H. B. 4801
(By Delegates Trump and Staton)
[Introduced February 24, 2006; referred to the
Committee on the Judiciary.]
A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new article, designated §46A-6L-1, §46A-6L-2
and §46A-6L-3, all relating to unfair trade practices of
residential real estate developers; legislative findings;
definitions; prohibiting residential real estate developers
from offering or providing any inducement or incentive to any
purchaser or prospective purchaser of residential real estate
to obtain a real estate mortgage loan from any provider of
residential real estate loans with whom the residential real
estate developer has an affiliated business arrangement;
creating a misdemeanor offense and penalties; providing that
a violation is an unfair or deceptive practice and is subject
to certain enforcement provisions and remedies.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §46A-6L-1, §46A-6L-2
and §46A-6L-3, all to read as follows:
ARTICLE 6L. PROTECTION OF CONSUMERS FROM UNFAIR TRADE PRACTICES
BY RESIDENTIAL REAL ESTATE DEVELOPERS.
§46A-6L-1. Legislative findings.
The Legislature finds that in recent years some residential
real estate developers may be taking unfair advantage of consumers
who purchase residential real estate from them, by offering
incentives or inducements to purchasers in the sale of residential
real estate only if the consumers utilize certain other settlement
services provided by the developers or provided by persons or
entities which have affiliated business arrangements with the
developers or if the consumers obtain financing to purchase the
residential real estate from a provider of real estate loans with
which the developer has an affiliated business arrangement; that in
many such instances, the rate of interest upon the loan principal
and the costs of loan charges and fees charged to the purchaser to
obtain the loan may be greater than what may be available to the
purchaser through other providers of residential mortgage loans,
resulting in greater expense and costs to the purchaser. The
Legislature further finds that such practices by developers take
unfair advantage of purchasers of residential real estate and is
against the public policy of the state.
§46A-6L-2. Definitions.
(a) "Residential real estate developer" means any person who
owns, develops and offers for sale three or more parcels of
residential real estate in a calendar year to a natural person who
incurs a consumer or mortgage real estate loan upon residential
real estate or is a consumer of residential real estate;
(b) "Real estate loan" means a loan which is secured by a
first or subordinate lien upon residential real estate and is
designed or intended to pay all or a portion of the cost to
purchase or construct improvements upon residential real estate;
(c) "Real estate settlement service" means any service in
connection with the sale of residential real estate for which
purchasers of residential real estate ordinarily pay; "real estate
settlement service" includes, but is not limited to, such things as
purchasing property and casualty insurance, settlement or closing
of the real estate transaction, appraisals of real estate,
examinations of title, and obtaining or issuing title insurance.
(d) "Residential real estate" means real property with an
improvement thereon of a single family dwelling or individual units
of condominiums and cooperatives designed for the occupancy of from
one to four families;
(e) "Inducement or incentive" means a discount in the price of
the residential real estate, a rebate, the payment of all or some
of the closing costs for the real estate transaction, the addition
of some amenity to the residential real estate, a reduction in the purchase price or the offer of any other thing of value, including
payment, advance, funds, loan, service or other consideration.
(f) "Affiliated business arrangement" means an arrangement in
which a real estate developer, or any associate of a real estate
developer, is in a position to receive any money or thing of value,
other than the proceeds of sale of the residential real estate, as
a result of the purchaser's utilization of any particular real
estate settlement service or as a result of purchaser taking a real
estate loan made or originated by a particular person or entity.
(g) "Associate" means:
(1) With respect to a residential real estate developer who is
a natural person;
(i) A spouse, parent, or child of the real estate developer;
(ii) An employee, agent, or partner of the real estate
developer;
(iii) Any corporation, partnership, limited partnership,
trust, limited liability company, limited liability partnership or
other business entity of any kind in which the real estate
developer has any ownership interest or in which the real estate
developer is a director, officer, partner, manager or member; or
(iv) Any person, corporation, partnership, limited
partnership, trust, limited liability company, limited liability
partnership or other business entity of any kind with which the
real estate developer has any agreement, arrangement or understanding, the purpose or substantial effect of which is to
allow the real estate developer or an associate of the real estate
developer to benefit financially, by the receipt of funds other
than the sale proceeds of the residential real estate;
(2) With respect to a residential real estate developer which
is other than a natural person;
(i) Any employee, agent, partner, director, officer, member,
manager or shareholder or owner of any interest in the residential
real estate developer;
(ii) A spouse, parent or child of any person identified in
paragraph (i), subdivision (2), subsection (g), section two,
article six-l, chapter forty-six-a above;
(iii) Any corporation, partnership, limited partnership,
trust, limited liability company, limited liability partnership or
other business entity in which the real estate developer has any
ownership interest or in which the real estate developer is a
director, officer, partner, manager or member;
(iv) Any corporation, partnership, limited partnership, trust,
limited liability company, limited liability partnership or other
business entity in which any person who would be defined as an
associate of the real estate developer under paragraph (i),
subdivision (2), subsection (g), section two, article six-l,
chapter forty-six-a or paragraph (ii), subdivision (2), subsection
(g), section two, article six-l, chapter forty-six-a above; has any ownership interest or is a director, officer, partner, manager or
member.
§46A-6L-3. Prohibition of certain inducements or incentives
offered by residential real estate developers to
purchasers; penalties, enforcement and remedies
for violations.
(a) No residential real estate developer may condition the
sale of residential real estate upon a requirement that the
purchaser use or obtain from the real estate developer or from an
associate of the real estate developer any real estate settlement
service or obtain a real estate loan from the real estate developer
or from an associate of the real estate developer.
(b) No residential real estate developer may offer to any
purchaser of residential real estate any inducement or incentive
conditioned upon a requirement that the purchaser use or obtain
from the real estate developer or from an associate of the real
estate developer any real estate settlement service or obtain a
real estate loan from the real estate developer or from an
associate of the real estate developer.
(c) No residential real estate developer may increase the
price of residential real estate to any purchaser as a result of
purchaser's election to use or obtain any real estate settlement
service of purchaser's own choosing or as a result of purchaser's
election to obtain a real estate loan from a lender of purchaser's choosing.
(d) Any person violating the provisions of this section is
guilty of a misdemeanor and, upon conviction thereof, shall be
fined not more than one thousand dollars or confined in jail not
more than one year, or both fined and imprisoned.
(e) A violation of this section is an unfair or deceptive
practice within the meaning of section one hundred two, article six
of this chapter and is subject to the enforcement provisions and
remedies provided by this chapter.
Note: The purpose of this bill is to prohibit residential
real estate developers from offering or providing any inducement or
incentive to any purchaser or prospective purchaser of residential
real estate to obtain a real estate mortgage loan from any provider
of residential real estate loans with whom the residential real
estate developer has an affiliated business arrangement; creates a
misdemeanor offense and penalties; provides that a violation is an
unfair or deceptive practice and is subject to certain enforcement
provisions and remedies.
§46A-6L-1, §46A-6L-2 and §46A-6L-3 are new; therefore,
strike-throughs and underscoring have been omitted.