Zane Sullivan Seminars
News & Notes
Recent Federal Court Decision on Subdivision Applications
Involvement Protects Your Interests
The recent federal court decision, Willoughby Development Corporation v. Ravalli County, once again shows how important it is for developers and builders to be involved in shaping and influencing local and state law so that they aren’t negatively affected by those laws later on. In Ravalli County, developers bought property and submitted a subdivision application. Sometime after that, the county adopted zoning regulations limiting new subdivisions in the county to one residence per two acres. Ravalli County then applied the new regulations to the developers’ submitted application. Yet Montana law requires cities and counties to apply the zoning regulations in effect at the time the application is filed. When the developers sued the County for violations of both state and federal law, the Court determined that although the United States’ Constitution protects certain property and liberty interests, only independent sources such as state law can create or define such interests. The Court denied the developers’ federal claims but ultimately left the developers the chance to bring claims of state law violations before a Montana state court because “[r]esolving the routine land-use disputes that inevitably and constantly arise among developers, local residents, and municipal officials is simply not the business of the federal courts…”
Instead, the federal court expressed that state and local law are better suited to resolving land-use disputes because of their knowledge and sensitivity to local conditions and the various interests at stake. Land-use issues can be quite complex. Those living in an area usually know the situation better than those outside it and are better suited to solving whatever problems come up. Here in Missoula, the Office of Planning and Grants, the City Council, the Mayor, and the County Commissioners are working with a number of out-of-state consultants on various plans, ordinances, and subdivisions rewrites that will largely impact the entire development community. Envision (the transportation plan for the city, which includes talk of mass public transportation); UFDA (Urban Fringe Development Area—designed to determine where growth should be permitted within Missoula County); Parkland Dedication for Small Subdivisions (requiring small subdivisions to dedicate a part of their land or pay a fee for parkland); the Zoning and Subdivision Rewrite; the Mayor’s Affordable Housing Initiative (now heavily considering inclusionary zoning and impact fees); and the Downtown Master Plan Rewrite and other Neighborhood Plans are just the latest issues before us. All of these will impact the development community, some of them in ways that are projected to slow or limit growth. It is essential that members of the development community contribute their knowledge, experience, and ideas to create positive short and long term solutions. To have a meaningful impact, everyone will need to be heard and be involved. Several groups have already begun this process. They currently work to encourage our local government to voluntarily include the development community throughout the planning process. Find out how your voice and your ideas can make the difference.
Our thanks to Aleea Sharp, an attorney at Sullivan, Tabaracci & Rhoades, P.C. in Missoula for this article.
What's the Story on Rebates?
In early April of this year, the U. S. Justice Department announced that the Board of Realty Regulation, the Montana licensing authority for real estate licensees, would be repealing a ruling prohibited soliciting business by advertising rebates, gifts and other promotional items to consumers.
(See http://helenair.com/articles/2008/04/02/state/106st_080402_realestate.txt).
To many readers the article suggests that real estate licensees are now free to do whatever may strike their fancy under the concept that rebates increase competition and thereby benefit the consumer. Competition is beneficial to the industry as well as the consumer and licensees need to keep in mind that there are varied and numerous business models available in today’s market place. However, before relying too much on the recent news release, licensees should make sure that they are aware of exactly what the change to the rule was and what regulations remain in this area.
The original rule referred to in the Justice Department announcement had stated: Licensees may not solicit business by offering gifts, rebates, or promotional items. As a result of input from the Justice Department, the Board of Realty Regulation opted to delete the foregoing sentence from the rule. Based upon the action to repeal the language the rule now states:
Licensees may not pay a commission in connection to a real estate sale or transaction to a person who is not licensed as a real estate broker. However, payment to the principal or reducing the commission owed by the principal is not considered payment of a commission to an unlicensed person.
Deleting the sentence does not legalize any and all payments between a licensee and a member of the public. It is important for licensees to understand that the foregoing is a rule change. It is also important to understand the correlation between rules and statutes. The Board of Realty Regulation promulgates rules to interpret and clarify statutes enacted by the Legislature. Rule changes do not negate statutes or repeal statutes. State statutes take precedence over rules enacted by administrative agencies While the Board has repealed a former rule, we are left with the following state statutes:
The following are identified as licensing violations under sections 37-51-321 (1) (p) and 37-51-321 (1) (m) of the Montana Code Annotated:
-paying a commission in connection with a real estate sale or transaction to a person who is not licensed as a real estate broker or real estate salesperson under this chapter.
-soliciting, selling, or offering for sale real property by conducting lotteries for the purpose of influencing a purchaser or prospective purchaser of real property.
The comparison between the rules as they are now worded and the language in state statute illustrates the complex and confusing state of Montana law in this area. Without question, the Board of Realty Regulation has repealed the rule which stated that it was a licensing violation to solicit business by offering rebates, gifts or promotional items. However, just because a broker can advertise rebates, is it contrary to existing state statutes to pay them? It will take court decisions or further enactments of the legislature to clarify what is at best a grey area. Each office will need to determine what course of conduct it feels is permissible under the statutes and rules that are now in effect.
The Justice Department’s announcement has also prompted out of state entities to solicit licensees to pay referral fees to internet service providers who furnish buyer leads. Unless the internet company has a licensed broker affiliated with it, to whom the referral fees are to be paid, payment of referral fees in this situation may well be a violation of state law.
Supervising Broker Continuing Education
The Montana Board of Realty Regulation at its March 28, 2008 meeting clarified the continuing education requirements for Montana Broker licensee’s holding the supervising broker endorsement. For the remainder of the 2008 education year (the education year expires October 31, 2008), supervising brokers will be required to obtain 4 hours of continuing education from courses the Board has approved for supervising broker continuing education. Zane Sullivan Seminars currently has two courses available and, as with all broker supervision courses for the 2008 education year, all licensees are able to attend these courses for credit (please see our “available courses” page for the description of our Broker Management and Legal Forum courses). For Brokers who are taking the course to satisfy their supervising broker continuing education requirements, the 4 hours can be part of the supervising broker’s 12 credit hours for the year, or in addition to the 12 hours of continuing education, at the broker’s election.
For the 2009 continuing education year (commencing November 1, 2008 and ending October 31, 2009) the Board of Realty Regulation has determined that supervising broker continuing education course will only be open to supervising brokers in order to emphasize specialized training for brokers on topics of supervision, risk reduction, agency and related issues of importance to brokers who employ sales licensees.
In remembrance - James Murphy.
Over the last several years, all most new real estate licensees have attended the “Rookie” course sponsored by the Montana Board of Realty Regulation. Those who have attended these sessions have received instruction on many of the practical issues that real estate licensees deal with on a day to day basis. James Murphy, an attorney practicing in Billings, Montana, has been one of the premier instructors for the course. Jim or “Murph”, was well known to the students as a caring, knowledgeable, professional who provided new licensees with excellent information on real estate law together with an ample dose of his Irish humor. Those of us who had an opportunity to learn from Jim appreciate his wisdom and his professionalism will long be a hallmark for Montana attorneys. Our condolences to Jim’s family on his passing.
Supervising Broker Rookie Course.
According to Montana law if you are a broker and wish to hire sales licensees, you must hold a supervising broker endorsement. If you did not receive your supervising broker endorsement at the time you renewed your license in October of 2008, there are two requirements to qualify for the endorsement. First, you must have been a Montana licensed broker for at least one year. Second, you must complete an 8 hour Supervising Broker Course. Conceptually, the “rookie” broker course is similar to the rookie sales licensee course. It is intended to provide the new broker with the basic tools necessary to supervise sales licensees and to enable the employing broker to comply with Montana law. Agency, Risk Reduction and similar issues will be covered in detail, with an emphasis on providing the supervising broker with methods to train and educate the sales licensees they employ on proper procedures and compliance with state and federal laws, rules and regulations. At present, the Board of Realty Regulation anticipates holding the rookie broker course twice per year in conjunction with the rookie sales licensee course. Please check our “events” calendar for dates and locations.