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Proposed Legislation - Real Estate Code Cleanup

posted by Mark Gavin | Mar 07, 2017

The IAR submitted the idea of a “Code Cleanup” bill.  Among other “routine modernization,”  part of the language of this bill allows the Iowa Real Estate Commission (IREC) to clearly enforce laws against non-licensees that are performing duties of a real estate licensee, and updating code to meet electronic realities of the day. This bill number is HSB125. The bill should be receiving a new bill number very soon as it made it through the March 3 funnel.

Highlights of the bill

Makes changes to criminal background information when applying for a license.  This language is still being worked on and we are working with the Real Estate Commission to find the best language.  Crimes such as a felony offense of forgery or embezzlement will have a five year waiting period as they currently do when applying for a license.  The intent of the language is to ensure that a petty crime or misdemeanor does not necessarily prohibit a person from obtaining a license.  The background check will stay in place and remains the best mechanism we have to catch any potential issues. 

Eliminates unnecessary information on the real estate application such as past address and work history.

Changes language dealing with license law violations.  Current code states that three violations within a five year time results in revocation of license.  The bill changes it to three violations within three years.  This is a ‘loosening’ of current law based upon the potential for licensee to get a violation for neglecting to send in change of address, late renewal of Errors and Omissions insurance and other minor infractions.  

Includes language that will allow a designated broker to manage more than one office or physical location of business.  Particularly in rural areas, a designated broker may have an office of two people in their hometown and then have a satellite office in a town 20 minutes away.  Current law does not allow them to manage both offices, and this legislation would allow the management of more than one office.  The broker will still be held responsible for any and all transactions in both offices.

This section would allow the real estate commission to assess civil penalties to non-licensees acting in real estate without a license, who violates current license laws and sells real estate as a course of business.  This language will be helpful in going after online fly by night companies.

Changes current code language from “non-resident licensee” language to “out-of-state licensee”

Includes language that states a trust account is applicable only when depositing a check into an account.  Sometimes a real estate licensee is merely is delivering a check to  another party and not depositing the check for escrow purposes.

Includes language that clarifies that an agency disclosure should be given to the primary client of the licensee.  

Allows a broker or salesperson to give electronic notice to the real estate commission of change of business location

Eliminates the requirement that a broker physically display licenses at an office location.   This information is available on the real estate commission website and other online sources.  

Allows for delivery of a seller’s disclosure form to another agent or client by electronic means.  Includes language that the Real  Estate Commission adopt rules to ensure proper acknowledgement of receipt of electronic disclosures.  Allows expansion of real estate disclosure exemption when selling to family members.  

Eliminates language dealing with filing of optional reports (such as home inspection or pest inspection).  These reports are already paid for by the buyer and received by the buyer.