§ 5-20.5-5. Real estate recovery account.
(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 that 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
that may result in collection from the real estate recovery account, the aggrieved
person shall notify the department of business regulation, 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, that 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 the 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 subsection (c)(2), 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 subsection (c)(3)(iv) 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 subsection (c)(3) 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 subsection (c)(5).
(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 that is false or untrue or contains any material misstatement
of fact.
(e) When the department receives notice, as provided in subsection (c)(1), 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.