§5-20.5-5  Real estate recovery account. –


Published: 2015

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TITLE 5

Businesses and Professions

CHAPTER 5-20.5

Real Estate Brokers and Salespersons

SECTION 5-20.5-5



   § 5-20.5-5  Real estate recovery account.

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(a)(1) The department of business regulation shall establish and maintain a

real estate recovery account from which any person aggrieved by an act,

representation, transaction, or conduct of a licensed real estate broker or

real estate salesperson, upon the grounds of fraud, misrepresentation or

deceit, may recover by order of the superior court of the county where the

violation occurred, an amount of not more than fifty thousand dollars ($50,000)

for damages sustained by the fraud, misrepresentation, or deceit, as a result

of any real estate transaction in which the real estate broker or salesperson

has acted in his or her capacity as a real estate broker or salesperson. This

account shall not be used to reimburse any real estate broker or salesperson

for any commission, fee, or other valuable consideration due or owing from any

other real estate broker or salesperson. Provided, that pursuant to subsection

(h) of this section the amount available for payments of claims is limited to

fifty thousand dollars ($50,000) for any one licensee. Payment of claims is

made in order according to the date a judgment is awarded with that judgment

awarded earliest in time being paid first.



   (2) When any person makes application for an original license

to practice as a real estate broker or salesperson he or she shall pay, in

addition to his or her original license fee, a fee determined by the department

for deposit in the real estate recovery account. If the department does not

issue the license, this fee is returned to the applicant.



   (b) If, on December 31 of any year, the balance remaining in

the real estate recovery account is less than two hundred thousand dollars

($200,000), every real estate broker, when renewing his or her license during

the following calendar year, shall pay, in addition to his or her license

renewal fee, a fee of twenty-five dollars ($25.00) for deposit in the real

estate recovery account, and every real estate salesperson, when renewing his

or her license during that year, shall pay, in addition to his or her license

renewal fee, a fee of twenty-five dollars ($25.00) for deposit in the real

estate recovery account.



   (c)(1) No action for a judgment which subsequently results in

an order for collection from the real estate recovery account shall be started

later than two (2) years from the accrual of the cause of action. When any

aggrieved person commences action for a judgment, which may result in

collection from the real estate recovery account, the aggrieved person shall

notify the department of business regulations, in writing, to this effect at

the time of the commencement of that action.



   (2) When any aggrieved person recovers a valid judgment in

any court of competent jurisdiction against any real estate broker, or real

estate salesperson, upon the grounds of fraud, misrepresentation, or deceit,

which occurred on or after May 11, 1978, the aggrieved person may, upon the

termination of all proceedings, including reviews and appeals in connection

with the judgment, file a verified claim in the court in which the judgment was

entered and, upon ten (10) days' written notice to the department, may apply to

the court for an order directing payment out of the real estate recovery

account, of the amount unpaid upon the judgment, subject to the limitations

stated in this section.



   (3) The court shall proceed upon the application in a summary

manner, and, upon the hearing on the application, the aggrieved person shall be

required to show:



   (i) He or she is not a spouse of debtor, or the personal

representative of the spouse;



   (ii) He or she has complied with all the requirements of this

section;



   (iii) He or she has obtained a judgment as set out in

subdivision (2) of this subsection, stating the amount of the judgment and the

amount owing on it on the date of the application;



   (iv) He or she has made all reasonable searches and inquiries

to ascertain whether the judgment debtor is possessed of real or personal

property or other assets, liable to be sold or applied in satisfaction of the

judgment; and



   (v) That by the search pursuant to paragraph (iv) of this

subdivision he or she has discovered no personal or real property or other

assets liable to be sold or applied, or that he or she has discovered certain

of them, describing them, owned by the judgment debtor and liable to be so

applied, and that he or she has taken all necessary action and proceedings for

the realization, and that the amount realized was insufficient to satisfy the

judgment, stating the amount realized and the balance remaining due on the

judgment after application of the amount realized.



   (4) The court shall make an order directed to the department

of business regulation requiring payment from the real estate recovery account

of whatever sum it finds to be payable upon the claim, pursuant to and in

accordance with the limitations contained in this section, if the court is

satisfied, upon the hearing of the truth of all matters required to be shown by

the aggrieved person by subdivision (3) of this subsection and that the

aggrieved person has fully pursued and exhausted all remedies available to him

or her for recovering the amount awarded by the judgment of the court.



   (5) Should the department of business regulation pay from the

real estate recovery account any amount in settlement of a claim or toward

satisfaction of a judgment against a licensed real estate broker or real estate

salesperson, the license of the broker or salesperson shall be automatically

revoked upon the issuance of a court order authorizing payment from the real

estate recovery account. This broker or salesperson is not eligible to receive

a new license until he or she has repaid in full, plus interest at the rate of

twelve percent (12%) a year, the amount paid from the real estate recovery

account on his or her account. A discharge in bankruptcy does not relieve a

person from the penalties and disabilities provided in this subdivision.



   (6) If, at any time, the money deposited in the real estate

recovery account is insufficient to satisfy any authorized claim or portion of

a claim, the department shall, when sufficient money has been deposited in the

real estate recovery account, satisfy those unpaid claims or portions of

claims, in the order that those claims or portions of claims were originally

filed, plus accumulated interest at the rate of twelve percent (12%) a year.



   (d) It is unlawful and constitutes a misdemeanor for any

person or his or her agent to file with the department of business regulation

any notice, statement, or other document required under this chapter which is

false or untrue or contains any material misstatement of fact.



   (e) When the department receives notice, as provided in

subdivision (c)(1) of this section, the department may enter an appearance,

file an answer, appear at the court hearing, defend the action, or take

whatever other action it deems appropriate on behalf and in the name of the

defendant, and take recourse through any appropriate method of review on behalf

of, and in the name of, the defendant.



   (f) When, upon the order of the court, the department of

business regulation has paid from the real estate recovery account any sum to

the judgment creditor, the department is subrogated to all of the rights of the

judgment creditor and the judgment creditor assigns all his or her right,

title, and interest in the judgment to the department and any amount and

interest recovered by the department on the judgment shall be deposited to the

account.



   (g) The failure of an aggrieved person to comply with this

chapter relating to the real estate recovery account constitutes a waiver of

any rights under this chapter.



   (h) Notwithstanding any other provision, the liability of

that portion of the real estate recovery account allocated for the purposes of

the real estate recovery account shall not exceed fifty thousand dollars

($50,000) for any one licensee.



   (i) Nothing contained in this section limits the authority of

the department of business regulation to take disciplinary action against any

licensee for a violation of this chapter, or the rules and regulations of the

department; nor does the repayment in full of all obligations to the real

estate recovery account by any licensee nullify or modify the effect of any

other disciplinary proceeding brought pursuant to this chapter.



History of Section.

(P.L. 1978, ch. 169, § 2; P.L. 1982, ch. 429, § 1; P.L. 1985, ch.

181, art. 59, § 1; P.L. 1990, ch. 412, § 2; P.L. 1990, ch. 480,

§ 1; P.L. 1992, ch. 61, § 1; P.L. 1993, ch. 138, art. 6, §

1.)

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