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Page 1: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Legal Update

Page 2: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Legal Update Learning Objectives

After study of this module you will be able to:

1. Identify current federal legislation affecting the real estate business.

2. Identify Virginia Assembly legislative updates.

3. Recognize recent changes to VREB Rules & Regulations.

Page 3: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Lead-Based Paint Disclosure

1Under direction of the Residential Lead-Based Paint Hazard Reduction Act of 1992, HUD and EPA require disclosure of all available information on lead-based paint and lead-based paint hazards for the sale or lease of properties built prior to 1978.

Page 4: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Lead-Based Paint Disclosure2

Effective December 1996, all purchasers and lessees of property built before 1978 must be given the pamphlet Protect Your Family from Lead in Your Home, and sign the appropriate “Purchase” or “Lease” disclosure forms, which should have been previously signed by the seller or landlord.

Page 5: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Lead-Based Paint Disclosure

3

Purchasers have the right to a 10-day inspection or risk assessment period. Although the seller is not required to remove lead-based paint, the purchaser may withdraw from the contract in the event lead-based paint is found. Purchasers and sellers may negotiate possible methods of reducing lead-based paint hazards.

Page 6: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Lead-Based Paint Disclosure4

The real estate agent is responsible for insuring that

• sellers and landlords are aware of their obligations• sellers and landlords make the proper disclosures • sellers give purchasers an opportunity for an

inspection• lease and sales contracts contain appropriate

language

Page 7: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Lead-Based Paint Disclosure

5

EPA and HUD have recently begun inspecting broker files to verify that all appropriate disclosure forms are included

in the pertinent company files.

Page 8: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Health Care Deduction for Self-employed

• Current legislation allows a 100% deduction of allowable health-care expenditures

• Under prior regulations, self-employed persons could deduct 45% of their health care insurance in 1998, 60% in 1999, 70% in

2002, and 100% in 2003.

Page 9: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

RESPA Rules and Regulations

The rules and regulations of The Real Estate Settlement Procedures Act have been under study for a number of years. The most current concern has been over the “one-stop” shopping concept, wherein a real estate brokerage company also has affiliated companies for mortgage loans, title insurance, hazard insurance, escrow and settlement services, and/or other related services.

RESPA seeks to insure that brokerage companies are not receiving kickbacks for services not performed. After a survey of the public showed that “one stop” shopping is perceived favorably by the consumers, the regulations are under continuing review.

Page 10: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Tax Relief Act of 1997

1• The tax benefit for the sale of a personal residence

was greatly enhanced with an exemption from capital gains tax on profit up to $500,000 for a married couple and $250,000 for a single person.

• The former one-time exclusion of $125,000 for persons 55 years of age or older no longer applies.

• The new exemption applies to all properties used as a primary residence for two years.

Page 11: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Tax Relief Act of 1997 2

• The two years may be an aggregate of any two of the previous five! [Actual time required is a total of 730 days!]

• It does not matter if the property formerly was used as a rental property, as long as the two-year residence requirement is met.

• The exemption may be taken once every two years, and there are no “buy-up” requirements.

• Special provisions have been made for widows and widowers or for others needing to sell due to extreme extenuating circumstances.

• The new law affects all properties sold after May 7, 1997.

Page 12: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Other Tax Matters

The maximum capital gains tax rate on the sale of investment property was reduced from 28% to 20%.

For someone in the 15% bracket the reduction went from 15% to 10%.

The depreciation recapture rate will be 25% for property held for a minimum of twelve months, although investment property is usually depreciated over several years.

Proposed legislation might further reduce the depreciation recapture rate to 20%

Page 13: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Private Mortgage Insurance1

Legislation effective July 29, 1999, mandated that for all new loans private mortgage insurance must be droppedwhen an equity position of 22% (Loan-to-Value of 78%) hasbeen reached. The 22% equity position is derived from theoriginal value of the property and does not allow for anyappreciation (or depreciation) of the value. The borrowermay request an elimination of the PMI with an equityposition of 20%. (This might require an appraisal.)

Page 14: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Private Mortgage Insurance2

Fannie Mae and Freddie Mac have agreed to dropPMI on all loans originated even before July 1999,• if the properties have reached the 22% equity

position, or• the “half-life” of the term of the loan has

arrived,• the borrower is in good standing on the loan, and• the borrower has not signed a previous agreement

with regard to elimination of PMI.

Page 15: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Private Mortgage Insurance

3

FHA and VA loans are not affected by the

new legislation.

Page 16: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Home Office Deduction

Under 1999 regulations, persons who performadministrative and ministerial tasks in their home office,but perform actual services that generate income outsidethe home office, are eligible for a home officededuction on their income tax. The prevailing taxrequirements for claiming part of a residence for a business must be followed.

Page 17: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update

Effective October 1, 2000, for electronic transactions andMarch 1, 2001, for electronic records.

Electronic Signatures – (H.R. 1714, S. 761, P.L. 106229) This law simplifies the real estate transaction byallowing two parties to treat electronic signatures withthe same legal standing as “pen and ink” versions. TheElectronic Signatures Law allows consumers andbusinesses to do all of the following procedures:

Page 18: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Federal Legislative Update• Contract electronically for the purchase of goods and services • Contract electronically for sale and lease of real estate

• Process mortgage loan transactions electronically

• Receive related state and federal disclosures online

• Transfer promissory notes electronically

• Notarize transactions electronically

• Obtain and maintain electronic records of transactions.

Page 19: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Information provided by Virginia Association ofREALTORS®. For more detail seewww.varealtor.com/MembersOnly/Legislative Information. Abbreviations used: • House Bill (HB)• Senate Bill (SB) • Property Owner Association (POA)

Page 20: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Licensee’s Ability to Prepare BPO’s/CMA’s

On a Fee for Service Basis

HB 2334 establishes that real estate licensees may

provide evaluations of property (as in a Broker Price

Opinion or Comparative Market Analysis) and charge

a fee for this service. The evaluation may not be

referred to as an appraisal under any circumstances.

Page 21: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Management

(Landlord Tenant Act) Changes

1

HB 2276, SB 132 require that rent be placed

in a court escrow account in a case where a

tenant has requested a continuance or in the event of a

contested trial date where the case involves an

unlawful detainer action.

Page 22: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Management

(Landlord Tenant Act) Changes

2

HB 2302 provides that tenants must not remove

or tamper with a properly working smoke

detector.

Page 23: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Management

(Landlord Tenant Act) Changes

3HB 2537, SB 1173 provide that a guest or invitee

of a tenant may be barred from the premises for

conduct violating the terms of the rental agreement,

local ordinance, or state or federal law.

Page 24: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Management

(Landlord Tenant Act) Changes

4

HB 1862 authorizes localities to establish

procedures permitting property owners to

designate the local law-enforcement

authority to enforce trespass violations.

Page 25: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Management

(Landlord Tenant Act) Changes

5

SB 933 requires that security deposits accrue

interest at an annual rate equal to one percent

below the Federal Reserve Discount rate as of

January 1 of each year

Page 26: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owner’s Association and

Condominium Act Changes

1

HB 1369 requires posting of signs at least 48

hours before pesticides are applied to common

areas.

Page 27: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owners’ Association and

Condominium Act Changes

2

HB 1595 provides that meetings shall be held at

least once a year in accordance with the bylaws

of the association.

Page 28: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owners’ Association and

Condominium Act Changes

3

HB 1632 requires that requests for records be

made for a purpose related to the owner’s

membership and clarifies the types of documents

to which an association may deny access.

Page 29: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owners’ Association and

Condominium Act Changes

4

SB 999 provides that a declaration may be

amended by agreement of two-thirds of the

owners of lots affected by the declaration.

Page 30: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owners’ Association and

Condominium Act Changes

5

HB 2063 increases maximum charge to be

assessed to a member of the association for a

single offense or violation of the association’s

rules from $50 to $100.

Page 31: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owners’ Association and

Condominium Act Changes

6HB 2534 conforms Condo Act and Real Estate Time

Share Act regarding conveyance of time-share interest

in condominium that is not completed: developer must

post completion bond for 100% of cost for completion

and disclose status of uncompleted unit to purchaser.

Page 32: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owners’ Association andCondominium Act Changes

7SB 1090 provides than when a contract iscancelled based on a seller failing to providecontract disclosures, or based on a purchaser’sright to cancellation, a deposit is to be returnedwithin 30 days.

Page 33: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owner’s Association and

Condominium Act Changes

8

SB 1138 provides that members of the

association that have requested notice must

be provided with time, date and place of all

regular and special meetings.

Page 34: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owner’s Association andCondominium Act Changes

9HB 2505 exempts persons engaged in propertymanagement from liability if a worker is injured whileengaged in the maintenance or repair of real propertymanaged by that person, as long as the propertymanager is not engaged in the same business as the injured worker and does not profit from the services ofthe injured worker.

Page 35: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Property Owner’s Association andCondominium Act Changes

10HB 2699 requires unit owners to disclose to purchaser all of the

following: • The unit is subject to Condominium Act • The seller must provide resale certificate • The purchaser has the right to cancel within 3 days of

receipt of resale certificate• The right to receive resale certificate and to cancel are

waived conclusively if not exercised prior to settlement (Conforms Condo Act to POA Act)

Page 36: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Real estate Closing and Settlements(CRESPA)

1SB 1278 establishes the Real Estate SettlementAgent Registration Act, which governsqualifications and financial responsibility forpersons conducting settlements not previouslycovered by Consumer Real Estate SettlementProtection Act (CRESPA). All lay settlement agentsmust comply with CRESPA requirements.

Page 37: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Real estate Closing and Settlements

(CRESPA)

2HB 2600 requires any person making referral to an

affiliate settlement service provider to disclose in

accordance with federal RESPA regulations and

requires disclosure of ownership of even less than 1%

(currently exempt under RESPA).

Page 38: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Occupational Regulation

1

HB 1861 increases the penalty for any board

violation from $1000 to $2500.

Page 39: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Occupational Regulation

2

HB 2503, SB 1330 authorizes a business

entity salesperson where a single licensee is

an owner or officer to be granted a license in a

fictitious name.

Page 40: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Occupational Regulation

3

HB 2517 requires licensed and certified

residential appraisers to authenticate all written

appraisal reports by signature, license

designation and license number only. No seal

is required.

Page 41: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Occupational Regulation

4

HB 2246 increases the Real Estate Appraiser

Board from four to six licensed appraisers, and

decreases to one mortgage lender, and from three

to two citizens. Current members will not be

affected.

Page 42: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Spot Blight Abatement Legislation

1

HB 2577 creates a fund to make loans to

localities for acquisition, demolition, removal,

rehabilitation or repair of derelict structures

causing blight in the community.

Page 43: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Spot Blight Abatement Legislation

2

HB 1962 allows localities to impose a $25

annual registration fee on owners of vacant

buildings with a $250 fine for failure to register.

Page 44: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Spot Blight Abatement Legislation

3

HB 2026, HB 2639, SB 1242 make the spot

blight abatement law applicable statewide.

Page 45: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Spot Blight Abatement Legislation

4

HB 2630 allows localities to waive liens

associated with weed or trash removal, property

repair or demolition to facilitate sale of the

property with such lien becoming a personal

responsibility of the current owner.

Page 46: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Spot Blight Abatement Legislation5

HB 2211 allows localities to streamline the taxdelinquent sale process for properties assessed at$20,000 or less in cases where • tax is delinquent for three years: land is declared

nuisance, notice has been given, liens placed on property have not been paid, or

• tax is delinquent for seven years.

Page 47: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Megan’s Law Disclosure1

HB 1204 added a disclosure to the Virginia ResidentialProperty Disclosure/Disclaimer Form informing buyersthat it is their responsibility to exercise whatever duediligence they feel is necessary to collect informationregarding released sex offenders. That information isavailable on the internet at

www.vsp.state.va.us/vsp.html

Page 48: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Megan’s Law Disclosure2

HB 570 specifies that information regardingreleased sex offenders shall be made public on theInternet and is to include name, address, pictureand criminal record. The public may also requestinformation from their local law enforcement office.Schools, day care centers and child service groupswill be notified through a proactive notice system.

Page 49: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

CRESPA Bills

SB 281 and HB 1265 clarified that real estate

licensees performing ministerial acts (such as

ordering a termite inspection) do not have to

register under the Consumer Real Estate

Settlement Protection Act.

Page 50: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Commercial Broker’s Lien Change

HB 1242 ensures that purchasers of a

commercial building with actual knowledge of

brokerage fees due to a broker will be liable for

payment regardless of whether the broker has

filed a lien.

Page 51: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Virginia Industrial Development Authority

Act Change

HB 1405 explicitly gives Industrial

Development Authorities the authority to pay

commissions to real estate brokers, including

buyer agents.

Page 52: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Calculation of Interest on Security Deposits

HB 1355 changes the law regarding

calculation of interest on security deposits

from six-month increments to an annual rate

equal to the Federal Reserve Discount rate

as of January 1 of each year.

Page 53: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

General Assembly Update

Disposal of Abandoned Property

HB 1247 allows a landlord to dispose of

abandoned property provided the landlord has

given the tenant 10 days notice.

Page 54: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Virginia Real Estate Board Regulations

Changes and Updates to Regulations

• Summary of changes effective April 2003

• Increase in continuing education hours from 8 to 16 forlicensees renewing after July 1, 2004

• New 30-hour education requirement for all new licensees who receive their initial license after January 1, 2004

(Handouts Available Upon request)

Page 55: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Virginia Real Estate Board Rules and Regulations Effective 01/01/99 and 04/01/03

Summary

A. Significant changes1. The numbering system has been changed to comply with

the requirements of the Virginia Administrative Code (VAC).

2. The definition of “actively engaged” has been changed from an average of 20 to 40 hours per week. (18 VAC 135-20-10)

3. Requirements for obtaining a salesperson’s or associate broker’s license as a business entity have been added. (18 VAC 135-20-45)

4. Requires applicants for licensor by reciprocity to take and pass the Virginia portion of the licensing examination. (18 VAC 135-20-60)

Page 56: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Virginia Real Estate Board Rules and Regulations Effective 01/01/99 and 04/01/03

Summary

5. Requires a roster of every salesperson and broker assigned to a branch office to be posted in that office (18 VAC 135-20-160)

6. Requires deposit of escrow funds by the end of the fifth business banking day following ratification (sale) or receipt (lease), unless otherwise agreed to in writing. (18 VAC 135-20-180)

7. Advertising requirements have changed to add the internet to the definition of advertising. (18 VAC 135-20-190)

Page 57: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Virginia Real Estate Board Rules and Regulations Effective 01/01/99 and 04/01/03

Summary

8. Disclosure of interest requirements were changed to incorporate agency law. (18 VAC 135-20-210)

9. Record keeping provisions changed to require that a copy of each disclosure of a brokerage relationship, each executed contract, agreement and closing statement related to the real estate transaction in the broker’s control or possession be retained for three years. (18 VAC 135-20-320)

Page 58: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Virginia Real Estate Board Rules and Regulations Effective 01/01/99 and 04/01/03

Summary

10. Effective 07/01/04, 16 hours of Continuing Education must be completed for license renewal. You must have 8 hours in the mandatory topics which includes: 2 hours in Fair Housing and the remaining 6 hours must be a minimum of 1 hour in each of the following categories: Legal Updates, Real Estate Agency, Real Estate Contracts, and Ethics & Standards of Conduct. The remaining hours may be real estate related or in the specific categories.

Page 59: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Virginia Real Estate Board Rules and Regulations Effective 01/01/99 and 04/01/03

Summary

11. If you received a new salesperson license (active or inactive) after December 31, 2003, and this is your FIRST TIME RENEWAL, you will need to complete 30 hours of Post License Education instead of Continuing Education.

Page 60: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Current VREB Members

S. Ronald Owens, Chairman R. Schaefer Oglesby, Vice Chair Marjorie Clark Florence Daniels Gerald S. Divaris Sharon Parker Johnson Herman Key, Jr. Frank J. Quayle Bry Phillips Taylor

Page 61: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

D.P.O.R.

Department of Professional and Occupational Regulation

3600 West Broad Street

Richmond, VA 23230-4917

804-367-8500

Page 62: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

D.P.O.R

Contact Person: Christine Martine, 804-367-8552

www.dpor.virginia.gov

Licensing Section: 804-367-8526

www.state.va.us/dpor/reb

Page 63: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Licensing Fees

APPLICATIONSSalesperson by education and examination - $75.00Salesperson by reciprocity - $64.00Business entity - $75.00Broker by education and examination - $85.00Broker by reciprocity - $85.00Broker concurrent - $65.00Firm - $125.00Branch Office - $65.00Transfer - $35.00Activate - $35.00

Page 64: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

TELEMARKETING COLD-CALLING

ISSUE: In December of 2002, the FTC finalized amendments to the Telemarketing Sales Rule. At the center of the changes is the creation of a national "do-not-call" registry. Real estate professionals must now refer to this list before engaging in cold calling and refrain from calling anyone who has placed their number on the list.

Page 65: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

TELEMARKETING COLD-CALLING

The registry will supplement the current company specific "do-not-call" list requirement. In a separate but similar effort, on June 26, 2003, the Federal Communications Commission (FCC) announced final amendments to their Telemarketing Rules that would among other things extend the National Do-Not-Call provisions of the FTC rule to intrastate calls.

Page 66: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

TELEMARKETING COLD-CALLING

This is a significant change and as a result, all real estate professionals making interstate as well as intrastate calls must comply with the requirements of the National Do-Not-Call registry, regardless of state law exemptions.

Page 67: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

TELEMARKETING COLD-CALLING

STATUS/OUTLOOK: On March 23, 2004, the FTC published a final rule requiring telemarketers to scrub their call lists no more than thirty-one (31) days prior to the date any call is made. This would replace the FTC's current requirement to scrub their lists every three months.

Page 68: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Problems with Homeowners Insurance - Overview

Homeowners insurance is the foundation for homeownership. Most homebuyers require a mortgage to purchase a home and mortgage lenders will not grant a loan without property insurance.

Page 69: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

Problems with Homeowners Insurance - Overview

The booming housing market and historically low interest rates have recently spurred many potential homebuyers into action. However, upon entry into the market many are faced with the grim reality of the decreasing availability and affordability of homeowners insurance.

Page 70: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

What is happening?

Current conditions are that prices are up and underwriting standards are tight. Fortunately, one of those - underwriting standards - can be addressed. Several scenarios are emerging throughout the country with Virginia being no exception.

Page 71: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

What is happening?

• Unavailability. A homebuyer is unable to obtain homeowners coverage through traditional lines of insurance.

• No renewal of an existing homeowners policy. At the time the policy is set to expire, an insurance company refuses to renew it due to the homeowner's filing of too many claims.

Page 72: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

What is happening?

Cancellation shortly after closing. An insurance company issues a policy, the real estate transaction closes and the company later revokes it within the allowable time under state law. In Virginia an insurance company may cancel a policy for almost any reason within the first 90 days so long as they give the consumer 30 days notice of the cancellation.

Page 73: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

What is happening?

Claims of a previous owner. An insurance company will deny coverage on a property to be purchased due to claims filed by a previous owner. This scenario is usually because the insurance company finds derogatory information in an insurance claims database after the fact and decides that the level of risk is too high.

Page 74: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

What is happening?

"Zero-dollar" claims. "Zero-dollar" claims refer to things that did not result in a loss for the insurer being listed as a claim in an insurance claim database. Most insurance companies consult claim databases when making underwriting decisions. For example, a person could call their insurance company about possibly filing a claim and have it later count against them - regardless of whether a claim was ever actually filed.

Page 75: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

What is happening?

Limited coverage in specific geographical regions. In various regions of the country some major insurance carriers have decided not to write any new homeowners policies indefinitely, which only makes things worse. Taking into account the fact that many of these carriers service a large percentage of the marketplace, this shift has created a very difficult environment for those seeking to obtain new coverage.

Page 76: Legal Update. Legal Update Learning Objectives After study of this module you will be able to: 1.Identify current federal legislation affecting the real

What is happening?

The end result is that homebuyers trying to insure their new property are forced into very expensive plans that offer minimal coverage - all because of the insurance company's perceived risk of loss. Other homeowners find their insurance company refusing to renew their existing policy due to prior claims. They are then left with very little time to find another policy - especially in today's insurance environment.