RULE 076.00.93-001 - Real Estate License Law Time-Share Act and Regulations

RULE 076.00.93-001. Real Estate License Law Time-Share Act and Regulations

TITLE 17

CHAPTER 35

REAL ESTATE BROKERS AND SALESMEN

SUBCHAPTER 1 - REAL ESTATE LICENSE LAW - GENERAL PROVISIONS

17-35-101. Definitions.

(a) As used in this chapter, unless the context otherwise requires:

(1) "Real estate principal broker" means an individual other than a real estate salesman, who for another and for compensation or the expectation of compensation:

(A) Sells, exchanges, purchases, rents, or leases real estate;

(B) Offers to sell, exchange, purchase, rent, or lease real estate;

(C) Negotiates, offers, attempts, or agrees to negotiate the sale, exchange, purchase, rental, or leasing of real estate;

(D) Lists, offers, attempts, or agrees to list real estate for sale, lease, or exchange;

(E) Auctions or offers, attempts, or agrees to auction real estate;

(F) Buys, sells, offers to buy or sell, or otherwise deals in options on real estate or improvements thereon;

(G) Collects, offers, attempts, or agrees to collect rent for the use of real estate;

(H) Advertises, or holds himself out as being engaged : n the business of buying, selling, exchanging, leasing, or rental of real estate;

(I) Assists or directs in the procuring of prospects calculated to result in the sale, exchange, leasing, or rental of real estate;

(J) Assists or directs in the negotiation of any transaction calculated or intended to result in the sale, exchange, leasing, or rental of real estate;

(K) Engages in the business of charging an advance fee in connection with any contract whereby he undertakes to promote the sale of real estate, either through its listing in a publication issued for that purpose or for referral of information concerning real estate brokers or both;

(L) Performing any of the foregoing acts as an employee of or on behalf of the owner of real estate, or interest therein, or improvements affixed thereon, for compensation;

(2) "Real estate executive broker" means any individual who performs any of the activities mentioned above while under the supervision of, or in the employ of, or affiliated with, a licensed real estate principal broker.

(3) "Real estate associate broker" means any individual who performs any of the activities mentioned above while under the supervision of, or in the employ of, or affiliated with, a licensed real estate principal broker or licensed real estate executive broker.

(4) "Real estate salesman" means any individual who performs any of the activities mentioned above while under the supervision of, or in the employ of, or affiliated with, a licensed real estate principal broker or licensed real estate executive broker.

(b) Any person who directly or indirectly for another with the intention, or on the promise, of receiving any valuable consideration, offers, attempts, or agrees to perform any single act described in this section, whether as part of a transaction or as an entire transaction, shall be deemed a broker or salesman within the meaning of this chapter. The commission of a single such act by a person required to be licensed under this chapter and not so licensed shall constitute a violation of this chapter.

17-35-102. Exemptions.

(a) The provisions of this chapter shall not apply to:

(1) Any person, firm, partnership, copartnership, association, or corporation who as owner or lessor shall perform any of the acts aforesaid with reference to property owned or leased by them, where such acts are performed in the regular course of, or as incident to, the management of the property and the investment therein;

(2) Persons acting as attorney in fact under a full executed power of attorney from the owner authorizing the final consummation by performance of any contract for the sale, lease, or exchange of real estate;

(3) Services rendered by an attorney at law in the performance of his duties as an attorney at law;

(4) A receiver, trustee in bankruptcy, guardian, administrator, or executor, while acting as such, or any such person acting under order of any court;

(5) A trustee acting under a trust agreement, deed of trust, or will;

(6) Any person acting as the resident manager for the owner, or an employee acting as the resident manager for a broker managing an apartment building, duplex, or apartment complex, when the resident manager resides on the premises and is engaged in the leasing of property in connection with his employment; or

(7) Any officer or employee of a federal agency in the conduct of his official duties or any officer or employee of the state government or any political subdivision thereof performing his official duties.

(b) Any multiple listing service wholly owned by a nonprofit organization or association of real estate brokers shall not be required to be licensed under the provisions of this chapter.

(c) Nothing in this chapter shall be so construed as to require a license for an owner to personally sell or lease his own property.

(d)

(1) Any real estate broker licensed by the Arkansas Real Estate Commission on or before January 1, 19 85, who is engaged in the sale of real estate by auction only is authorized to employ real estate salesmen to work under the license of the broker even though the broker is employed in a non-real estate-related field and is only a part-time broker.

(2) The Arkansas Real Estate Commission shall have no authority to adopt or enforce any rule or regulation contrary to the provisions of this subsection.

17-35-103. Nonresidents.

(a) A nonresident of this state who performs any of the acts of a real estate broker or a real estate salesman within this state must conform to all of the provisions of this chapter, including the maintenance of an office in Arkansas. However, in lieu of the maintenance of an office in Arkansas, the broker or salesman may operate through or in conjunction with a resident real estate broker licensed under the provisions of this chapter.

(b) As a prerequisite to the issuance of a license, every nonresident broker or salesman shall file an irrevocable consent that suits and actions may be instituted against the broker or salesman in the proper court of any county of this state in which a cause of action may arise, or in which the plaintiff may reside, by the service of any process, or pleading authorized by the laws of the state, on the Chairman of the Arkansas Real Estate Commission.

(c) The Arkansas Real Estate Commission shall have the power and may, in its discretion in the interest of mutual trade relations with border states, waive the requirements of the maintenance of an office in this state by applicants for license from border states.

17-35-104. Penalties - Prosecution.

(a) Any person violating the provisions of subchapters 1, 2, or 3 of this chapter shall be deemed guilty of a felony and, upon conviction, shall be sentenced to imprisonment in the state penitentiary for not less than one (1) year and not more than five (5) years, or sentenced to pay a fine of not less than one thousand dollars ($1,000) and not more than ten thousand dollars ($10,000), or sentenced to both imprisonment and a fine.

(b) Any officer or agent of a corporation or member or agent of a firm, partnership, copartnership, or association who shall personally participate in or in any way be accessory to any violation of subchapters 1, 2, and 3 of this chapter by the firm, partnership, copartnership, association, or corporation shall be subject to all the penalties prescribed in this section for individuals.

(c) This law shall not be construed to release any person from civil liability or criminal prosecution under the laws of this state.

(d) Any member of the Arkansas Real Estate Commission, its secretary, or any citizen of the county holding a license as authorized by subchapters 1, 2, and 3 of this chapter may by affidavit institute criminal prosecution before any municipal court or justice of the peace against any violator of the terms of subchapters 1, 2, and 3 of this chapter without filing bond for costs and shall, in the name of the state, have the same right of appeal as has the defendant.

(e) It shall be the 'duty of the prosecuting attorney to prosecute such actions, though such appearance shall not be essential. If he appears and prosecutes, he shall receive a fee of twenty-five dollars ($25.00), which shall be taxed as part of the costs, except in the counties in which he is paid a stipulated salary for his services.

(f) Each day the defendant shall operate without a license shall constitute a separate offense.

17-35-105. Injunction.

Upon petition of any member of the Arkansas Real Estate Commission, its secretary, or any holder of a license under subchapters 1, 2, and 3 of this chapter, the chancery court shall enjoin a violation of subchapters 1, 2, and 3 of this chapter if and when it shall appear that the action is necessary to protect the interest of those who have complied with the terms of subchapters 1, 2, and 3 of this chapter and who are operating legitimately.

SUBCHAPTER 2 - REAL ESTATE LICENSE LAW - ARKANSAS REAL ESTATE COMMISSION

17-35-201. Creation - Members.

(a) There is created the Arkansas Real Estate Commission.

(b) The commission shall consist of five (5) members appointed by the Governor for a term of three (3) years.

(1) Three (3) members shall have been licensed real estate brokers or licensed real estate salesmen for not less than five (5) years prior to nomination. The Governor shall appoint members to fill vacancies from a list of four (4) nominees submitted by the Arkansas Real Estate Association.

(2) Two (2) members shall not be actively engaged in or retired from the business of real estate. One shall represent consumers, and one shall be sixty (60) years of age or older, and shall represent the elderly. Both shall be appointed from the state at large, subject to confirmation by the Senate, but shall not be required to be appointed from a list submitted by the Arkansas Real Estate Association. The two (2) positions may not be held by the same person. Both shall be full voting members but shall not participate in the grading of examinations.

(c) Each commissioner shall receive as full compensation for his services the sum of fifty dollars ($50.00) per day for each day actually spent on the work of the commission and his actual and necessary traveling expenses incurred in the performance of the duties pertaining to his office.

17-35-202. Organization - Employees.

(a) Immediately upon the qualification of the member appointed in each year, the commission shall meet and organize by selecting from its members a chairman.

(b) The commission shall employ a secretary and such clerical assistance as may be necessary to carry out the provisions of this chapter and to put into effect the rules and regulations the commission may promulgate. The commission shall fix the salaries of employees, and may, if it deems it advisable, require employees to make good and sufficient surety bond for the faithful performance of their duties.

17-35-203. Powers and duties.

(a) The commission may do all things necessary and convenient for carrying into effect the provisions of this chapter and may from time to time promulgate necessary rules and regulations.

(b) The commission shall have power to administer oaths.

(c) The commission shall adopt a seal with such design as it may prescribe engraved thereon, by which it shall authenticate its proceedings.

(d) Copies of all records and papers in the office of the commission, certified and authenticated by the seal of the commission, shall be received in evidence in all courts equally and with like effect as the original.

(e) The commission shall annually publish:

(1) A list of the names and addresses of all licensees licensed by it under the provisions of this chapter, and of all persons whose license has been suspended or revoked during that period, together with other information relative to the enforcement of the provisions of this chapter, as it may deem of interest to the public; and

(2) A statement of all funds received and an itemized statement of all disbursements.

(f) The commission may conduct or assist in conducting real estate institutes and seminars and incur and pay the reasonable and necessary expenses in connection therewith, which institutes or seminars shall be open to all licensees.

(g) The commission is authorized to make charges for materials provided by the commission and for services performed in connection with providing materials. Charges shall be determined by the commission and shall be reasonably calculated to cover the approximate cost to the commission of providing the materials.

(h) The commission shall have the power to purchase an office facility or to purchase land and construct an office facility suitable for the commission's needs.

17-35-204. Disposition of funds.

(a) All fees and charges collected by the commission under the provisions of subchapters 1, 2, and 3 of this chapter shall be deposited in a fund to be known as the Arkansas Real Estate Commission Fund.

(b) The commission is empowered to expend funds for the requirements, purposes, and expenses of the commission under the provisions of subchapters 1, 2, and 3 of this chapter, upon voucher signed by the secretary of the commission and countersigned by the chairman thereof, provided the total expense for every purpose incurred shall not exceed the total fees and charges collected by the commission under the provisions of subchapters 1, 2, and 3 of this chapter.

17-35-205. Subpoena duces tecum.

(a) The Arkansas Real Estate Commission shall have the power to issue subpoenas duces tecum.

(b) The subpoena duces tecum may require any book, writing, document, or other paper or thing which is germane to an investigation or hearing conducted by the commission, to be transmitted to the commission. No person shall be required to accompany the items which are the subject of the subpoena.

(c) Service of the subpoena shall be in the manner as now provided by law for the service of subpoenas in civil cases in the circuit courts of this state, and the fees and mileage of officers serving the subpoenas and of witnesses appearing in answer to the subpoenas shall be the same as provided by law for proceedings in civil cases in the circuit courts of this state.

(d) In the event a person shall have been served with a subpoena duces tecum as herein provided and fails to produce the books, writings, documents, or other papers or things as directed by the subpoena, the commission may apply to the circuit court of the county in which the commission is conducting its investigation or hearing for an order causing the arrest of the person and directing that the person be brought before the court.

(e) The court shall have the power to punish the disobedient person for contempt as now provided by law in the trial of civil cases in the circuit courts of this state.

(f) The commission shall issue a subpoena duces tecum upon the request of any party to a hearing before the commission. The fees and mileage of the officers serving the subpoena and of the witness shall be paid by the party at whose request a witness is subpoenaed.

SUBCHAPTER 3 - REAL ESTATE LICENSE LAW - PROCEDURE

17-35-301. License required.

(a) It shall be unlawful for any person, firm, partnership, copartnership, association, or corporation to:

(1) Act as a real estate broker or real estate salesman in Arkansas or advertise or assume to act as a real estate broker or real estate salesman without first having complied with every provision of this chapter and having secured a regular valid license issued by the Arkansas Real Estate Commission authorizing the performance of such acts;

(2) Serve as auctioneer or participate in or supervise the auctioning of any real property in this state unless the person has a regular valid license issued by the Arkansas Real Estate Commission authorizing the person to act as a real estate broker or salesman. The person shall also conform to all of the requirements of law that may be in addition hereto governing auctioneers and auctions.

(b) Any person violating the provisions of subsection (a) of this section shall be deemed guilty of a felony and, upon conviction, shall be sentenced to imprisonment in the state penitentiary for not less than one (1) year and not more than five (5) years, or sentenced to pay a fine of not less than one thousand dollars ($1,00 0) and not more than ten thousand dollars ($10,000), or sentenced to both imprisonment and a fine.

(c) The provisions of this section shall not apply to:

(1) The sale of real property in this state that is ordered or approved by a court of competent jurisdiction of this state;

(2) Any sale of real property in this state where the person offering the property for sale is the owner;

(3) Any sale of real property in this state where the broker or salesman is duly licensed as an attorney at law in this state.

(d) No recovery may be had by any broker or salesman in any court in this state on a suit to collect a commission due him unless he is licensed under the provisions of this chapter and unless that fact is stated in his complaint.

17-35-302. Applicant qualifications.

Licenses shall be granted only to applicants who:

(1) Bear a good reputation for honesty, truthfulness, and fair dealing;

(2) Are competent to transact the business of real estate brokers or real estate salesmen in such manner as to safeguard the interest of the public; and

(3) Pass a written examination.

17-35-303. Education requirement.

(a) Each applicant for an original broker's license, where application for examination is received by the commission subsequent to June 28, 1985, as a prerequisite to taking the examination, shall satisfy the following requirements:

(1) Serve an active, bona fide apprenticeship by holding a valid real estate salesman's license issued by the Arkansas Real Estate Commission, or the appropriate licensing agency of another state, for a period of not less than twenty-four (24) months within the previous forty-eight-month period immediately preceding issuance of a broker's license; or

(2) Serve an active, bona fide apprenticeship by holding a valid real estate broker's license issued by the Arkansas Real Estate Commission or the appropriate licensing agency of another state for a period of not less than twenty-four (24) months within the previous one hundred twenty-month period immediately preceding the issuance of a broker's license; and

(3) In addition to fulfilling the requirements of subdivision (1) or (2) of this subsection, the broker applicant shall file a certificate or certificates or authenticated copies thereof stating that the applicant has successfully completed, within thirty-six (36) months immediately preceding the date of his or her application, a course or courses of instruction in real estate by actual classroom attendance for such number of hours not to exceed one hundred twenty (120) hours as the commission may by regulation require. In establishing the minimum number of hours required, the commission shall give due consideration to the hours necessary to provide instruction in basic competencies required for a broker's license and to the advice and recommendations of the State Board of Private Career Education.

(b) All classroom hours required by this chapter shall be conducted by:

(1) An accredited college or university wherever situated; or

(2) A school or organization licensed by the State Board of Private career Education.

(c) The course or courses of instruction requirement as provided by subsections (a) and (d) of this section may be satisfied by successful completion of such correspondence courses as the commission may by regulation require, giving due consideration to the correspondence conversion from the number of hours necessary to provide instruction in basic competencies required for a broker's license or salesman's license, as the case may be, and to the advice and recommendations of the State Board of Private Career Education.

(d) Each applicant for an original salesman's license shall file a certificate or certificates or authenticated copies thereof stating that the applicant has successfully completed a course or courses of instruction, including a course of not less than thirty (30) hours in the basic principles of real estate, by actual classroom attendance for such number of hours not to exceed ninety (90) hours as the commission may by regulation require. In establishing the minimum number of hours required, the commission shall give due consideration to the hours necessary to provide instruction in basic competencies required for a salesman's license and to the advice and recommendations of the State Board of Private Career Education.

17-35-304. Application procedure.

(a) Every applicant for a real estate broker's or salesman's license shall:

(1) Make application for the license in writing upon forms prepared or furnished by the commission; and

(2) Furnish such information as the commission may reasonably require to determine the eligibility of the applicant.

(b) The application shall be accompanied by the recommendation of at least five (5) citizens, real estate owners not related to the applicant, who have owned real estate for a period of five (5) years or more in the county in which the applicant resides or has his place of business. The recommendation shall:

(1) Certify that the applicant bears a good reputation for honesty, truthfulness, fair dealing, and competency; and

(2) Recommend that a license be granted to the applicant.

(c) Every application for a license under the provisions of this chapter shall be accompanied by an application fee that the commission may by regulation require. However, no application fee for a real estate salesman's or a real estate broker's license shall exceed fifty dollars ($50.00).

(d) Every application for a license shall also be accompanied by an examination fee that the commission may by regulation require. However, the commission, at its discretion, may direct each applicant to pay the actual cost of the examination fee directly to a testing service engaged by the commission to administer the examination. No examination fee for a real estate license shall exceed seventy-five dollars ($75.00).

(e) The application fee and the examination fee shall be paid each time an applicant applies to take an examination.

(f) If the applicant passes the examination, he shall be so notified by the commission.

(g) The successful applicant shall then pay to the commission, within ninety (90) days from the date of the examination which he successfully completed, the license fee prescribed in § 17-35-306.

(h) If a successful applicant shall fail to pay the prescribed fee within ninety (90) days following the date of the examination, the examination results shall be null and void, and the applicant shall be required to make new application and retake the examination as an original applicant.

17-35-305. Issuance - Display.

(a) The commission shall issue to each licensee a license in such form and size as it may prescribe.

(b) Any broker or salesman who does not wish to engage in the real estate business at the time of issuance of the license may have the license issued on inactive status.

(c) A broker's license shall be at all times conspicuously displayed in his place of business. A salesman's license shall be issued under the sponsorship of a principal broker and shall be displayed in the office of the principal broker.

17-35-306. Fees - Original and renewal.

(a) The original fee and the annual renewal fee for each real estate broker's license and each real estate salesman's license shall be the amount the commission may require by regulation.

(b) The original fee for each real estate broker's license shall not exceed sixty dollars ($60.00), and the annual renewal fee shall not exceed sixty dollars ($60.00).

(c) The original fee for each real estate salesman's license shall not exceed forty dollars ($40.00), and the annual renewal fee shall not exceed forty dollars ($40.00).

17-35-307. Expiration and renewal.

(a) Every license, both active and inactive, shall expire on December 31 of each year.

(b)

(1) For active licensees, the commission shall issue a new license for each ensuing year, in the absence of any reason or condition which might warrant the refusal of the granting of a license, upon receipt of the written request of the applicant no later than September 30 of each year upon forms provided by the commission together with the annual fee therefor.

(2)

(A) For any broker or salesman who does not wish to engage in the real estate business, the commission shall issue inactive status for each ensuing year, in the absence of any reason or condition which might warrant the refusal of the granting of a license, upon receipt of the written request of the applicant no later than September 30 of each year upon forms provided by the commission together with the annual fee therefor.

(B) However, the commission may by regulation limit the number of renewal periods which a license may be renewed on inactive status.

(C) The renewal fee for inactive status shall be the same as for renewal of an active license.

(c)

(1) In the event an application for the renewal of a license is filed after September 30 of any year, then the application shall be treated as an application to renew a lapsed license.

(2) If any person to whom a valid real estate broker's or salesman's license may have been issued permits the license to lapse for a period not exceeding five (5) years, the commission shall issue to the person a current license without requiring the person to submit to any examination if the person furnishes the information provided for in § 17-35-304 and pays a fee that the commission may by regulation require.

(3) However, the fee for the renewal of a broker's lapsed license shall not exceed ninety dollars ($90.00) per year or fraction thereof, and that of a salesman's lapsed license shall not exceed sixty dollars ($60.00) per year or fraction thereof.

17-35-308. Lost license or card - Change of name or address.

(a) Notice in writing shall be promptly given to the commission by each licensee of any change of name or address shown on his license issued by the commission, or of the loss of a license or pocket card.

(b) Failure to notify the commission shall automatically cancel any license heretofore issued.

(c) Upon receipt of notice, the commission shall issue a new license for the unexpired period of the lost license upon the payment of a fee that the commission may require by regulation.

(d) However, no license reissuance fee shall exceed thirty dollars ($30.00).

17-35-309. Grounds for revocation or suspension.

The commission may, upon its own motion, and shall, upon the verified complaint in writing of any person, provided the complaint or the complaint with evidence, documentary or otherwise, presented in connection therewith shall make out a prima facie case, investigate the actions of any real estate broker or real estate salesman or any person who shall assume to act in either capacity within this state. The commission shall have power to suspend or to revoke any license issued under the provisions of this chapter at any time where the licensee has by false or fraudulent representation obtained a license, or where the licensee in performing or attempting to perform any of the acts mentioned herein is deemed to be guilty of:

(1) Making any substantial misrepresentation;

(2) Making any false promises of a character likely to influence, persuade, or induce;

(3) Pursuing a continued and flagrant course of misrepresentation or making of false promises through agents or salesmen or advertising or otherwise;

(4) Acting for more than one (1) party in a transaction without the knowledge of all parties for whom he acts;

(5) Accepting a commission or valuable consideration as a real estate salesman for the performance of any of the acts specified in this chapter from any person except the licensed broker by whom he is employed;

(6) Representing or attempting to represent a real estate broker other than the employer, without the express knowledge and consent of the employer;

(7) Failing, within a reasonable time, to account for or to remit any moneys coming to his possession which belong to others;

(8) Being unworthy or incompetent to act as a real estate broker or salesman in such manner as to safeguard the interests of the public;

(9) Paying a commission or valuable consideration to any person for acts or services performed in violation of subchapters 1, 2, and 3 of this chapter; or

(10) Any other conduct whether of the same or a different character from that hereinbefore specified which constitutes improper, fraudulent, or dishonest dealing.

17-35-310. Denial, suspension, revocation - Procedure.

(a) Before denying an application for license or before suspending or revoking any license, the commission shall set the matter down for a hearing.

(b) At least ten (10) days prior to the date set for the hearing, the commission shall notify in writing the applicant or licensee of any charges made.

(c) The commission shall afford the applicant or licensee an opportunity to be heard in person or by counsel and to offer oral testimony, affidavit, or depositions in reference thereto.

(d) The commission shall have the power to subpoena and bring before it any person in this state or take testimony of any such person by deposition with the same fees and mileage in the same manner as prescribed by law in judicial procedure in courts of this state in civil cases. Fees and mileage shall be paid by the party at whose request a witness is subpoenaed.

(e) If the commission shall determine that any applicant is not qualified to receive a license, a license shall not be granted to the applicant.

(f) If the commission shall determine that the licensee is guilty of a violation of the provisions of subchapters 1, 2, and 3 of this chapter, his or its license shall be suspended or revoked.

(g) The findings of fact made by the commission, acting within its powers, shall be taken as prima facie true.

(h) Except in cases where a licensee has obtained a license by false or fraudulent representation, the commission shall not investigate the actions of, or conduct any disciplinary hearing regarding, any real estate broker or salesman unless the complaint is filed or the investigation initiated within three (3) years from the date of the actions complained of or concerning which an investigation is initiated.

17-35-311. Place of business.

Every real estate broker shall maintain a place of business in this state and shall display a sign bearing the name of the firm and the words "real estate" or other words approved by the commission which clearly indicate to the public that the firm is engaged in the real estate business.

17-35-312. Duplicate licenses.

(a) If a real estate broker maintains more than one (1) place of business within the state, a duplicate license shall be issued to that broker upon payment of an initial fee and thereafter of an annual renewal fee, both of which the commission may by regulation require.

(b) However, no initial duplicate license fee or renewal duplicate license fee shall exceed thirty dollars ($30.00).

(c) The duplicate license shall not be issued to a supervising broker for any additional office at which salesmen will be assigned unless the other office has another supervising broker responsible for salesmen.

17-35-313. Change or termination of sponsorship.

(a) The surrender, suspension, or revocation of a broker's license shall automatically cancel every real estate salesman's or broker's license granted to any person by virtue of sponsorship by or affiliation with the broker pending a change of sponsor and the issuance of a new license.

(b) When any real estate salesman or broker shall be discharged or shall terminate sponsorship by the real estate broker by whom he is sponsored, it shall be the duty of the sponsoring real estate broker to so notify the commission and to return the terminated broker's or salesman's license and pocket card. Notification shall automatically cancel the license.

(c) If a real estate broker who has sponsored a broker or salesman fails to notify the commission of the termination of a salesman's or broker's affiliation with him, it shall be cause for the suspension or cancellation of his broker's license.

(d) If a broker or salesman terminated under subsection (b) of this section shall transfer his license to another firm, he must, after his license and pocket card have been returned, file a transfer application signed by the new sponsoring broker accompanied by:

(1) A statement that he is not taking any listings, copies thereof, or pertinent information belonging to his former sponsoring broker; and

(2) Payment of a transfer fee that the commission may by regulation require. However, no transfer fee shall exceed thirty dollars ($30.00).

17-35-314. Appeal from dismissal of complaint.

(a) Any person whose complaint against a licensed real estate broker or salesperson is dismissed by the Executive Secretary of the Arkansas Real Estate Commission without a hearing may appeal such dismissal to the commission subject to and in accordance with the following provisions:

(1) The request for appeal must be in writing and received in the offices of the Arkansas Real Estate Commission not later than sixty (60) days following the date of dismissal by the executive secretary;

(2) The request for appeal must be accompanied by the filing fee required by the commission, which shall not exceed one hundred dollars ($100).

(3)

(A) The appellant must also pay the cost of preparing the record for the commission's review, which cost shall be determined by the commission.

(B) Provided, however, that if the commission review results in a hearing being ordered on the complaint, both the filing fee and the cost of preparing the record shall be refunded to the appellant.

(C) Any person who is indigent and unable to pay either the filing fee or the cost of the record, or both, may file a pauper's oath in such form as required by the commission, and if the commission determines that the appellant is indeed indigent, the filing fee or cost of the record, or both, shall be waived.

(b) All appeals duly perfected pursuant to the foregoing provision shall be presented to and decided by the commission on the written record. Such decision may be to affirm the executive secretary's dismissal, to order additional investigation, or to order a hearing on the complaint.

(c) The commission may enact such regulations as it deems necessary or desirable to implement this section.

SUBCHAPTER 4 - REAL ESTATE RECOVERY FUND

17-35-401. Application.

The provisions of this subchapter shall apply only to:

(1) Licensees who were licensed at the time of the occurrence of the acts or violations complained of; and

(2) Acts or violations which occur after December 31, 1979.

17-35-402. Construction.

Nothing in this subchapter shall be construed to limit or restrict in any manner other civil or criminal remedies which may i be available to any person.

17-35-403. Creation - Administration.

There is created and established the Real Estate Recovery Fund, which shall be maintained and administered by the Arkansas Real Estate Commission as provided in this subchapter.

17-35-404. Powers of commission - Disposition of fund.

(a) The commission shall set the fees at such amount as it deems necessary to initially establish the fund and to reestablish the fund at the beginning of each biennial renewal period. However, the fee shall not exceed the limits set forth in § 17-35-405.

(b) The assets of the fund may be invested and reinvested as the commission may determine, with the advice of the State Board of Finance.

(c) Any amounts in the fund, including accumulated interest, may be used by the commission for the following additional purposes:

(1) To fund educational seminars and other forms of educational projects for the use and benefit generally of licensees;

(2) To fund real estate chairs or courses at various state institutions of higher learning for the purpose of making such courses available to licensees and the general public;

(3) To fund research projects in the field of real estate; and

(4) To fund any and all other educational and research projects of a similar nature having to do with the advancement of the real estate field in Arkansas.

17-35-405. Additional fee.

(a) In addition to the other fees provided for in this chapter and commission regulations, each licensed real estate broker and salesman shall pay to the commission for the benefit of the fund a fee as the commission may require, not to exceed the lesser of:

(1) Twenty-five dollars ($25.00) per biennial renewal; or

(2) An amount sufficient to restore the fund balance to two hundred fifty thousand dollars ($250,000.00).

(b) Likewise, each person who becomes a licensee for the first time shall at that time pay to the commission for the benefit of the fund such fee as the commission may require, not to exceed twenty-five dollars ($25.00).

(c) No fees collected under the provisions of this subchapter may be expended from the fund except for the purposes set forth in this subchapter.

17-35-406. Awards - Procedure.

(a) In any disciplinary hearing before the commission which involves any licensee who has allegedly violated any provision of this chapter or commission regulations, the commission shall first determine whether a violation has occurred.

(b) If so, the commission shall then determine the amount of damages, if any, suffered by the aggrieved party or parties. However, damages shall be limited to actual damages in accordance with § 17-35-407.

(c) The commission shall then direct the licensee to pay that amount to the aggrieved party or parties.

(d) If that amount has not been paid within thirty (30) days following entry of the commission's final order in the matter and the order has not been appealed to the circuit court, then the commission shall, upon request, pay from the fund to the aggrieved party or parties the amount specified. However, the commission shall not:

(1) Pay in excess of ten thousand dollars ($10,000) for any one (1) violation or continuing series of violations of a given licensee;

(2) Pay an amount in excess of the fund balance.

(e) The question of whether or not certain violations constitute a continuing series of violations shall be a matter solely within the discretion and judgment of the commission.

(f) Nothing within this section shall obligate the fund for any amount in excess of a total of fifty thousand dollars ($50,000) with respect to:

(1) The acts of any one (1) licensee, or

(2) Any single claim, or

(3) Any one (1) violation or continuing series of violations, regardless of the number of licensees who participated in said violation or continuing series of violations.

(g) Whether or not the limitations of this section apply in any given situation shall be a matter solely within the discretion and judgment of the commission.

(h) When unsatisfied or pending claims are such that they exceed the limits payable under subsection (f) of this section, the commission shall be the sole determinant of how the available funds shall be allocated among such claims.

17-35-407. Jurisdiction.

(a) The commission's jurisdiction and authority to award damages to an aggrieved party pursuant to § 17-35-406 is limited to actual, compensatory damages. The commission shall not award punitive or exemplary damages.

(b) Likewise, the appellate jurisdiction of the circuit court is limited to the awarding of actual, compensatory damages.

(c) The circuit court shall have no authority or jurisdiction to assess punitive or exemplary damages under this subchapter.

(d) The circuit court's jurisdiction over the fund shall be limited to appeals from the commission.

(e) The circuit court shall have no jurisdiction or authority to order payments from the fund in any amount in excess of either:

(1) The amount determined by the commission; or

(2) The limits set forth in § 17-35-406.

17-35-408. Appeal.

(a) An appeal may be taken to the circuit court from a final order of the commission in accordance with the Arkansas Administrative Procedure Act, as amended, § 25-15-201 et seq.

(b) An appeal shall automatically stay that portion of the commission order which directs the payment of damages, and neither the licensee nor the commission shall be obligated to pay the damages to the aggrieved party or parties until such time as the appeal is finally decided, whether in the circuit court or the Arkansas Supreme Court.

17-35-409. Subrogation - License suspension pending reimbursement.

Upon the payment by the commission of any amount of money under the provisions of § 17-35-406:

(1) The recipients of the payment, to the extent, of the payment, shall assign to the commission all rights and claims that they may have against the licensee involved;

(2) The commission shall be subrogated to all of the rights of the recipients of the payment, to the extent of the payment; and

(3) In addition to any other disciplinary action taken against the licensee on the merits of the hearing, his license shall be immediately suspended until he has completely reimbursed the commission for the payment plus interest at a rate to be determined by the commission, which rate shall not exceed ten percent (10%) per annum.

SUBCHAPTER 5 - CONTINUING EDUCATION

17-35-501. Definitions.

As used in this subchapter, unless the context otherwise requires:

(1) "Classroom hour" means a period of at least fifty (50) minutes, but not more than sixty (60) minutes, of actual classroom instruction with the instructor present;

(2) "Continuing education" means post licensure education derived from participation in courses in real estate-related subjects, which have been approved by the board or which are not required by this subchapter to be approved by the board;

(3) "Board" means State Board of Private Career Education.

17-35-502. Regulations.

The commission may promulgate such regulations as it deems necessary for the implementation of this subchapter.

17-35-503. Requirements - Waiver - Inactive status.

(a) As a condition precedent to renewal or activation of licenses, licensees shall meet the following requirements:

(1) Licensees on inactive status are not required to comply with this subchapter during their inactive status. Prior to activation of a license on inactive status, the licensee shall satisfactorily complete six (6) classroom hours, or equivalent correspondence work, of continuing education. However, that will satisfy the requirements only for that particular license year and not for the following license year.

(2) Persons licensed as real estate brokers or salespersons shall successfully complete six (6) classroom hours, or equivalent correspondence work, of continuing education annually. Those persons shall be deemed to have successfully completed the continuing education requirements for the licensing year following the year in which first licensed in Arkansas.

(3) Provided the course or courses consist of no less than six (6) classroom hours of real estate related subjects and otherwise comply with the minimum requirements of this subchapter, and further provided that evidence of such compliance satisfactory to the commission is submitted in form, manner, and content prescribed by the commission:

(A) A nonresident licensee may meet the Arkansas continuing education requirements by meeting the continuing education requirements of his or her resident state during the licensing year in question; and

(B) A licensee may meet the continuing education requirements of this subchapter by attending an accredited and recognized out-of-state college or university during the licensing year in question.

(b) The commission may waive all or part of the requirements of subsection (a) of this section for any licensee who submits satisfactory evidence of inability to meet the continuing education requirements due to health reasons or other hardship or extenuating circumstances beyond the licensee's control.

(c) Licenses for persons who apply for renewal of their licenses and who do not provide to the commission evidence of meeting the continuing education requirements, but who have otherwise met all requirements for license renewal, shall be placed on inactive status until the evidence is provided to the commission.

17-35-504. Curriculum.

(a) The commission may establish the continuing education curriculum by identifying subject matter topics, but shall not require licensees to complete specific courses within the subject matter topics. Changes in the initial curriculum shall be applicable beginning with the license renewal period subsequent to the curriculum change.

(b) The board may approve only those continuing education courses which meet the criteria prescribed by the commission. In establishing such criteria, the commission shall give due consideration to the advice and recommendations of the board.

(c) The board shall determine the classroom hour equivalency of correspondence courses.

17-35-505. Matters not qualifying.

The following do not qualify as continuing education:

(1) Courses of instruction designed to prepare a student for passing the real estate broker or salesperson examinations, except as provided in § 17-35-503;

(2) Offerings in mechanical skills, office and business skills including, but not limited to: typing, speed-reading, memory improvements, language, report writing, personal motivation, salesmanship, and sales psychology;

(3) Sales promotions or other meetings held in conjunction with the general business of the licensee;

(4) Time devoted to breakfast, luncheons, and dinners; and

(5) The same course may not be used to meet the continuing education requirement twice during the same license year.

17-35-506. Courses not requiring approval to qualify.

(a) The following courses and their instructors are not required to obtain the approval of the board in order to qualify as continuing education courses under this subchapter:

(1) Courses in real estate-related subjects offered by the National Association of Realtors, the National Association of Real Estate Brokers, or their societies, institutes, or councils;

(2) Courses in real estate-related subjects offered by the commission.

(b) Courses listed in § 17-35-505 are unacceptable.

17-35-507. Credentials of instructors.

(a) Except as provided in this subchapter, instructors in continuing education courses shall file credentials with the board showing the necessary specialized preparation, training, and experience to insure competent and qualified instruction.

(b) Instructors shall meet at least one (1) of the following requirements:

(1) A bachelor's degree in the field in which the instructor is to teach; or

(2) A valid teaching credential or certificate from Arkansas or another state authorizing the holder to teach in the field of instruction being offered; or

(3) Five (5) years of full-time experience in a profession, trade, or technical occupation in the field of instruction being offered.

17-35-508. Credit - Certificate of attendance.

(a) Credit shall be earned on the basis of attendance.

(b)

(1) A certificate of attendance, which states the name of the student, the name of the school or sponsor of the course, the date the course was completed, and the number of classroom hours of instruction covered by the individual course shall be presented to each attendee upon completion of the course. Either a copy of the certificate or other proof of satisfactory completion of the course acceptable to the commission shall be furnished to the commission by the licensee. It is the licensee's responsibility to establish his or her successful completion of a continuing education course.

(2) No certificate of attendance shall be issued to a licensee who is absent for more than ten percent (10%) of the classroom hours.

SUBCHAPTER 6 - INTEREST ON TRUST ACCOUNTS

17-35-601. Establishment of program.

(a) The Arkansas Real Estate Commission is hereby authorized and empowered, subject to the following restrictions and limitations, to establish a program authorizing and permitting the collection of interest on real estate brokers1 trust accounts and the disbursement of such interest by the depository institutions involved to an Arkansas nonprofit corporation for use for such tax exempt purposes as hereinafter set forth.

(b) Participation in the program shall be completely voluntary with each broker rather than mandatory.

17-35-602. Posting of notice.

(a) All real estate brokers participating in this program shall post a notice at least four inches by seven inches (4n x 7") stating that they participate in the interest on real estate brokers' trust accounts program.

(b) Said notice shall be displayed prominently and shall contain information concerning the purposes for which the interest accumulating on the account shall be used, and shall state: "If funds belonging to you are deposited in this firm's trust account, any interest earned therefrom will be forwarded by the depository bank to a nonprofit organization which will dispense the funds to provide for economic development, research, education, and such other public service purposes as may be determined by the recipient corporation selected by the Arkansas Real Estate Commission."

17-35-603. Disposition of funds - Regulations.

(a) The recipient of the funds generated by such program shall be such Arkansas nonprofit corporation as the Arkansas Real Estate Commission shall designate. The corporation shall be tax exempt as defined by Section 501(c)(3) of the Internal Revenue Code. Such corporation shall be governed by a board of directors consisting of not fewer than five (5) nor more than fifteen (15) members. At least sixty percent (60%) of the total number of directors shall be appointed by the Arkansas Real Estate Commission and the remainder by the Arkansas Realtors Association.

(b) The funds generated by the program shall be used for economic development, research, education, and such other public service purposes as may be determined by the recipient corporation specified in this section.

(c) The Arkansas Real Estate Commission may promulgate such regulations as it deems necessary for the implementation of §§ 17-35-601 - 17-35-603.

RULES AND REGULATIONS

101. Broker - Application and examination.

(a) Each applicant for an original broker's license must apply on a form furnished by the Arkansas Real Estate Commission accompanied by the official certificate required by Ark. Code Ann. Sec. 17-35-303. The certificate shall state that the applicant has successfully completed within 36 months immediately preceding the date of the application a course or courses of instruction in real estate by actual classroom attendance for not less than 60 hours. This requirement shall apply to all applicants who are examined after April 1, 1992, except those applicants who are retaking only one part of the examination pursuant to paragraph (b) of this regulation, which applicants shall remain subject to the requirement which was in effect at the time the applicant passed the other part of the examination.

The applicant must also pass a written examination to show competency to act as a real estate broker in such a way as to safeguard the interests of the public. Minimum grades of 70 on the uniform portion of the examination and 75 on the Arkansas law part are required. A person who is licensed as a broker may not apply and may not be examined. A person who has passed the Arkansas real estate broker's examination but who is not licensed as a broker may apply. However, in addition to meeting other requirements, such a person will request in writing the reason for applying. Such a person may be examined only after being advised in writing by a representative of the Commission that permission is granted for him to be examined.

(b) If the applicant has taken the broker's examination in Arkansas and has passed either the Arkansas law part or the uniform part but has failed the other, the applicant need not again take the part passed. Such an applicant, however, shall be required to make new application as an original applicant and must pass the part failed within six months following the month in which the applicant first failed that part, but passed the other part, and must furnish such documentation of entitlement thereto as the Commission may require.

(c) If the applicant has passed a uniform or multi-state part of an examination for a broker's license in another state in which the examination is administered by a national testing service recognized by the Arkansas Real Estate Commission, if that state requires a minimum passing grade no lower than that required for the uniform part of the Arkansas examination, and if the applicant at the time of taking the Arkansas examination is a licensed broker in that state, then the applicant will be required to take only the Arkansas law part. However, if the applicant at the time of taking the Arkansas examination is not a licensed broker in that state, he will be required to take only the Arkansas law part provided that applicant passed the uniform or multi-state part of the examination in that state within six months prior to the month in which the applicant passes the Arkansas law part. Such applicant, however, must furnish such documentation of his entitlement thereto as the Commission may require.

102. Office - Sign and photograph.

An applicant for broker's license is required upon being otherwise qualified to furnish a photograph of the front of the applicant's place of business displaying a sign bearing his name or the name of his firm, and the words "real estate" or "realty".

The licensing department shall accept no sign as meeting this requirement until and unless such sign is clearly visible to the public and displayed in such a manner as to clearly indicate to the public that the firm is engaged in the real estate brokerage business.

If a real estate firm shall establish an office within an office building, the licensing department shall require a photograph of the office building directory showing the real estate firm's name, and also a photograph of the firm's office entrance bearing the name of the firm.

If a real estate firm shall move any sign of which a photograph has been filed with the Commission, the firm shall notify the Commission office immediately in writing of the new location and furnish a photograph of the new sign. If the firm's business location shall also change, the broker shall be required to comply with Ark. Code Ann. § 17-35-308 as well.

103. License - Issuance.

Once an applicant has passed the Arkansas real estate salesman's examination, or the Arkansas broker's examination, and has paid the prescribed license fee, the license of the applicant will be automatically placed on inactive status. This license may be activated at any time if the applicant completes a "request for initial issuance of a broker's license" form, or a "request for initial issuance of a salesman's license" form, and files the form with the Commission office.

104. Salesman - Application and examination.

(a) Each applicant for an original salesman's license must apply on a form furnished by the Commission accompanied by the official certificate required by Ark. Code Ann. Sec. 17-35-303(d). The certificate shall state that the applicant has successfully completed a course or courses of instruction, including a course of not less than 30 hours in the basic principles of real estate, by actual classroom attendance for at least 60 hours. This requirement shall apply to all applicants who are examined after April 1, 1992, except those applicants who are re-taking only one part of the examination pursuant to paragraph (b) of this regulation, which applicants shall remain subject to the requirement which was in effect at the time the applicant passed the other part of the examination.

The applicant must also pass a written examination. Minimum grades of 70 on the uniform part of the examination and 70 on the Arkansas law part are required. A person who is licensed as a salesman or as a broker may not apply and may not be examined. A person who has passed the Arkansas real estate salesman's examination but who is not licensed as a salesman may apply. However, in addition to meeting other requirements, such a person will request in writing the reason for applying. Such a person may be examined only after being advised in writing by a representative of the Commission that permission is granted for him to be examined.

(b) If the applicant has taken the salesman's examination in Arkansas and has passed either the Arkansas law part or the uniform part but has failed the other, the applicant need not again take the part passed. Such an applicant, however, shall be required to make new application as an original applicant and must pass the part failed within six months following the month in which the applicant first failed that part but passed the other part, and must furnish such documentation of entitlement thereto as the Commission may require.

(c) If the applicant has passed a uniform or multi-state part of an examination for a salesman's license in another state in which the examination is administered by a national testing service recognized by the Arkansas Real Estate Commission; if that state requires a minimum passing grade no lower than that required for the uniform part of the Arkansas examination; and if the applicant at the time of taking the Arkansas examination is a licensed salesman in that state, then the applicant will be required to take only the Arkansas law part. However, if the applicant at the time of taking the Arkansas examination is not a licensed salesman in that state, he will be required to take only the Arkansas law part, provided the applicant passed the uniform or multi-state part of the examination in that state within six months prior to the month in which the applicant passes the Arkansas law part. Such an applicant, however, must furnish such documentation of entitlement thereto as the Commission may require.

105. Examinations - Locations, times, fees.

(a) All broker's and salesman's examinations are held at various locations within the state once each month during every month except December. The examinations are normally held on the fourth Saturday of each month, unless that happens to be a holiday weekend, in which case the examination will be scheduled for another date during that month. Generally, all applications should be received in the Commission office at least thirty days before the examination which the applicant desires to sit for. However, regardless of the date on which the application is received by the Commission, it shall be processed as expeditiously as possible under the circumstances, and the applicant will be scheduled to sit for the exam on the earliest date possible.

(b) Each application for either a salesman's license or a broker's license shall be accompanied by a $50 application fee. In addition, each application for a salesman's license and each application for a broker's license shall be accompanied by an examination fee which shall equal the actual cost of the examination as established by the testing service engaged by the Commission to administer the examination. The examination fee shall be made payable to the Commission unless the applicant is otherwise notified by the Commission to pay the examination fee directly to the testing service. The application fee and the examination fee shall be charged each time an applicant applies to take an examination. However, an applicant who has taken the examination in Arkansas and is to be reexamined under the Walk-In Testing Program prescribed by the Commission and who is being examined on only the Arkansas law part or the uniform part of the examination pursuant to Regulation 101 or Regulation 104 shall not be required to pay an additional application fee when being reexamined within six (6) months following the month in which the applicant first failed either part. Neither the application fee nor the examination fee shall be subject to refund.

(c) An applicant shall receive notice upon passing the examination. Each successful broker applicant shall pay to the Commission, within 90 days from the date of the successful completion of the examination, a $60 license fee and a $25 recovery fund fee; each successful salesman applicant shall pay to the Commission, within 90 days from the date of successful completion of the examination, a $40 license fee and a $25 recovery fund fee. However, the payment of the $25 recovery fund fee shall be waived for any successful applicant who has previously paid such fee. If a successful applicant shall fail to pay the prescribed fee(s) within 90 days following the date of the examination, the examination results shall be null and void, and the applicant shall be required to make new application and retake the examination, as an original applicant.

106. Reputation for honesty - Competency.

In addition to a written examination all applicants must bear a good reputation for honesty, truthfulness and fair dealing and be competent to transact the business of a real estate broker or a real estate salesman in such manner as to safeguard the interests of the public and the Commission may at any time require information pertaining thereto.

Having advance access to a real estate licensing examination which is administered (or scheduled to be administered), or giving or receiving unauthorized assistance during the course of an examination, shall create a presumption of a violation of the real estate license law, and may subject the guilty party to appropriate disciplinary action, including license revocation or suspension.

107. Termination of affiliation - Transfer of license.

(a) When any real estate salesperson, Associate Broker or Executive Broker shall be discharged or shall terminate affiliation with the real estate Principal Broker or Executive Broker, such Principal Broker or Executive Broker shall notify the Commission of such discharge or termination and return to the Commission the license and pocket card of the terminated Broker or salesperson. Such notification shall automatically inactivate the license.

Failure of the Principal Broker or Executive Broker to so notify the Commission of such discharge or termination shall be cause for the suspension or revocation of his/her broker's license.

(b) A broker or salesperson terminated under subsection (a) above may transfer his/her license to another firm, after his/her license and pocket card have been returned to the Commission, by filing with the Commission a transfer application signed by the new Principal Broker or Executive Broker. Such transfer application must be accompanied by (1) a statement that he/she is not taking any listings, management contracts, appraisals, lease agreements, or copies of any such documents, or any other pertinent information belonging to his former Principal Broker or Executive Broker, and (2) a transfer fee. At the time the transfer application and the two accompanying items are filed, the Commission may issue a temporary interim license.

108. Office display of sign and license - Branch office.

A real estate broker must maintain an office and display a real estate sign and his broker's license, and the licenses of any salesman licensed under him. If more than one office is maintained, a real estate sign and a duplicate broker's license shall be displayed at each branch office maintained. Brokers who wish to secure a branch office license shall furnish the Commission a photograph of the office sign bearing the name of the company and the words "Branch Office". If salesmen are to be assigned to that branch office, a second duly qualified and licensed full time broker, in addition to the main office broker, must be in charge of said branch office. Such broker shall be viewed as if he were a separate firm and shall be responsible for any salesman licensed with such branch office. Any salesman employed or affiliated with such branch office shall perform only the acts contemplated to be done as a salesman under a salesman's license and the preparation of instruments in connection with a real estate sale and the closing of such a sale are functions of a broker which must be performed by or under the constant supervision of either the branch office broker or the main office broker.

If such branch office shall be located outside the community of the main office, the branch office shall be required to maintain its own escrow account and the branch office broker shall be responsible for such account. The main office broker may, however, be a signatory on such an account, and may if desired direct handling of the account. It is further understood that a license will not be granted to a salesman who operates in a different county, city or town from that of his employing broker, and that if a salesman is assigned to operate in a different town other than that of the main office broker, then the provisions of this regulation with regard to the establishment of a branch office shall apply.

109. Change of name or address - Lost license.

Upon any change of name or address shown on any license issued by the Commission, or upon the loss or misplacement of a license or pocket card, the licensee shall promptly notify the Commission of such change or loss on a form prescribed by the Commission. Failure to notify the Commission shall automatically cancel any license heretofore issued. Upon receipt of such notice and other information as may be necessary to issue a new license, the Commission shall issue a new license for the unexpired period of the license upon the payment of a $30 license reissuance fee.

110. Duplicate license.

If a real estate broker maintains more than one (1) place of business within the state, a duplicate license shall be issued to that broker upon payment of a $30 initial fee and thereafter payment of a $30 annual renewal fee. However, notwithstanding the payment of the required fee, such a duplicate license shall not be issued to a supervising broker for any additional office at which salesmen will be assigned unless such other office has another supervising broker responsible for any such salesmen.

111. Broker employed as salesman.

A licensed broker who desires to be in the employ of another broker may do so either as a broker or as a salesman, but if it is as a salesman, he must file his or her broker's license and pocket card on inactive status with the Commission, and apply for a salesman's license under such broker.

112. Renewal of license - Fees, deadlines.

(a) The fee for the annual renewal of each broker's license shall be $60. The fee for the annual renewal of each salesman's license shall be $40.

(b) Notice to renew with renewal application blanks will be sent by mail about July 15 of each year to each actively licensed broker or salesman, at the last business address furnished to the Commission, and to each person who maintains his inactive status pursuant to Regulation 113 at the last address furnished to the Commission. Renewal applications accompanied by the required fee must be filed with the Commission no later than September 30. In order to be considered filed with the Commission by the deadline, the renewal applications must bear a U.S. Postal Service postmark of September 30, or be received in the Commission's office on September 30. If September 30 shall fall on a Saturday, Sunday or legal holiday, the Commission shall accept as meeting the filing deadline those renewal applications that bear a U.S. Postal Service postmark of September 30, and those applications received in the Commission office on the first day the office is open to the public after such Saturday, Sunday or legal holiday. In the event an application for renewal of a license is filed after September 30, then such application shall be treated as an application to renew a lapsed license.

113. Inactive license.

(a) Any broker or salesman who does not wish to engage in the real estate business at the time of renewal shall apply for inactive status on renewal forms furnished by the Commission. The fee for inactive status for each renewal period shall be $60 for brokers and $40 for salesmen. Any person who shall renew his license on inactive status may do so for six (6) consecutive renewals. If he shall not activate his license before the seventh (7th) renewal, he shall be required to sit for the examination in the same manner as an original applicant. However, there shall be no limitation on the renewal of an inactive broker's license, if the individual holds an active license as a salesman at any time during the same renewal period. Also there shall be no limitation on the renewal of an inactive license if the individual holds an active license in another state. There shall also be no limitation on the renewal of an inactive license by an employee of the federal, state, county or local government if the holding of an active license would not be in the public interest. Likewise, there shall be no limitation on the renewal of an inactive license by a full-time instructor of real estate at a college, university, or business school whose course of instruction is deemed by the Commission to satisfy the educational requirements of the real estate license law.

It shall be the responsibility of any person who renews his license on inactive status to promptly notify the Commission in writing of any change of name or address.

(b) If an actively licensed broker or actively licensed salesman does not wish to continue to engage in the real estate business, such broker or salesman shall return any license and pocket card in his possession to his sponsoring broker who shall then return these items to the Commission for inactive status. If a broker shall close his firm, such broker shall remove all signs reflecting the company name and shall return all licenses and pocket cards issued to the firm to the Commission office for cancellation. If a real estate firm shall close its office, any real estate salesman licensed with such firm shall be entitled to transfer to a new firm upon compliance with Regulation 107.

114. Lapsed license.

In the event that an application for the renewal of a license, either active or inactive, is not filed prior to the renewal deadline, such license is deemed to have lapsed at the end of the renewal period. Upon reapplication within five (5) years, a person formerly licensed by the Commission may be relicensed without submitting to any examination if the applicant furnishes the information required in the Ark. Code Ann. § 17-35-304 and pays the required fees. The fee for renewal of a lapsed broker's license is $90 per year of lapse or fraction thereof and a $25 recovery fund fee; renewal of a lapsed salesman's license is $60 per year of lapse or fraction thereof and a $25 recovery fund fee. However, the payment of the $25 recovery fund fee shall be waived for any person who has previously paid such fee. A former licensee who fails to apply for renewal of a lapsed license within five (5) years shall be regarded as an original applicant.

115. Pocket card - Temporary license.

No licensee may presume that a valid license has been issued by the Commission office until such time as the licensee shall actually receive a pocket card issued by the Commission, and it shall be unlawful for any person to act as a real estate broker or salesman in this state unless said person shall possess a current valid pocket card evidencing the fact that the person holds an active real estate license and stating the firm with which the licensee is affiliated. However, the Commission may issue a temporary interim license pending issuance of the permanent license and pocket card, which temporary interim license shall be valid for a period of not more than thirty (30) days.

116. Salesperson dealing independently - Disciplinary proceedings.

If a Principal Broker or Executive Broker learns a salesperson, Associate Broker or Executive Broker licensed under him/her has, without his/her permission, engaged in real estate activities independently or through some other broker, it is his/her duty to immediately notify the Commission in writing and forward such licensee's license and pocket card to the Commission. The Commission may initiate disciplinary proceedings against the licensee under A.C.A. § 17-35-309(5), (6), (8), (10), and/or any other sections of the license law or regulations which may have been violated.

117. Change of address - Failure to notify - Cancellation of license.

Failure to notify the Commission of a change in business location shall automatically cancel any license heretofore issued. Notice of such cancellation will be sent by certified mail to the last address furnished the Commission, and if the license and pocket cards are not returned to the Commission immediately, such cancellation will be announced in at least one publication.

118. Procurement of listings without a license.

The procurement of or an attempt to procure a listing contract, either oral or written, without a real estate license is held by the Commission to be acting or assuming to act as a real estate broker or salesman and a violation of the real estate license law.

119. Specific expiration date on listing contract.

A licensee's failure to put a specific, determinable duration, or a specific expiration date on a written listing contract, or any extension thereof, shall be considered presumptive evidence of violation of Ark. Code Ann. § 17-35-309(8) and (10).

120. Regular meetings of Commission.

Regular meetings of the Arkansas Real Estate Commission shall generally be held on the Monday immediately preceding the second Tuesday of each month, and will continue in session until its business is completed insofar as is possible; provided, however, that any regular meeting of the Commission may be set forward, postponed, cancelled or adjourned to another day.

121. Place of regular meetings.

All regular meetings of the Arkansas Real Estate Commission shall be held in the Commission's offices unless otherwise specified.

122. Special meetings.

Special meetings of the Commission may be called at any time by a majority of the Commission.

123. Appearance before Commission.

Any person desiring to appear before the Commission at any of its regular meetings, to take up any business within the jurisdiction of the Commission shall, at least 15 days prior to such meeting, file with the Secretary a written request therefor, in which the nature and purpose of the appearance shall be clearly and concisely stated with sufficient details to fully apprise the Commission of the basis and extent of such business. Provided, however, that a person may not appear before the Commission in connection with any matter pending before the Commission for administrative adjudication except upon notice and opportunity for all parties to participate.

124. Commission Secretary to prepare agenda.

The Secretary of the Commission shall arrange the order of business of all meetings of the Commission and shall at least ten days prior thereto, notify all persons who are to appear before any such meeting the place and approximate time he or she is to appear before the Commission.

125. Appearance at special meeting - Voluntary.

Appearances before any special meeting of the Commission shall be voluntary on the part of any person and they must file with the Secretary, prior to any such appearance, a signed statement to the effect that such appearance is voluntary.

126. Complaints - Form.

Any and all complaints within the jurisdiction of the Commission must be in writing, dated and signed by the complainant, notarized, and filed with the Secretary. The Secretary, upon receiving any such complaint, may proceed to investigate said complaint and may take statements from any person thought to have any knowledge of any facts pertaining thereto.

127. Complaints - Procedure.

Any and every complaint which establishes reasonable cause to believe a violation of the real estate license law or Commission regulations has occurred shall be presented to and reasonably disposed of by the Commission, giving due consideration to sufficient and necessary time to investigate and consider the complaint. Any person whose complaint is dismissed by the Executive Secretary without a hearing may appeal such dismissal to the Commission in the following manner:

(a) The request for appeal must be in writing and received in the offices of the Commission not later than sixty (60) days following the date of dismissal by the Executive Secretary; and

(b) The request for appeal must be accompanied by the filing fee of $100; and

(c) The Commission staff shall determine the cost of preparing the record for the Commission's review, which cost shall be paid by the appellant prior to submission of the appeal to the Commission.

Upon submission of the appeal, the Commission shall review the written record and either uphold or overrule the Executive Secretary's decision. If the decision is overruled, the Commission may either order a hearing or request further investigation or documentation of the complaint. If the Commission review results in a hearing being ordered on the complaint, both the filing fee and the cost of preparing the record shall be refunded to the appellant.

Provided, however, that a person may not appear before the Commission in connection with any matter pending before the Commission for administrative adjudication except upon notice and opportunity for all parties to participate.

128. Licensee to be notified of complaint.

The Secretary shall notify, in writing, every licensee complained against, provided the complaint has been determined to have established reasonable cause to believe a violation of the real estate license law or Commission regulations has occurred.

129. Notice sent by mail.

Any and every Notice, Order or other instrument herein required to be forwarded or sent to any person shall be deemed sufficient if addressed to the person at his or her address as last furnished to the Commission, in a sealed envelope, and deposited in the United States Mail service, postage prepaid.

130. Hearings - Testimony under oath and recorded.

Any and every person appearing before the Commission at any of its hearings shall be first placed under oath. All testimony given or statements made to or before the Commission shall be stenographically reported and made a part of the record in such case.

131. Hearings - Procedure.

(a) At any and all meetings of the Commission at which a hearing is to be held on any complaint previously filed, the same shall be set down for a day certain by the Commission, at least 30 days prior to any such hearing date.

(b) The Secretary shall, at least 30 days prior to any such hearing date, send notice to all persons entitled to notice thereof of the place and approximate time of said hearing, a brief and concise statement of the facts forming the basis of the complaint, and the provisions of the law or the rules and regulations thought to be involved therein.

(c) Any licensee complained against and to be heard, or any complaining witness, may, by written petition, signed and dated, invoke the aid of the Commission in the procurement of any witness or document he or she may desire to be present and testify at such hearing, provided such petition is filed with the Secretary at least 7 days prior to such hearing date. Any and all costs anticipated must be deposited with the Secretary at the time of any such request.

(d) Every complaint filed with the Secretary which shall be determined to have established reasonable cause to believe a violation has occurred shall be given a file number by the Secretary and thereafter all written documents pertaining thereto shall bear that assigned file number.

(e) Each and every hearing of the Commission, after being duly called to order, shall begin with a statement by the Chairman or Vice-chairman, as to the nature of the cause to be heard, an inquiry of the parties present as to whether each is prepared to proceed, and thereafter the cause shall proceed with the presentation of evidence for and on behalf of the complainant. At the conclusion of such evidence the person complained against may then proceed to introduce evidence in contradiction, after which rebuttal testimony may be offered.

(f) Either oral or written argument of the issues raised may be called for or dispensed with at the discretion of the Commission.

(g) The Commission shall file with the Secretary its findings and conclusions as to all hearings and an appropriate Order shall be sent to the licensee involved.

(h) At any hearing both the respondent licensee and complainant may be present in the hearing room during the entire hearing and the respondent licensee shall have the right to cross examine any witness and to examine any document or evidence submitted.

(i) The Commission will receive into evidence all affidavits, depositions, certified copies of documents, photocopies of official records and exhibits therewith introduced, together with such other evidence as may be admissible by law. The Commission shall give to such evidence such weight as the Commission shall determine just and proper.

(j) Every pleading, motion or other document, and every request to the Commission must be filed with the Secretary in writing, signed, dated and in quintuplicate.

(k) No attorney shall withdraw his appearance in any cause before this Commission except by leave of the Commission after notice served by him on his client and counsel for the Commission.

132. Use of trade name or insignia.

The use of the term "REALTOR", "REALTIST" or any trade name or insignia of membership of any real estate organization of which the licensee is not a member shall be held by the Commission to be prima facie evidence of violation of Ark. Code Ann. § 17-35-309(1).

133. Broker responsibilities - Instructing and supervising salespersons and brokers.

Principal Brokers and Executive Brokers have the duty and responsibility to instruct those brokers and salespersons licensed under them with regard to the fundamentals of real estate practice and the ethics of the profession, and to keep them informed and abreast of all changes and developments pertaining to the Arkansas Real Estate License Law and Commission Regulations. They shall also exercise strict supervision of the real estate activities of all those licensed under them and for whom they have supervisory responsibility.

Whether or not a Principal Broker or Executive Broker has discharged these responsibilities for those licensed under him/her will depend on various factors and circumstances, including, without limitation, the following:

1. Frequency and manner of contact and communication;

2. Type and frequency of educational and instructional activities;

3. Method and frequency of monitoring sales activities.

134. Advertisements to include firm name.

The holder of a real estate license may not advertise for sale or rent, or display a real estate sign without including in that advertisement or sign the name of the firm with whom that licensee is affiliated.

135. Knowledge of property offered for sale.

A licensee shall exert reasonable efforts to ascertain those facts which are material to the value or desirability of every property for which the licensee accepts the agency, so that in offering the property the licensee will be informed about its condition, and thus able to avoid intentional or negligent misrepresentation to the public concerning such property.

136. Detrimental character of property or use.

A licensee shall not be instrumental in introducing into a neighborhood a character of property or use which will clearly be detrimental to property values in that neighborhood.

137. Handling of funds - Maintenance of records.

(a)

(1) A broker shall not commingle with his own personal funds or place in his own personal bank account moneys coming into his hands which belong to others such as escrows, trust funds, client's moneys, earnest moneys, rents, advance fees, and other items; and he shall also maintain at all times an accurate and detailed record of any such moneys coming into his possession and belonging to others. Such records shall be maintained by the broker for three years or for such time as may be required by law, whichever shall be greater.

(2) A broker shall deposit all advance fees in the broker's trust account and shall disburse such funds only in accordance with the terms of a written agreement signed by the owner of the funds. If such written agreement is not received within a reasonable time after payment of the advance fee, the fee shall be refunded to the owner.

(b) Each firm shall maintain complete records of each transaction conducted by that firm. It shall be required for each firm to maintain a file of each listing that firm shall take. It shall also be required of each firm that the firm maintain signed copies of all offers, offer and acceptance contracts, signed copies of all closing statements, and any additional documents as may be necessary to make a complete record of each transaction effected by such firms. A file shall be maintained by each firm of each transaction effected by such firms. Complete records and copies of all instruments, contracts and all financial transactions with regard to property managed for others shall be maintained by such firms. All such records shall be maintained by the firm for three years or such time as may be required by law whichever shall be greater. Such records shall be open to inspection by the investigative staff of the Arkansas Real Estate Commission.

(c) When a real estate firm ceases to do business and to maintain an office, the last real estate broker remaining with the firm shall be responsible for all records of the firm, including the firm's real estate trust account and transaction records, and he shall at the time the real estate firm's office is closed, immediately notify the Commission of the address and phone number of the place where those records are being maintained; and, if for any reason that broker delivers custody or responsibility for those records to another person or firm, he shall immediately notify the Commission of such transfer and furnish the name, address and phone number of such person or firm. A violation of this regulation shall be deemed by the Commission to be prima facie evidence of violation of Ark. Code Ann. § 17-35-309(8) and (10).

138. Trust account - Earnest money.

(a) Each firm shall maintain a separate trust account for all funds belonging to others. The principal broker of the firm shall be held solely responsible and accountable for any and all disbursements from the trust account. Except as authorized by subsection (f) of this regulation, the trust account shall be non-interest bearing and it shall not contain any funds belonging to the broker, firm, or any member of the firm. However, the broker may maintain a sufficient fixed amount of personal funds to insure that the bank will not charge a service or maintenance fee for the account. The name on the account should include either "trust" or "escrow" and must be located in an institution insured by either the FDIC or some other insuring agency of the federal government.

(b) With regard to each separate trust account, the principal broker shall submit to the Commission in writing the following:

1. Name and number of the account.

2. Name and address of the bank.

3. Date the account was opened.

(c) The information referred to in the immediately preceding paragraph shall be submitted to the Commission within ninety days after the effective date of this regulation, and thereafter it shall be submitted immediately upon any of the following events or occurrences:

1. Commission approval of real estate firm name.

2. Change of real estate firm name.

3. Designation of new principal broker.

4. The account is changed in any respect.

(d) Within one working day following acceptance of an offer by the seller, all earnest money funds shall be (1) deposited in the trust account, or (2) delivered to the broker's escrow agent. All other funds delivered to the broker pending performance of any act shall be, within one working day (1) deposited in the trust account, or (2) delivered to the broker's escrow agent. If the broker shall deliver funds to an escrow agent, he shall maintain an accounting of all such funds and shall keep in his file a signed receipt from the escrow agent for such funds. Likewise, a broker shall at all times keep detailed records of all funds coming into his possession and all disbursements made by him. Such records shall be open to inspection by the investigative staff of the Commission.

(e) All security deposits made under a rental or lease agreement shall be deposited in the principal broker's trust account, including those deposits made on property owned by any broker or salesperson licensed under the principal broker unless the broker or salesperson who owns the property has a written agreement with the tenant providing that he/she may keep the security deposit in his/her separate account. A copy of any such agreement shall be furnished to the Principal Broker.

Provided, however, that the Principal Broker shall not be responsible for the failure of those licensed under him/her to comply with this subsection (e) as long as he/she is in compliance with Regulation 133.

(f) Nothing in this regulation shall be deemed to prohibit a broker from maintaining certain funds or deposits in particular transactions in an interest-bearing account when required to do so by law or valid regulation of any governmental agency, nor shall it prohibit a broker from maintaining an interest-bearing account while participating in the Interest on Real Estate Brokers' Trust Account program authorized by Act 340 of 1989.

139. Advertising - Full disclosure.

(a) A real estate brokerage firm shall not advertise or otherwise conduct real estate brokerage business under any name other than the name in which the firm's real estate license has been issued.

(b) A broker in his public advertising shall be especially careful to present a true picture and should not indulge in the practice of blind ads or permit salesmen to use individual names or telephone numbers, unless the salesmen's connection with the broker is obvious in the advertisement.

140. Contracts and financial obligation in writing - Copies to all parties.

(a) Except as provided in subparagraph (b) below, a licensee, for the protection of the public and of all parties with whom he deals, shall see that financial obligations and commitments regarding real estate are in writing, expressing the exact agreement of the parties, and that copies of such agreements are placed in the hands of all parties involved. (Examples: Offer and acceptance contracts, closing statements, lease agreements, management agreements, etc.) If a real estate broker or salesperson shall fail to voluntarily place copies of such contracts and statements into the hands of all affected parties such action shall be deemed by the Commission to be prima facie evidence of violation of Ark. Code Ann. § 17-35-309(8) and (10).

(b) It is strongly recommended that listing agreements be in writing.

141. Fidelity to client - Fairness to all parties.

In accepting employment as an agent, a broker pledges himself to protect and promote, as he would his own, the interests of the client he had undertaken to represent; this obligation of absolute fidelity to the client's interest is primary, but does not relieve a broker from the equally binding obligation of dealing fairly with all parties to the transaction.

142. Dual agency - Full disclosure required.

Since a broker presumptively is representing one or another party to a transaction, he shall not accept compensation from more than one party without the full knowledge of all parties to the transaction.

143. Self-dealing - Full disclosure required.

Licensees shall not buy or sell property for themselves or for a corporation or partnership in which they have an interest without first making full disclosure to the buyer or seller, as the case may be, of the exact facts that they are licensed as a real estate broker or salesperson and are buying the property for their own account or have an interest in the property which they are selling. All such disclosures must be made in writing before the contract of sale is entered into.

144. Sale or management of property - No secret profits.

When acting as agent in the sale or management of property, a licensee shall not accept any commission, rebate, profit or payment from any source in connection with the property without full written disclosure to the party represented by the licensee.

145. Appraisals.

When asked for a formal appraisal of real property, a licensee should never give an unconsidered answer; his counsel constitutes a professional service which he should render only after having ascertained and weighed the facts, and then in writing over his signature; for this service he should make a fair charge. A licensee must not undertake to make an appraisal on any property in which he is in any way financially interested, unless such interest is specifically disclosed in the appraisal report; under no circumstances should he undertake to make a formal appraisal when his employment is contingent upon the amount of his appraisal.

146. Property offered as agreed with owner.

A broker shall not submit or advertise property without authority and in any offering the price quoted must not be other than that agreed upon with the owners as the offering price.

147. Offer and Acceptance.

(a) Subject to the provisions of Regulation 148, any formal offer received on a specific property shall promptly be presented by the listing broker or listing salesperson to the seller for his consideration. In the event that more than one formal offer is made before the seller has accepted a proposal, all offers shall be presented to the seller for his decision.

(b) Every offer received must be signed by the salesperson or Associate Broker who receives it and by either the Principal Broker or the Executive Broker who is responsible for supervising the salesperson or Associate Broker. Every acceptance must bear the names, but not necessarily the signatures, of the salesperson, Associate Broker or Executive Broker who takes the listing and of either the Principal Broker or the supervising Executive Broker. (It is desirable for the Principal or supervising Executive Broker to review and sign each offer before it is submitted to the seller, although that is not always possible. However, the Principal or supervising Executive Broker shall review and sign the offer as soon as possible after it is received, and, in all cases, prior to closing.)

148. Exclusive listing and management contracts - No circumvention.

If a firm shall hold an exclusive listing contract on a parcel of property, all other firms shall present any offer they shall receive on that property to the firm holding the exclusive listing contract not later than the close of the next business day after the receipt of the offer. Likewise, all earnest moneys and deposits shall be forwarded to the listing firm for deposit in the listing firm's trust account. The listing firm shall then present the offer to the seller. The selling broker or salesperson may accompany the listing broker or salesperson with his/her permission, but he/she shall not contact the seller alone unless he/she shall have prior written permission from the listing broker. Under no circumstances may a broker or salesperson negotiate with a seller/owner who has an exclusive listing or management contract with another firm without prior permission from the listing/managing firm. A licensee who knowingly circumvents an exclusive listing or management contract or who negotiates directly with a seller/owner without permission will have presumptively violated Ark. Code Ann. § 17-35-309(8) and (10).

149. Signs.

Signs offering or advertising a property may be on the property only during the existence of a listing agreement, unless otherwise authorized by the owner.

150. Reporting violations.

It is the duty of each licensee to report in writing to this Commission any information coming to his or her knowledge which is or may be (1) a violation of the real estate license law; or (2) a violation of the Commission rules and regulations.

151. Out of state property.

Brokers who propose to engage in sales of a promotional nature in Arkansas of property located outside of Arkansas, must submit to the Commission full particulars regarding such property and the proposed terms of sale, and they and their salesmen must comply with such rules, restrictions, and conditions pertaining thereto as the Commission may impose. All expenses incurred by the Commission in investigating such property and the proposed sale thereof in Arkansas, shall be paid by the applying broker to the State of Arkansas. No broker or salesman shall in any manner refer to the Arkansas Real Estate Commission, or to any officer or employee thereof in selling, offering for sale, or advertising, or otherwise promoting the sale, mortgage or lease of any such property, nor make any representation whatsoever that such property has been inspected or approved or otherwise passed by said Commission or by Commission official or employee.

152. Criminal convictions - Disciplinary actions.

(a) Conviction of, or a plea of guilty or nolo contendere to, a crime involving moral turpitude or which involves dishonesty, untruthfulness or untrustworthiness shall be deemed noncompliance with and a prima facie violation of A.C.A. § 17-35-302 and § 17-35-309(8) and (10).

(b) A licensee convicted of any crime other than a traffic violation shall make written report thereof to the Commission within thirty (30) days after the conviction. The report shall include the date of the offense and of the conviction, the name and address of the convicting court, the specific crime for which convicted, the fine, penalty and/or other sanctions imposed, and copies of the charging document and judgment of conviction. The report shall also include the licensee's explanation of the circumstances which led to the charge and conviction, along with any other information which the licensee wishes to submit.

(c) A licensee who has a real estate broker's or salesperson's license denied, revoked or suspended shall make written report thereof to the Commission within thirty (30) days after such denial, revocation or suspension. The report shall include the date of the action, the name and address of the regulatory agency which has taken the action and copies of documents pertaining thereto. The report shall also include the licensee's explanation of the circumstances which led to the denial, revocation or suspension, along with any additional information the licensee wishes to submit.

(d) An applicant for a real estate license who has been convicted of or pleaded guilty or nolo contendere to any crime other than a traffic violation or who has had a real estate broker's or salesperson's license denied, revoked or suspended shall furnish the written report referred to in subsection (b) and/or (c) hereof to the Commission at the time his/her application is submitted if such conviction, plea, denial, suspension or revocation has already occurred; otherwise such report shall be made immediately after the conviction, plea, denial, suspension or revocation occurs.

153. Approval of company name.

The Arkansas Real Estate Commission shall issue no broker's license to a firm where the issuance of such license shall be confusing to the public. It shall be the duty of the person requesting a broker's license to inquire of the Commission concerning the acceptability of the proposed company name.

154. Part-time brokers.

No broker who is gainfully employed, or who is engaged in a non-real estate related field, may employ any salesman to work under the broker's license issued to such broker. A broker who is employed or who is engaged in any field other than real estate will be presumed to be gainfully employed, or engaged in a non-real estate related field. This presumption may be overcome by proof that such employment, or the affiliation is (1) proven to be in a real estate related field; and (2) conducted in the same office as the broker's real estate business.

155. Dishonored checks.

Any applicant or licensee who shall submit to the Commission a check or bank draft which is not honored by the bank shall not be eligible to take any examination, or receive any grade or license from the Commission until such time as such check is honored. The Commission in its discretion may order any such applicant or licensee to appear before it for the purpose of determining whether or not he/she has the necessary qualifications for licensure, including a good reputation for truthfulness and fair dealing and competency to act in such manner as to safeguard the interests of the public.

The Commission shall charge a fee not to exceed $25.00 for a dishonored check or bank draft and shall also require such check or bank draft to be made good immediately by the maker. If such person shall be a real estate salesperson, Associate Broker or Executive Broker, and shall fail to make such check or bank draft good, the Commission may require such funds from the Principal Broker under whom such person is licensed.

156. Overpayment of fees.

In the event that an applicant or licensee shall submit to the Commission any funds which are in excess of the funds required by the Commission pursuant to Commission rule or state law, the Commission shall refund such overpayment according to the following schedule: If the overpayment is at least $0.01, and not more than $10.00, no refund shall be made; if the overpayment shall exceed $10.00, the Commission shall first deduct $10.-00 for processing the refund check, and shall refund the remainder of the overpayment.

157. Syndication of real estate.

A real estate license does not empower the bearer to engage in the business of syndication of real estate or marketing of real estate securities, or to act as a securities broker dealer in this state. Similarly, a real estate license does not empower the bearer to act as mortgage loan company or a mortgage loan broker in this state. Any real estate licensee wishing to engage in such practices shall be properly registered or exempted from registration with the Arkansas Securities Department. Any finding by a court of competent jurisdiction or the Arkansas Securities Commissioner that a real estate licensee has violated either the Arkansas Securities Act or the Arkansas Mortgage Loan Brokers Act shall be taken by the Commission to be presumptive evidence of violation of Ark. Code Ann. § 17-35-309(8) and (10).

158. Real estate closings.

It is generally the responsibility of the Principal Broker of the listing firm to ensure that the real estate closing is conducted properly and in accordance with the agreement of the buyer and seller. In those cases where the listing Principal Broker is excluded from participating in the closing, he/she must nevertheless make all reasonable efforts to fulfill this responsibility.

159. Death or incapacity of broker - Continuation of business.

Upon the death or incapacity of a principal broker or the closing of a real estate company for any reason, including bankruptcy, the Commission may in its discretion, based upon the merits and circumstances of each case, permit the real estate company to continue operating for a period of time not to exceed one hundred eighty (18 0) days under the supervision of a person approved by the Commission and subject to conditions prescribed by the Commission.

CONTINUING EDUCATION REGULATIONS

201. Delegation of authority - Appeal.

The Commission may delegate any of its authority or responsibility under Act 453 of 1987 and these regulations to its Secretary. Any person who considers himself aggrieved by any decision of the Secretary may, upon written request, appeal such decision to the Commission. The Commission shall then review the written record and sustain or overrule the Secretary's decision.

202. Waiver - Procedure.

Each request for a waiver shall be in writing and shall be supported by clear and convincing evidence. The Commission shall acknowledge each such request and shall announce its decision in writing, along with any terms and conditions to which the waiver, if granted, is subject.

203. Lapsed license.

A person who applies to renew a lapsed license under Ark. Code Ann. § 17-35-307(c) will be considered to be in the same status as a person holding an inactive license.

204. Certificate of Attendance.

The certificate of attendance required by Section 8 of Act 453 of 1987 [Ark. Code Ann. § 17-35-508] shall be in such form and shall contain such information as the Commission shall prescribe.

205. Approval of continuing education courses by State Board of Private Career Education.

Only those courses which are approved by the State Board of Private Career Education or which are exempted from such approval by Section 5(a) of Act 814 of 1991 [Ark. Code Ann. § 17-35-506(a)] shall be accepted by the Commission for continuing education credit.

TITLE 18

CHAPTER 14

REAL ESTATE TIME-SHARING

SUBCHAPTER 1 - GENERAL PROVISIONS

18-14-101. Title.

This chapter shall be known and may be cited as the "Arkansas Time-Share Act. "

18-14-102. Definitions.

As used in this chapter, unless the context otherwise requires:

(1) "Acquisition agent" means a person who by means of telephone, mail, advertisement, inducement, solicitation, or otherwise in the ordinary course of the acquisition agent's business attempts directly to encourage any person to attend a sales presentation for a time-share program;

(2) "Agency" means the Arkansas Real Estate Commission, which is an agency within the meaning of the Arkansas Administrative Procedure Act, § 25-15-201 et seq.;

(3) "Developer" in the case of any given property, means any person or entity which is in the business of creating or which is in the business of selling its own time-share intervals in any time-share program. This definition does not include a person acting solely as a sales agent;

(4) "Development," "project," or "property" means all of the real property subject to a project instrument and containing more than one (1) unit;

(5) "Exchange agent" means a person who exchanges or offers to exchange time-share intervals in an exchange program with other time-share intervals;

(6) "Managing agent" means a person who undertakes the duties, responsibilities, and obligations of the management of a time-share program;

(7) "Offering" means any offer to sell, solicitation, inducement, or advertisement made in this state, whether directly or indirectly, whether by radio, television, newspaper, magazine, or by mail, whereby a person is given an opportunity or encouraged to acquire a time-share interval. This definition shall not include a property owner who may refer persons to a developer-owned subdivision provided that the owner's activities are limited to the referral of a prospective purchaser to the developer-owned subdivision and the time-share owner receives only nominal consideration which is not contingent upon the sale of a time-share interval;

(8) "Person" means one (1) or more natural persons, corporations, partnerships, associations, trusts, other entities, or any combination thereof;

(9) "Project instrument" means one (1) or more recordable documents applicable to the whole project, by whatever name denominated, containing restrictions or covenants regulating the use, occupancy, or disposition of an entire project, including any amendments to the document but excluding any law, ordinance, or governmental regulation;

(10) "Public offering statement" means that statement required by § 18-14-404;

(11) "Purchaser" means any person other than a developer or lender who acquires an interest in a time-share interval;

(12) "Sales agent" means a person who sells, or offers to sell, in his ordinary course of business, time-share intervals in a time-share program to a purchaser. All such sales agents shall be licensed and subject to the provisions of § 17-35-101 et seq. Provided, however, that the provisions of § 17-35-401 et seq. pertaining to the Real Estate Recovery Fund shall not apply to violations occurring as a result of, or in connection with, any time-share activity;

(13) "Time-share estate" means an ownership or leasehold estate in property devoted to a time-share fee such as tenants in common, time span ownership, or interval ownership, and a time-share lease;

(14) "Time-share instrument" means any document, by whatever name denominated, creating or regulating time-share programs, but excluding any law, ordinance, or governmental regulation;

(15) "Time-share interval" means a time-share estate or a time-share use;

(16) "Time-share program" means any arrangement for time-share intervals in a time-share project whereby the use, occupancy, or possession of real property has been made subject to either a time-share estate or time-share use whereby such use, occupancy, or possession circulates among purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis occurring annually over any period of time in excess of three (3) years in duration;

(17) "Time-share project" means any real property that is subject to a time-share program;

(18) "Time-share use" means any contractual right of exclusive occupancy which does not fall within the definition of a time-share estate including, without limitation, a vacation license, club membership, limited partnership, or vacation bond pertaining to a time-share program;

(19) "Unit" means the real property or real property improvement in a project which is divided into time-share intervals.

18-14-103. Applicability.

This chapter shall apply to any time-share program created or commenced after February 25, 1983, and ninety (90) days thereafter as to any time-share program heretofore created or commenced with respect to the requirements of subchapters 2, 4, and 5 of this chapter.

18-14-104. Legal status of time-share estates.

(a) A time-share estate is an estate in real property and has the character and incidents of an estate in fee simple at common law. It may include an estate for years with a remainder over in fee simple or an estate for years with no remainder if a leasehold. The foregoing shall supersede any contrary rule at common law.

(b) A document transferring or encumbering a time-share estate in real property may not be rejected for recordation because of the nature or duration of that estate or interest.

(c) Each time-share estate constitutes, for purposes of title, a separate estate or interest in property, except for real property tax purposes.

18-14-105. Regulatory discrimination prohibited.

A zoning, subdivision, or other ordinance or regulation may not discriminate against the creation of time-share intervals or impose any requirement upon a time-share program which it would not impose upon a similar development under a different form of ownership.

SUBCHAPTER 2 - ADMINISTRATION AND REGISTRATION

18-14-201. Powers and duties of state agency.

(a) The agency may adopt, amend, and repeal rules or regulations and issue orders consistent with, and in furtherance of, the objectives of this chapter. The agency may prescribe forms and procedures for submitting information to the agency.

(b) The agency may accept grants-in-aid from any governmental source and may contract with agencies charged with similar functions in this or other jurisdictions in furtherance of the objectives of this chapter.

(c) The agency may cooperate with agencies performing similar functions in this and other jurisdictions to develop uniform filing procedures and forms, uniform disclosure standards, and uniform administrative practices and may develop information that may be useful in the discharge of the agency's duties.

(d) The agency may initiate private investigations within or without this state.

(e) The agency, after notice and hearing, may issue a notice of suspension if any of the following conditions exist:

(1) Any representation in any document or information filed with the agency is false or misleading;

(2) Any developer or agent of a developer has engaged or is engaging in any unlawful act or practice;

(3) Any developer or agent of a developer has disseminated or caused to be disseminated, orally or in writing, any false or misleading promotional materials in connection with a time-share program;

(4) Any developer or agent of a developer has concealed, diverted, or disposed of any funds or assets of any person in a manner impairing rights of purchasers of time-share intervals in the time-share program;

(5) Any developer or agent of a developer has failed to perform any stipulation or agreement made to induce the agency to issue an order relating to that time-share program; or

(6) Any developer or agent of a developer has otherwise violated any provision of this chapter or the agency's rules, regulations, or orders.

(f) The agency may issue a cease and desist order if the developer has not registered the time-share program as required by this chapter.

(g) The agency, after notice and hearing, may issue an order revoking the registration of a time-share program upon determination that a developer or agent of a developer has failed to comply with a notice of suspension issued by the agency, which order affects the time-share program.

18-14-202. Registration, etc., with agency required.

(a)

(1) Unless exempted by § 18-14-203, a developer may not offer or dispose of a time-share interval unless the time-share program is registered with the agency. However, a developer may accept a reservation together with a deposit if the deposit is placed in an escrow account with an institution having trust powers and is refundable at any time at the purchaser's option.

(2) In all cases, a reservation must require a subsequent affirmative act by the purchaser via a separate instrument to create a binding obligation'.

(3) A developer may not dispose of or transfer a time-share interval while an order revoking or suspending the registration of the time-share program is in effect.

(b)

(1) An acquisition agent shall register the time-share program or programs for which it is providing prospective purchasers with the agency unless there is an effective registration of the program or programs filed with the agency by the developer.

(2) In any event, the acquisition agent shall be required to furnish to the agency its principal office address and telephone number and designate its responsible managing employee. The acquisition agent shall also furnish such additional information as the agency may require.

(3) The acquisition agent shall furnish evidence that a bond of five thousand dollars ($5,000) has been placed with a surety company, corporate bond acceptable to the agency, or a cash bond with the agency to cover any violations of any solicitation ordinances, zoning ordinances, building codes, or other regulations governing the use of the premises in which the time-share program is promoted.

(4) Each acquisition agent shall renew the registration at least annually and shall pay a filing fee of fifty dollars ($50.00) for the registration and each renewal thereof.

(c) A sales agent shall register with the agency the time-share program or programs for which it is selling unless there is an effective registration of the program or programs filed with the agency by the developer. In any event, the sales agent shall be required to furnish to the agency its principal office address and telephone number and designate its responsible managing employee and any special escrow accounts set up for the deposit and collection of purchasers' funds and shall furnish such additional information as the agency may require. The sales agent shall furnish evidence that a bond of five thousand dollars ($5,000) has been placed with a surety company, corporate bond acceptable to the agency, or a cash bond with the agency to cover any defalcations of the sales agent. Each individual sales agent shall renew his registration annually and shall pay a filing fee of fifty dollars ($50.00) for the registration and each renewal thereof.

(d) A managing agent shall register with the agency the time-share program or programs for which it is managing unless there is an effective registration of the program or programs filed with the agency by the developer. In any event, the managing agent shall be required to furnish to the agency its principal office address and telephone number, to designate its responsible managing employee, and to furnish such additional information as the agency may require. The managing agent shall furnish evidence that a bond of five thousand dollars ($5,000) has been placed with a surety company, corporate bond acceptable to the agency, or a cash bond with the agency to cover any default of the managing agent of his duties and responsibilities. Each managing agent shall renew the registration at least annually and shall pay a filing fee of fifty dollars ($50.00) with each registration and renewal thereof.

(e) In the event that the acquisition agent, sales agent, or management agent is under the control of, a subsidiary of, or affiliate of the developer or any person, the bond as to such agents, whether one or more, can be consolidated and reduced to fifty thousand dollars ($50,000), provided that there is a disclosure of the affiliation to the agency. Where the developer registers additional time-share projects, including additional phases of existing time-share projects, with the commission, the developer shall not be required to furnish an additional bond or increase the existing bond for the additional registration provided the initial bond remains in effect.

(f) An exchange agent, including the developer if it is also the exchange agent, shall file a statement with the agency containing a list of the time-share program or programs that it is offering exchange services for, indicate its principal office address and telephone number, and designate who its responsible managing employee is or the person to whom any contact is to be made.

(g) The acquisition agent and sales agent shall each maintain their respective records of any independent contractors employed by them, their addresses, and the commissions paid for the immediately preceding two (2) calendar years.

(h) Any interest earned on any bond or substitute therefor, whether cash, certificate of deposit, bank account, security, or other instrument, while on deposit with, or for the benefit of, the agency shall become the separate property of the agency and shall be deposited in the Real Estate Recovery Fund, as created in § 17-35-403.

18-14-203. Exemptions from registration.

(a) No registration with the agency shall be required if the developer is registered and there has been issued a public offering statement or similar disclosure document which is provided to purchasers under the following:

(1) Securities and Exchange Act of 1933;

(2) Arkansas Securites Act, § 23-42-101 et seq.;

(3) Federal Interstate Land Sales Full Disclosure Act, in which the time-share program is made a part of the subdivison that is being registered.

(4)

(A) Any federal or state act which requires a federal or state agency to review a public offering statement, or similar disclosure document which is required to be distributed to purchasers, if the agency determines after review that the federal or state public offering statement is substantially equivalent to that required by this chapter and issues its certificate of exemption.

(B) Whenever a public offering statement is amended, and at least annually in any event, the public offering statement shall be submitted to the agency for its review and recertification.

(C) Applicants for certificates of exemption shall pay a filing fee of three hundred dollars ($300) and any necessary investigation expenses as set forth in § 18-14-204(d) and a fee of one hundred fifty dollars ($150) for each request for review and recertification pursuant to subsection (a)(4)(B) of this section.

(b) No registration with the agency shall be required in the case of:

(1) Any transfer of a time-share interval by any time-share interval owner other than the developer or his agent unless the transfer is made for the purpose of evading the provisions of this chapter;

(2) Any disposition pursuant to court order;

(3) A disposition by a government or governmental agency;

(4) A disposition by foreclosure or deed in lieu of foreclosure; or

(5) A gratuitous transfer of a time-share interval.

18-14-204. Application for registration.

(a) An application for registration shall contain the public offering statement, a brief description of the property, copies of time-share instruments, financial statements prepared in accordance with generally accepted accounting principles fully and fairly disclosing the current financial condition of the developer, and any documents referred to therein and such other information as may be required by the agency.

(b) If the dwelling units in the time-share project are in a condominium development or other common-interest subdivision, the application for registration shall contain evidence that the use of the units for time-share purposes is not prohibited by the project instruments and, if the project instruments do not expressly authorize time-sharing, evidence that purchasers in the condominium development or other common-interest subdivision were given at least sixty (60) days' notice in writing prior to the application for registration that the units would be used for time-share purposes. In the event the project instruments contain a prohibition against time-sharing, there must be a certification by the board of directors of the association that any procedures specified in the project instruments for the amendment of such instruments, in order to permit time-sharing, have been followed and that the project instruments have been duly amended to permit time-sharing.

(c) The application shall be accompanied by a filing fee of three hundred dollars ($300) plus five dollars ($5.00) for each twenty-five (25) time-share intervals or portions thereof. The filing fee shall not exceed the sum of five hundred dollars ($500).

(d) The agency shall thoroughly investigate all matters relating to the application and may require a personal inspection of the real estate by a person or persons designated by it. All direct expenses incurred by the agency in inspecting the real estate shall be borne by the applicant, and the agency may require a deposit sufficient to cover the direct expenses prior to incurring them.

(e) All applications for registration shall be updated and renewed at least annually, and the renewal shall be accompanied by a filing fee of one-half (1/2) the amount of the original filing fee.

18-14-205. Material changes.

A developer shall amend or supplement its registration to report any material change in the information required by § 18-14-204.

18-14-206. Effectiveness of registration or amendment.

(a) Except as hereinafter provided, the effective date of the registration or any amendment thereto, shall be the forty-fifth day after the filing thereof, or such earlier date as the agency may determine, having due regard to the public interest and the protection of purchasers. If any amendment to any registration is filed prior to the effective date, the registration shall be deemed to have been filed when the amendment was filed.

(b) If it appears to the agency that the application for registration, or any amendment thereto is on its face incomplete or inaccurate in any material respect, the agency shall so advise the developer by listing each specific deficiency in writing prior to the date the registration would otherwise be effective. The notification shall serve to suspend the effective date of the filing until the tenth day after the developer files such additional information as the agency shall require. Any developer, upon receipt of the notice of deficiencies, may request a hearing, and the hearing shall be held within thirty (30) days of receipt of the request.

18-14-207. Regulation and use of public offering statement.

(a) The agency, at any time, may require a developer to alter or supplement the form or substance of a public offering statement to assure adequate and accurate disclosure to prospective purchasers. In order to ensure adequate protection of the purchaser through disclosure, the agency may require that certain disclosures contained in the public offering statement be placed in boldface type.

(b) The public offering statement may not be used for any promotional purposes before registration, and the statement may be used afterwards only if it is used in its entirety. No person may advertise or represent that the agency has approved or recommended the time-share program, the disclosure statement, or any of the documents contained in the application for registration.

SUBCHAPTER 3 - CREATION, TERMINATION, AND MANAGEMENT

18-14-301. Time-share programs permitted.

A time-share program may be created in any unit, unless expressly prohibited by the project instruments.

18-14-302. Contents of instruments creating time-share estates.

Project instruments and time-share instruments creating time-share estates must contain the following:

(1) The name of the county in which the property is situated;

(2) The legal description, street address, or other description sufficient to identify the property;

(3) Identification of time periods by letter, name, number, or combination thereof;

(4) Identification of time-share estates and, where applicable, the method whereby additional time-share estates may be created;

(5) The formula, fraction, or percentage of the common expenses and any voting rights assigned to each time-share estate and, where applicable, to each unit in a project that is not subject to the time-share program;

(6) Any restrictions on the use, occupancy, alteration, or alienation of time-share intervals;

(7) The ownership interest, if any, in personal property and provisions for care and replacement;

(8) Any other matters the developer deems appropriate;

(9) Any provisions pertaining to the establishment of a lien against an owner's time-share interest in favor of the association of time-share estate owners to secure payment of common expenses. This lien when provided for in the time-share instrument shall be enforceable and foreclosable in the same manner in which other statutory liens are enforceable and foreclosable under the laws of this state.

18-14-303. Provisions for management and operation of time-share estate programs.

The time-share instruments for a time-share estate program shall prescribe reasonable arrangements for management and operation of the time-share program and for the maintenance, repair, and furnishing of units, which shall ordinarily include, but need not be limited to, provisions for the following:

(1) Creation of an association of time-share estate owners;

(2) Adoption of bylaws for organizing and operating the association;

(3) Payment of costs and expenses of operating the time-share program and owning and maintaining the units;

(4) Employment and termination of employment of the managing agent for the association;

(5) Preparation and dissemination to owners of an annual budget and of operating statements and other financial information concerning the time-share program;

(6) Adoption of standards and rules of conduct for the use and occupancy of units by owners;

(7) Collection of assessments from owners to defray the expenses of management of the time-share program and maintenance of the units and time-share project;

(8) Comprehensive general liability insurance for death, bodily injury, and property damage arising out of, or in connection with, the use of units by owners, their guests, and other users;

(9) Methods for providing compensating use periods or monetary compensation to an owner if a unit cannot be made available for the period to which the owner is entitled by schedule or by confirmed reservation;

(10) Procedures for imposing a monetary penalty or suspension of an owner's rights and privileges in the time-share program for failure of the owner to comply with provisions of the time-share instruments or the rules of the association with respect to the use of the units. Under these procedures an owner must be given notice and the opportunity to refute or explain the charges against him in person or in writing to the governing body of the association before a decision to impose discipline is rendered. Any monetary penalty may be secured by the lien provided for in § 18-14-302;

(11) Employment of attorneys, accountants, and other professional persons as necessary to assist in the management of the time-share program and the units.

18-14-304. Developer control period.

(a) The time-share instruments for a time-share estate program may provide for a period of time, hereafter referred to as the "developer control period," during which the developer, or a managing agent selected by the developer, may manage the time-share program and the units in the time-share program.

(b) If the time-share instruments for a time-share estate program provide for the establishment of a developer control period, they shall ordinarily include provisions for the following:

(1) Termination of the developer control period by action of the association;

(2) Termination of contracts for goods and services for the time-share program or for units in the time-share program entered into during the developer control period;

(3) A regular accounting by the developer to the association as to all matters that significantly affect the interests of owners in the time-share program.

18-14-305. Instruments creating time-share uses.

Project instruments and time-share instruments creating time-share uses must contain the following:

(1) Identification by name of the time-share project and street address where the time-share project is situated;

(2) Identification of the time periods, type of units, and the units that are in the time-share program and the length of time that the units are committed to the time-share program;

(3) In case of a time-share project, identification of which units are in the time-share program and the method whereby any other units may be added, deleted, or substituted;

(4) Any other matters that the developer deems appropriate.

18-14-306. Provisions for management and operation of time-share use programs.

The time-share instruments for a time-share use program shall prescribe reasonable arrangements for management and operation of the time-share program and for the maintenance, repair, and furnishing of units which shall ordinarily include, but need not be limited to, provisions for the following:

(1) Standards and procedures for upkeep, repair, and interior furnishing of units and for providing of maid, cleaning, linen, and similar services to the units during use periods;

(2) Adoption of standards and rules of conduct governing the use and occupancy of units by owners;

(3) Payment of the costs and expenses of operating the time-share program and owning and maintaining the units;

(4) Selection of a managing agent;

(5) Preparation and dissemination to owners of an annual budget and of operating statements and other financial information concerning the time-share program;

(6) Procedures for establishing the rights of owners to the use of units by prearrangement or under a first-reserved, first-served priority system;

(7) Organization of a management advisory board consisting of time-share use owners, including an enumeration of rights and responsibilities of the board;

(8) Procedures for imposing and collecting assessments or use fees from time-share use owners as necessary to defray costs of management of the time-share program and in providing materials and services to the units;

(9) Comprehensive general liability insurance for death, bodily injury, and property damage arising out of, or in connection with, the use of units by time-share use owners, their guests, and other users;

(10) Methods for providing compensating use periods or monetary compensation to an owner if a unit cannot be made available for the period to which the owner is entitled by schedule or by a confirmed reservation;

(11) Procedures for imposing a monetary penalty or suspension of an owner's rights and privileges in the time-share program for failure of the owner to comply with the provisions of the time-share instruments or the rules established by the developer with respect to the use of the units. The owner shall be given notice and the opportunity to refute or explain the charges, in person or in writing, to the management advisory board before a decision to impose discipline is rendered;

(12) Annual dissemination to all time-share use owners by the developer, or by the managing agent, of a list of the names and mailing addresses of all current time-share use owners in the time-share program.

18-14-307. Partition of units.

No action for partition of a unit may be maintained except as permitted by the time-share instrument.

SUBCHAPTER 4 - PROTECTION OF PURCHASERS

18-14-401. Penalties.

Any developer or any other person subject to this chapter who offers or disposes of a time-share interval without having complied with this chapter or who violates any provision of this chapter shall be guilty of a misdemeanor punishable by a fine not exceeding five thousand dollars ($5,000) or by imprisonment in the state prison or in the county jail not exceeding one (1) year, or by both fine and imprisonment.

18-14-402. Civil remedies.

(a) If a developer or any other person subject to this chapter violates any provision thereof or any provision of the project instruments, any person or class of persons adversely affected by the violation or violations has a claim for appropriate relief. Punitive damages or attorney's fees, or both, may be awarded for willful violation of this chapter.

(b) The Real Estate Recovery Fund, § 17-35-403, shall not apply to any claims arising from or damages caused by a violation or violations of this chapter or of the Real Estate License Law, § 17-35-101 et seq., or regulations by any licensee while engaged in any time-share activities.

18-14-403. Statute of limitations.

A judicial proceeding where the accuracy of the public offering statement or validity of any contract of purchase is in issue and a rescission of the contract or damages is sought must be commenced within four (4) years after the date of the contract of purchase, notwithstanding that the purchaser's terms of payments may extend beyond the period of limitation. However, with respect to the enforcement of provisions in the contract of purchase which require the continued furnishing of services and the reciprocal payments to be made by the purchaser, the period of bringing a judicial proceeding will continue for a period of four (4) years for each breach, but the parties may agree to reduce the period of limitation to not less than two (2) years.

18-14-404. Required contents of public offering statements for time-share intervals.

(a) A public offering statement must be provided to each purchaser of a time-share interval and must contain or fully and accurately disclose:

(1) The name of the developer and the principal address of the developer and the time-share intervals offered in the statement;

(2) A general description of the units including, without limitation, the developer's schedule of commencement and completion of all buildings, units, and amenities or, if completed, that they have been completed;

(3) As to all units offered by the developer in the same time-share project:

(A) The types and number of units;

(B) Identification of units that are subject to time-share intervals; and

(C) The estimated number of units that may become subject to time-share intervals;

(4) A brief description of the project;

(5) If applicable, any current budget and a projected budget for the time-share intervals for one (1) year after the date of the first transfer to a purchaser. The budget must include, without limitation:

(A) A statement of the amount included in the budget as a reserve for repairs and replacement;

(B) The projected common expense liability, if any, by category or expenditures for the time-share intervals;

(C) The projected common expense liability for all time-share intervals; and

(D) A statement of any services not reflected in the budget that the developer provides or expenses that it pays;

(6) Any initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee;

(7) A description of any liens, defects, or encumbrances on, or affecting, the title to the time-share intervals;

(8) A description of any financing offered by the developer;

(9) A statement that, within five (5) days after execution of a contract of purchase, a purchaser may cancel any contract for purchase of a time-share interval from a developer;

(10) A statement of any pending suits material to the time-share intervals of which a developer has actual knowledge;

(11) Any restraints on alienation of any number or portion of any time-share intervals;

(12) A description of the insurance coverage which shall be provided for the benefit of time-share interval owners;

(13) Any current or expected fees or charges to be paid by time-share interval owners for the use of any facilities related to the property;

(14) The extent to which financial arrangements have been provided for completion of all promised improvements; and

(15) The extent to which a time-share unit may become subject to a tax or other lien arising out of claims against other owners of the same unit.

(b) If a purchaser is offered the opportunity to subscribe to any program that provides exchanges of time-shares among purchasers in either the same time-sharing project or other timesharing projects, or both, the developer shall deliver to the purchaser, prior to the execution of any contract between the purchaser and the company offering the exchange program, written information regarding such exchange program. The purchaser shall certify in writing to the receipt of the written information, which information shall include, but is not limited to, the following:

(1) The name and address of the exchange program;

(2) The names of all officers and directors;

(3) Whether the exchange program, or any of its officers or directors, has any legal or beneficial interest in any developer or managing agent for any time-sharing plan participating in the exchange program and, if so, the name and location of the timesharing plan and the nature of the interest;

(4) Unless otherwise stated, a statement that the purchaser's contract with the exchange program is a contract separate and distinct from the purchaser's contract with the developer;

(5) Whether the purchaser's participation in the exchange program is dependent upon the continued affiliation of the timesharing project with the exchange program;

(6) Whether the purchaser's membership or participation, or both, in the exchange program is voluntary or mandatory;

(7) A complete and accurate description of the terms and conditions of the purchaser's contractual relationship with the exchange program and the procedure by which changes thereto may be made;

(8) A complete and accurate description of the procedure to qualify for and effectuate exchanges;

(9) A complete and accurate description of all limitations, restrictions, or priorities employed in the operation of the exchange program including, but not limited to, limitations on exchanges based on seasonality, unit size, or levels of occupancy, expressed in bold-faced type and, in the event that such limitations, restrictions, or priorities are not uniformly applied by the exchange program, a clear description of the manner in which they are applied;

(10) Whether exchanges are arranged on a space-available basis and whether any guarantees of fulfillment of specific requests for exchanges are made by the exchange program;

(11) Whether and under what circumstances, a purchaser, in dealing with the exchange program, may lose the use and occupancy of his time-share in any properly applied for exchange without his being provided with substitute accommodations by the exchange program;

(12) The fees or range of fees for participation by purchasers in the exchange program, a statement whether any such fees may be altered by the exchange company, and the circumstances under which alterations may be made;

(13) The name and address of the site of each accommodation or facility included in the time-sharing projects which are participating in the exchange program as of the last annual audit;

(14) The number of time-share units in each time-sharing project which are available for occupancy, pursuant to the last annual audit, and which qualify for participation in the exchange program, expressed within the following numerical groupings: 1-5, 6-10, 11-20, 21-50, and 51 and over;

(15) The number of purchasers enrolled for each time-sharing project participating in the exchange program, pursuant to the last annual audit, expressed within the following numerical groupings: 1-100, 101-249, 250-499, 500-999, and 1,000 and over, and a statement of the criteria used to determine those purchasers who are currently enrolled with the exchange program;

(16) The disposition made by the exchange company of time-shares deposited with the exchange program by purchasers enrolled in the exchange program and not used by the exchange company in effecting changes;

(17) The following information, which shall be independently audited by a certified public accountant or accounting firm in accordance with the standards of the Accounting Standards Board of the American Institute of Certified Public Accountants and reported on an annual basis:

(A) The number of purchasers currently enrolled in the exchange program;

(B) The number of accommodations and facilities that have current written affiliation agreements with the exchange program;

(C) The percentage of confirmed exchanges, which shall be the number of exchanges confirmed by the exchange program divided by the number of exchanges properly applied for, together with a complete and accurate statement of the criteria used to determine whether an exchange request was properly applied for;

(D) The number of time-share periods for which the exchange program has an outstanding obligation to provide an exchange to a purchaser who relinquished a time-share during the year in exchange for a time-share in any future year;

(E) The number of exchanges confirmed by the exchange program during the year;

(18) A statement in bold-faced type to the effect that the percentage described in subsection (b)(17)(C) of this section is a summary of the exchange requests entered with the exchange program in the period reported and that the percentage does not indicate a purchaser's probabilities of being confirmed to any specific choice or range of choices, since availability at individual locations may vary.

(c) Each exchange company offering an exchange program to purchasers in this state must include the statement set forth in subsection (b)(18) of this section on all promotional brochures, pamphlets, advertisements, or other materials disseminated by the exchange company which also contain the percentage of confirmed exchanges described in subsection (b)(17)(C) of this section.

(d) A developer may satisfy the requirements of this section by delivery to purchasers of materials furnished to the developer by the exchange program, provided the exchange program has certified to the developer that the materials satisfy the requirements of this section. A developer shall have no liability to any person if the materials furnished by the exchange program fail to comply with this section.

18-14-405. Material changes.

The developer shall amend or supplement the public offering statement to report any material change in the information required by § 18-14-404. As to any exchange program, the developer shall use the' current written materials that are supplied to it for distribution to the time-share interval owners as it is received.

18-14-406. Other statutes not applicable.

(a) Any time-share program in which a public offering statement has been prepared pursuant to this chapter does not require registration under any of the following:

(1) Arkansas Securities Act, § 23-42-101 et seq.;

(2) Any other Arkansas statute which requires the preparation of a public offering statement or substantially similar document for distribution to purchasers.

(b) Any time-share program that fails to restrict the price at which an owner may sell or exchange his time-share interval shall not by virtue of such failure cause the time-share interval to become a security under the Arkansas Securities Act. An exchange agent offering such a time-share interval for exchange shall not be construed to be offering a security under such act.

18-14-407. Escrow accounts or other financial assurances.

(a) Any deposit made in connection with the purchase or reservation of a time-share interval from a developer must be placed in a noninterest-bearing escrow account and held in this state, in an account designated solely for the purpose, by an independent bonded escrow company, or in an institution whose accounts are insured by a governmental agency or instrumentality until:

(1) Delivered to the developer at the expiration of the time for rescission or any later time specified in any contract or sale ;

(2) Delivered to the developer because of the purchaser's default under a contract to purchase the time-share interval; or

(3) Refunded to the purchaser.

(b)

(1) In lieu of any escrows required by this section, the agency shall have the discretion to accept other financial assurances including, but not limited to, a surety bond, an irrevocable letter of credit, or a cash deposit in an amount equal to the escrow requirements of this section.

(2) Interest earned on any such bond or other deposit while deposited with, or for the benefit of, the agency shall become the property of the agency and shall be deposited in the Real Estate Recovery Fund created in § 17-35-403.

18-14-408. Guarantees for completion of time-share projects.

(a) If a developer contracts to sell a time-share interval and the construction, furnishings, and landscaping of the time-share project have not been substantially completed in accordance with the representations made by the developer in the disclosures required by this chapter, the developer shall:

(1) Pay into an escrow account established and held in this state, in an account designated solely for the purpose, by an independent bonded escrow company, or in an institution whose accounts are insured by a governmental agency or instrumentality, all payments received by the developer from the purchaser towards the sale price until the project is substantially complete. The escrow agent may invest the escrow funds in securities for the United States, or any agency thereof, or in savings or time deposits in institutions insured by an agency of the United States. Funds shall be released from escrow as follows:

(A) If a purchaser properly terminates the contract pursuant to its terms or pursuant to this chapter, the funds shall be paid to the purchaser, together with any interest earned;

(B) If the purchaser defaults in the performance of his obligations under the contract of purchase and sale, the funds shall be paid to the developer, together with any interest earned;

(C) If the funds of a purchaser have not been previously disbursed in accordance with the provisions of this subsection, they may be disbursed to the developer by the escrow agent upon substantial completion of the time-share project;

(2) The developer shall not be required to comply with subsection (a)(1) of this section when the agency has been furnished and is satisfied that all of the following provisions have been met:

(A) That the developer is an Arkansas corporation or a foreign corporation qualified to do business in Arkansas;

(B) That the corporation has been in existence and operated for not less than three (3) years within the State of Arkansas;

(C) That the corporation has net assets within this state of an amount not less than three (3) times the cost to complete the time-share project;

(D) The agency shall have the discretion to require such other assurances as may reasonably be required either to assure completion of the time-share project or to reimburse the purchaser all funds paid to the developer together with any interest earned;

(3)

(A) In lieu of any escrows required by this section, the agency shall have the discretion to accept other financial assurances including, but not limited to, a performance bond or an irrevocable letter of credit in an amount equal to the cost to complete the time-share project.

(B) Interest earned on any such bond, letter of credit, deposit, or other instrument while deposited with, or for the benefit of, the agency shall become the separate property of the agency and shall be deposited in the Real Estate Recovery Fund created in § 17-35-403.

(b) For the purpose of this section, "substantially completed" means that all amenities, furnishings, appliances, and structural components and mechanical systems of buildings on all real property dedicated to the project and subject to the project instruments are completed and provided as represented in the public offering statement, that the premises are ready for occupancy, and that the proper governmental authority has caused to be issued a certificate of occupancy.

18-14-409. Mutual rights of cancellation.

(a) Before transfer of a time-share interval, and no later than the date of any sales contract, the developer shall provide the intended transferee with a copy of the public offering statement and any amendments and supplements thereto. The contract is voidable by the purchaser until he has received the public offering statement. In addition, the contract is voidable by the purchaser for five (5) days after execution of the contract of sale. Cancellation is without penalty, and all payments made by the purchaser before cancellation must be refunded within a reasonable time after receipt of the notice of cancellation as provided in subsection (c) of this section.

(b) Up to five (5) days after execution of the contract of sale, the developer may cancel the contract of purchase without penalty to either party. The developer shall return all payments made and the purchaser shall return all materials received in good condition, reasonable wear and tear excepted. if the materials are not returned, the developer may deduct the cost of them and return the balance to the purchaser.

(c) If either party elects to cancel a contract pursuant to subsections (a) or (b) of this section, he may do so by hand-delivering notice thereof to the other party or by mailing notice thereof by prepaid United States mail to the other party or to his agent for service of process, which notice shall be deemed given when deposited in the United States mail.

18-14-410. Liens.

(a) Prior to the transfer of a time-share interval, the developer shall record, or furnish to the purchaser, releases of all liens affecting that time-share interval or shall provide a surety bond or insurance against the lien from a company acceptable to the agency, as provided for liens on real estate in this state; or such underlying lien document shall contain a provision wherein the lienholder subordinates its rights to that of a time-share purchaser who fully complies with all of the provisions and terms of the contract of sale.

(b) Unless a time-share interval owner or his predecessor in title agrees otherwise with the lienor, if a lien other than a mortgage or deed of trust becomes effective against more than one (1) time-share interval in a time-share project, any time-share interval owner is entitled to a release of his time-share interval from the lien upon payment of the amount of the lien attributable to his time-share interval. The amount of the payment must be proportionate to the ratio that the time-share interval owner's liability bears to the liabilities of all time-share interval owners whose interests are subject to the lien. Upon receipt of payment, the lienholder shall promptly deliver to the time-share interval owner a release of the lien covering that time-share interval. After payment, the managing entity may not assess or have a lien against that time-share interval for any portion of the expenses incurred in connection with that lien.

18-14-411. Financial records - Examination.

(a) The person or entity responsible for making or collecting common expense assessments or maintenance assessments shall keep detailed financial records.

(b) All financial and other records shall be made reasonably available for examination by any time-share interval owner and his authorized agents.

SUBCHAPTER 5 - ADVERTISING

18-14-501. Filing of advertising materials.

(a) All advertising materials proposed for use in this state by any person in connection with the offer or sale of time-shares shall be filed with the agency within ten (10) days of their use.

(b) Each separate filing of advertising materials shall be accompanied by a filing fee of ten dollars ($10.00).

(c) Advertising materials include, but are not limited to, the following:

(1) Promotional brochures, pamphlets, advertisements, or other materials to be disseminated to the public in connection with the sale of time-shares;

(2) Transcripts of all radio and television advertisements;

(3) Offers of travel, accommodations, meals, or entertainment at no cost or reduced cost;

(4) Direct mail solicitation;

(5) Advertising, including testimonials or endorsements;

(6) Scripts or standardized narrative for use in making telephone solicitations.

18-14-502. False advertising declared unlawful.

(a) It shall be unlawful for any person with intent, directly or indirectly, to offer for sale or sell time-shares in this state to authorize, use, direct, or aid in the publication, distribution, or circulation of any advertisement, radio broadcast, or telecast concerning the time-share project in which the time-shares are offered which contains any statement, pictorial representation, or sketch which is false or misleading.

(b) Nothing in this section shall be construed to hold the publisher or employee of any newspaper, any job printer, any broadcaster or telecaster, or any magazine publisher, or any of the employees thereof, liable for any publication herein referred to unless the publisher, employee, or printer has actual knowledge of the falsity thereof or has an interest either as an owner or agent in the time-share project so advertised.

18-14-503. Prohibited advertising.

No advertising for the offer or sale of time-shares shall:

(1) Contain any representation as to the availability of a resale program or rental program offered by, or on behalf of, the developer or its affiliate, unless the resale program or rental program has been made a part of the offering and submitted to the agency;

(2) Contain an offer or inducement to purchase which purports to be limited as to quantity or restricted as to time, unless the numerical quantity or time applicable to the offer or inducement is clearly and conspicuously disclosed;

(3) Contain any statement concerning the investment merit or profit potential of the time-share, unless the agency has determined from evidence submitted on behalf of the developer that the representation is neither false nor misleading;

(4) Make a prediction of or imply specific or immediate increases in the price or value of the time-shares; nor shall a price increase of a time-share be announced more than sixty (60) days prior to the date that the increase will be placed into effect;

(5) Contain statements concerning the availability of time-shares at a particular minimum price if the number of time-shares available at that price comprises less than ten percent (10%) of the unsold inventory of the developer, unless the number of time-shares then for sale at the minimum price is set forth in the advertisement;

(6) Contain any statement that the time-share being offered for sale can be further divided, unless a full disclosure is included as to the legal requirements for further division of the time-share;

(7) Contain any asterisk or other reference symbol as a means of contradicting or changing the ordinary meaning of any previously made statement in the advertisement;

(8) Misrepresent the size, nature, extent, qualities, or characteristics of the accommodations or facilities which comprise the time-share project;

(9) Misrepresent the nature or extent of any services incident to the time-share project;

(10) Misrepresent or imply that a-- facility or service is available for the exclusive use of purchasers or owners if a public right of access or of use of the facility or service exists;

(11) Make any misleading or deceptive representation with respect to the contents of the time-share permit, the purchase contract, the purchaser's rights, privileges, benefits, or obligations under the purchase contract or this chapter;

(12) Misrepresent the conditions under which a purchaser or owner may participate in an exchange program;

(13) Describe any proposed or uncompleted private facilities over which the developer has no control unless the estimated date of completion is set forth and evidence has been presented to the agency that the completion and operation of the facilities are reasonably assured within the time represented in the advertisement.

18-14-504. Unfair acts or practices.

(a) It is unlawful for any person to offer, by mail, by telephone, or in person, a prize or gift, with the intent to offer a sales presentation for a time-share project, without disclosing at the time of the offer of the prize or gift, in a clear and unequivocal manner, the intent to offer the sales presentation.

(b) The following unfair acts or practices undertaken by, or omissions of, any person in the operation of any prize or gift promotional offer for a time-share project are prohibited:

(1) Failing clearly and conspicuously to disclose the rules, regulations, terms, and conditions of the promotional program; a description of the prizes offered, if any; and the date on or before which the prize or gift offer will terminate or expire;

(2) Failing to disclose the retail value of the gift or prize and the odds of winning. The person making the offer must maintain a sufficient inventory of the gift or prize so as to be able to equal the reasonable response to the offer;

(3) Failing to obtain the express written or oral consent of individuals before their names are used for a promotional purpose in connection with a mailing to a third person;

(4) Failing to award and distribute at least one (1) of each prize or gift of the value and type represented in the promotional program by the day and year specified in the promotion. When a promotion promises the award of a prescribed number of each prize, this number of prizes shall be awarded by the date and year specified in the promotion;

(5) Misrepresenting in any manner the odds of receiving any prize or gifts or the rules, terms, or conditions of participation in the promotional program.

18-14-505. Enforcement.

Whenever the agency determines from evidence available to it that a person is violating or failing to comply with the requirements of this subchapter, the agency may order the person to desist and refrain from such violations and may take enforcement action under the provisions of subchapter 2 of this chapter.

SUBCHAPTER 6 - FINANCING

18-14-601. Financing of time-share programs.

In the financing of a time-share program, the developer shall retain financial records of the schedule of payments required to be made and the payments made to any person or entity which is the lienholder of any underlying blanket mortgage, deed of trust, contract of sale, or other lien or encumbrance. Any transfer of the developer's interest in the time-share program to any third person shall be subject to the obligations of the developer.

18-14-602. Protection of purchasers from subsequent underlying lien.

The developer whose project is subjected to an underlying blanket lien or encumbrance subsequent to the transfer of a time-share interval shall protect nondefaulting purchasers from foreclosure by the lienholder by obtaining from the lienholder a nondisturbance clause, subordination agreement, or partial release of the lien as to those time-share intervals sold or shall provide a surety bond or insurance against the lien from a company acceptable to the agency.

TIME-SHARE REGULATIONS

301. Registration - Renewal.

Each application for a Time-Share Program shall be made on a form furnished by the Arkansas Real Estate Commission and shall be accompanied by a filing fee of three hundred dollars ($300) plus five dollars ($5) for each twenty-five (25) time-share intervals or portions thereof, provided however, the filing fee shall not exceed the sum of five hundred dollars ($500).

Each registration shall be renewed annually pursuant to Ark. Code Ann. §§ 18-14-204(e) and 18-14-206(b) and shall be filed no later than July 1. Such renewal shall be made on a form prescribed by the Commission and accompanied by a fee of one-half (1/2) the amount of the original filing fee.

302. Agents - Amendment of registration.

(a) Each Developer shall file with the Commission the name, street address, mailing address, and telephone number of each Acquisition Agent, Managing Agent, Sales Agent and Exchange Agent and the responsible managing employee for each of said agents associated with each Time-Share Program. Should any of the information contained in this list change, then the Developer shall notify the Commission of such change within two (2) weeks of such change.

(b) A Developer shall amend or supplement its registration to report any material change in the information required by Ark. Code Ann. § 18-14-204. Such amendment or supplementation shall be made within forty-five (45) days of the occurrence of the material change. "Material change" means any change which alters the meaning or effect of an instrument or information, or any change which affects the rights or liabilities of any time-share owner or any potential time-share purchaser.

303. Fictitious name.

Each Developer, Acquisition Agent, Managing Agent, Sales Agent and Exchange Agent shall register with the Commission each fictitious name, if any, under which that person conducts business. No person shall conduct business which is regulated by the provisions of the Arkansas Time-Share Act under any names other than those registered with the Commission.

304. Purchase contract - Cancellation notice - Form, time, procedure.

(a) A purchaser may cancel any contract for the purchase of a time-share interval from a Developer within five (5) days after execution of the contract. The purchaser's right to cancel a contract for purchase shall not be waived.

(b) The Public Offering Statement shall be written in clear, plain and concise language. There shall be attached to the front of the Public Offering Statement a notice in duplicate containing the following language in at least 10 point boldface type:

"IMPORTANT NOTICE

I UNDERSTAND THAT IF I SIGN A CONTRACT FOR THE PURCHASE OF A TIME-SHARE INTERVAL I HAVE THE RIGHT TO CANCEL THE CONTRACT WITHIN FIVE (5) DAYS AFTER SIGNING THE CONTRACT. I UNDERSTAND THAT CANCELLATION IS WITHOUT PENALTY AND ALL PAYMENTS MADE BY ME BEFORE CANCELLATION SHOULD BE REFUNDED WITHIN THIRTY (30) DAYS OF RECEIPT OF THE NOTICE OF CANCELLATION. IF THE FIFTH DAY AFTER THE SIGNING OF THIS CONTRACT IS A SATURDAY, SUNDAY, OR LEGAL HOLIDAY MY RIGHT TO CANCEL IS EXTENDED TO THE NEXT DAY WHICH IS NOT A SATURDAY, SUNDAY, OR LEGAL HOLIDAY.

I REALIZE THAT TO CANCEL THIS CONTRACT I MUST MAIL OR DELIVER A WRITTEN NOTICE OF CANCELLATION TO (NAME OF DEVELOPER) AT (DEVELOPERS ADDRESS).

I UNDERSTAND THAT THE ARKANSAS REAL ESTATE COMMISSION NEITHER RECOMMENDS NOR APPROVES THIS OR ANY OTHER TIMESHARE PROGRAM.

I HEREBY ACKNOWLEDGE RECEIPT OF THE ATTACHED PUBLIC OFFERING STATEMENT.

____________________________________________________________________

(Purchaser's Signature)

DATE:____________________________________________________________"

The original executed notice shall be retained by the Developer and the duplicate copy shall be given to the purchaser. This notice shall contain no other printing or writing thereon.

(c) There shall be included in each contract for the purchase of a time-share interval immediately above the signature line a notice containing the following language in print size larger than the other provisions of the contract (excluding descriptive headings and titles) but no less than 10 point boldface type:

"NOTICE TO PURCHASER

YOU HAVE THE RIGHT TO CANCEL THIS CONTRACT WITHIN FIVE (5) DAYS AFTER YOU SIGN THE CONTRACT. FOR FURTHER INFORMATION, SEE "IMPORTANT NOTICE" ATTACHED TO THE PUBLIC OFFERING STATEMENT."

(d) Should the fifth day after the execution of the contract for purchase of a time-share interval be a Saturday, Sunday or legal holiday, then the five (5) day cancellation period shall not expire until the end of the next day which is not a Saturday, Sunday or legal holiday. "Legal holiday" means any day designated as a holiday by the President or the Congress of the United States or designated by the laws of this State.

Notice of cancellation shall be properly addressed with sufficient postage prepaid to assure delivery and notice shall be deemed given when postmarked by the United States Postal Service.

305. Record maintenance.

Each Developer shall assure that any records required to be maintained pursuant to the Arkansas Time-Share Act or regulations promulgated thereunder shall be maintained and made available to the Arkansas Real Estate Commission upon request.

306. Records - Developer and Agents - Type, time.

(a) Each Developer shall maintain complete records of each sale of any time-share intervals in the Time-Share Project. The records shall be maintained for three (3) years and shall contain complete and detailed records of all escrow accounts required by statute or otherwise maintained; complete records of each sale of any time-share intervals, including copies of sales contracts, closing statements, credit disclosure information, executed copies of "Important Notice"; and any other information necessary to make a complete record of each transaction effected by the Developer. These records shall be open to inspection by the Arkansas Real Estate Commission.

(b) Each Sales Agent functioning as a supervising broker pursuant to Ark. Code Ann. § 17-35-305(b) shall maintain complete records of each transaction conducted by his/her firm. Each firm shall maintain signed copies of all offers, signed copies of all closing statements, detailed records of all escrow accounts required by statute or otherwise maintained, and any additional documents as may be necessary to make a complete record of each transaction effected by such firm. All such records shall be maintained for three (3) years and shall be open to inspection by the Arkansas Real Estate Commission.

(c) Each Acquisition Agent shall maintain complete records of all advertising and/or promotional materials used, names and addresses of all persons who receive prizes, other than the names and addresses of persons who received the prize most frequently awarded, the retail value of all prizes awarded and a statement of the odds of winning each prize. These records shall be maintained for three (3) years following the expiration date of the contest or gift offer and shall be open to inspection by the Arkansas Real Estate Commission.

(d) Each Managing Agent shall maintain complete records of all Time-Share Programs managed by his/her firm. Each firm shall maintain complete and detailed records of all maintenance fees collected and the disbursement of these fees for repair and maintenance of the units. These records shall include copies of all contracts, agreements, receipts and invoices, and any additional documents as may be necessary to make a complete record of all financial transactions with regard to the management of each unit. Each firm shall also maintain complete records of any rental program operated for the benefit of interval owners. These records shall be maintained for three (3) years and shall be open to inspection by the Arkansas Real Estate Commission.

307. Advertising materials - Filing, time.

Advertising materials required to be submitted to the Commission under Ark. Code Ann. § 18-14-501 shall not be used in this State until either ten (10) days after such material has been received by the Commission or such earlier date as the Commission may determine in writing. Each separate filing of advertising materials shall be accompanied by a filing fee of ten dollars ($10).

308. Financial statements.

Financial statements required to be submitted to the Commission under Ark. Code Ann. § 18-14-204(a) shall be certified by a certified public accountant or a registered public accountant who shall state that in his/her opinion the financial statement presents fairly the financial position of the entity for which the certification is rendered. The accountant shall state that he/she has examined the entity's financial statement, that the examination was made in accordance with generally accepted auditing standards, and that the financial statement presents fairly the financial position of the entity in conformity with generally accepted accounting principles.

309. Promotional programs - Prizes, odds.

(a) At least ten (10) days prior to the initiation of any promotion, contest, sweepstakes or other prize or gift offer (hereinafter referred to as "promotional program") regarding a Time-Share Development registered in Arkansas, the Developer or Acquisition Agent or other principal party shall submit to the Commission a full and complete description of the promotional program, including but not limited to the following information:

1. The duration of the promotional program;

2. A description of each prize or gift to be awarded including the retail value of each prize or gift to be awarded and the minimum number of each prize to be awarded;

3. A copy of all advertising material to be used;

4. A statement of each condition precedent to the receipt of any gift or prize;

5. The formula used in computing the odds of winning each prize or category of prizes, if such odds are less than one to one.

(b) No change shall be made in any of the information submitted pursuant to Regulation 309(a) 1-5 without prior written approval of the Arkansas Real Estate Commission. The Commission shall determine within ten (10) days of receipt of the proposed change whether such change would constitute a material alteration to the promotional program and therefore constitute a new promotional program. "Material alteration" is any change in the odds of winning any prize or category of prizes; or any substantial change in the nature of the promotional program, value of prizes or gifts, length of the promotional program, or any other right or obligation of the participants in the promotional program. Should a proposed change constitute a new promotional program, the Developer or Acquisition Agent or other principal party shall submit to the Commission a full and complete description of the promotional program under Regulation 309(a).

(c) Any representation of the odds of winning a prize or gift shall be stated in a straightforward and easily comprehensible manner in whole numbers without the use of decimal points or percentage signs.

(d) All materials which advertise a promotional program shall prominently contain:

1. A disclosure of the odds of winning, if such odds are less than one to one;

2. A disclosure that a "Time-Share" sales presentation will be offered or required;

3. A disclosure of the qualifications necessary for participation in the promotional program;

4. The description and retail value of the prize or gift; and

5. If the promotional program involves the participation of other entities or Developers, the disclosure that the promotional program has multiple sponsors and is either national, regional or statewide in scope, whichever is applicable.

(e) Within one (1) month of the conclusion of any prize offer in which the odds of receiving the prize are less than 1 to 1, the Developer shall certify to the Commission the total number of offers made and the total number of winning numbers distributed by prize category.

(f) Within one (1) month of the conclusion of any contest, the Developer shall provide to the Commission a list of the names and addresses of each person who received each prize, other than the prize most frequently awarded. The list shall identify the prize received by each person. The developer shall provide a copy of this list of winners to any person upon request.

310. "Reasonable time" defined.

"Reasonable time" as used in Ark. Code Ann. § 18-14-409(a) shall be presumed to be thirty (30) days.

311. Limitations.

Should the parties agree to reduce the period of limitation as stated in Ark. Code Ann. § 18-14-403, such agreement to reduce shall be a separate and distinct paragraph of the contract and shall be initialed by the parties as though the paragraph were an alteration of the original agreement.

312. Reservation - Deposit refundable.

Upon receipt of a deposit and acceptance of a reservation pursuant to Ark. Code Ann. § 18-14-202(a), the Developer shall notify the purchaser in writing that the deposit is refundable at any time at the purchaser's option and that the acceptance of the deposit does not create a binding obligation.

313. General regulations apply.

Rules and Regulations of the Arkansas Real Estate Commission 120 through 131(k) inclusive shall regulate the practice and procedure for the Commission for enforcement of the Arkansas Time-Share Act and are hereby adopted and incorporated by reference as though included herein word for word; provided that, for purposes of the Arkansas Time-Share Act Regulations, reference to the real estate license law or Commission regulations, and/or reference to licensees, shall be deemed to include the Arkansas Time-Share Act and Time-Share Regulations; and reference to licensees shall be deemed to include registrants under the Arkansas Time-Share Act.

314. "No action" letter.

Whenever the Commission determines on the basis of the facts presented that no affirmative action is necessary to protect the public interest or prospective purchasers, a letter stating that no action will be taken by the Commission may be issued. Any letter by the Commission that action shall not be taken shall not bind the Commission with regard to its future actions relating to such matters unless the Commission shall specifically set forth in writing its determination to be so bound and the extent and nature thereof. Any such no-action letter shall not affect any right which any purchaser may have under the Arkansas Time-Share Act.

315. Effective date.

The effective date of the Regulations adopted herein shall be the first day of the fourth month following adoption. [Adopted 11-27-84; effective 3-1-85.]

(7/26/1993)

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