RELRA amendments mean two key changes

For the past several years, PAR has been working to amend the Real Estate Licensing and Registration Act (RELRA) in two key areas. In early July we helped to pass what is now Act 14 of 2009, which takes effect on September 4, 2009.

The first change allows licensees to be paid through “qualified associations” that are established by one or more licensees affiliated with the same broker. Up until this change, the law required that brokers pay licensees directly and not through any sort of a corporate entity. Now, brokers can pay to (and licensees can be paid as) certain entities as laid out in the law.

There are a number of issues to be considered when deciding whether or not to establish a qualified association. These include:

• whether the broker allows them as a brokerage practice
• what tax or business benefits may be gained from setting up such an entity
• whether you are willing and able to maintain the entity in compliance with RELRA and relevant state/federal laws that apply to the entity.

The second change clarifies a number of issues relating to escrow requirements. The biggest change to the escrow rules now permits brokers to release escrow where there is a dispute between the parties if the parties agreed in advance how the money should be distributed in the event of an unresolved dispute. The PAR Standard Forms Oversight Committee will be working on appropriate forms language to assist members in handling this issue.