MISSISSIPPI LEGISLATURE
2023 Regular Session
To: Business and Financial Institutions; Judiciary, Division A
By: Senator(s) Boyd, Sparks, Michel, Williams, England, Chism
AN ACT TO AMEND SECTION 73-35-4.1, MISSISSIPPI CODE OF 1972, TO REVISE LIABILITY FOR A REAL ESTATE LICENSEE REGARDING DISCLOSURE OF THE SIZE OR AREA OF PROPERTY; TO AMEND SECTIONS 89-1-505 AND 89-1-523, MISSISSIPPI CODE OF 1972, TO REVISE LIABILITY FOR CERTAIN REQUIRED REAL ESTATE DISCLOSURES; TO AMEND SECTION 89-1-527, MISSISSIPPI CODE OF 1972, TO REVISE LIABILITY FOR THE FAILURE TO DISCLOSE NONMATERIAL FACT; TO AMEND SECTION 89-1-503, MISSISSIPPI CODE OF 1972, TO REVISE LIABILITY FOR FAILURE OF A TRANSFEROR OF REAL PROPERTY TO PROVIDE CERTAIN INFORMATION; TO AMEND SECTIONS 89-1-507 AND 89-1-515, MISSISSIPPI CODE OF 1972, TO REMOVE REFERENCES TO AGENTS OF TRANSFERORS OF REAL PROPERTY; TO AMEND SECTION 89-1-519, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT NO PERSON OR ENTITY SHALL BE DEEMED THE AGENT OF THE TRANSFEROR OR TRANSFEREE FOR PURPOSES OF THE DISCLOSURE REQUIREMENTS OF SECTIONS 89-1-501 THROUGH 89-1-523; TO AMEND SECTION 89-1-523, MISSISSIPPI CODE OF 1972, TO REVISE LIABILITY OF REAL ESTATE LICENSEES; TO AMEND SECTION 89-1-525, MISSISSIPPI CODE OF 1972, TO CLARIFY THE AUTHORITY OF THE REAL ESTATE COMMISSION; TO AMEND SECTIONS 73-35-21 AND 73-35-23, MISSISSIPPI CODE OF 1972, TO REVISE THE AUTHORITY OF THE REAL ESTATE COMMISSION REGARDING; TO REPEAL SECTIONS 89-1-521 AND 89-1-525, MISSISSIPPI CODE OF 1972, WHICH PROVIDE FOR CERTAIN DISCLOSURES AND PENALTIES OF LICENSED REAL ESTATE BROKERS AND SALESPERSONS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 73-35-4.1, Mississippi Code of 1972, is amended as follows:
73-35-4.1. (1) (a) In connection with any real estate transaction, the size or area, in square footage or otherwise, of the subject property, if provided by any real estate licensee in accordance with paragraph (b)(i) and (ii), shall not be considered any warranty or guarantee of the size or area information, in square footage or otherwise, of the subject property.
(b) (i) If a real estate licensee provides any party to a real estate transaction with third-party information concerning the size or area, in square footage or otherwise, of the subject property involved in the transaction, the licensee shall identify the source of the information.
(ii) For the purposes of this section, "third-party information" means:
1. An appraisal or any measurement information prepared by a licensed appraiser;
2. A surveyor developer's plan prepared by a licensed surveyor;
3. A tax assessor's public record; or
4. A builder's plan used to construct or market the property.
(c) A real estate licensee has no duty to the seller or purchaser of real property to conduct an independent investigation of the size or area, in square footage or otherwise, of a subject property, or to independently verify the accuracy of any third-party information.
(d) A real estate licensee who has complied with the requirements of this section, as applicable, shall have no further duties to the seller or purchaser of real property regarding disclosed or undisclosed property size or area information, and shall not be subject to liability to any party for any damages sustained with regard to any conflicting measurements or opinions of size or area, including exemplary or punitive damages.
(2) (a) If a real estate licensee has provided third-party information to any party to a real estate transaction concerning size or area of the subject real property, a party to the real estate transaction may recover damages from the licensee in a civil action only when a licensee knowingly violates the duty to disclose the source of the information as required in this section. However, nothing in this act shall provide immunity from civil liability to any licensee who knowingly misrepresents the size or area of the subject real property.
(b) The sole and exclusive civil remedy at common law or otherwise for a violation of this section by a real estate licensee shall be an action for actual damages suffered by the party as a result of such violation and shall not include exemplary or punitive damages.
(c) For any real estate transaction commenced after the effective date of this section, any civil action brought pursuant to this section shall be commenced within two (2) years after the date of transfer of the subject real property.
(d) In any civil action brought pursuant to this section, the prevailing party shall be allowed court costs and reasonable attorney fees to be set by the court and collected as costs of the action.
(e) A transfer of a possessory interest in real property subject to the provisions of this section may not be invalidated solely because of the failure of any person to comply with the provisions of this section.
(f) The provisions of this section shall apply to, regulate and determine the rights, duties, obligations and remedies, at common law or otherwise, of the seller marketing the seller's real property for sale through a real estate licensee, and of the purchaser of real property offered for sale through a real estate licensee, with respect to disclosure of third-party information concerning the subject real property's size or area, in square footage or otherwise, and this section hereby supplants and abrogates all common-law liability, rights, duties, obligations and remedies of all parties therefor.
(3) Notwithstanding any other provision of law to the contrary, no real estate licensee shall have any duty or obligation, and shall not be liable to any party to any real estate transaction nor be subject to discipline or other action of any kind by any licensing authority of the State of Mississippi, pertaining to information required to be disclosed by Sections 89-1-501 through 89-1-523.
(4) The Mississippi Real Estate Commission shall not promulgate any rule or regulation, nor make any administrative or other interpretation, whereby any real estate licensee may be held responsible or subject to discipline or other actions by the commission relating to the provisions of this section or the information required to be disclosed by Sections 89-1-501 through 89-1-523.
SECTION 2. Section 89-1-505, Mississippi Code of 1972, is amended as follows:
89-1-505. (1) * * * The transferor shall not
be liable for any error, inaccuracy or omission of any information delivered
pursuant to Sections 89-1-501 through 89-1-523 if the error, inaccuracy or
omission was not within the personal knowledge of the transferor, was based on
information timely provided by public agencies or by other persons providing
information as specified in subsection (2) that is required to be disclosed
pursuant to Sections 89-1-501 through 89-1-523, and ordinary care was exercised
in obtaining and transmitting the information.
(2) The delivery of any information required to be disclosed by Sections 89-1-501 through 89-1-523 to a prospective transferee by a public agency or other person providing information required to be disclosed pursuant to Sections 89-1-501 through 89-1-523 shall be deemed to comply with the requirements of Sections 89-1-501 through 89-1-523 and shall relieve the transferor or any listing or selling agent of any further duty under Sections 89-1-501 through 89-1-523 with respect to that item of information.
(3) The delivery of a report
or opinion prepared by a licensed engineer, land surveyor, geologist,
structural pest control operator, contractor or other expert, dealing with
matters within the scope of the professional's license or expertise, shall be
sufficient compliance for application of the exemption provided by subsection (1) * * *.
(4) No listing or selling agent shall be liable for any error, inaccuracy or omission of any information delivered pursuant to Sections 89-1-501 through 89-1-523.
(5) The Mississippi Real Estate Commission shall not promulgate any rule or regulation, nor make any administrative or other interpretation, whereby any real estate licensee may be held responsible or subject to discipline or other actions by the commission relating to the provisions of this section or the information required to be disclosed by Sections 89-1-501 through 89-1-523 or delivery of information required to be disclosed by Sections 89-1-501 through 89-1-523.
SECTION 3. Section 89-1-523, Mississippi Code of 1972, is amended as follows:
89-1-523. No transfer subject
to Sections 89-1-501 through 89-1-523 shall be invalidated solely because of
the failure of any person to comply with any provision of Sections 89-1-501
through 89-1-523. * * *
SECTION 4. Section 89-1-527, Mississippi Code of 1972, is amended as follows:
89-1-527. (1) The fact or suspicion that real property is or was:
(a) The site of a natural death, suicide, homicide or felony crime (except for illegal drug activity that affects the physical condition of the property, its physical environment or the improvements located thereon);
(b) The site of an act or occurrence that had no effect on the physical condition of the property, its physical environment or the improvements located thereon;
(c) Owned or occupied by a person affected or exposed to any disease not known to be transmitted through common occupancy of real estate including, but not limited to, the human immunodeficiency virus (HIV) and the acquired immune deficiency syndrome (AIDS);
does not constitute a material fact that must be disclosed in a real estate transaction. A failure to disclose such nonmaterial facts or suspicions shall not give rise to a criminal, civil or administrative action against the owner of such real property, a licensed real estate broker or any affiliated licensee of the broker.
(2) A failure to disclose in any real estate transaction any information that is provided or maintained, or is required to be provided or maintained, in accordance with Section 45-33-21 through Section 45-33-57, shall not give rise to a cause of action against an owner of real property, a licensed real estate broker or any affiliated licensee of the broker. Likewise, no cause of action shall arise against any licensed real estate broker or affiliated licensee of the broker for revealing information to a seller or buyer of real estate in accordance with Section 45-33-21 through Section 45-33-57. Any factors related to this subsection, if known to a property owner or licensee shall be disclosed if requested by a consumer.
(3) Failure to disclose any
of the facts or suspicions of facts described in subsections (1) and (2) shall
not be grounds for the termination or rescission of any transaction in which
real property has been or will be transferred or leased. * * *
SECTION 5. Section 89-1-503, Mississippi Code of 1972, is amended as follows:
89-1-503. (1) The transferor of any real property subject to Sections 89-1-501 through 89-1-523 shall deliver to the prospective transferee the written property condition disclosure statement required by Sections 89-1-501 through 89-1-523, as follows:
(a) In the case of a sale, as soon as practicable before transfer of title.
(b) In the case of transfer by a real property sales contract, or by a lease together with an option to purchase, or a ground lease coupled with improvements, as soon as practicable before execution of the contract. For the purpose of this paragraph, "execution" means the making or acceptance of an offer.
With respect to any transfer subject to paragraph (a) or (b), the transferor shall indicate compliance with Sections 89-1-501 through 89-1-523 either on the receipt for deposit, the real property sales contract, the lease, or any addendum attached thereto or on a separate document.
If any disclosure, or any material amendment of any disclosure, required to be made by Sections 89-1-501 through 89-1-523, is delivered after the execution of an offer to purchase, the transferee shall have three (3) days after delivery in person or five (5) days after delivery by deposit in the mail, to terminate his or her offer by delivery of a written notice of termination to the transferor or the transferor's agent.
(2) If a transferor of real property subject to Sections 89-1-501 through 89-1-523 shall fail to deliver the disclosure statement required by Sections 89-1-501 through 89-1-523, or fails to complete some portion of the disclosure statement, the prospective transferee is presumed to be on notice to inquire of the transferor concerning the content of the disclosure or the lack thereof and any duly licensed real estate broker or salesperson involved with the transaction shall have no duty or obligation, and shall not be liable to any party, nor be subject to discipline or other action of any kind by any licensing authority of the State of Mississippi, pertaining to the disclosure or the failure of any disclosure to comply with Sections 89-1-501 through 89-1-523.
SECTION 6. Section 89-1-507, Mississippi Code of 1972, is amended as follows:
89-1-507. If information
disclosed in accordance with Sections 89-1-501 through 89-1-523 is subsequently
rendered inaccurate as a result of any act, occurrence or agreement subsequent
to the delivery of the required disclosures, the inaccuracy resulting therefrom
does not constitute a violation of Sections 89-1-501 through 89-1-523. If at
the time the disclosures are required to be made, an item of information
required to be disclosed is unknown or not available to the transferor, and the
transferor * * * has made a reasonable effort to ascertain it, the transferor
may use an approximation of the information, provided the approximation is
clearly identified as such, is reasonable, is based on the best information
available to the transferor * * *, and is not used for the purpose
of circumventing or evading Sections 89-1-501 through 89-1-523.
SECTION 7. Section 89-1-515, Mississippi Code of 1972, is amended as follows:
89-1-515. Any disclosure
made pursuant to Sections 89-1-501 through 89-1-523 may be amended in writing
by the transferor * * *, but the amendment shall be subject to the provisions of
Section 89-1-503.
SECTION 8. Section 89-1-519, Mississippi Code of 1972, is amended as follows:
89-1-519. * * * (1) No person or entity * * *
shall * * *
be deemed the agent of the transferor or transferee for purposes of the
disclosure requirements of Sections 89-1-501 through 89-1-523 * * *.
(2) Notwithstanding any other provision of law to the contrary, no real estate licensee shall have any duty or obligation, and shall not be liable to any party to any real estate transaction nor be subject to discipline or other action of any kind by any licensing authority of the State of Mississippi, pertaining to information required to be disclosed by Sections 89-1-501 through 89-1-523 or delivery of information required to be disclosed by Sections 89-1-501 through 89-1-523.
SECTION 9. Section 89-1-523, Mississippi Code of 1972, is amended as follows:
89-1-523. (1) No
transfer subject to Sections 89-1-501 through 89-1-523 shall be invalidated
solely because of the failure of any person to comply with any provision of
Sections 89-1-501 through 89-1-523. * * *
(2) Notwithstanding any other provision of law to the contrary, no real estate licensee shall have any duty or obligation, and shall not be liable to any party to any real estate transaction nor be subject to discipline or other action of any kind by any licensing authority of the State of Mississippi, pertaining to information required to be disclosed by Sections 89-1-501 through 89-1-523 or delivery of information required to be disclosed by Sections 89-1-501 through 89-1-523.
SECTION 10. Section 89-1-525, Mississippi Code of 1972, is amended as follows:
89-1-525. (1) Except as otherwise provided in this section, the Mississippi Real Estate Commission is authorized to enforce the provisions of Sections 89-1-501 through 89-1-523. Any violation of the provisions of Sections 89-1-501 through 89-1-523 shall be treated in the same manner as a violation of the Real Estate Broker License Law of 1954, Section 73-35-1 et seq., and shall be subject to same penalties as provided in that chapter.
(2) The Mississippi Real Estate Commission shall not promulgate any rules or regulations, nor make any administrative or other interpretation, that are not clearly provided in Sections 89-1-501 through 89-1-523 whereby any real estate licensee is held responsible or subject to discipline or other actions by the commission relating to the provisions of this section or the information required to be disclosed by Sections 89-1-501 through 89-1-523 or delivery of information required to be disclosed by Sections 89-1-501 through 89-1-523.
SECTION 11. Section 73-35-21, Mississippi Code of 1972, is amended as follows:
73-35-21. (1) Except as otherwise provided in this section, the commission may, upon its own motion and shall upon the verified complaint in writing of any person, hold a hearing pursuant to Section 73-35-23 for the refusal of license or for the suspension or revocation of a license previously issued, or for such other action as the commission deems appropriate. The commission shall have full power to refuse a license for cause or to revoke or suspend a license where it has been obtained by false or fraudulent representation, or where the licensee in performing or attempting to perform any of the acts mentioned herein, is deemed to be guilty of:
(a) Making any substantial misrepresentation in connection with a real estate transaction;
(b) Making any false promises of a character likely to influence, persuade or induce;
(c) Pursuing a continued and flagrant course of misrepresentation or making false promises through agents or salespersons or any medium of advertising or otherwise;
(d) Any misleading or untruthful advertising;
(e) Acting for more than one (1) party in a transaction or receiving compensation from more than one (1) party in a transaction, or both, without the knowledge of all parties for whom he acts;
(f) Failing, within a reasonable time, to account for or to remit any monies coming into his possession which belong to others, or commingling of monies belonging to others with his own funds. Every responsible broker procuring the execution of an earnest money contract or option or other contract who shall take or receive any cash or checks shall deposit, within a reasonable period of time, the sum or sums so received in a trust or escrow account in a bank or trust company pending the consummation or termination of the transaction. "Reasonable time" in this context means by the close of business of the next banking day;
(g) Entering a guilty plea or conviction in a court of competent jurisdiction of this state, or any other state or the United States of any felony;
(h) Displaying a "for sale" or "for rent" sign on any property without the owner's consent;
(i) Failing to furnish voluntarily, at the time of signing, copies of all listings, contracts and agreements to all parties executing the same;
(j) Paying any rebate, profit or commission to any person other than a real estate broker or salesperson licensed under the provisions of this chapter;
(k) Inducing any party to a contract, sale or lease to break such contract for the purpose of substituting in lieu thereof a new contract, where such substitution is motivated by the personal gain of the licensee;
(l) Accepting a commission or valuable consideration as a real estate salesperson for the performance of any of the acts specified in this chapter from any person, except his employer who must be a licensed real estate broker;
(m) Failing to successfully pass the commission's background investigation for licensure or renewal as provided in Section 73-35-10; or
(n) Any act or conduct, whether of the same or a different character than hereinabove specified, which constitutes or demonstrates bad faith, incompetency or untrustworthiness, or dishonest, fraudulent or improper dealing. However, simple contact and/or communication with any mortgage broker or lender by a real estate licensee about any professional, including, but not limited to, an appraiser, home inspector, contractor, and/or attorney regarding a listing and/or a prospective or pending contract for the lease, sale and/or purchase of real estate shall not constitute conduct in violation of this section.
(2) No real estate broker shall practice law or give legal advice directly or indirectly unless said broker be a duly licensed attorney under the laws of this state. He shall not act as a public conveyancer nor give advice or opinions as to the legal effect of instruments nor give opinions concerning the validity of title to real estate; nor shall he prevent or discourage any party to a real estate transaction from employing the services of an attorney; nor shall a broker undertake to prepare documents fixing and defining the legal rights of parties to a transaction. However, when acting as a broker, he may use an earnest money contract form. A real estate broker shall not participate in attorney's fees, unless the broker is a duly licensed attorney under the laws of this state and performs legal services in addition to brokerage services.
(3) It is expressly provided that it is not the intent and purpose of the Mississippi Legislature to prevent a license from being issued to any person who is found to be of good reputation, is able to give bond, and who has lived in the State of Mississippi for the required period or is otherwise qualified under this chapter.
(4) In addition to the reasons specified in subsection (1) of this section, the commission shall be authorized to suspend the license of any licensee for being out of compliance with an order for support, as defined in Section 93-11-153. The procedure for suspension of a license for being out of compliance with an order for support, and the procedure for the reissuance or reinstatement of a license suspended for that purpose, and the payment of any fees for the reissuance or reinstatement of a license suspended for that purpose, shall be governed by Section 93-11-157 or 93-11-163, as the case may be. If there is any conflict between any provision of Section 93-11-157 or 93-11-163 and any provision of this chapter, the provisions of Section 93-11-157 or 93-11-163, as the case may be, shall control.
(5) Nothing in this chapter shall prevent an associate broker or salesperson from owning any lawfully constituted business organization, including, but not limited to, a corporation, limited liability company or limited liability partnership, for the purpose of receiving payments contemplated in this chapter. The business organization shall not be required to be licensed under this chapter and shall not engage in any other activity requiring a real estate license.
(6) The Mississippi Real Estate Commission shall not promulgate any rule or regulation, nor make any administrative or other interpretation, whereby any real estate licensee may be held responsible or subject to discipline or other actions by the commission relating to the provisions of this section or the information required to be disclosed by Sections 89-1-501 through 89-1-523 or delivery of information required to be disclosed by Sections 89-1-501 through 89-1-523.
SECTION 12. Section 73-35-23, Mississippi Code of 1972, is amended as follows:
73-35-23. (1) The commission is hereby authorized and directed to take legal action against any violator of this chapter. Upon complaint initiated by the commission or filed with it, the licensee or any other person charged with a violation of this chapter shall be given fifteen (15) days' notice of the hearing upon the charges filed, together with notice of the option of appearing before the commission or an administrative hearing officer as provided in subsection (7) of this section, and a copy of the complaint. The applicant or licensee or other violator shall have an opportunity to be heard in person or by counsel, to offer testimony, and to examine witnesses appearing in connection with the complaint. Hearings shall be held at the offices of the Mississippi Real Estate Commission, or at the commission's sole discretion, at a place determined by the commission.
At such hearings, all witnesses shall be properly sworn and stenographic notes of the proceedings shall be taken and filed as a part of the record in the case. Any party to the proceedings shall be furnished with a copy of such stenographic notes upon payment to the commission of such fees as it shall prescribe, not exceeding, however, the actual cost to the commission. The preponderance of evidence standard of proof shall be used to examine factors during all hearings. The commission shall render a decision on any complaint and shall immediately notify the parties to the proceedings in writing of its ruling, order or decision.
(2) In addition to the authority granted to the commission as hereinabove set forth, the commission is hereby vested with the authority to bring injunctive proceedings in any appropriate forum against any violator or violators of this chapter, and all judges or courts now having the power to grant injunctions are specifically granted the power and jurisdiction to hear and dispose of such proceedings.
(3) The commission is hereby authorized and empowered to issue subpoenas for the attendance of witnesses and the production of books and papers. The process issued by the commission shall extend to all parts of the state, and such process shall be served by any person designated by the commission for such service. The person serving such process may receive such compensation as may be allowed by the commission, not to exceed the fee prescribed by law for similar services. All witnesses who are subpoenaed and who appear in any proceedings before the commission may receive the same fees and mileage as allowed by law, and all such fees shall be taxed as part of the costs in the case.
(4) Where in any proceeding before the commission any witness shall fail or refuse to attend upon subpoena issued by the commission, shall refuse to testify, or shall refuse to produce any books and papers the production of which is called for by the subpoena, the attendance of such witness and the giving of his testimony and the production of the books and papers shall be enforced by any court of competent jurisdiction of this state in the same manner as the attendance and testimony of witnesses in civil cases are enforced in the courts of this state.
(5) The commission may obtain legal counsel privately to represent it in proceedings when legal counsel is required.
(6) No commissioner, administrator, employee, investigator, representative or agent of the commission shall communicate with a licensee in connection with any preliminary or formal investigation associated with alleged violations of licensing law or regulations prior to the delivery of written notice to the licensee's responsible broker. Any licensee represented by legal counsel shall be entitled to communication through such legal counsel unless waived in writing by the licensee.
(7) The commission shall establish an administrative hearing option by July 1, 2022, which shall consist of administrative hearing officers designated by the Attorney General for the purpose of holding hearings, hearing evidence and rendering decisions on matters determined to be the subject of a hearing for a licensee or any other person charged with a violation of this chapter or affecting the license of any person coming under its jurisdiction, when the licensee or any other person charged with a violation of this chapter shall request, in writing, for the matter to be heard by the administrative hearing officer. Administrative hearing officers shall be staff attorneys employed by the Attorney General's office, but must not currently hold a license issued by the commission. The administrative hearing officers shall have the same powers and authority in conducting hearings and rendering decisions as granted to the commission in this section. Hearings before an administrative hearing officer shall be held in the City of Jackson, Mississippi, at a place, time and manner agreed upon by the commission and the hearing officer. The preponderance of evidence standard of proof shall be used to examine factors during all hearings. Any right of appeal available to a licensee or applicant for a license availing itself to the provisions hereof shall be preserved as if the matter had been heard and decided by the commission.
(8) Nothing in this section shall preclude the commission and a licensee from entering into an agreed order resolving a complaint prior to the hearing.
(9) The provisions of this section shall not be construed to authorize the Mississippi Real Estate Commission to promulgate any rule or regulation, nor make any administrative or other interpretation, whereby any real estate licensee may be held responsible or subject to discipline or other actions by the commission relating to the provisions of this section or the information required to be disclosed by Sections 89-1-501 through 89-1-523 or delivery of information required to be disclosed by Sections 89-1-501 through 89-1-523.
SECTION 13. Sections 89-1-521 and 89-1-525, Mississippi Code of 1972, which provide for certain disclosures and penalties of licensed real estate brokers and salespersons, are repealed.
SECTION 14. This act shall take effect and be in force from and after July 1, 2023, and shall stand repealed on June 30, 2023.