Trial Engrossment of Amendment A03804 to House Bill 0657 P.N. 2725, Regular Session 2023-2024

A03804

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

657

Session of

2023

INTRODUCED BY BULLOCK, CEPHAS, MADDEN, HILL-EVANS, DELLOSO,

SMITH-WADE-EL, SANCHEZ, ISAACSON, KENYATTA, KINSEY, KHAN,

SCHLOSSBERG, PARKER, D. WILLIAMS, CERRATO, KRAJEWSKI, GREEN

AND MULLINS, MARCH 21, 2023

AS REPORTED FROM COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT,

HOUSE OF REPRESENTATIVES, AS AMENDED, MARCH 18, 2024

AN ACT

Providing for transparency in realty agreements; requiring and

prohibiting certain provisions in realty agreements;

PROHIBITING UNFAIR REAL ESTATE SERVICE AGREEMENTS; and

imposing penalties.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Transparency

in Realty Unfair Real Estate Service Agreements Act.

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Real estate professional." A real estate broker,

salesperson, company or other person regularly engaged in the

trade or business of buying and selling real property.

"Realty agreement." A contract under which a real estate

professional agrees to provide realty services connected to the

purchase or sale of residential real property by a homeowner.

"Security interest." A mortgage, lien or other encumbrance

on residential real property.

Section 3. Realty agreements.

(a) Requirements.--A realty agreement between a real estate

professional and a homeowner shall:

(1) Include a detailed list of the transactions covered

under the realty agreement.

(2) Identify the capacity in which the real estate

professional is involved in the transactions covered under

the realty agreement.

(3) Include a statement to be signed by the homeowner

acknowledging that the homeowner understands the nature and

extent of the transactions covered under the realty

agreement.

(b) Prohibitions.--A realty agreement between a real estate

professional and a homeowner may not:

(1) Provide for a service that will not be performed

within one year of the execution of the realty agreement,

including a one-time payment to the homeowner in exchange for

the exclusive opportunity to list the residential real

property on the realty market for a period in excess of one

year.

(2) Provide a service without the notice or consent of

the homeowner.

(3) Purport to create a security interest in the

residential real property that is the subject of the realty

agreement.

Section 4. Prohibited action.

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A real estate professional may not record, or cause to be

recorded, a security interest on real property covered under a

realty agreement prior to notifying the homeowner with the

details of the security interest and without the express written

consent of the homeowner or the assignee of the homeowner.

Section 5. Cancellation.

(a) Authorization.--A homeowner may cancel a realty

agreement at any time.

(b) Fees.--Cancellation fees specified in a realty agreement

shall be limited to not more than $500.

must be given in writing.

SECTION 6 2. UNFAIR REAL ESTATE SERVICE AGREEMENTS.

(A) ENFORCEABILITY.--AN UNFAIR REAL ESTATE SERVICE AGREEMENT

IS VOID AND UNENFORCEABLE AS A MATTER OF LAW.

(B) DECEPTIVE ACT.--AN UNFAIR REAL ESTATE SERVICE AGREEMENT

ENTERED INTO WITH A CONSUMER SHALL BE DEEMED A DECEPTIVE ACT

UNDER THE ACT OF DECEMBER 17, 1968 (P.L.1224, NO.387), KNOWN AS

THE UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW.

(1) A PERSON MAY NOT RECORD OR CAUSE TO BE RECORDED AN

UNFAIR REAL ESTATE SERVICE AGREEMENT OR NOTICE OR MEMORANDUM

OF AN UNFAIR REAL ESTATE SERVICE AGREEMENT IN THIS

COMMONWEALTH.

(2) A PERSON WHO VIOLATES PARAGRAPH (1) SHALL BE GUILTY

OF A MISDEMEANOR OF THE THIRD DEGREE.

(3) A COUNTY RECORDER OF DEEDS MAY REFUSE TO ACCEPT FOR

RECORDATION AN UNFAIR REAL ESTATE SERVICE AGREEMENT.

(4) IF AN UNFAIR REAL ESTATE SERVICE AGREEMENT IS

RECORDED IN THIS COMMONWEALTH, IT SHALL NOT PROVIDE ACTUAL OR

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CONSTRUCTIVE NOTICE AGAINST AN OTHERWISE BONA FIDE PURCHASER

OR CREDITOR.

(D) RECORDING OF COURT ORDER.--IF AN UNFAIR REAL ESTATE

SERVICE AGREEMENT OR A NOTICE OR MEMORANDUM OF AN UNFAIR REAL

ESTATE SERVICE AGREEMENT IS RECORDED IN THIS COMMONWEALTH, A

PARTY WITH AN INTEREST IN THE REAL PROPERTY THAT IS THE SUBJECT

OF THE AGREEMENT MAY APPLY TO THE COURT OF JURISDICTION IN THE

COUNTY WHERE THE RECORDING EXISTS TO RECORD A COURT ORDER

DECLARING THE AGREEMENT UNENFORCEABLE.

(E) RIGHT OF RECOVERY.--

(1) A CONSUMER WITH AN INTEREST IN REAL PROPERTY THAT IS

THE SUBJECT OF AN UNFAIR REAL ESTATE SERVICE AGREEMENT,

WHETHER OR NOT ANY LIEN OR OTHER NOTICE IS FILED AGAINST THE

PROPERTY IN THE OFFICE OF THE COUNTY RECORDER OF DEEDS, MAY

BRING A CIVIL ACTION AGAINST THE REAL ESTATE SERVICE

PROVIDER. RELIEF SHALL INCLUDED, BUT NOT BE LIMITED TO:

(I) PRELIMINARY AND OTHER EQUITABLE OR DECLARATORY

RELIEF AS MAY BE APPROPRIATE.

(II) AN ORDER THAT THE CONSUMER IS NOT REQUIRED TO

REPAY OR REIMBURSE ANY MONEY PAID TO THE CONSUMER BY THE

REAL ESTATE SERVICES PROVIDER.

(III) ACTUAL DAMAGES SUFFERED BY THE CONSUMER, AS

FOLLOWS:

(A) EXCEPT AS PROVIDED UNDER CLAUSE (B), DAMAGES

SHALL EQUAL THE AMOUNT OF DAMAGES SUFFERED BY THE

CONSUMER OR $5,000, WHICHEVER AMOUNT IS GREATER.

(B) IF THE CONSUMER IS 60 YEARS OF AGE OR OLDER,

DAMAGES SHALL EQUAL THE AMOUNT OF DAMAGES SUFFERED BY

THE CONSUMER OR $15,000, WHICHEVER AMOUNT IS GREATER.

(IV) REASONABLE ATTORNEY FEES AND OTHER LITIGATION

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COSTS REASONABLY INCURRED.

(2) THIS SECTION SHALL NOT REPLACE OR SUPERSEDE ANY

OTHER REMEDY AT LAW OR EQUITY THAT THE CONSUMER MAY HAVE.

(F) RELATIONSHIP TO OTHER LAWS.--NOTHING IN THIS SECTION

SHALL ALTER OR AMEND ANY PART OF THE ACT OF FEBRUARY 19, 1980

(P.L.15, NO.9), KNOWN AS THE REAL ESTATE LICENSING AND

REGISTRATION ACT.

(G) DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING

WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS

SUBSECTION UNLESS THE CONTEXT CLEARLY INDICATES OTHERWISE:

"ASSOCIATION." AS DEFINED UNDER 15 PA.C.S. § 102 (RELATING

TO DEFINITIONS).

"CONSUMER." A PERSON WHO IS THE RECIPIENT OR ANTICIPATED

RECIPIENT OF A REAL ESTATE SERVICE.

"PERSON." A NATURAL PERSON, CORPORATION, CORPORATE

FIDUCIARY, PARTNERSHIP, LIMITED PARTNERSHIP, LIMITED LIABILITY

COMPANY, JOINT VENTURE OR ASSOCIATION.

"REAL ESTATE SERVICE." AS DEFINED UNDER SECTION 201 OF THE

REAL ESTATE LICENSING AND REGISTRATION ACT.

"REAL ESTATE SERVICE AGREEMENT." A CONTRACT UNDER WHICH A

REAL ESTATE SERVICE PROVIDER AGREES TO PROVIDE A REAL ESTATE

SERVICE TO A CONSUMER.

"REAL ESTATE SERVICE PROVIDER." A PERSON PROVIDING OR WHO IS

ANTICIPATED TO PROVIDE A REAL ESTATE SERVICE TO A CONSUMER

PURSUANT TO A REAL ESTATE SERVICE AGREEMENT.

"RECORDING." PRESENTING A DOCUMENT TO A COUNTY RECORDER OF

DEEDS FOR OFFICIAL PLACEMENT IN THE PUBLIC LAND RECORDS.

"RESIDENTIAL REAL ESTATE." AN INTEREST IN REAL PROPERTY

LOCATED WITHIN THIS COMMONWEALTH THAT CONSISTS OF NOT LESS THAN

ONE AND NOT MORE THAN FOUR RESIDENTIAL DWELLING UNITS.

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"UNFAIR REAL ESTATE SERVICE AGREEMENT." A REAL ESTATE

SERVICE AGREEMENT THAT:

(1) PURPORTS TO RUN WITH THE LAND OR TO BE BINDING ON

FUTURE OWNERS OF INTERESTS IN THE REAL PROPERTY;

(2) PURPORTS TO CREATE OR ALLOW A LIEN, ENCUMBRANCE OR

OTHER SECURITY INTEREST IN THE PROPERTY; OR

(3) ALLOWS FOR THE AGREEMENT TO BE ASSIGNED WITHOUT

TIMELY NOTIFICATION TO THE OWNER OF THE PROPERTY.

Section 6 7 3. Penalties.

(a) Unenforceability and violation of other State law.--If a

violation of section 3 or 4 2 occurs, the realty agreement shall

be deemed unenforceable and the violation shall constitute an

unfair method of competition and an unfair or deceptive act or

practice under the act of December 17, 1968 (P.L.1224, No.387),

known as the Unfair Trade Practices and Consumer Protection Law.

(b) Damages.--In addition to the penalties specified under

the Unfair Trade Practices and Consumer Protection Law, a real

estate professional found to be in violation of this act shall

be subject to actual damages incurred by any person with an

interest in the residential real property that is the subject of

the unenforceable realty agreement, including reasonable costs

and attorney fees.

Section 7 8 4. Effective date.

This act shall take effect in 60 days.

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