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Question
Salesperson Berry is assisting Best Deals LLC with the purchase of investment property. Best Deals LLC signs a buyer agency agreement and Salesperson Berry is named as a designated buyer’s agent. Salesperson Berry is the only member of Best Deals LLC.
Salesperson Berry writes up the offer on 123 Main Street in Topeka, Kansas with the buyer listed as Best Deals LLC. The seller accepts the offer and executes the purchase contract. Later, issues arise with the transaction and the buyer and seller agree to cancel the contract.
After the contract is cancelled, the seller finds out that Salesperson Berry is a member of Best Deals LLC. The seller files a complaint with the Kansas Real Estate Commission (KREC) because Salesperson Berry did not disclose in the purchase contract that a licensee would take an interest in the property being purchased.
KREC contacts Salesperson Berry. Salesperson Berry tells KREC he did not include the disclosure in the purchase contract because he was not taking an interest in the property, only the LLC would take an interest.
Did Salesperson Berry commit any license law violations?
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Answer
Yes. Kansas law requires licensees to disclose in the purchase contract any interest the licensee will have in the real estate being purchased. The law defines interest to include any member of an LLC that owns real estate. Salesperson Berry violated 58-3062(a)(15).
58-3062(a)(15). No salesperson or associate broker shall: Fail to make known to any purchaser or lessee any interest the licensee has in the real estate the licensee is selling or leasing or to make known to any seller or lessor any interest the licensee will have in the real estate the licensee is purchasing or leasing.
58-3035(i) “Interest” means: (1) Having any type of ownership in the real estate involved in the transaction; or (2) an officer, member, partner or shareholder of any entity that owns such real estate excluding an ownership interest of less than 5% in a publicly traded entity.
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