Commission Adopts Rules on Advertising, Broker Duties; Kills License Number Display Proposal

The Real Estate Commission adopted a wide range of rule changes on June 20, highlighted by new advertising requirements for associate brokers and associate broker teams, and delineation of broker duties owed to customers and clients, tenants, and other brokers. 

The Commission voted to not adopt a proposed change that would have required brokers to display their license numbers on all forms of advertising. However, the Commission did adopt a new rule requiring that the qualifying broker’s contact information, including license number, be clearly and conspicuously displayed on any written document generated by the brokerage. 

Associate brokers and associate broker teams will be required to display in all forms of advertising the name and telephone number of the brokerage with which they are affiliated in a type size not less than 33 percent of the associate broker or team name. Directional signs, such as those pointing to an open house, are exempt from the requirement. 

The new rules break down broker duties to distinguish between those duties owed to customers and clients, tenants, other parties to the transaction, and/or other brokers. Although there are many similarities among the duties owed, including an expansion of the current duty of honesty and reasonable care to add “professional and ethical conduct”, key differences and changes include: 

• “Active participation” by brokers in assisting their client or customer in complying with the terms and conditions and closing of a contract, unless otherwise agreed to in writing.

• Advice to clients and customers and tenants to seek legal advice regarding the effectiveness, validity, or consequences of any express written agreement they are required to sign. 

• Written disclosure by brokers to tenants that the broker is the exclusive agent of the property owner in a residential property management transaction. The rules will be amended in several places to specify the exclusive agency relationship between residential property managers and property owners, and will make the rules consistent with the Uniform Owner Resident Relations Action. 

• Non-interference with a purchase agreement or any express written agreement that another broker has with their client or customer. 

The Commission also adopted rules to implement the transition from the eight hour Mandatory Course required every three years to a four-hour Core Course required every year, and to reconfigure and rename the Education Steering Committee (ESC) to the Education Advisory Committee (EAC). The new EAC will consist of eleven members, seven of whom will be non-instructor voting members. 

Because license renewals and continuing education requirements are on a three-year cycle, implementing and monitoring an annual requirement presents challenges. The Commission and staff are continuing to work on the details of how the annual requirement will be phased in, but one rule adopted on June 20 states that a broker who has completed the Mandatory Course during their current licensing cycle by December 31, 2016 will not be subject to the Core Course requirement until their next licensing cycle.** The new rule also states that the Mandatory Course will not be available after December 31, 2016.

Continuing education requirements will be increased from 30 to 36 hours every three years, consisting of the four-hour Core Course every year, a four-hour Core Elective course in residential, commercial property management, or vacant land/ranch transactions every three years, four hours of ethics training, and sixteen hours of other electives. 

At the recommendation of the Commercial Association of Realtors of New Mexico (CARNM), the Commission adopted a rule that will allow brokers to complete either the New Broker Business Practices Course (NBBP) or the CCIM 101 course in their first year of licensure. The change was made in response to an ongoing concern that the NBBP course with its residential focus is not relevant to commercial brokerage. 

Another rule change will require that fingerprinting occur no earlier than twenty-one days prior to submitting paperwork for initial licensure or renewal. The change was made to ensure that Commission investigators have timely access to criminal background reports generated by fingerprints. 

The new rules will reinstate foreign brokerage, which was repealed by the legislature in its entirety in 2013 and reinstated in 2014 in a form that limits it to transactions involving commercial real estate. 

The Commission also created a definition for a “virtual brokerage office” in response to a comment that while the Commission was implementing a rule that addressed license display requirements for virtual offices, it did not define a virtual office. Courtesy of Google, the new definition of a virtual brokerage office is one that “provides communication and address services without providing dedicated office space.” 

The red-line version of these and other changes can be viewed on the Commission web site, Members and Meetings, Proposed Rule Changes.

The Commission will decide on a rules filing and effective date at their July 18 meeting. The State Rules Act provides that rules take effect the day they are published in the New Mexico Register, the bi-monthly official publication of the State Records Center and Archives. The Real Estate License Law provides that the Commission give licensees 30 days advance notice of the filing and effective date. 

The Commission would like to extend its sincere thanks to Rules Task Force Chair Bob Treece and members Alice Tozer, Coleen Dearing, Jacque Moise, Dana Barnhill, Kerry Dunagan-Harvey, Commissioner Kurstin Johnson, and former Commissioner Bob Dunn for nearly three years of hard work and dedication on behalf of the Commission, New Mexico real estate brokers, and consumers. 


** UPDATE: On July 28th, the commission unanamiously passsed a rule that "ALL brokers be required to take the Core Course for either core or elective credit by no later than December 31, 2017. Brokers that recently took the Mandatory Course are still required to take the Core Course in 2017.