Controversy is brewing again in Oklahoma over measures that require real estate brokers to provide a specific set of services for their clients.
U.S. Justice Department officials in September issued a letter to members of the Oklahoma Real Estate Commission over a new set of rules that the commission considered relating to the adoption of Senate Bill 673, which requires brokers in the state to provide a minimum level of service for their clients. Commissioners have backed away from the new rules, which the commission’s director said were intended to clearly define the requirements of the new law.
The state Attorney General’s Office has reportedly received a request to issue an opinion on the impacts of the new law.
In April, U.S. Justice Department officials issued a letter to Oklahoma legislators opposing Senate Bill 673, which was backed by the Oklahoma Association of Realtors trade group. Justice Department officials alleged that the bill would “decrease competition among real estate professionals and … result in Oklahoma home buyers and sellers paying higher real estate commissions.”
Legislators amended the bill slightly after the Justice Department expressed its views, though federal officials did not endorse the revisions. And the bill was passed in June.
Oklahoma is one of four states that have passed so-called minimum-service real estate legislation despite Justice Department and Federal Trade Commission objections, and several other states have recently passed or are considering similar legislation. In every case, the legislation is backed by Realtor trade groups and promoted as pro-consumer measures. State legislation is largely immune to actions by federal agencies that enforce antitrust laws, say legal experts.
Proponents of the minimum-service laws have said that the measures seek to protect consumers by ensuring they receive an adequate level of service in real estate transactions, while protecting full-service agents from confusing situations in which they might feel obligated to work directly with a consumer on the other side of a real estate transaction who doesn’t have full representation. Meanwhile, opponents of the measures have said that consumers should have the right to choose which services they need in a real estate transaction and legislators should not pass laws that can limit industry competition.
Martin VanMeter, a broker for VanMeter Realty in Durant, Okla., who led a task force for the Oklahoma Real Estate Commission to develop new rules relating to Senate Bill 673, said, “We think right now that the law itself is pretty direct and self-explanatory. Right now the task force basically says we think the law stands on its own.”
VanMeter, who is also a member of the real estate commission, said there is some difference of opinions on whether the legislation requires brokers to receive offers from other brokers. “The commission feels it is very self-explanatory — that they will be available,” he said. The decision not to consider passage of the task force’s proposed rules relating to Senate Bill 673 was not related to the Justice Department letter, VanMeter said.
In a Sept. 21 letter, John R. Read, a U.S. Justice Department antitrust official, said Senate Bill 673 “allows the consumer to waive the broker’s obligation to receive an offer or counteroffers on his or her behalf, if, for example, the consumer would rather receive the offer directly from the other party.”
Read also referred to a notice that was posted at the state real estate commission’s Web site, which stated “that a listing broker cannot refuse to receive a written offer or counteroffer from another broker, even if the seller instructs the listing broker that he/she wants to receive offers or counteroffers directly.”
He suggested that the commission post a notice on its Web site that is “consistent with the letter of SB 673 and the intent of the Oklahoma Legislature,” containing the following language: “Unless the client instructs otherwise, a listing transaction broker cannot refuse to receive a written offer or counteroffer from another broker.”
VanMeter said that the Oklahoma Association of Realtors may be planning to introduce new legislation relating to SB 673, “to make it purer.”
But Charla Slabotsky, director of government and public affairs for the Oklahoma Association of Realtors, said, “I don’t think we’re going to pursue any further legislation. We feel pretty confident on what the bill says.”
Slabotsky said association officials had suggested language for the real estate commission’s proposed rules relating to SB 673.
Steven L. Sizemore, who owns The Real Estate Place, an Oklahoma real estate company that offers menu-based and full-service real estate packages for consumers, said he believes that the real estate commission has misinterpreted the new law, and he contacted the Attorney General’s Office to get a formal opinion on Senate Bill 673.
He also said the real estate commission’s proposed rule changes would have extended the reach of the legislation.
SB 673, he said, specifically mandates services that brokers must give to their clients. “Those duties are to the client — not to the broker,” he said.
The text of the bill provides that if a broker intends to perform fewer services than those required to complete a real estate transaction, “written disclosure shall be provided to the party for whom the broker is providing services. Such disclosure shall include a description of those steps in the transaction for which the broker will not perform services.”
Anne M. Woody, executive director for the Oklahoma Real Estate Commission, said the new set of rules that the real estate commission was expected to consider at its Sept. 21, called the “Emergency Rule Additions for 2005,” were intended to educate consumers and brokers about the provisions of Senate Bill 673.
“Staff basically was recommending that these rules be adopted … so consumers would know what to expect and brokers would know what to comply with. It basically was a restatement of the law,” though she said there were some additions that were not referenced in the legislation.
The Justice Department objected to what was considered to be an expansion of the law’s requirements, she added.
“After talking to (federal officials) and getting a better understanding of what their concern was, I was able to see what their problem was. I relayed that on to the commission,” Woody said. The commission’s rule proposal was called “Emergency Rule Additions” because the original legislation had an emergency provision, she said.
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