Dan Naylor ProfileDan Naylor

The Utah Real Estate Commission met on August 15th, 2018 and approved 2 new rule changes for real estate professionals in Utah.

Ownership, and who is an “owner” of property seems like a very clear concept. Most people would assume that it is easily defined in law. However, there were increasing cases in real estate transactions where individuals would stretch the definition of the word “owner” so that they could avoid licensing laws, and perform real estate transactions without a real estate license.

Licensing rules have an exception for a homeowner. Every individual should be able to sell their own property without getting a license, and the rules were written so that they are allowed to do so. So what if I see an opportunity to sell a home but I’m not licensed? How about they just sell me a 1% interest in the property? Now I’m an owner, and I can sell the property without a license, right?

It is very clear that this scenario is not what the owner exemption to licensing was meant for. The rules as they were previously written were somewhat ambiguous in a situation like this.

The commission approved the addition of a definition of “owner” to the licensing rules, specifically as it applies to real estate licensure and the requirements to have a real estate license in Utah. An owner is now defined:

R162-2f-200. Owner

(1) For purposes of Section 61-2f-202(1):

(a) “owner” means a person who has:

(i) a sole ownership interest in real estate, or

(ii) an ownership interest in real estate as a joint tenant or a tenant in common;

(b) “owner or lessor” does not include:

(i) a person who holds an option to purchase real property;

(ii) a mortgagee;

(iii) a beneficiary under a deed of trust;

(iv) a trustee under a deed of trust; or

(v) a person who owns or holds a claim that encumbers any real property or an improvement to the real property.

(2) For purposes of Subsection 61-2f-202(1)(a)(i):

(a) any person performing an act described in Subsection 61-2f-102(20) on behalf of an entity must be:

(i) if the entity is a corporation, an officer or director of the corporation;

(ii) if the entity is a limited liability company,

(A) a member of a member-managed limited liability company, or

(B) a manager of a manager-managed limited liability company;

(iii) if the entity is a partnership, a partner of the partnership;

(iv) if the entity is a limited partnership, a general partner of the limited partnership;

(v) if the entity is a trust, a trustee of the trust;

(vi) if the entity is an estate of a deceased individual, a court-appointed personal representative of the estate; or

(vii) if the entity is the estate of an individual subject to a conservatorship, a court-appointed conservator of the estate.

(b) A person who is an entity or organization not described in Subsections (1)(c)(i) through (vii) above is not exempt from licensure under Section 61-2f-202(1)(a)(i).

Another rule change now limits how much experience that broker candidates are able to submit to the Division of Real Estate with their Utah real estate broker license application. All transactions that you submit to the Division for your broker license have to have your name on the agency agreement, and need to have your name on the real estate purchase contract or lease agreements. Some agents who were not sure if all of their transactions were applicable would simply submit an extremely large number of transactions with their broker license application. This created a lot of work for licensing staff who had to review all of these transactions, at the expense of other broker license applicants who were waiting for their license application to be reviewed.

This new rule states that you cannot submit more than 80 experience points worth of transactions, and you only need 60 experience points to get licensed as a broker in Utah. The Division of Real Estate says you should only submit your best transactions with the clearest contracts to get licensed as a broker.