate Brokers, Salespersons and Companies.
Instructor's NOTE: these three articles are Bar Exam Question Material, you must KNOW them by heart, so you can confidently identify them without confusing them.
Power Point link: (copy and paste link in your browser)
Art. 10 - License -- Real Estate Broker (20 L.P.R.A. sec. 3033)
Any natural person who wishes to practice the profession of real estate broker in Puerto Rico shall meet the following requirements:
Instructor's NOTE: Bar Exam Question. This Article was amended by Act 172 of July 30, 1999.
Art. 11 - License -- Real Estate Salesperson (20 L.P.R.A. sec. 3034)
Any natural person who wishes to practice the profession of real estate salesperson in Puerto Rico, shall meet the same requirements established for real estate brokers, with the exception of what is established in subsections (e), (f) and (i) of § 3033 of this title, and shall also:
Art. 12 - License -- Real Estate Company (20 L.P.R.A. sec. 3035)
A real estate company license shall be issued to a corporation or partnership if it meets the following requirements:
Art. 13 - License -- Bond (20 L.P.R.A. sec. 3036)
Instructor's NOTE: This article has been amended by Act 118 of September 26, 2005.
Act118 of Sept. 26, 2005: https://edu.educatepr.com/files/130428/Law%20No.%20118%20of%20September%2026,%202005%20(Enmienda%20la%20Ley%2010).pdf?lmsauth=305dcfe0c4af0a9ef63b357e83812c775c1572a6
*Power Point Video: https://youtu.be/oUMYtkK5GL8
The Board shall issue to a real estate broker, salesperson, or company a license after the applicant has passed the proper examination and has posted bond in favor of the Commonwealth of Puerto Rico, and deposited it with the Board, in the amount of ten thousand dollars (10,000) in cases of real estate broker or salesperson licenses and in the amount of twenty thousand dollars (20,000) in cases of real estate companies. Said bond shall be issued by an insurance company duly authorized to do business in the Commonwealth of Puerto Rico, within a term of thirty (30) days after the Board has issued or renewed the corresponding license. The real estate broker, salesperson, or company shall be bound to inform in writing to the Department of Consumer Affairs the name, physical and mailing address, and telephone number of the insurance company that has issued the bond. The bond shall include the condition that the applicant or person who obtains the license shall comply with all the provisions of this chapter and the rules and regulations adopted thereunder. The bond shall be surety for any loss or damage caused to any person for any failure to comply with the provisions of this chapter or the rules and regulations issued thereunder. Said bond shall also stipulate that the revocation of a license shall not affect the effectiveness of the bond with regard to original claims for acts incurred prior to the date of said revocation.
Any person who suffers losses or damages due to any act or omission by a real estate broker, salesperson, or company may file a suit pleading redress for the loss or damages suffered against the insuring company directly or the broker, salesperson, or company, or against both.
Articles 14 and 15 are related to all subjects that are Bar Exam Question material and all continued education requirements. These are of themselves, Bar Exam Question materials.
Art. 14 - License -- Examination ; subject matters (20 L.P.R.A. sec. 3037)
(a) Each original applicant for a license to practice the profession of real estate broker shall meet the following professional education requirements:
In order to renew the real estate broker's license, as established in § 3040 of this title, the broker shall be required to take continuing education courses for a minimum of six (6) hours a year. The Board shall be establish, by regulations, which continuing education activities shall be accepted for said renewal; Provided, That the requirement for the renewal of licenses shall become effective two (2) years from the approval of this act.
(b) All aspirants for a license to practice the profession of real estate salesperson shall meet the following professional education requirements:
In order to renew the real estate salesperson's license as established in § 3040 of this title, the salesperson shall be required to take continuing education courses for a minimum of four (4) hours a year. The Board shall establish the continuing education courses that shall be required for said renewal.
(c) The professional education courses mentioned in subsections (a) and (b) of this section shall be taken in a college, institute or university accredited by the General Council on Education or by the Department of Education of the Commonwealth of Puerto Rico, and approved by the Board. The Board shall accept the accreditation for the term it has been granted; provided, that it offers the real estate study program approved by it.
The Board shall accept, in lieu of the colleges or universities, those educational courses or seminars sponsored by professional real estate associations previously approved by the Board.
The Board shall consider, at a public hearing, any application by any person, entity, association or institute to offer the courses established in this chapter, for its approval or rejection. Provided, That the Board shall give at least forty-five (45) days notice of said hearing to the professional organizations related to the real estate industry, and shall publish the invitation to said hearings in a newspaper of general circulation in Puerto Rico at least forty-five (45) days prior thereto.
(d) The Board shall provide, through regulations, the requirements to accept courses by alternate educational methods in those cases of applicants to practice the profession of real estate salesperson or broker, who cannot attend them in a classroom, due to physical limitations.
Instructor's NOTE: Section (c) was amended by Act 172 of July 30, 1999
If the student fails to pass the bar. (Which of course, won't happen to any of you who are diligently studying and making note of all your Instructor's NOTES.)
Art. 16 - License -- Failure to pass examination (20 L.P.R.A. sec. 3039)
Any person who does not pass any of the examinations established in this chapter may take them again the next time they are given by the Board. The Board may retain the documents submitted by the applicant. The Board shall retain the examinations of the applicants who have not passed them, so that they can be examined by them in order to review the examination, if they so request. (sic)
Power Point:
Art. 17 - License -- Renewal of Licenses (20 L.P.R.A. sec. 3040)
Real estate brokers, salespersons and company licenses shall expire four (4) years after their issue. Every applicant for renewal who has filed his application along with the accompanying or requested complementary documents prior to thirty (30) days from the expiration date of the license, shall have said license automatically extended for the term the Board may take to consider the application. The duly sworn application for the renewal of the license shall be filed with the Board, on the form that the Board has furnished for such purposes, and shall include the following:
Art. 18 - License -- Issuance and Display of License (20 L.P.R.A. sec. 3041)
The Board shall immediately issue the real estate broker, salesperson or company's license to those persons who have met the requirements established in this chapter. The license shall be displayed to the public in the real estate broker, salesperson or company's workplace.
Art. 19 - License -- Denial, Refusal, Suspension, Revocation (20 L.P.R.A. sec. 3041)
The Board may deny, refuse to renew, suspend or revoke a license motu proprio or by request of a party after filing charges and an administrative hearing, pursuant to the provisions of §§ 2101 et seq. of Title 3, of any real estate broker, salesperson, or company that:
Instructor's NOTE: Sections (i) and (j) were amended by Act 172 of July 30, 1999.
Art. 20 - License -- Reciprocity (20 L.P.R.A. sec. 3043)
The Board is hereby authorized to establish a reciprocity relationship to grant licenses without an examination directly with the several states or territories of the United States or with any foreign country in which requirements similar to those established in this chapter to obtain a real estate broker, salesperson or company license are required, and in which a similar concession is provided for the Commonwealth of Puerto Rico licensees.
Art. 21 - Escrow accounts -- Special accounts (20 L.P.R.A. sec. 3044)
These reports shall be subject to the inspection of the Board and the Department of Consumer Affairs. The real estate broker, salesperson or company shall be bound to present within a term of thirty (30) days after obtaining the license issued by the Board, a written authorization which shall empower the Department of Consumer Affairs to review the escrow account.
Art. 22 - Inactivity (20 L.P.R.A. sec. 3045)
Instructor's NOTE: This article was amended by Act 118 of September 26, 2005. This is Bar Exam Question Material.
ACT 118 of Sept. 26, 2005 - https://edu.educatepr.com/files/130428/Law%20No.%20118%20of%20September%2026,%202005%20(Enmienda%20la%20Ley%2010).pdf?lmsauth=305dcfe0c4af0a9ef63b357e83812c775c1572a6
SYNCHRONOUS SESSION ON ACT 10 - PART I
1) What is Act 10's official title and when was it enacted?
2) Define the following terms:
3)The administrative organization in charge of implementing Act 10. What government agency is it attached to?
4) Describe the Board (in detail):
5)
6)
7)
8) List all Powers and Duties of the Board:
9) Explain:
10)
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
All real estate property located outside of Puerto Rico, that is offered for sale in Puerto Rico, as well as all licensed Real Estate Brokers, Salespersons and Companies, MUST be registered with the Department of Consumer Affairs (DACO for its Spanish achronym). Arts. 23 through 29 of our Act 10, regulates our relationship with said agency and establishes certain responsibilities, like filing a semiannual report, that are not to be taken lightly.
As we study these dispositions in detail, you should keep in mind that Arts. 23, 24 and 27 were amended by Act 118 of September 26, 2005. Also, Art. 24(d) was amended by Act 172 of July 30, 1999.
Power Point Video: https://youtu.be/2N-qFF0aQbI
Art. 23 - Department of Consumer Affairs -- Powers (20 L.P.R.A. sec. 3046)
The Department of Consumer Affairs is hereby empowered to supervise the real estate business in the Commonwealth of Puerto Rico and the sale in the Commonwealth of Puerto Rico of real estate located outside the Commonwealth of Puerto Rico. Pursuant to the provisions established below and to the purposes established above, the Department of Consumer Affairs may:
Art. 24 - Locations outside Puerto Rico -- Registry (20 L.P.R.A. sec. 3047)
Any person engaged in the sale in the Commonwealth of Puerto Rico of real property located outside of the Commonwealth of Puerto Rico whether through purchase sale contracts or promises, in installment or cash or otherwise, shall register as real estate broker, salesperson or company or proprietor in the Department of Consumer Affairs (DACO, Spanish Acronym.)
The Department of Consumer Affairs shall issue a registration certificate once the necessary investigations have been conducted and it determines that the applicant meets all requirements. The registration certificate issued shall be non-transferable. This certificate shall be effective for the term of one (1) year as of the date of issue and be renewed annually. The renewals shall not be necessary when the applicant certifies in writing that he/she has determined that he/she will not longer be engaged in the sale or offering for sale of real property located in or outside the Commonwealth of Puerto Rico.
The real estate salesperson, broker, or company whose intention is to conduct business in representation of a proprietor shall previously require the latter a copy of the registration certificate in effect.
No person in the Commonwealth of Puerto Rico may be engaged in the sale of real property located outside the Commonwealth of Puerto Rico without having first obtained a registration certificate from the Department of Consumer Affairs.
The printed registration form provided for such purposes by the Department of Consumer Affairs shall contain:
America or of the foreign country in which he/she resides.
In the case of partnerships and corporations, a good conduct certificate shall be included for each partner, and in the case of a corporation, for each shareholder, director, and official thereof, as the case may be. The date, place and number of incorporation, the name and address of each incorporator or the articles of incorporation of the partnership shall be provided. In addition, the name of the residing agent or person authorized to receive summonses in the Commonwealth of Puerto Rico, as well as the certification of the Department of State authorizing them to do business in the Commonwealth of Puerto Rico shall be provided.
The Department of Consumer Affairs is hereby empowered to issue the corresponding registration certificates and to collect the fees set by regulations through Internal Revenue vouchers.
Art. 25 - Locations outside Puerto Rico -- Initial Registration of Offers (20 L.P.R.A. sec. 3048)
Every real estate proprietor, broker or company, duly registered in the Department of Consumer Affairs pursuant to § 3047 of this title, shall file with said Department all information related to offerings for the sale of real property located outside of Puerto Rico, all promotional material related thereto, all documents that shall be used in the real property sales transaction, and any other information that is required by this chapter or by the Secretary of Consumer Affairs as pertinent to comply with the purposes of this chapter.
Art. 26 - Locations outside Puerto Rico -- Subsequent registration (20 L.P.R.A. sec. 3049)
In addition to the requirements stated in §§ 3047 and 3048 of this title, said real estate proprietor, broker or company shall be bound to report any change in the information or documentation required in § 3047 of this title, and to report any new information or promotional material related to the real property for which an initial registration has already been made.
Art. 27 - Locations outside Puerto Rico -- Proprietors bonded (20 L.P.R.A. sec. 3050)
The Department of Consumer Affairs shall not register or issue any registration certificate whatsoever, unless the proprietor of the real property located outside of the Commonwealth of Puerto Rico has posted in favor of the Commonwealth of Puerto Rico and deposited in the Department of Consumer Affairs a bond in the amount of one million dollars ($1,000,000) or six percent (6%) of the sales price of each real property on the date any sale or option to purchase contract is executed, as determined by regulations. Said bond shall be approved by the Secretary of the Treasury and issued by an insurance company duly authorized to do business in the Commonwealth of Puerto Rico, or a mortgage security approved by the Secretary of the Treasury. The insurance companies that issue such bonds shall present evidence attesting that they are authorized to do business in the Commonwealth of Puerto Rico.
The bond shall include the condition that the proprietor of the real property located outside the Commonwealth of Puerto Rico shall comply with all the provisions of this chapter and the regulations adopted by virtue thereof, relative to the sale of real property located outside of the Commonwealth of Puerto Rico. Said bond shall also stipulate that the revocation of the registration certificate shall not affect the effectiveness of the bond with regard to claims originated for acts incurred prior to the date of revocation.
The cancellation of a bond shall have the result of rendering the registration ineffective until a new bond is posted. Said bond shall answer for any damages or losses caused to any person due to breach of contract and claims for defects or vices of the property, whether involving deception or defective construction thereof or noncompliance with the provisions of this chapter or the regulations issued thereunder.
Likewise, the bond shall remain in effect for two (2) years as of the date of execution of the final bill of sale of the real property.
Said bond shall not be required for the sale of residences located outside the Commonwealth of Puerto Rico when, as a result of the real estate transaction, the buyer receive the warranty provided by the Home Owners Warranty Program endorsed by the National Association of Home Builders.
Art. 28 - Locations outside Puerto Rico -- Semiannual report (20 L.P.R.A. sec. 3051)
The real estate broker shall submit a report to the Department of Consumer Affairs during the first week of each semester, of all sales to residents of the Commonwealth of Puerto Rico for the previous semester. Said report shall be a sworn statement signed before a notary public, which shall include the name and address of every buyer, exact location of each property, the sales price, the amount of advance payments, deposits, commissions, and all other conditions of the sale and its financing, and any other necessary information to keep the Department of Consumer Affairs fully informed about any transaction of this kind carried out in Puerto Rico.
Art. 29 - Locations outside Puerto Rico -- Additional Information. (20 L.P.R.A. sec. 3052)
If necessary, and when the Secretary of Justice justifies it, the Department of State shall render any assistance needed for the Department of Consumer Affairs to obtain any additional pertinent information from those corporations or businesses located in foreign countries, which are engaged in the sale in Puerto Rico of real estate located abroad.
Art. 30 - Locations outside Puerto Rico -- Obligations of financial institutions (20 L.P.R.A. sec. 3053)
Every financial institution engaged in collecting the accounts of companies that sell real estate located outside of Puerto Rico, shall:
Art. 31 Proscribed Acts or Practices (20 L.P.R.A. sec. 3054)
The following specific acts or practices are hereby proscribed:
(a) Every person subject to the provisions of this chapter is hereby forbidden to incur or induce another person to incur any of the acts or practices listed below:
(1) Act in representation of more than one party in a transaction, without the express consent of all parties.
(2) Unduly withhold any document or amount of money from the parties.
(3) Offer a property for sale without the owner's consent.
(4) Deposit one party's funds in a real estate transaction together with his/her own funds.
(5) Refuse to produce information required by an agency or a state or federal court that is not protected by evidentiary privilege.
(6) Use only a telephone number or address in any advertisement or promotional medium, without indicating the name and the operating license number of the broker or company in question [sic].
(7) Use information obtained in the course of his/her efforts as a broker or salesperson, to directly or indirectly acquire a property without the consent of the parties that provided the information.
(8) Fail to furnish to the parties all the information and all documents required by the applicable laws and regulations needed therefor, at the moment a real estate transaction is executed.
(9) Execute an exclusive or semi-exclusive brokerage contract with any party without explaining the terms and conditions thereof and its expiration date; Provided, that automatic renewal clauses in brokerage contracts shall not be permitted. Instructor's NOTE: This paragraph was amended by Act 271 of 1998.
(10) Charge a commission to more than one party in a transaction, unless the parties agree to it.
(11) Withhold any deposit when the transaction or deal subject to such deposit has not been executed, through no fault of the buyer.
(12) Fail to display the license issued by the Board publicly, in the workplace.
(13) In the case of salespersons, to represent another broker or company other than that for which he/she renders services as an employee or independent contractor, without the consent of said broker[age] company.
(14) In the case of salespersons, to accept a commission for services rendered from a person who is not the broker or company for which he/she works, without the consent of the parties and of the broker or company for which he/she works.
Instructor's NOTE: paragraphs 15 through 20 were amended by Act 172 of 1999.
(15) Discriminate against any of the parties to a real estate transaction because of race, religion, sex, physical or mental disability, family status or national origin.
(16) Prior to the granting of a brokerage contract or net listing, not have advised the client adequately on the scope of the transaction and the convenience of using the services of a professional appraiser.
(17) Deliberately conceal essential information on the condition of a property, with the purpose of inducing one of the parties to conclude the transaction in certain terms that if he had been aware of them, would not have completed the transaction or [would have] paid a lower price.
(18) Not presenting in a diligent manner, or retain or delay any offer on a property, in order to benefit another person, or the broker, salesperson, or a real estate enterprise.
(19) Use the funds deposited by the clients as part of a real estate transaction, for personal benefit and without written authorization.
(20) Improperly inform the client that he holds a deposit to secure a real estate transaction, when in fact, it does not exist.
Instructor's NOTE: paragraphs 15 through 20 were amended by Act 172 of 1999.
(21) Induce a party in a real estate transaction to rescind a valid contract to make a new one in order to benefit the broker, salesperson, or a real estate enterprise.
(22) The failure to notify and advise the owner prior to the signing of the brokerage contract and the prospective buyer prior to the execution of a written purchase option or purchase and sale contract and as a part thereof, on the need and convenience of having an expert, duly certified by the Commonwealth of Puerto Rico, perform a physical inspection of the real property as a part of the real estate transaction. The owner or prospective buyer shall certify with his/her signature that he/she has received the broker's advice. Instructor's NOTE: This paragraph was added by Act 93 of May 16, 2006.
All proscribed acts or prohibited practices are Bar Examination Question Material and were amended by Act 93 of May 16, 2006 (adding paragraph 22).
Proscribed Practices Part II
http://www.educatepr.org/ActosProscritos1.html
Art. 32 - Proscribed acts or practices -- Locations outside Puerto Rico (20 L.P.R.A. sec. 3055)
(a) Acts or practices proscribed to salespersons, brokers and companies in the sale of real property located outside of Puerto Rico:
(b) Acts or practices proscribed to proprietors in the sale of real property located outside of Puerto Rico:
Art. 33 Exceptions (20 L.P.R.A. sec. 3056)
The provisions of this chapter shall not apply:
Art. 34 Penalties (20 L.P.R.A. sec. 3057)
The commission of one single act by a person who is required to have a license, without holding it, shall be a violation of this chapter; Provided, also, That each act shall be considered as a separate violation.
Art. 35 Administrative penalties (20 L.P.R.A. sec. 3058)
Any violation of the provisions of this chapter shall be punishable [by] the imposition of an administrative fine by the Department of Consumer Affairs, up to a maximum of ten thousand dollars ($10,000) for each infraction, as provided by §§ 2101 et seq. of Title 3. The monies collected for these fines shall be covered into the funds of the Department of Consumer Affairs.
Art. 36 Actions constituting profession (20 L.P.R.A. sec. 3059)
Any person or entity that, directly or indirectly, with the intention or the promise of receiving compensation, offers, attempts or agrees to perform a real estate transaction as defined in this chapter for another person, whether as a part of a real estate transaction or the complete transaction in itself, shall be deemed a broker, salesperson or company, under said definition.
The commission of one single action by a person who is required to hold a license, without having it, shall constitute a violation of this chapter; Provided, further, That each act shall be considered as a separate violation.
Art. 37 Transitory provisions (20 L.P.R.A. sec. 3060)
All regulations adopted by virtue of Act No. 139 of June 14, 1980, shall remain in effect with full force and power until they are amended or revoked, provided they are not in conflict with this chapter. Those procedures, applications for examinations, licenses, actions and claims that are pending before the Board or any ourt as of the date of approval of this act which have been initiated according to the provisions of Act No. 139 of June 14, 1980, shall continue to be handled until a final decision is made, pursuant to the laws and regulations in force on the date that said procedures, applications, actions or claims were presented or initiated.
Those procedures, applications for registration, complaints, investigations, claims or actions pending before the Department of Consumer Affairs or any court as of the date of approval of this act, that have been initiated pursuant to the provisions of Act No. 145 of June 18, 1980, shall continue to be handled until a final decision is made, pursuant to the laws and regulations in force on the date said procedures were presented or initiated.
Art. 38 Special Fund (20 L.P.R.A. sec. 3061)
A special fund is hereby created in the Department of the Treasury, not subject to a specific fiscal year, separate and distinct from any other moneys or funds of the Government of the Commonwealth of Puerto Rico, to defray the expenses incurred by the Board to implement this chapter. This fund shall be nourished from the sums collected from examination fees and the fees for the issuing and renewal of the real estate broker and salesperson license.
Art. 39 Allocations (20 L.P.R.A. sec. 3062)
The amount of twenty five thousand dollars ($25,000) will be assigned to the Department of State to cover the Board’s operating expenses during fiscal year 1994-1995. Thereon after all expenditures necessary for the implementation of this law, will be allocated within the functional expense budget of said Department.
Art. 40 Provision (20 L.P.R.A. sec. 3063)
In the event that any article, paragraph, clause or part of this act is declared unconstitutional by a court with competent jurisdiction, sentence so dictated shall not render the rest of it without effect. The effects of such a judicial decree will be limited to the article, paragraph, clause or part of this act that was declared unconstitutional.
Art. 41 Repeal and amendment (20 L.P.R.A. sec. 3064)
Art. 42 Enactment (20 L.P.R.A. sec. 3065)
This Act will enter in full effect upon ninety (90) days of its approval.
Read the following situations carefully and answer according to what you have learned about proscribed acts or practices, as they were presented to you through the study of Act 10 of April 26, 1980.
You need an 80% passing score to move on to the next lesson.
1) As part of the regular course in a real estate transaction, the buyer giver the broker a deposit to "hold" or "option" a property. What does the broker do with this deposit?
2) City John wants to sell Country Jane's parcel. They haven't signed a brokerage contract because she's unsure about using his services. But John already has an interested buyer, Loaded Carl. Desperate to make the sale, City John sends Loaded Carl a brochure he made in a hurry, using he pictures of the parcel that he took during his visit to Country Jane's place. After sending the brochure, John realizes he forgot to include the Broker's license number in it...
3) Shiny Nickel is very good friends with Golden Coin, who happens to be a Real Estate Broker. Shiny bequests his friend to find him a 3-bedroom apartment near the beach. He wants to capitalize on the new mortgage incentive legislation and save some money. Lucky for him Golden just so happens to have a 5%brokerage contact on an ocean front property in Condado, so she tells him about it. Shiny immediately offers Golden a "little something" on the side, if Golden can manage to get Proprietor to sell him the property $5000 below sale price. He tells her he has some cash, but doesn't qualify for financing on the full price... Proprietor doesn't need to know.
4) The exclusive and semi-exclusive brokerage contracts are the ones most commonly used in the Real Estate Business. Which of the following statements is correct?
5) Who's responsibility is it to complete a full physical inspection of the property of a real estate transaction?
Answers: