KCPA v. MREC - Appellant's Brief - Appendix by David Roland

SC91125 IN THE SUPREME COURT OF MISSOURI

KANSAS CITY PREMIER APARTMENTS, INC., Plaintiff-Appellant, v. MISSOURI REAL ESTATE COMMISSION, Defendant-Respondent.

APPEAL FROM THE CIRCUIT COURT OF PLATTE COUNTY The Honorable Abe Shafer, Judge

APPELLANT’S BRIEF—APPENDIX

DAVID E. ROLAND, Mo. Bar #60548 Freedom Center of Missouri 5938 De Giverville Ave. St. Louis, Missouri 63112 Telephone: (314) 604-6621 Facsimile: (314) 720-0989 dave@mofreedom.org Attorney for the Plaintiff/Appellant

TABLE OF CONTENTS TO APPENDIX Judgment…………………………………………………………………………….

First Amendment to the U.S. Constitution…………………………………………..

Fourteenth Amendment to the U.S. Constitution……………………………………

Article I, Section 2 of the Missouri Constitution……………………………………

Article I, Section 8 of the Missouri Constitution……………………………………

Article I, Section 10 of the Missouri Constitution…………………………………..

Article III, Section 40(30) of the Missouri Constitution…………………………….

Section 339.010, RSMo……………………………………………………………...

Section 339.170, RSMo……………………………………………………………... A14 Section 339.180, RSMo……………………………………………………………… A15 Section 558.011, RSMo……………………………………………………………… A15 20 CSR 2250-8.090…………………………………………………………………... A18 Plaintiff’s Trial Exhibit #6 (MREC Responses to Requested Stipulations)…………. A30

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IN THE CIRCUIT COURT OF PLATTE COUNTY, MISSOURI SIXTH JUDICIAL CIRCUIT KANSAS CITY PREMIER APARTMENTS, INC.,

)

Plaintiff,

) )

Defendant.

(gI

SANDRA L. OOWD

Clerk of the Circuit Court Platte County, Mo

Case No. 07AE-CV01240 Division 1

)

MISSOURI REAL ESTATE COMMISSION,

JUN 3 0 2010

) ) ) )

JUDGMENT On the 23 rd day of June, 2010, Plaintiff Kansas City Premier Apartments appeared by corporate representative and by Counsel Dave Roland and Timothy J. Thonlpson.

Tiffany Le,vis and Ryan Gran appeared in person and by Counsel Dave Roland and

Timot11Y J. Thonlpson. The Missouri Real Estate Commission appeared by Counsel Edwin Frownfelter. The Court heard evidence and arguments of the parties. Now on this 30 th day of June, 2010, the Court lllakes the following findings and enters judgment as follows,

1. The Court has jurisdiction over the parties and the subject mauer of this action.

2. Kansas City Premier Apartments (KCP A) filed on April 16, 2007, requesting a declaratory judgment that ยง 339.010.1 does not encompass its business activities; that Kep r'\ is exenlpt from the provisions of Chapter 339; that the Missouri Real Estate

Conlnlission (MREC) violated KCPA's right to due process as protected under the

Fourteenth Amendment and the Missouri Constitution; that the statute violates KCPA's

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freedon1 of speech as protected under the First Amendment and the Missouri Constitution, and that the statute violates KCPA's right to equal protection of the law as protected under the Fourteenth Amendment and the Missouri Constitution. The MREC filed a motion to dismiss. In an order issued on November 26, 2007, Judge Hull disrnissed KCPA's procedural due process claims, but allowed the rest ofKCPA's claims to proceed. On June 4, 2009, the MREC filed a Petition for Preliminary Injunction and Permanent Injunction, asking the court to prohibit Kep A from continuing any of its

business activities that, in the estirnation of the court, would constitute perfonning real estate activities \vithout a license. The requested injunction alleges violations of ยง ยง 339.101.1(3), (4), (7), (8), and (10).

3. The MREC is responsible for administering and enforcing the statutes and regulations relating to the licensing and practice of real estate brokers and salespersons, pO'wers delegated through Chapter 339, RSMo. Ms. Lewis does not hold and has never held a real estate broker or salesperson license issued by the MREC. 4. KCPA is internet based with several components, including a database of real

estate advertisements; a search function that allows interested members of the public to vie\v only those advertisements that match criteria that they select thetnselves; an online roommate Inatching service, a collection of useful infomlation about the advantages of

living in the Kansas City area; a blog and other social media outlets that allow owners or

tnanagers of rental properties to notify prospective renters of the availability of specials that might othenvise escape the renters' notice. Kep A enters into written agreements \vith owners and nlanagers of rental property under which KCPA agrees to post on its

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vvebsite advertisements prepared and submitted by the property owners, managers, or brokers working on their behalf. KCP A does

110t

alter these advertiselllents once they

have been provided by the properties. The MREC did not prove that any of the property advertiseJllents on the KCPA website were false or 111isleading. If a renter notifies the o\vner or manager of a rental property with whom KCPA has an agreement that they discovered the property through KCPA, KCPA is paid a percentage of the first Inonths rent. The MREC did not prove that KCPA's rental advisors have conveyed any false or misleading infomlation about specific rental units. 5. KCPA's business activities do not include collecting rents or security deposits for owners.KCPA does not accept money directly from renters or prospective renters and does not handle tenant complaints for o\vners or managers of rental properties. KCP A does not

properties to prospective renters through actual in person

inspection. It does not advertise or hold itself out as a licensed real estate broker or salesperson. KCPA does not charge or accept advance fees for advertisenlents appearing on the KCPA website.

6. Before KCPA began

Ms. Lewis contacted both the Kansas Real

Estate Commission and the MREC to find out if state laws \vould require her business to have a license. The Kansas commission responded that no license would be necessary. A representative of the MREC responded that her proposed activities

occupied a "grey area" of the law. Ms. Lewis thereafter conlmenced business operations with KepA.

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7. In June of 2004, the MREC notified Ms. Lewis that her fornler elnployer had filed a complaint alleging that Kep A was unlawfully engaging in real estate activities. On Decen1ber 26, 2006, the MREC announced its determination that KCPA \vas violating the law. A letter signed by Janet Carder, the Executive Director of the MREC, demanded that KCPA cease conducting real estate activity. On January 25,2007. K,CPA's attorney, Timothy 1. Thompson, sent a well \vritten and \vell reasoned letter to the MREC explaining why KCPA believed the law did not apply to its business. On March 22, 2007, Kimberly Grinston, an attorney for the

MREC sent another letter stating that KCPA was violating § 339.010.1, which the letter quoted. The letter specifically highlighted §§ 339.010.1(4),

and (9), placing

these provisions in bold and italic font, but the letter did not specify any of KCPA's business activities that it believed to violate these provisions. The letter specifically advised KCPA that operating as a real estate broker or salesperson without a license was a crirninal offense and it threatened to refer Kep A's activities to the Missouri

Attorney General's Office and all applicable prosecuting authorities for official and inlmediate legal action. 8. The commission did not direct Ms. Grinston to highlight the particular provisions enlphasized in the cease-and-desist letter that bore her signature.

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that: 1. KCPA is nol exempt from the restrictions and requirenlents of Chapter 339. 2. Sections 339.010.1(3), (4), (7), (8), (9) and (10) are not unconstitutional under the Missouri or U"nites States Constitution.

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The application of Sections 339.010.1(3), (4), (7), (8), (9), and (10) are not facially unconstitutional under the Missouri or United States Constitution.

4. Sections 339.010.1(3), (4), (7), (8), (9)) and (10), are not unconstitutionally

overbroad. 5. Sections 339.010.1(3). (4), (7), (8), (9), and (10) are not unconstitutionally vague. 6. Section 339.010.6 is not unconstitutional.

7. KCPA is not excepted from the definition in Section 339.010.1 by any of the exceptions in Section 339.010.6. 8. The Court finds that the application of Chapter 339 RSMo to the activities of

KCP A does not violate any section of the United States or Missouri Constitutions. With regard to the request for Injunctive Relief by MREA the Court finds and Orders as follows: 1. MREC has shown that KCPA has performed acts which require licensure under Chapter 339,

and Kep A does not hold a Missouri real estate

license under Chapter 339, RSMo.

2. MREC has shown that there are grounds for an injunction restraining KCPA fronl certain actions under the provisions of Section 339.180.1 (I), RSMo.

WHEREFORE IT IS ORDERED, ADJUDGED AND DECREED: 1. That until KCPA complies with the requirements of Chapt.er 339 applicable to KCPA operations, KCPA is restrained and enjoined from:

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A. Contracting with property owners to receive cOlnpensation in return for

referring prospective tenants who rent from property

which is

not an enforceable contract under the terms of Section 339.160, RSMo; B. Any act requiring real estate licensure pursuant to the terms of Cja[ter

339 RSMo. IT IS FURTHER ORDERED, ADJUDGED AND DECRED: That KCP A is restrained and enjoined from paying a reward or incentive to tenants \.vho notifY property owners that they were directed to the property through

KCPA's services, which \vould violate Section 339.100.2(13) ifperfonned by a licensed real estate broker.

All requests for relief not granted herein are denied. Costs are assessed against

KCP A.

Dated:

Judge

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First Amendment to the U.S. Constitution â&#x20AC;&#x153;Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.â&#x20AC;? Fourteenth Amendment to the U.S. Constitution Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. Section 2. Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State. A7

Section 3. No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may, by a vote of two-thirds of each House, remove such disability. Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void. Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article. Article I, Section 2 of the Missouri Constitution â&#x20AC;&#x153;That all constitutional government is intended to promote the general welfare of the people; that all persons have a natural right to life, liberty, the pursuit of happiness and the enjoyment of the gains of their own industry; that all persons are created equal and are entitled to equal rights and opportunity under the law; that to give security to these things is the principal office of government, and that when government does not confer A8

this security, it fails in its chief design.” Article I, Section 8 of the Missouri Constitution “That no law shall be passed impairing the freedom of speech, no matter by what means communicated: that every person shall be free to say, write or publish, or otherwise communicate whatever he will on any subject, being responsible for all abuses of that liberty; and that in all suits and prosecutions for libel or slander the truth thereof may be given in evidence; and in suits and prosecutions for libel the jury, under the direction of the court, shall determine the law and the facts.” Article I, Section 10 of the Missouri Constitution “That no person shall be deprived of life, liberty or property without due process of law.” Article III, Section 40(30) of the Missouri Constitution “The general assembly shall not pass any local or special law… where a general law can be made applicable, and whether a general law could have been made applicable is a judicial question to be judicially determined without regard to any legislative assertion on that subject.” Section 339.010, RSMo § 339.010. Definitions -- applicability of chapter 1. A "real estate broker" is any person, partnership, association, or corporation, foreign or domestic who, for another, and for a compensation or valuable consideration, does, or attempts to do, any or all of the following: (1) Sells, exchanges, purchases, rents, or leases real estate; (2) Offers to sell, exchange, purchase, rent or lease real estate; A9

(3) Negotiates or offers or agrees to negotiate the sale, exchange, purchase, rental or leasing of real estate; (4) Lists or offers or agrees to list real estate for sale, lease, rental or exchange; (5) Buys, sells, offers to buy or sell or otherwise deals in options on real estate or improvements thereon; (6) Advertises or holds himself or herself out as a licensed real estate broker while engaged in the business of buying, selling, exchanging, renting, or leasing real estate; (7) Assists or directs in the procuring of prospects, calculated to result in the sale, exchange, leasing or rental of real estate; (8) Assists or directs in the negotiation of any transaction calculated or intended to result in the sale, exchange, leasing or rental of real estate; (9) Engages in the business of charging to an unlicensed person an advance fee in connection with any contract whereby the real estate broker undertakes to promote the sale of that person's real estate through its listing in a publication issued for such purpose intended to be circulated to the general public; (10) Performs any of the foregoing acts on behalf of the owner of real estate, or interest therein, or improvements affixed thereon, for compensation. 2. A "real estate salesperson" is any person who for a compensation or valuable consideration becomes associated, either as an independent contractor or employee, either directly or indirectly, with a real estate broker to do any of the things above mentioned. The provisions of sections 339.010 to 339.180 and sections 339.710 to 339.860* shall not be construed to deny a real estate salesperson who is compensated solely by commission A10

the right to be associated with a broker as an independent contractor. 3. The term "commission" as used in sections 339.010 to 339.180 and sections 339.710 to 339.860* means the Missouri real estate commission. 4. "Real estate" for the purposes of sections 339.010 to 339.180 and sections 339.710 to 339.860* shall mean, and include, leaseholds, as well as any other interest or estate in land, whether corporeal, incorporeal, freehold or nonfreehold, and the real estate is situated in this state. 5. "Advertising" shall mean any communication, whether oral or written, between a licensee or other entity acting on behalf of one or more licensees and the public, and shall include, but not be limited to, business cards, signs, insignias, letterheads, radio, television, newspaper and magazine ads, Internet advertising, web sites, display or group ads in telephone directories, and billboards. 6. The provisions of sections 339.010 to 339.180 and sections 339.710 to 339.860* shall not apply to: (1) Any person, partnership, association, or corporation who as owner, lessor, or lessee shall perform any of the acts described in subsection 1 of this section with reference to property owned or leased by them, or to the regular employees thereof; (2) Any licensed attorney-at-law; (3) An auctioneer employed by the owner of the property; (4) Any person acting as receiver, trustee in bankruptcy, administrator, executor, or guardian or while acting under a court order or under the authority of a will, trust instrument or deed of trust or as a witness in any judicial proceeding or other proceeding A11

conducted by the state or any governmental subdivision or agency; (5) Any person employed or retained to manage real property by, for, or on behalf of the agent or the owner of any real estate shall be exempt from holding a license, if the person is limited to one or more of the following activities: (a) Delivery of a lease application, a lease, or any amendment thereof, to any person; (b) Receiving a lease application, lease, or amendment thereof, a security deposit, rental payment, or any related payment, for delivery to, and made payable to, a broker or owner; (c) Showing a rental unit to any person, as long as the employee is acting under the direct instructions of the broker or owner, including the execution of leases or rental agreements; (d) Conveying information prepared by a broker or owner about a rental unit, a lease, an application for lease, or the status of a security deposit, or the payment of rent, by any person; (e) Assisting in the performance of brokers' or owners' functions, administrative, clerical or maintenance tasks; (f) If the person described in this section is employed or retained by, for, or on behalf of a real estate broker, the real estate broker shall be subject to discipline under this chapter for any conduct of the person that violates this chapter or the regulations promulgated thereunder; (6) Any officer or employee of a federal agency or the state government or any political subdivision thereof performing official duties; A12

(7) Railroads and other public utilities regulated by the state of Missouri, or their subsidiaries or affiliated corporations, or to the officers or regular employees thereof, unless performance of any of the acts described in subsection 1 of this section is in connection with the sale, purchase, lease or other disposition of real estate or investment therein unrelated to the principal business activity of such railroad or other public utility or affiliated or subsidiary corporation thereof; (8) Any bank, trust company, savings and loan association, credit union, insurance company, mortgage banker, or farm loan association organized under the laws of this state or of the United States when engaged in the transaction of business on its own behalf and not for others; (9) Any newspaper, magazine, periodical, Internet site, Internet communications, or any form of communications regulated or licensed by the Federal Communications Commission or any successor agency or commission whereby the advertising of real estate is incidental to its operation; (10) Any developer selling Missouri land owned by the developer; (11) Any employee acting on behalf of a nonprofit community, or regional economic development association, agency or corporation which has as its principal purpose the general promotion and economic advancement of the community at large, provided that such entity: (a) Does not offer such property for sale, lease, rental or exchange on behalf of another person or entity; (b) Does not list or offer or agree to list such property for sale, lease, rental or A13

exchange; or (c) Receives no fee, commission or compensation, either monetary or in kind, that is directly related to sale or disposal of such properties. An economic developer's normal annual compensation shall be excluded from consideration as commission or compensation related to sale or disposal of such properties; or (12) Any neighborhood association, as that term is defined in section 441.500, RSMo, that without compensation, either monetary or in kind, provides to prospective purchasers or lessors of property the asking price, location, and contact information regarding properties in and near the association's neighborhood, including any publication of such information in a newsletter, Internet site, or other medium. Section 339.170, RSMo ยง 339.170. Penalty for violation Any person or corporation knowingly violating any provision of sections 339.010 to 339.180 and sections 339.710 to 339.860 shall be guilty of a class B misdemeanor. Any officer or agent of a corporation, or member or agent of a partnership or association, who shall knowingly and personally participate in or be an accessory to any violation of sections 339.010 to 339.180 and sections 339.710 to 339.860, shall be guilty of a class B misdemeanor. This section shall not be construed to release any person from civil liability or criminal prosecution under any other law of this state. The commission may cause complaint to be filed for violation of section 339.020 in any court of competent jurisdiction, and perform such other acts as may be necessary to enforce the provisions hereof. A14

Section 339.180, RSMo 1. It shall be unlawful for any person or entity not licensed under this chapter to perform any act for which a real estate license is required. Upon application by the commission, and the necessary burden having been met, a court of general jurisdiction may grant an injunction, restraining order or other order as may be appropriate to enjoin a person or entity from: (1) Offering to engage or engaging in the performance of any acts or practices for which a permit or license is required by this chapter upon a showing that such acts or practices were performed or offered to be performed without a permit or license; or (2) Engaging in any practice or business authorized by a permit or license issued pursuant to this chapter upon a showing that the holder presents a substantial probability of serious danger to the health, safety or welfare of any person with, or who is considering obtaining, a legal interest in real property in this state. 2. Any such action shall be commenced either in the county in which such conduct occurred or in the county in which the defendant resides. 3. Any action brought under this section shall be in addition to and not in lieu of any penalty provided by this chapter and may be brought concurrently with other actions to enforce this chapter. Section 558.011, RSMo ยง 558.011. Sentence of imprisonment, terms--conditional release 1. The authorized terms of imprisonment, including both prison and conditional release terms, are: A15

(1) For a class A felony, a term of years not less than ten years and not to exceed thirty years, or life imprisonment; (2) For a class B felony, a term of years not less than five years and not to exceed fifteen years; (3) For a class C felony, a term of years not to exceed seven years; (4) For a class D felony, a term of years not to exceed four years; (5) For a class A misdemeanor, a term not to exceed one year; (6) For a class B misdemeanor, a term not to exceed six months; (7) For a class C misdemeanor, a term not to exceed fifteen days. 2. In cases of class C and D felonies, the court shall have discretion to imprison for a special term not to exceed one year in the county jail or other authorized penal institution, and the place of confinement shall be fixed by the court. If the court imposes a sentence of imprisonment for a term longer than one year upon a person convicted of a class C or D felony, it shall commit the person to the custody of the department of corrections for a term of years not less than two years and not exceeding the maximum authorized terms provided in subdivisions (3) and (4) of subsection 1 of this section. 3. (1) When a regular sentence of imprisonment for a felony is imposed, the court shall commit the person to the custody of the department of corrections for the term imposed under section 557.036, RSMo, or until released under procedures established elsewhere by law. (2) A sentence of imprisonment for a misdemeanor shall be for a definite term and the court shall commit the person to the county jail or other authorized penal institution for A16

the term of his or her sentence or until released under procedure established elsewhere by law. 4. (1) A sentence of imprisonment for a term of years for felonies other than dangerous felonies as defined in section 556.061, RSMo, and other than sentences of imprisonment which involve the individual's fourth or subsequent remand to the department of corrections shall consist of a prison term and a conditional release term. The conditional release term of any term imposed under section 557.036, RSMo, shall be: (a) One-third for terms of nine years or less; (b) Three years for terms between nine and fifteen years; (c) Five years for terms more than fifteen years; and the prison term shall be the remainder of such term. The prison term may be extended by the board of probation and parole pursuant to subsection 5 of this section. (2) â&#x20AC;&#x153;Conditional releaseâ&#x20AC;? means the conditional discharge of an offender by the board of probation and parole, subject to conditions of release that the board deems reasonable to assist the offender to lead a law-abiding life, and subject to the supervision under the state board of probation and parole. The conditions of release shall include avoidance by the offender of any other crime, federal or state, and other conditions that the board in its discretion deems reasonably necessary to assist the releasee in avoiding further violation of the law. 5. The date of conditional release from the prison term may be extended up to a maximum of the entire sentence of imprisonment by the board of probation and parole. The director of any division of the department of corrections except the board of A17

probation and parole may file with the board of probation and parole a petition to extend the conditional release date when an offender fails to follow the rules and regulations of the division or commits an act in violation of such rules. Within ten working days of receipt of the petition to extend the conditional release date, the board of probation and parole shall convene a hearing on the petition. The offender shall be present and may call witnesses in his or her behalf and cross-examine witnesses appearing against the offender. The hearing shall be conducted as provided in section 217.670, RSMo. If the violation occurs in close proximity to the conditional release date, the conditional release may be held for a maximum of fifteen working days to permit necessary time for the division director to file a petition for an extension with the board and for the board to conduct a hearing, provided some affirmative manifestation of an intent to extend the conditional release has occurred prior to the conditional release date. If at the end of a fifteen-working-day period a board decision has not been reached, the offender shall be released conditionally. The decision of the board shall be final. 20 CSR 2250-8.090 20 CSR 2250-8.090 Brokerage Service Agreements PURPOSE: This rule requires that a listing agreement be in writing and that a copy of the agreement be delivered to the owner before a broker may advertise or place a sign on the property. The agreement must contain all terms, conditions, a definite expiration date, and signatures of all parties. All information contained on the agreement shall be carefully investigated for accuracy by the listing agent. In a cooperative listing, the selling broker shall be presumed to be a subagent of the listing broker. A18

(1) A licensee shall not advertise or place a sign upon any property offering it for sale or lease to prospective customers without the written consent of the owner or his or her duly authorized agent. (2) A licensee shall not show residential property unless a broker holds a currently effective written seller’s/lessor’s agency agreement, seller’s/lessor’s transaction brokerage agreement, or other written authorization to show. (3) In a commercial real estate transaction, a brokerage service agreement prepared by legal counsel for the client/customer to be represented or assisted shall not be subject to the provisions of 20 CSR 2250-8.090(4)-(7). (4) Seller’s/Lessor’s Agency (Sale/Lease Listing) Agreement. (A) Every written listing agreement or other written agreement for brokerage services shall contain all of the following: 1. The price; 2. The commission to be paid (including any and all bonuses); 3. A definite beginning date; 4. An expiration date; 5. The licensee’s duties and responsibilities; 6. A statement which permits or prohibits the designated broker from offering subagency; 7. A statement which permits or prohibits the designated broker and/or affiliated licensee from acting as a disclosed dual agent and if permitted, the duties and responsibilities of a dual agent; 8. A statement which permits or prohibits the designated broker and/or affiliated licensee A19

from acting as a transaction broker and if permitted, the duties and responsibilities of a transaction broker; 9. Specification of whether or not the designated broker is authorized to cooperate with and compensate other designated brokers acting pursuant to any other brokerage relationship as defined by 339.710 to 339.860, RSMo, including but not limited to buyerâ&#x20AC;&#x2122;s agents and/or transaction brokers; 10. A statement which confirms that the seller/lessor received the Broker Disclosure Form prescribed by the commission: a) on or before the signing of the sellerâ&#x20AC;&#x2122;s agency agreement, or b) upon the licensee obtaining any personal or financial information, whichever occurs first; 11. The signatures of all owners and the listing broker or listing agent as authorized by the broker; 12. The type of listing; 13. The legal description or the complete street address of the property, which includes the city where the property is located; or, in the absence of a legal description or address, a clear description which unmistakably identifies the property; and 14. All other terms and conditions under which the property is to be sold, leased, or exchanged. (B) The agreement shall contain no provision requiring an owner to notify the broker of intent to cancel the listing after the expiration date. (C) Any addendums, riders, endorsements, attachments, or changes to the listing agreement or other written agreement for brokerage services must contain the initials of A20

all parties. (D) The licensee shall give a legible copy of every written listing agreement or other written agreement for brokerage services to the owner of the property at the time the signature of the owner is obtained. (E) A licensee shall not negotiate or enter into a brokerage service agreement with an owner if the licensee knows, or has reason to know, that the owner has a written unexpired exclusive brokerage service agreement as to the property with another broker, unless the owner initiates the discussion and provided the licensee has not directly or indirectly solicited the discussion, in which case the licensee may negotiate and enter into an agreement which will take effect after the expiration of the current agreement. (F) No licensee shall make or enter into a net listing agreement for the sale or lease of real property or any interest in real property; this agreement is defined as one that stipulates a net price to be received by the owner with the excess over that price to be received by the broker as commission. (G) A listing agreement or other written agreement for brokerage services may not be assigned, sold, or otherwise transferred to another broker without the express written consent of all parties to the original agreement. (5) Buyerâ&#x20AC;&#x2122;s/Tenantâ&#x20AC;&#x2122;s Agency Agreement. (A) Every written buyer or tenant authorization shall contain all of the following: 1. A description of the type of property sought by the buyer or tenant; 2. The commission or fee to be paid (including any and all bonuses); 3. A definite beginning date; A21

4. An expiration date; 5. The licenseeâ&#x20AC;&#x2122;s duties and responsibilities; 6. A statement which permits or prohibits the designated broker from offering subagency; 7. A statement which permits or prohibits the designated broker and/or affiliated licensee from acting as a disclosed dual agent and if permitted, the duties and responsibilities of a dual agent; 8. A statement which permits or prohibits the designated broker and/or affiliated licensee from acting as a transaction broker and if permitted, the duties and responsibilities of a transaction broker; 9. Specification of whether or not the designated broker is authorized to cooperate with and compensate other designated brokers acting pursuant to any other brokerage relationship as defined by 339.710 to 339.860, RSMo, including but not limited to sellerâ&#x20AC;&#x2122;s agents and/or transaction brokers; 10. A statement which confirms that the buyer received the Broker Disclosure Form prescribed by the commission: a) on or before the signing of the buyerâ&#x20AC;&#x2122;s agency agreement, or b) upon the licensee obtaining any personal or financial information, whichever occurs first; 11. The signatures of the buyers or tenants and the broker or agent as authorized by the broker; 12. The type of agreement; and 13. All other terms and conditions prescribed by the buyers or tenants. (B) The agreement shall contain no provision requiring a buyer or tenant to notify the A22

broker of intent to cancel the agreement after the expiration date. (C) Any addendums, riders, endorsements, attachments, or changes to the agreement or other written authorization must contain the initials of all parties. (D) The licensee shall give a legible copy of every written agreement or other authorization to the buyer or tenant at the time the signatures are obtained and a copy of the written authorization shall be retained in the brokerâ&#x20AC;&#x2122;s office. (E) A licensee shall not negotiate or enter into a brokerage service agreement with a buyer or tenant if the licensee knows, or has reason to know, that the buyer or tenant has a written unexpired exclusive agreement with another broker, unless the buyer or tenant initiates the discussion and provided the licensee has not directly or indirectly solicited the discussion, in which case the licensee may negotiate and enter into an agreement which will take effect after the expiration of the current agreement. (F) A buyer or tenant agency agreement may not be assigned, sold, or otherwise transferred to another broker without the express written consent of all parties to the original buyer or tenant agency agreement. (6) Transaction Brokerage Agreement Between Broker and Seller/Lessor. (A) Every written sellerâ&#x20AC;&#x2122;s or lessorâ&#x20AC;&#x2122;s transaction brokerage agreement shall contain all of the following: 1. The price; 2. The commission to be paid (including any and all bonuses); 3. A definite beginning date; 4. An expiration date; A23

5. The licenseeâ&#x20AC;&#x2122;s duties and responsibilities; 6. The signatures of all owners and the broker or affiliated licensee as authorized by the broker; 7. The type of agreement; 8. The legal description or the complete street address of the property, which includes the city where the property is located; or, in the absence of a legal description or address, a clear description which unmistakably identifies the property; 9. All other terms and conditions under which the property is to be sold, leased, or exchanged; 10. Specification of whether or not the designated broker is authorized to cooperate with and compensate other designated brokers acting pursuant to any other brokerage relationship as defined by 339.710 to 339.860, RSMo, including but not limited to buyerâ&#x20AC;&#x2122;s agents and/or other transaction brokers; and 11. A statement which confirms that the seller/lessor received the Broker Disclosure Form prescribed by the commission: a) on or before the signing of the transaction brokerage agreement, or b) upon the licensee obtaining any personal or financial information, whichever occurs first. (B) The agreement shall contain no provision requiring an owner to notify the broker of intent to cancel the agreement after the expiration date. (C) Any addendums, riders, endorsements, attachments, or changes to the agreement must contain the initials of all parties. (D) The licensee shall give a legible copy of every written agreement to the owner of the A24

property at the time the signature of the owner(s) is obtained. (E) A licensee shall not negotiate or enter into a brokerage service agreement with an owner if the licensee knows, or has reason to know, that the owner has a written unexpired exclusive brokerage service agreement as to the property with another broker, unless the owner initiates the discussion and provided the licensee has not directly or indirectly solicited the discussion, in which case the licensee may negotiate and enter into an agreement which will take effect after the expiration of the current agreement. (F) No licensee shall make or enter into a net agreement for the sale or lease of real property or any interest in real property; this agreement is defined as one that stipulates a net price to be received by the owner with the excess over that price to be received by the broker as commission. (G) Transaction brokerage agreements may not be assigned, sold, or otherwise transferred to another broker without the express written consent of all parties to the original transaction brokerage agreement. (7) Transaction Brokerage Agreement Between Broker and Buyer/Tenant. (A) Every written buyerâ&#x20AC;&#x2122;s or tenantâ&#x20AC;&#x2122;s transaction brokerage agreement shall contain all of the following: 1. A description of the type of property sought by the buyer or tenant; 2. The commission or fee to be paid (including any and all bonuses); 3. A definite beginning date; 4. An expiration date; 5. The licenseeâ&#x20AC;&#x2122;s duties and responsibilities; A25

6. The signatures of the buyers or tenants and the broker or affiliated licensee as authorized by the broker; 7. The type of agreement; 8. All other terms and conditions prescribed by the buyers or tenants; 9. Specification of whether or not the designated broker is authorized to cooperate with and compensate other designated brokers acting pursuant to any other brokerage relationship as defined by 339.710 to 339.860, RSMo, including but not limited to sellerâ&#x20AC;&#x2122;s agents and/or other transaction brokers; and 10. A statement which confirms that the buyer received the Broker Disclosure Form prescribed by the commission: a) on or before the signing of the transaction brokerage agreement, or b) upon the licensee obtaining any personal or financial information, whichever occurs first. (B) The agreement shall contain no provision requiring a buyer or tenant to notify the broker of intent to cancel the agreement after the expiration date. (C) Any addendums, riders, endorsements, attachments, or changes to the agreement must contain the initials of all parties. (D) The licensee shall give a legible copy of every written agreement or other authorization to the buyer or tenant at the time the signatures are obtained and a copy of the agreement shall be retained in the brokerâ&#x20AC;&#x2122;s office. (E) A licensee shall not negotiate or enter into a brokerage service agreement with a buyer or tenant if the licensee knows, or has reason to know, that the buyer or tenant has a written unexpired exclusive agreement with another broker, unless the buyer or tenant A26

initiates the discussion and provided the licensee has not directly or indirectly solicited the discussion, in which case the licensee may negotiate and enter into an agreement which will take effect after the expiration of the current agreement. (F) Transaction brokerage agreements may not be assigned, sold, or otherwise transferred to another broker without the express written consent of all parties to the original transaction brokerage agreement. (8) Other Written Authorization. Written authorization to show residential property without an agency agreement or transaction brokerage agreement with the owner/landlord must contain all of the following: (A) A definite beginning date; (B) An expiration date; (C) The signatures of all owners or landlords and the broker or licensee as authorized by the broker; (D) The legal description or the complete street address of the property, which includes the city where the property is located; or, in the absence of a legal description or address, a clear description which unmistakably identifies the property; (E) Permission to enter and show the property; (F) The commission or fee to be paid (including any and all bonuses); (G) All other terms and conditions prescribed by the owners or landlords; (H) Any addendums, riders, endorsements, attachments, or changes to the written authorization must contain the initials of all parties; and (I) A statement which confirms that the owner or landlord received the Broker Disclosure A27

Form prescribed by the commission: a) on or before the signing of the other written authorization, or b) upon the licensee obtaining any personal or financial information, whichever occurs first. (9) Every written property management agreement or other written authorization between a broker and the owners of the real estate shall: (A) Identify the property to be managed; (B) State the amount of fee or commission to be paid and when the fee or commission will be paid; (C) Specify whether security deposits and prepaid rents will be held by the broker or the owner; (D) Contain the beginning date of the agreement; (E) Provide the terms and conditions for termination of the property management agreement by the broker or the owner of the property; (F) Include the licenseeâ&#x20AC;&#x2122;s duties and responsibilities; (G) Contain a statement which permits or prohibits the designated broker from offering subagency (not applicable for transaction broker agreements); (H) Contain a statement which permits or prohibits the designated broker and/or affiliated licensee from acting as a disclosed dual agent and if permitted, the duties and responsibilities of a dual agent; (I) Contain a statement which permits or prohibits the designated broker and/or affiliated licensee from acting as a transaction broker and if permitted, the duties and responsibilities of a transaction broker; A28

(J) Include specification of whether or not the designated broker is authorized to cooperate with and compensate other designated brokers acting pursuant to any other brokerage relationship as defined by sections 339.710 to 339.860, RSMo, including but not limited to tenantâ&#x20AC;&#x2122;s agents and/or transaction brokers; (K) Contain a statement which confirms that the landlord received the Broker Disclosure Form prescribed by the commission: 1. On or before the signing of the brokerage relationship agreement; or 2. Upon the licensee obtaining any personal or financial information, whichever occurs first; (L) Contain the signatures of all the owners and the broker or affiliated licensee as authorized by the broker; and (M) Any addendums, riders, endorsements, or attachments to the property management agreement or other written authorization between a broker and the owners of the real estate shall contain the signatures of all the owners and the broker or affiliated licensee as authorized by the broker. (10) The licensee shall give to the owner or the ownerâ&#x20AC;&#x2122;s authorized agent a legible copy of every written property management agreement or other written authorization at the time the signature of the owner is obtained. The licenseeâ&#x20AC;&#x2122;s broker shall retain a copy of the written property management agreement or other written authorization and a signed copy of any addendums, riders, endorsements, or attachments to the written property management agreement or other written authorization.

A29

Plaintiff’s Trial Exhibit #6 (MREC Responses to Requested Stipulations) While the Exhibit Index of the Trial Transcript shows that Plaintiff’s Exhibit #6 was “not offered,” it clearly was approved by Defendant’s counsel, Tr. at 8-10, and admitted into evidence. Tr. at 297. Stipulations to be Requested of MREC 1.

When assuming their position on the Missouri Real Estate Commission (MREC),

every member took an oath “to support the Constitution of the United States and of this State.” The circumstances under which Commissioners take office are within the control of the Governor’s office. Such an oath is required of all state officers by Article VII, Section 11 of the Missouri Constitution. 2.

Under § 339.170, “Any person or corporation knowingly violating any provision

of sections 339.010 to 339.180 and sections 339.710 to 339.860 shall be guilty of a class B misdemeanor.” Agreed. 3.

Under § 558.011.1(6), a class B misdemeanor is punishable by imprisonment for

“a term not to exceed six months.” Agreed.

A30

The injunction requested by the MREC seeks to prevent KCPA from engaging in

specified future communications or publications the MREC believes to be prohibited by Chapter 39, but not to punish any past violations of Chapter 339. Agreed. 5.

The decision by the MREC to seek an injunction does not prevent it from seeking

to impose against KCPA and its rental advisors any criminal penalties authorized by ยง 339.170. Agreed, although it has not been the practice of the MREC to file complaints in Circuit Courts under this section and the MREC has not done so in at least twenty years, if ever, as far as is known. 6.

The injunction requested by the MREC seeks not to terminate all business

operations in which KCPA is currently involved, but to prohibit those aspects of its business that, in the opinion of the MREC, violate Chapter 339. Agreed, except that the injunction would apply to those aspects of the business which violated Chapter 339 in the determination of the Court, not the opinion of the MREC. 7.