18 VAC 135-20-10. Definitions +8Virginia · Real Estate · English

An 'active' licensee is under the supervision of a principal or supervising broker and performing real estate activities under §§ 54.1-2100 and 54.1-2101. 'Inactive status' means the licensee is not under broker supervision, not active with a firm/sole proprietorship, and not performing licensed activities.

• ✓Active status requires supervision by a principal or supervising broker
• ✓Inactive status means no supervision and no performance of licensed activities

The principal broker is designated by each firm to assure compliance, receive board communications, and has responsibility for the firm and all its licensees. The principal broker must have signatory authority on all escrow accounts. In a sole proprietorship, the licensed broker/sole proprietor holds these responsibilities.

• ✓Principal broker has responsibility for the firm and all its licensees
• ✓Principal broker must have signatory authority on all escrow accounts
• ✓Each firm must designate a principal broker

The principal broker is the individual broker designated by each firm to assure compliance with Chapter 21 and the regulations, and to receive board communications. In a sole proprietorship, the licensed broker who is sole proprietor has these responsibilities. The principal broker is responsible for the firm and all its licensees and has signatory authority on all firm escrow accounts.

• ✓Each firm must designate a principal broker to assure compliance
• ✓The principal broker has responsibility for the firm and all its licensees
• ✓The principal broker has signatory authority on all escrow accounts maintained by the firm

'Actively engaged' means active licensure with a licensed firm or sole proprietorship performing licensed activities for an average of at least 40 hours per week. This requirement may be waived at the board's discretion per § 54.1-2105.

• ✓Actively engaged = average of at least 40 hours per week
• ✓Requirement may be waived at board discretion under § 54.1-2105

An 'associate broker' is any broker licensee other than the designated principal broker. A 'supervising broker' is designated by the principal broker to supervise brokerage services by associate brokers and salespersons assigned to branch offices or real estate teams, or to supervise a designated agent.

• ✓Associate broker holds a broker's license but is not the principal broker
• ✓Supervising broker is designated by the principal broker to oversee branch offices or teams

A 'standard agent' acts for or represents a client in an agency relationship with obligations under Article 3 (§ 54.1-2130 et seq.). An 'independent contractor' acts for a client other than as a standard agent, with duties governed by a written contract between licensee and client.

• ✓Standard agent has agency obligations under Article 3 of Chapter 21
• ✓Independent contractor's duties are governed by a written contract

A 'principal to a transaction' is a party such as seller/buyer, landlord/tenant, optionor/optionee, or licensor/licensee. Listing or selling brokers are NOT principals to the transaction by virtue of their brokerage relationship.

• ✓Principals include seller/buyer, landlord/tenant, optionor/optionee
• ✓Listing/selling brokers are not principals to the transaction

An 'active' licensee is a broker or salesperson under the supervision of a principal or supervising broker of a firm or sole proprietor who performs the real estate activities defined in §§ 54.1-2100 and 54.1-2101. An 'inactive status' licensee is not under supervision, not active with a firm or sole proprietorship, and is not performing any regulated activities.

• ✓Active licensees must be supervised by a principal or supervising broker
• ✓Inactive licensees cannot perform activities defined in §§ 54.1-2100 and 54.1-2101

'Actively engaged' means active licensure with a licensed real estate firm or sole proprietorship performing activities under §§ 54.1-2100 and 54.1-2101 for an average of at least 40 hours per week. This requirement may be waived at the discretion of the board under § 54.1-2105.

• ✓Actively engaged requires an average of at least 40 hours per week
• ✓The 40-hour requirement may be waived at board discretion under § 54.1-2105

A supervising broker is (i) the individual broker designated by the principal broker to supervise real estate brokerage services provided by associate brokers and salespersons assigned to branch offices or real estate teams, or (ii) the broker (who may be the principal broker) designated to supervise a designated agent under § 54.1-2130.

• ✓Supervising brokers oversee associate brokers and salespersons at branch offices or teams
• ✓A supervising broker may be the principal broker

An 'associate broker' is any individual licensee holding a broker's license other than the designated principal broker. A 'firm' means any sole proprietorship (non-broker owner), partnership, association, LLC, or corporation—other than a sole proprietorship principal broker owner—required to obtain a separate brokerage firm license.

• ✓Associate broker holds a broker's license but is not the principal broker
• ✓A firm must obtain a separate brokerage firm license under 18VAC135-20-20 B

A 'standard agent' is a licensee who acts for or represents a client in an agency relationship with obligations under Article 3 (§ 54.1-2130 et seq.). An 'independent contractor' is a licensee who acts for a client other than as a standard agent, with duties governed by a written contract between the licensee and client.

• ✓Standard agents have obligations under Article 3 (§ 54.1-2130 et seq.)
• ✓Independent contractor duties are governed by a written contract with the client

A 'client' is a person who has entered into a brokerage relationship with a licensee under § 54.1-2130. A 'principal to a transaction' is a party such as seller/buyer, landlord/tenant, optionor/optionee, or licensor/licensee. The listing or selling broker is NOT a principal to the transaction by virtue of the brokerage relationship.

• ✓A client has entered a brokerage relationship under § 54.1-2130
• ✓Listing/selling brokers are not principals to the transaction by virtue of brokerage relationship

A licensee engaged by a buyer must perform per the brokerage agreement and promote the buyer's interests by seeking acceptable property, assisting in drafting/negotiating offers and counteroffers, timely presenting all written offers, and helping the buyer meet contract obligations to reach settlement. The agent is not obligated to seek other properties while the buyer is under a purchase contract unless agreed.

• ✓Must perform in accordance with the terms of the brokerage agreement
• ✓Must present all written offers/counteroffers in a timely manner even when buyer is already under contract
• ✓Not obligated to seek other properties while buyer is party to a purchase contract unless agreed

A buyer's agent must maintain confidentiality of all personal and financial information and any other information the client requests be kept confidential unless required by law or the buyer consents in writing. The agent must exercise ordinary care, account timely for money/property, and disclose material facts of which the agent has actual knowledge.

• ✓Maintain confidentiality unless required by law or buyer consents in writing
• ✓Exercise ordinary care and account timely for all money and property
• ✓Disclose material facts related to the property or transaction of which agent has actual knowledge

Licensees must treat all prospective sellers honestly and not knowingly give false information. If the licensee has actual knowledge of defective drywall (as defined in § 36-156.1) in a residential property, it must be disclosed to the buyer. In residential transactions, a buyer's agent must disclose to the seller whether the buyer intends to occupy the property as a principal residence.

• ✓Treat all prospective sellers honestly; no knowingly false information
• ✓Disclose actual knowledge of defective drywall to the buyer
• ✓Disclose to seller whether buyer intends to occupy as principal residence in residential transactions

A licensee engaged by a buyer must perform per the brokerage agreement, promote the buyer's interests, maintain confidentiality, exercise ordinary care, account for money/property, disclose material facts, and comply with all applicable statutes and fair housing laws.

• ✓Must seek property acceptable to buyer in type, price, and terms but is not obligated to seek other properties while buyer is party to a purchase contract unless agreed
• ✓Must present all written offers/counteroffers in a timely manner even when buyer is already party to a contract
• ✓Must maintain confidentiality of personal and financial information unless required by law or buyer consents in writing
• ✓Must exercise ordinary care and account in a timely manner for all money/property in which buyer has an interest
• ✓Must disclose material facts related to the property or transaction of which licensee has actual knowledge

A buyer's agent may perform ministerial acts to assist a seller without violating the brokerage agreement or forming a brokerage relationship with the seller, unless expressly prohibited. A written agreement is NOT required before showing properties to a prospective buyer.

• ✓Ministerial acts for a seller do not create a brokerage relationship with that seller
• ✓No written agreement required prior to showing properties to a prospective buyer
• ✓Showing properties to other buyers or representing sellers on other properties does not breach duty to the buyer

Licensees must treat all prospective sellers honestly and cannot knowingly give false information. Actual knowledge of defective drywall must be disclosed to the buyer.

• ✓Must treat prospective sellers honestly and not knowingly give false information
• ✓Must disclose actual knowledge of defective drywall (as defined in § 36-156.1) to the buyer
• ✓In residential transactions, must disclose to seller whether buyer intends to occupy property as principal residence
• ✓Buyer's expression of occupancy intent in the contract of sale satisfies this disclosure requirement
• ✓No cause of action arises against a licensee for revealing information required by law

A buyer's licensee may perform ministerial acts for the seller without violating the buyer brokerage agreement or forming a new brokerage relationship, and may represent other buyers.

• ✓Performing ministerial acts for a seller does not violate the buyer brokerage agreement unless expressly prohibited
• ✓Ministerial acts do not form a brokerage relationship with the seller
• ✓Showing properties to other buyers or representing other buyers/sellers does not breach duty to the buyer
• ✓No written agreement is required before showing properties to a prospective buyer

The Real Estate Board has authority to fine, suspend, or revoke any license or certificate when a licensee violates or cooperates with others in violating provisions of the applicable Code of Virginia chapters or any board regulation. Disciplinary action follows the Administrative Process Act.

• ✓The board may fine, suspend, or revoke licenses for violations of Chapters 1, 2, 3, and 21 of Title 54.1, Chapter 10 of Title 55.1, or any board regulation
• ✓Disciplinary actions are conducted in accordance with the Administrative Process Act (Chapter 40 of Title 2.2)

A licensee failing to comply with Chapter 21 or board regulations while performing acts covered by §§ 54.1-2100 and 54.1-2101 may be charged with a violation regardless of whether the acts were done in a personal capacity or as a real estate licensee.

• ✓Violations can be charged whether committed in the licensee's personal capacity or professional capacity
• ✓The board's disciplinary authority covers acts defined under §§ 54.1-2100 and 54.1-2101

A licensee must avoid conflicts of interest by adhering to strict rules about brokerage affiliation, dual representation consent, and performing activities outside their firm. These actions are prohibited unless proper written consent is obtained.

• ✓Being active with a broker other than the licensee's principal broker without written consent of the principal broker is a conflict
• ✓Acting for more than one client in a transaction without first obtaining written consent of all clients is prohibited
• ✓Performing regulated activities as a standard agent, limited service agent, or independent contractor for any client outside the licensee's brokerage firm or sole proprietorship is a conflict

A licensee must avoid conflicts of interest by operating only under their principal broker and obtaining necessary written consents. Being active with another broker, representing multiple clients without consent, or performing regulated activities outside one's brokerage all constitute conflicts.

• ✓Being active with a broker other than the principal broker requires the principal broker's written consent
• ✓Acting for more than one client in a transaction under §§ 54.1-2139, 54.1-2139.01, 54.1-2139.1 requires written consent of all clients
• ✓Performing regulated activities for clients outside the licensee's brokerage firm or sole proprietorship is prohibited

Active salespersons and brokers must complete continuing education prior to each renewal or reinstatement. The required curriculum includes eight mandatory hours covering specific topics plus eight hours of general electives approved by the Board.

• ✓Minimum of eight required hours: at least 3 hours ethics/standards of conduct, 2 hours fair housing, and 3 hours legal updates/emerging trends, real estate agency, contracts, and flood hazard/National Flood Insurance Program
• ✓Eight hours of general elective courses approved by the Board
• ✓Board may readjust required hours/topics year-by-year, but adjustments must be made prior to September 1 of any given calendar year

As of July 1, 2012, every applicant for relicensure as an active broker or salesperson must complete a minimum three-hour continuing education course on the changes to residential standard agency effective July 1, 2011.

• ✓Must complete at minimum one three-hour CE course on residential standard agency changes prior to renewal or reinstatement
• ✓A licensee who submits a notarized affidavit certifying he does not practice residential real estate is exempt from residential representation training
• ✓Taking one three-hour CE class on residential representation satisfies the requirement; no further CE on residential standard agency is required

Fair housing CE must include updates on current cases and administrative decisions. Distance learning courses have specific testing procedures, while classroom instruction does not require testing.

• ✓Fair housing requirements shall include an update on current cases and administrative decisions under fair housing laws
• ✓A licensee not practicing residential real estate (per notarized affidavit) must instead receive training in other federal/state discrimination laws
• ✓Board shall establish testing procedures for correspondence/distance learning and require a notarized affidavit; Board shall NOT require testing for CE courses completed through classroom instruction

CE applies to active licensees and inactive licensees applying for active status. Military personnel and hardship cases have special provisions, and CE credits may carry over.

• ✓Military personnel called to active duty may complete required CE within six months of release from active duty
• ✓The Board shall establish procedures for carryover of CE credits from current to next renewal period
• ✓The Board may grant exemptions or waive/reduce CE hours in cases of certified illness or undue hardship

Every sole proprietor (nonbroker owner), partnership, association, LLC, or corporation must secure a real estate firm license before transacting real estate business. This license is separate and distinct from the individual broker license required of each active partner, associate, LLC manager, or corporate officer.

• ✓Firm license must be secured before transacting business
• ✓Firm license is separate from individual broker licenses
• ✓Entity must be authorized under Chapter 5 of Title 59.1 first

Each real estate firm is required to have a principal broker whose license is in good standing with the board in order to transact real estate business.

• ✓Each firm must have a principal broker in good standing
• ✓Principal broker's good standing is required to transact business

Every sole proprietor (nonbroker owner), partnership, association, LLC, or corporation must secure a real estate license for its firm before transacting real estate business. This firm license is separate and distinct from the individual broker license required of each active partner, associate, LLC manager, and corporate officer.

• ✓A firm license must be secured before transacting real estate business
• ✓The firm license is separate from individual broker licenses of active participants
• ✓Business entities must be authorized under Chapter 5 (§ 59.1-69 et seq.) of Title 59.1 before board consideration

Each real estate firm is required to have a principal broker whose license is in good standing with the board in order to transact real estate business.

• ✓Each firm must have a principal broker to transact business
• ✓The principal broker's license must be in good standing

If a broker maintains more than one place of business in Virginia, a branch office license must be issued for each location. The application must reveal the firm name, branch location, and supervising broker for that branch. The branch office license must be maintained at the branch location.

• ✓A separate branch office license is required for each place of business
• ✓Branch office license must be maintained at the branch location
• ✓Application must name the supervising broker for the branch

If a broker maintains more than one place of business in the state, a branch office license is required for each place of business. The application must reveal the firm name, branch office location, and the name of the supervising broker for that branch. The branch office license must be maintained at the branch office location.

• ✓A branch office license is required for each additional place of business
• ✓The branch office license must be maintained at the branch office location
• ✓The application must name the supervising broker for the branch

A broker's license issued to an individual trading under an assumed/fictitious name is issued only after the individual signs a board certificate stating the business name, residence address, and place of business address. The board considers the application only after the individual is authorized under Chapter 5 (§ 59.1-69 et seq.) of Title 59.1.

• ✓A signed certificate with business name and addresses is required for fictitious-name licensure
• ✓Individual must be authorized to conduct business under Chapter 5 of Title 59.1

A licensee engaged by a landlord must perform per the brokerage agreement and promote the landlord's interests through marketing, seeking tenants at agreed rent/terms, assisting in drafting/negotiating leases and letters of intent, timely presenting all written leasing offers, and providing reasonable assistance to finalize the lease.

• ✓Conduct marketing and seek tenants at rent and terms acceptable to the landlord
• ✓Present all written leasing offers/counteroffers timely even when property is already leased
• ✓Not obligated to seek additional offers while property is subject to a lease unless agreed

Licensees must treat prospective tenants honestly and disclose in writing all material adverse facts about the physical condition of the property known to the licensee. Actual knowledge of pipes/fittings not meeting the federal 'lead free' Safe Drinking Water Act definition must be disclosed. 'Physical condition' excludes matters outside the land boundaries, land use regulations, and highways/public streets.

• ✓Disclose in writing material adverse facts about the physical condition actually known
• ✓Disclose non-'lead free' plumbing per 42 U.S.C. § 300g-6 in residential property
• ✓Physical condition excludes adjacent property, land use regulation, and highway matters

A landlord's licensee must perform per the brokerage agreement, promote the landlord's interests through marketing, drafting/negotiating leases, maintain confidentiality, exercise ordinary care, account for money, and disclose material facts.

• ✓Must conduct marketing and seek a tenant at agreed or acceptable rent/terms
• ✓Not obligated to seek additional lease offers while property is subject to a lease/letter of intent unless agreed
• ✓Must present all written leasing offers/counteroffers in a timely manner even when property is already leased
• ✓Must maintain confidentiality, exercise ordinary care, and account for all money/property in a timely manner

A landlord's agent must maintain confidentiality, exercise ordinary care, account timely, and disclose material facts to the landlord. The agent may perform ministerial acts for tenants without forming a brokerage relationship and does not breach duty by showing alternative properties or representing other landlords.

• ✓Maintain confidentiality unless required by law or landlord consents in writing
• ✓Ministerial acts for tenants do not form a brokerage relationship with the tenant
• ✓Showing alternative properties or representing other landlords does not breach duty

Licensees must treat prospective tenants honestly and disclose in writing all material adverse facts about the physical condition of the property actually known, including non-lead-free plumbing.

• ✓Must disclose all material adverse facts pertaining to the physical condition of the property actually known by the licensee, in writing
• ✓Must disclose actual knowledge of pipes/plumbing not meeting the Safe Drinking Water Act 'lead free' definition (42 U.S.C. § 300g-6)
• ✓'Physical condition' excludes matters outside boundaries, land-use regulations, and highways/public streets
• ✓Disclosure does not limit a prospective tenant's right to inspect the property's physical condition

Licensees must not pay or receive commissions improperly. Compensation may only flow through the principal broker, and licensees cannot pay unlicensed persons for services requiring a license or profit from client information without consent.

• ✓Cannot pay a transaction-based fee to any person not licensed for services requiring a real estate license
• ✓A salesperson or associate broker may only accept commission from their principal or supervising broker at the time of transaction
• ✓Cannot receive financial benefit from use of property/transaction/party information without prior written consent of the principal broker
• ✓Net listings that leave the licensee free to sell above a set 'net' price are prohibited

Licensees may only receive compensation from their principal or supervising broker and only pay licensed persons for services requiring a real estate license. Net listings and undisclosed financial benefits are prohibited.

• ✓Cannot pay a transaction-based fee to any person not licensed for services requiring a real estate license
• ✓Salespersons/associate brokers may only accept commission from their principal or supervising broker at the time of the transaction
• ✓Making a 'net' listing contract or lease that lets the licensee keep excess over the net price is prohibited
• ✓Cannot receive financial benefit from another person for regulated acts without prior written consent of the principal broker

A place of business is an office where the principal broker (through himself, employees, or associates) regularly transacts real estate broker business and where business calls can be received and directed to be made.

• ✓The principal broker must regularly transact real estate business at the office
• ✓The broker and associates must be able to receive and direct business calls at the office

A place of business may not be in a residence unless it is separate and distinct from the living quarters, has its own entrance, and is accessible by the public.

• ✓A residential place of business must be separate and distinct from living quarters
• ✓It must have its own entrance and be accessible to the public

Every principal broker must have readily available to the public at the main place of business the firm license, principal broker license, and license of every active salesperson and broker. Branch office license and roster of assigned licensees must be posted conspicuously in each branch office.

• ✓Firm, principal broker, and all active licensee licenses must be readily available to the public at the main office
• ✓Branch office license and roster of assigned salespersons/brokers must be posted conspicuously in each branch