Allergens Legislation Passes the House

On September 20, MAR-sponsored Senate Bill 370 passed in the Michigan House of Representatives 106-2. SB 370, introduced by Senator Cameron Brown (R-Sturgis), amends the seller disclosure form to include language recommending testing for potentially high levels of allergens.  This was a nice legislative victory, considering this legislation saw no action during the 2004 session, and the MAR Public Policy staff defeated several amendments in the senate that would have compromised the original intent of the sellers disclosure form. 

The purpose of this legislation is to make sure that buyers are aware of the potential health risks associated with the failure to properly identify bacteria and mold, among other things, in the air or water of a home. Certainly, REALTORS® cannot be experts in this area, so it is necessary to recommend that the buyer take action before completing the purchase of a property, especially if that person or anyone in their family is sensitive to such allergens.  Another goal is to reduce the potential for future litigation between buyers and sellers. 

Since the governor’s signature is likely, this new law will take effect January 1, 2006. Language was also inserted into this bill to allow for the proper replacement of old seller disclosure forms and the distribution of new forms. REALTORS® would have until April 1, 2006, or 90 days, to replace old forms without being in violation of the law.

Agency Responsibility Act Ready to Move

Nearly a year after appearing before the MAR Public Policy Committee as a mere idea, the Agency Responsibility Act (ARA) is now written legislation and ready for debate in the Michigan House of Representatives.  We have spent the last several months working with representatives on the House Regulatory Reform Committee, including Chair Rep. Tory Rocca (R-Sterling Heights) and bill sponsors Tonya Schuitmaker (R-Lawton) and Kevin Green (R-Wyoming), to make the case for the importance of this legislation both for the stability of the industry and the protection of the consumer. 

On the surface, this issue has raised eyebrows and red flags for a few legislators and members of our own REALTOR® community. With all the negative press across the country related to “minimum service requirements,” multiple listing services, and the advocacy role taken by the United States Department of Justice (DOJ), it is easy to see why this bill package might attract extra scrutiny.  Clarifying the need for this legislation required a strong effort on our part to make sure that all legislators understood how the real estate industry operates and the foundation of agency law. It also required clear communications internally to the highest possible number of our membership for understanding that in no way would MAR promote or endorse legislation that would destroy or “lock out” any specific business models.  The elimination of specific business models and antitrust violations charged to similar legislation passed in other states does not relate to Michigan.  Most obviously, under the recommendation of Chairman Rocca, we have agreed to an amendment that overtly explains the intent to preserve business models in real estate while providing consumer protections. This new amendment specifically states, “A licensee providing real estate services pursuant to an agreement allowed under law that is not a service provision agreement creating an exclusive agency relationship is not considered in violation of this subdivision.” 

For legislative language, that’s pretty clear. For the rest of us, this means that all agents who do not enter into an exclusive agency relationship will not be subject to this law or the outlined service provisions. This distinction is very important for all to understand, including outside interests such as the DOJ. 

As this legislation moves forward this fall, it is likely that we will hear from some opponents both locally and nationally. The advocacy role played by the DOJ in Texas, Oklahoma, and other states seems like a foregone conclusion here, despite the substantive differences in our legislation.  Word has come our way that some members and local associations have received preliminary phone calls inquiring about ARA.  We hope that, if anything, this is not a signal of an adversarial relationship, but rather an opportunity to explain our position to the DOJ and create a better understanding of the real estate industry.  By the time this article reaches you, we expect ARA to have been passed through the House Regulatory Reform Committee and even the house itself. It is our goal that, when the time comes for debate in the senate, our position will be well-defined and understood. In the meantime, we will have strengthened the legislature’s perception of this industry and the professional and ethical stability necessary for it to succeed.

Commercial Broker Lien Legislation

After deliberating for several years, our Michigan Commercial Alliance (MiCAR) of REALTORS® and their representative on the MAR Public Policy Committee have made the decision to move forward on legislation allowing commercial brokers to place a lien on a property. 

The main concept of this legislation is to allow brokers to place a lien on a commercial property when the owner fails to pay the commission that was agreed upon contractually. Many commercial REALTORS® face the potential of being pressured into reducing or renegotiating their commissions at the time of closing; this is an unfair practice for the broker when the original commission amount was in writing via a contract during the sales process. Several brokers have reported difficulties in collecting commissions on deals that may have taken months or even years to complete. 

Another purpose of this legislation is to prevent future lawsuits in regard to commissions.  While commercial real estate brokers make up a small percentage of our membership, it is necessary to do everything possible to avoid costly litigation procedures with buyers or sellers who might be looking to take advantage of brokers not wanting to lose a sale. Avoiding litigation is a good thing for all REALTORS®, whether they sell commercial or residential properties .  Several states already have commercial broker lien laws in place. Our prospects for passage in the legislature are good, and we look forward to making the case for why this legislation is needed. Just like the Agency Responsibility Act, keeping honesty in real estate transactions, whether it is with the real estate practitioner, the buyer, or the seller, is a good thing and should be encouraged.