SSB 1117 (LSB 1925SC (5) 87)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON ANDERSON)

A BILL FOR

An Act relating to licensed real estate professionals and real estate disclosure statements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
REAL ESTATE LICENSEES

    Section 1.  Section 543B.1, Code 2017, is amended to read as follows:
   543B.1  License mandatory.
   A person shall not, directly or indirectly, with the intention or upon the promise of receiving any valuable consideration, offer, attempt, agree to perform, or perform any single act as a real estate broker constituting dealing in real estate as provided in section 543B.6, whether as a part of a transaction or as an entire transaction, or represent oneself as a real estate broker, broker associate, or salesperson licensee, without first obtaining a license and otherwise complying with the requirements of this chapter.
    Sec. 2.  Section 543B.2, Code 2017, is amended to read as follows:
   543B.2  Individual licenses necessary Brokerage ownership.
   A partnership, association, corporation, professional corporation, or professional limited liability company brokerage shall not be granted a license, unless every member or officer of the partnership, association, corporation, professional corporation, or professional limited liability company brokerage who actively participates in the brokerage business of the partnership, association, corporation, professional corporation, or professional limited liability company brokerage services holds a license as a real estate broker or salesperson licensee, and unless every employee who acts as a salesperson licensee for the partnership, association, corporation, professional corporation, or professional limited liability company brokerage holds a license as a real estate broker or salesperson licensee. At least one member or officer of each partnership, association, corporation, professional corporation, or professional limited liability company shall be a real estate broker.
    Sec. 3.  Section 543B.3, Code 2017, is amended to read as follows:
   543B.3  Broker Brokerage services —— definition.
   As used in this chapter, “real estate broker” “brokerage services” means a person acting for on behalf of another person for a fee, commission, or other compensation or promise, whether it be for all or part of a person’s time, and who engages engaging directly or indirectly in any of the following acts:
   1.  Sells Selling, exchanges exchanging, purchases purchasing, rents renting, or leases leasing real estate.
   2.  Lists Listing, offers or offering, attempts attempting, or agrees agreeing to list, real estate for sale, exchange, purchase, rent, or lease.
   3.  Advertises Advertising or holds holding oneself out as being engaged in the business of selling, exchanging, purchasing, renting, leasing, or managing real estate.
   4.  Negotiates Negotiating, or offers offering, attempts attempting, or agrees agreeing to negotiate, the sale, exchange, purchase, rental, or lease of real estate.
   5.  Buys Buying, sells selling, offers offering to buy or sell, or otherwise deals dealing in options on real estate or improvements on real estate.
   6.  Collects Collecting, or offers offering, attempts attempting, or agrees agreeing to collect, rent for the use of real estate.
   7.  Assists Assisting, referring, or directs directing in the procuring of prospects, intended to result in the sale, exchange, purchase, rental, or leasing of real estate.
   8.  Assists Assisting or directs directing in the negotiation of any transaction intended to result in the sale, exchange, purchase, rental, or leasing of real estate.
   9.  Prepares Preparing offers to purchase or purchase agreements, listing contracts, agency disclosures, real property residential and agricultural rental agreements, real property commercial rental agreements of one year or less, and groundwater hazard statements, including any modifications, amendments, or addendums to these specific documents.
    Sec. 4.  Section 543B.5, Code 2017, is amended to read as follows:
   543B.5  Other definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Agency” means a relationship in which a real estate broker licensee acts for or represents another by the other person’s express authority in a transaction.
   2.  “Agency agreement” means a written agreement between a broker licensee and a client which identifies the party the broker licensee represents in a transaction.
   3.  “Appointed agent” means that affiliated an associated licensee who is appointed by the designated broker of the affiliated associated licensee’s real estate brokerage agency to act solely for a client of that brokerage agency to the exclusion of other affiliated associated licensees of that brokerage agency.
   4.  “Branch office” means a real estate broker’s office other than a brokerage located separately from the principal place of business of the brokerage.
   5.  “Broker associate” means a person who has a broker’s license but licensee who is licensed under, and employed by or otherwise associated with, another a designated broker as a salesperson.
   6.  “Brokerage” means the a business or occupation of a real estate broker entity offering brokerage services.
   7.  “Brokerage agreement” means a contract between a broker brokerage and a client which establishes the relationship between the parties as to the brokerage services to be performed and contains the provisions required in section 543B.56A.
   8.  “Brokerage services” means those activities identified in sections 543B.3 and 543B.6.
   9.  8.  “Client” means a party to a transaction who has an agency a brokerage agreement with a broker brokerage for brokerage services.
   10.  9.  “Customer” means a consumer who is not being represented by a licensee but for whom the licensee may perform ministerial acts.
   11.  10.  “Designated broker” means a licensee designated by a real estate brokerage agency to act for the agency a brokerage in conducting real estate brokerage services.
   12.  11.  “Inactive license” means either a broker or salesperson license certificate that is on file with the real estate commission in the commission office and during pursuant to which time the licensee is precluded from engaging in any of the acts of this chapter.
   13.  “Licensee” means a broker or a salesperson licensed pursuant to this chapter.
   14.  12.  “Listing” is means an agreement between a property owner or other authorized person and another a brokerage or other person in pursuant to which that person the brokerage or other person holds or advertises the property to the public as being available for sale or lease.
   15.  13.  a.  “Material adverse fact” means an adverse fact that a party indicates is of such significance, or that is generally recognized by a competent licensee as being of such significance to a reasonable party, that it affects or would affect the party’s decision to enter into a contract or agreement concerning a transaction, or affects or would affect the party’s decision about the terms of the contract or agreement.
   b.  For purposes of this subsection, “adverse fact” means a condition or occurrence that is generally recognized by a competent licensee as resulting in any of the following:
   (1)  Significantly and adversely affecting the value of the property.
   (2)  Significantly reducing the structural integrity of improvement to real estate.
   (3)  Presenting a significant health risk to occupants of the property.
   16.  14.  “Negotiate” means to act as an intermediary between the parties to a transaction, and includes any of the following acts:
   a.  Participating in the parties’ discussion of the terms of a contract or agreement concerning a transaction.
   b.  Completing, when requested by a party, appropriate forms or other written record to document the party’s proposal in a manner consistent with the party’s intent.
   c.  Presenting to a party the proposals of other parties to the transaction and informing the party receiving a proposal of the advantages and disadvantages of the proposal.
   17.  15.  “Party” means a person seeking to sell, exchange, buy, or rent an interest in real estate, a business, or a business opportunity. “Party” includes a person who seeks to grant or accept an option to buy, sell, or rent an interest in real estate.
   18.  16.  “Person” means an individual, partnership, association, corporation, professional corporation, or professional limited liability company.
   17.  “Real estate broker” or “broker” means a person who is licensed as a real estate broker pursuant to this chapter.
   18.  “Real estate license” or “license” means a license issued pursuant to this chapter.
   19.  “Real estate licensee” or “licensee” means the holder of a license issued pursuant to this chapter.
   20.  “Real estate salesperson” or “salesperson” means a person who is licensed as a real estate salesperson pursuant to this chapter and who is employed by or otherwise associated with a brokerage as a selling, renting, or listing agent or representative of the brokerage.
   19.  21.  “Regular employee” means a person whose compensation is fixed in advance, who does not receive a commission, who works exclusively full-time for the owner of a brokerage, and whose total compensation is subject to state and federal withholding.
   20.  “Salesperson” means a person who is licensed under, and employed by or otherwise associated with, a real estate broker, as a selling, renting, or listing agent or representative of the broker.
   21.  22.  “Transaction” means the sale, exchange, purchase, or rental of, or the granting or acceptance of an option to sell, exchange, purchase, or rent an interest in real estate.
    Sec. 5.  Section 543B.6, Code 2017, is amended to read as follows:
   543B.6  Acts constituting dealing in real estate.
   A person who, for another, in consideration of compensation, by fee, commission, salary, or otherwise, or with the intention or in the expectation or upon the promise of receiving or collecting a fee, does, offers or attempts or agrees to do, engages in or offers or attempts or agrees to engage in, either directly or indirectly, any single act or transaction contained in the definition of a real estate broker brokerage services as set out in section 543B.3, whether the act be is an incidental part of a transaction or the entire transaction is a real estate broker or real estate salesperson dealing in real estate within the meaning of this chapter.
    Sec. 6.  Section 543B.7, subsection 5, paragraph a, subparagraphs (1) and (2), Code 2017, are amended to read as follows:
   (1)  The auctioneer shall provide in any advertising the name and address of the real estate broker licensee who is providing brokerage services for the transaction and the name of the real estate broker brokerage, attorney, or closing company who is responsible for closing the sale of the property.
   (2)  The real estate broker licensee providing brokerage services shall be present at the time of the auction and, if found to be in violation of this subsection, shall be subject to a civil penalty of one thousand dollars.
    Sec. 7.  Section 543B.7, subsection 5, paragraph c, Code 2017, is amended to read as follows:
   c.  If an investigation pursuant to this chapter reveals that an auctioneer has violated this subsection or has assumed to act in the capacity of a real estate broker or real estate salesperson licensee, the real estate commission shall issue a cease and desist order, and shall impose a civil penalty of one thousand dollars for the first offense, and impose a civil penalty of up to the greater of ten thousand dollars or ten percent of the real estate sales price for each subsequent violation.
    Sec. 8.  Section 543B.15, subsections 1, 2, 3, 4, 5, and 9, Code 2017, are amended to read as follows:
   1.  Except as provided in section 543B.20 an applicant for a real estate broker’s or salesperson’s license must be a person whose application has not been rejected for licensure in this or any other state within twelve months prior to the date of application, and whose real estate license has not been revoked in this or any other state within two years prior to date of application.
   2.  To qualify for a real estate license as a real estate broker or salesperson a person shall be eighteen years of age or over. However, an applicant is not ineligible because of citizenship, sex, race, religion, marital status, or national origin, although the application form may require citizenship information.
   3.  a.  An applicant for a real estate broker’s or salesperson’s license who has been convicted of an offense specified in this subsection shall not be considered for licensure until the following time periods have elapsed following completion of any applicable period of incarceration, or payment of a fine or fulfillment of any other type of sentence:
   (1)  For an offense which is classified as a felony, two an offense including or involving forgery, embezzlement, obtaining money under false pretenses, theft, arson, extortion, conspiracy to defraud, or other similar offense, or any other offense involving a criminal breach of fiduciary duty, five years.
   (2)  Notwithstanding subparagraph (1), for offenses including or involving forgery, embezzlement, obtaining money under false pretenses, theft, arson, extortion, conspiracy to defraud, or other similar offense, any offense involving moral turpitude, or other offense involving a criminal breach of fiduciary duty, five years.  For any offense not described in subparagraph (1) involving moral turpitude, one year.
   b.  After expiration of the time periods specified in paragraph “a”, an application shall be considered by the commission pursuant to subsection 6 and may be denied on the grounds of the conviction. An applicant may request a hearing pursuant to section 543B.19 in the event of a denial.
   c.  For purposes of this section, “convicted” or “conviction” means a guilty plea, deferred judgment from the time of entry of the deferred judgment until the time the defendant is discharged by the court without entry of judgment, or other finding of guilt by a court of competent jurisdiction in this state, or in any other state, territory, or district of the United States, or in any foreign jurisdiction.  A copy of the record of conviction is conclusive evidence of such conviction.
   4.  An applicant for a real estate broker’s or salesperson’s license who has had a professional license of any kind revoked or suspended or who has had any other form of discipline imposed, in this or any other jurisdiction, may be denied a license by the commission on the grounds of the revocation, suspension, or other discipline.
   5.  A person who makes a false statement of material fact on an application for a real estate broker’s or salesperson’s license, or who causes to be submitted, or has been a party to preparing or submitting any false application for such license, may be denied a license by the commission on the grounds of the false statement or submission. 
   9.  An applicant for an initial real estate broker’s or salesperson’s license shall be subject to a national criminal history check through the federal bureau of investigation. The commission shall request the criminal history check and shall provide the applicant’s fingerprints to the department of public safety for submission through the state criminal history repository to the federal bureau of investigation. The applicant shall authorize release of the results of the criminal history check to the real estate commission. The applicant shall pay the actual cost of the fingerprinting and criminal history check, if any. Unless the criminal history check was completed within the two hundred ten calendar days prior to the date the license application is received by the real estate commission, the commission shall reject and return the application to the applicant. The commission shall process the application but hold delivery of the license until the background check is complete. The results of a criminal history check conducted pursuant to this subsection shall not be considered a public record under chapter 22.
    Sec. 9.  Section 543B.16, Code 2017, is amended to read as follows:
   543B.16  Application forms.
   1.  Every applicant for a real estate broker’s license shall apply in writing upon blanks prepared or furnished by the real estate commission. The real estate commission shall not require that a recent photograph of the applicant be attached to the application.  The real estate commission shall not require an applicant to disclose criminal background information on the application except for a conviction of an offense described in section 543B.15, subsection 3.
   2.  Every applicant for a license shall furnish information setting forth the applicant’s present mailing address, both of business and residence, a complete list of all former places where the applicant may have been engaged in business for a period of sixty days or more, during the last five years, accounting for such entire period and electronic mail address.
   3.  The commission shall prepare and furnish written application blanks for the salesperson’s license requesting information as the commission may require. The commission shall not require that a recent photograph of the applicant be attached to the application. The application Every applicant for the a salesperson’s license shall be accompanied by furnish a written statement by the designated broker whose service the applicant is about to enter recommending that the license be granted to the applicant.
    Sec. 10.  Section 543B.19, Code 2017, is amended to read as follows:
   543B.19  License denied —— hearing.
   If the real estate commission, after an application in proper form has been filed with it the commission, accompanied by the proper fee, shall deny denies a license to the applicant, upon the applicant’s application applicant may apply in writing, and within a period of thirty days of such denial, and the applicant shall be entitled to a hearing as provided in section 543B.35.
    Sec. 11.  Section 543B.20, Code 2017, is amended to read as follows:
   543B.20  Examination.
   Examinations for a license shall be given as often as deemed necessary by the real estate commission, but no less than one time per year. Each applicant for a license must pass an examination authorized by the commission and administered by the commission or persons designated by the commission. The examination shall be of scope and wording sufficient in the judgment of the commission to establish the competency of the applicant to act as a real estate broker or salesperson in a manner to protect the interests of the public. An examination for a real estate broker shall be of a more exacting nature than that for a real estate salesperson and require higher standards of knowledge of real estate. The identity of the persons taking the examinations shall be concealed until after the examination has been graded. A person who fails to pass either examination once may immediately apply to take the next available examination. Thereafter, the applicant may take the examination at the discretion of the commission. An applicant who has failed either examination may request in writing information from the commission concerning the applicant’s examination grade and subject areas or questions which the applicant failed to answer correctly, except that if the commission administers a uniform, standardized examination, the commission is only required to provide the examination grade and other information concerning the applicant’s examination results which is available to the commission.
    Sec. 12.  Section 543B.21, Code 2017, is amended to read as follows:
   543B.21  Nonresident license Out-of-state licensee —— reciprocity.
   A nonresident of this state person holding a valid and active license to engage in brokerage services in another state may be licensed as a real estate broker or a real estate salesperson in this state, upon complying with all requirements of law and with all the provisions and conditions of this chapter relative to resident brokers or salespersons and the filing by the applicant with the real estate commission of a certification from the state of original licensure signed by the duly qualified and authorized official or officials of that state that the applicant is there currently licensed, that no charges against the applicant are there pending, and that the applicant’s record in that state justifies the issuance of a license to the applicant in Iowa. The commission may waive the requirement of an examination in the case of a nonresident broker an out-of-state licensee who is licensed under the laws of a state having similar requirements and where similar recognition and courtesies are extended to licensed real estate brokers and salespersons licensees of this state.
    Sec. 13.  Section 543B.22, Code 2017, is amended to read as follows:
   543B.22  Nonresident’s Out-of-state licensee’s place of business.
   A nonresident An out-of-state licensee to whom a license is issued upon compliance with all the other requirements of law and provisions of this chapter, is not required to maintain a definite an active place of business within this state. Provided that However, the nonresident, if a broker, out-of-state licensee shall maintain an active place of business within the state of the nonresident’s domicile, and that the original licensure. The privilege of submitting a certification of licensure certified to by the qualified and authorized official or officials of the state of original licensure, in lieu of the recommendations and statements otherwise required, only applies to licensed real estate brokers and real estate salespersons of those states under the laws of which similar recognition and courtesies are extended to licensed real estate brokers and real estate salespersons licensees of this state.
    Sec. 14.  Section 543B.23, Code 2017, is amended to read as follows:
   543B.23  Actions against nonresidents out-of-state licensees.
   Every nonresident out-of-state licensee applicant, before the issuance of a license in this state, shall file an irrevocable consent that suits and actions may be commenced against such applicant in the proper court of any county of this state in which a cause of action may arise, by the service of any process or pleadings authorized by the laws of this state on the chairperson of the real estate commission, said such consent stipulating and agreeing that such service of such process or pleadings on the commission shall be taken and held in all courts to be as valid and binding as if due service had been made upon said the applicant within the state of Iowa. Said The instrument containing such consent shall be authenticated by the seal thereof of the out-of-state licensee, and if a corporation, or by the acknowledged signature of a member or officer thereof, if otherwise of the corporation. All such applications, except from individuals, shall be accompanied by a duly certified copy of the resolutions of the proper officers, or managing board, authorizing the proper officer to execute the same application. In case any process or pleadings mentioned in the case are served upon the commission it shall be by duplicate copies, one of which shall be filed in the office of the commission, and the other immediately forwarded by certified mail to the main office of the applicant against whom or which said such process or pleadings are directed.
    Sec. 15.  Section 543B.24, Code 2017, is amended to read as follows:
   543B.24  Custody of salesperson’s license.
   The A license of a real estate salesperson shall be delivered or mailed to the real estate broker brokerage by whom the real estate salesperson licensee is employed and shall be kept in the custody and control of the broker brokerage.
    Sec. 16.  Section 543B.27, subsection 1, unnumbered paragraph 1, Code 2017, is amended to read as follows:
   The real estate commission shall set fees for examination and licensing of real estate brokers and real estate salespersons licensees. The commission shall determine the annual cost of administering the examination and shall set the examination fee accordingly. The commission shall set the fees for the real estate broker’s licenses and for real estate salesperson’s licenses based upon the administrative costs of sustaining the commission. The fees shall include, but shall not be limited to, the costs for:
    Sec. 17.  Section 543B.27, subsection 2, Code 2017, is amended to read as follows:
   2.  Notwithstanding subsection 1, a nonresident person an out-of-state licensee seeking to procure a license pursuant to this chapter shall be charged a fee equal to the greater of the following:
   a.  The fee as determined pursuant to subsection 1.
   b.  A fee equal to the fee the nonresident person out-of-state licensee would be charged by such person’s state of residence if that person were a resident of this state making application for a license in that state and that state charges a nonresident an out-of-state licensee a fee which is greater than that charged by that state to a resident of that state.
    Sec. 18.  Section 543B.29, subsection 1, unnumbered paragraph 1, Code 2017, is amended to read as follows:
   A license to practice the profession of real estate broker and salesperson may be revoked or suspended when the licensee is guilty of any of the following acts or offenses:
    Sec. 19.  Section 543B.29, subsection 1, paragraph b, Code 2017, is amended to read as follows:
   b.  Having made a false statement of material fact on an application for a real estate broker’s or salesperson’s license, or having caused to be submitted, or having been a party to preparing or submitting any false application for such license.
    Sec. 20.  Section 543B.29, subsection 1, paragraph f, subparagraphs (1) and (2), Code 2017, are amended to read as follows:
   (1)  A licensed real estate broker or salesperson licensee shall notify the commission of the licensee’s conviction of an offense included in section 543B.15, subsection 3, paragraph “a”, within ten days of the conviction. Notification of a conviction for an offense which is classified as a felony shall result in the immediate suspension of a license pending the outcome of a hearing conducted pursuant to section 543B.35 to determine the nature of the disciplinary action, if any, the commission will impose on the licensee. The hearing shall be conducted within thirty days of the licensee’s notification to the commission, and the commission’s decision shall be provided to the licensee no later than thirty days following the hearing. The failure of the licensee to notify the commission of the conviction within ten days of the date of the conviction is sufficient grounds for revocation of the license.
   (2)  The commission, when considering the revocation or suspension of a license pursuant to this paragraph “f”, shall consider the nature of the offense; any aggravating or extenuating circumstances which are documented; the time lapsed since the conduct or conviction; the rehabilitation, treatment, or restitution performed by the licensee; and any other factors the commission deems relevant. Character references may be required but shall not be obtained from licensed real estate brokers or salespersons licensees.
    Sec. 21.  Section 543B.29, subsections 2, 3, and 4, Code 2017, are amended to read as follows:
   2.  The revocation of a designated broker’s license shall automatically suspend every license granted to any person by virtue of the person’s employment by the broker whose license has been revoked who is employed or associated with the brokerage, pending a change of employer the designated broker and the issuance of a new license. The new license shall be issued upon payment of a fee in an amount determined by the commission based upon the administrative costs involved, if granted during the same license period in which the original license was granted.
   3.  A real estate broker or salesperson licensee who is an owner or lessor of property or an employee of an owner or lessor may have the broker’s or salesperson’s their license revoked or suspended for violations of this section or section 543B.34, except section 543B.34, subsection 1, paragraphs “d”, “e”, “f”, and “i”, with respect to that property.
   4.  A real estate broker’s or salesperson’s licensee’s license shall be revoked following three violations of this section or section 543B.34 within a five-year three-year period.
    Sec. 22.  Section 543B.30, Code 2017, is amended to read as follows:
   543B.30  Actions —— license as prerequisite.
   A person engaged in the business or acting in the capacity of a real estate broker or a real estate salesperson licensee within this state shall not bring or maintain any action in the courts of this state for the collection of compensation for services performed as a real estate broker or salesperson licensee without alleging and proving that the person was a duly licensed real estate broker or real estate salesperson at the time the alleged cause of action arose.
    Sec. 23.  Section 543B.31, Code 2017, is amended to read as follows:
   543B.31  Place of business —— branch license.
   Every real estate broker brokerage, except as provided in section 543B.22, shall maintain a place of business in this state.  A brokerage may maintain more than one place of business within the state. If the real estate broker brokerage maintains more than one place of business within the state, a duplicate branch license shall be issued to such broker brokerage for each branch office maintained. Provided, that if such broker be a partnership, association, corporation, professional corporation, or professional limited liability company a duplicate shall be issued to the members or officers thereof, and a A fee determined by the real estate commission in each case shall be paid for each duplicate branch license.
    Sec. 24.  Section 543B.32, Code 2017, is amended to read as follows:
   543B.32  Change of location.
   Notice in writing, electronic or otherwise, shall be given to the real estate commission by each licensee of any change of principal business location, whereupon the commission shall issue a new license for the unexpired period upon the payment of a fee established by rule to cover the cost of issuing the license.
    Sec. 25.  Section 543B.33, Code 2017, is amended to read as follows:
   543B.33  Salespersons Licensees —— change of employment brokerage employment or association.
   When any real estate salesperson a licensee is discharged or terminates employment or association with the real estate broker by whom the salesperson is employed a brokerage, the real estate designated broker for the brokerage shall immediately deliver, or mail, or electronically submit to the real estate commission a copy of the real estate salesperson’s licensee’s license on the reverse side of which the employing designated broker shall set out the date and cause of termination of employment. The real estate designated broker at the time of mailing submitting a copy of the real estate salesperson’s licensee’s license to the commission shall address a communication to the last known residence address of the real estate salesperson licensee stating that a copy of the licensee’s license has been delivered, or mailed, or electronically submitted to the commission. A copy of the communication to the real estate salesperson licensee shall accompany the copy of the license when mailed or delivered submitted to the commission. It is unlawful for any real estate salesperson a licensee to perform any of the acts contemplated by this chapter either directly or indirectly under authority of a license from and after the date of receipt of a copy of the licensee’s license by the commission. The commission shall, upon presentation of evidence by the salesperson licensee that the salesperson licensee has been employed by or is associated with another broker brokerage, issue another license for the balance of the current license period showing each change of employment or association with a brokerage. A fee as determined by the commission shall be charged for the issuance of the license. Not more than one license shall be issued to any real estate salesperson licensee for the same period of time.
    Sec. 26.  Section 543B.34, Code 2017, is amended to read as follows:
   543B.34  Investigations by commission —— licensing sanctions —— civil penalty.
   1.  The real estate commission may upon its own motion and shall upon the verified complaint in writing of any person, if the complaint together with evidence, documentary or otherwise, presented in connection with the complaint makes out a prima facie case, request commission staff or any other duly authorized representative or designee to investigate the actions of any real estate broker, real estate salesperson, licensee or other person who assumes to act in either such capacity within this state. The commission may assess civil penalties against any person or entity, and may suspend or revoke a license issued under this chapter at any time if the licensee has by false or fraudulent representation obtained a license, or if the licensee or other person assuming to act in the capacity of a real estate broker or real estate salesperson licensee, except for those actions exempt pursuant to section 543B.7, is found to be guilty of any of the following:
   a.  Making any substantial misrepresentation.
   b.  Making any false promise of a character likely to influence, persuade, or induce.
   c.  Pursuing a continued and flagrant course of misrepresentation, or making of false promises through agents or salespersons licensees or advertising or otherwise.
   d.  Acting for more than one party in a transaction without the knowledge of all parties for whom the licensee acts.
   e.  Accepting a commission or valuable consideration as a real estate broker associate or salesperson licensee for the performance of any of the acts specified in this chapter, from any person, except the broker associate’s or salesperson’s employer, who must be a licensed real estate broker licensee’s brokerage. However, a broker associate or salesperson licensee may, without violating this paragraph, accept a commission or valuable consideration from a corporation which is wholly owned, or owned with a spouse, by the broker associate or salesperson licensee if the conditions described in paragraph “i” are met.
   f.  Representing or attempting to represent a real estate broker brokerage other than the licensee’s employer, without the express knowledge and consent of the employer brokerage.
   g.  Failing, within a reasonable time, to account for or to remit any moneys coming into the licensee’s possession which belong to others.
   h.  Being unworthy or incompetent to act as a real estate broker or salesperson licensee in such manner as to safeguard the interests of the public.
   i.  (1)  Paying a commission or other valuable consideration or any part of such commission or consideration for performing any of the acts specified in this chapter to a person who is not a licensed broker or salesperson under this chapter or who is not engaged in the real estate business brokerage services in another state or foreign country, provided that the provisions of this section shall not be construed to prohibit the payment of earned commissions or consideration to any of the following:
   (a)  The estate or heirs of a deceased real estate licensee when such licensee had a valid real estate license in effect at the time the commission or consideration was earned.
   (b)  A citizen of another country acting as a referral agent if that country does not license real estate brokers or salespersons and if the Iowa licensee paying the commission or consideration obtains and maintains reasonable written evidence that the payee is a citizen of the other country, is not a resident of this country, and is in the business of brokering real estate in that other country.
   (c)  A corporation pursuant to subparagraph (2).
   (2)  A broker brokerage may pay a commission to a corporation which is wholly owned, or owned with a spouse, by a salesperson or broker associate licensee employed by or otherwise associated with the broker brokerage, if all of the following conditions are met:
   (a)  The corporation does not engage in real estate transactions as a third-party agent or in any other activity requiring a license under this chapter.
   (b)  The employing broker brokerage is not relieved of any obligation to supervise the employed licensee or any other requirement of this chapter or the rules adopted pursuant to this chapter.
   (c)  The employed broker associate or salesperson licensee is not relieved from any personal civil liability for any licensed activities by interposing the corporate form.
   j.  Failing, within a reasonable time, to provide information requested by the commission as the result of a formal or informal complaint to the commission which would indicate a violation of this chapter.
   k.  Any other conduct, whether of the same or different character from that specified in this section, which demonstrates bad faith, or improper, fraudulent, or dishonest dealings which would have disqualified the licensee from securing a license under this chapter.
   2.  Any unlawful act or violation of any of the provisions of this chapter by any real estate broker associate or salesperson licensee, employee, or partner or associate of a licensed real estate broker licensee, is not cause for the revocation of the license of any real estate broker licensee, unless the commission finds that the real estate broker licensee had guilty knowledge of the unlawful act or violation.
   3.  If an investigation pursuant to this section reveals that an unlicensed person has assumed to act in the capacity of a real estate broker or real estate salesperson licensee, the commission shall issue a cease and desist order, and shall impose a civil penalty of up to the greater of ten thousand dollars or ten percent of the real estate sale price.
    Sec. 27.  Section 543B.35, Code 2017, is amended to read as follows:
   543B.35  Hearing on charges.
   The real estate commission shall, upon request of the applicant as provided in section 543B.19, or before revoking any license, set the matter down for a hearing and at least twenty days prior to the date set for the hearing it shall notify the applicant or licensee in writing, which said notice shall contain an exact statement of the charges made and the date and place of the hearing. The applicant or licensee at all such hearings shall have the opportunity to be heard in person and by counsel in reference thereto. Such written notice of hearing may be served by delivery personally to the applicant or licensee or by mailing the same by certified mail to the last known business address of such applicant or licensee. If such applicant or licensee be a salesperson, the The commission shall also notify the designated broker employing the salesperson or into whose employ the salesperson is about to enter associated with the applicant or licensee’s brokerage by mailing such notice by certified mail to the designated broker’s last known business address. The hearing on such charges shall be at such time and place as the commission shall prescribe.
    Sec. 28.  Section 543B.40, Code 2017, is amended to read as follows:
   543B.40  Depositions.
   The testimony may be taken by deposition as in civil cases, and any person may be compelled to appear and depose in the same manner as witnesses may be compelled to appear and testify as hereinbefore provided.
    Sec. 29.  Section 543B.46, Code 2017, is amended to read as follows:
   543B.46  Trust accounts.
   1.  Each real estate broker A brokerage which is in the practice of depositing funds in a trust account shall maintain a common trust account in a bank, bank holding company, savings bank, savings and loan association, or credit union, or other similar entity for the deposit of all down payments, earnest money deposits, or other trust funds received by the broker or the broker’s salespersons on behalf of the broker’s a licensee as directed by the licensee’s principal, except that a broker acting as a salesperson shall deposit these funds in the common trust account of the broker for whom the broker acts as salesperson. The account shall be an interest-bearing account. The interest on the account shall be transferred quarterly to the treasurer of state and transferred to the Iowa finance authority for deposit in the housing trust fund established in section 16.181 unless there is a written agreement between the buyer and seller to the contrary. The broker brokerage shall not benefit from interest received on funds of others in the broker’s brokerage’s possession.  A brokerage which is not in the practice of depositing funds in a trust account shall not be required to maintain a common trust account pursuant to this section.
   2.  Each broker A brokerage required to maintain a trust account pursuant to this section shall notify the real estate commission of the name of each bank, bank holding company, savings bank, savings and loan association, or credit union, or other similar entity in which a trust account is maintained and also the name of the account on forms provided therefor.
   3.  Each broker A brokerage required to maintain a trust account pursuant to this section shall authorize the real estate commission to examine each trust account and shall obtain the certification of the bank, bank holding company, savings bank, savings and loan association, or credit union, or other similar entity attesting to each trust account and consenting to the examination and audit of each account by a duly authorized representative of the commission. The certification and consent shall be furnished on forms prescribed by the commission. This subsection does not apply to an individual farm account maintained in the name of the owner or owners for the purpose of conducting ongoing farm business whether it is conducted by the farm owner or by an agent or farm manager when the account is part of a farm management agreement between the owner and agent or manager. This subsection also does not apply to an individual property management account maintained in the name of the owner or owners for the purpose of conducting ongoing property management whether it is conducted by the property owner or by an agent or manager when the account is part of a property management agreement between the owner and agent or manager.
   4.  Each broker A brokerage required to maintain a trust account pursuant to this section shall only deposit trust funds received on real estate or business opportunity transactions as directed by the principal of a transaction constituting dealing in real estate as defined in section 543B.6 in the common trust account and shall not commingle the broker’s personal brokerage’s operating funds or other funds in the trust account with the exception that a broker brokerage may deposit and keep a sum not to exceed five hundred one thousand dollars in the account from the broker’s personal brokerage’s operating funds, which sum shall be specifically identified and deposited to cover bank service charges relating to the trust account.
   5.  A broker brokerage may maintain more than one trust account provided the commission is advised of said the account as specified in subsections 2 and 3 above.
   6.  The commission shall verify on a test basis, a random sampling of the brokers, corporations, professional corporations, professional limited liability companies, and partnerships brokerages for their trust account compliance. The commission may upon reasonable cause, or as a part of or after an investigation, request or order a special report.
   7.  The examination of a trust account shall be conducted by the commission or the commission’s authorized representative.
   8.  The commission shall adopt rules to ensure implementation of this section.
    Sec. 30.  Section 543B.53, Code 2017, is amended to read as follows:
   543B.53  Application of chapter.
   The provisions of this chapter which require successful completion of a real estate education course before being licensed as a real estate salesperson shall not apply to persons who hold real estate salesperson’s licenses on July 1, 1976 or to the issuance of new licenses to these persons under the provisions of pursuant to section 543B.28.
    Sec. 31.  Section 543B.55, Code 2017, is amended to read as follows:
   543B.55  Disclosure of relationship.
   The real estate commission shall adopt rules requiring that each real estate broker or salesperson licensee in a real estate transaction disclose in writing the broker’s or salesperson’s licensee’s agency relationship with the buyer or seller in the transaction.
    Sec. 32.  Section 543B.56A, subsection 2, unnumbered paragraph 1, Code 2017, is amended to read as follows:
   A brokerage agreement shall specify that the broker licensee shall, at a minimum, do all of the following:
    Sec. 33.  Section 543B.57, Code 2017, is amended to read as follows:
   543B.57  Confirmation and disclosure of relationship.
   1.  A licensee shall not represent any party or parties to in a transaction or otherwise act as a licensee unless that licensee makes a written agency disclosure to all parties to the transaction identifying which party that person represents in the transaction.
   2.  a.  The disclosure required in subsection 1 shall be made by the licensee at the time the licensee provides specific assistance to the client. A change in a licensee’s representation that makes the initial disclosure incomplete, misleading, or inaccurate requires that a new disclosure be made immediately.
   b.  A written disclosure is required to be made to a brokerage client prior to an offer being made or accepted by any party to a transaction. The written disclosure shall be acknowledged by separate signatures of all parties to the transaction prior to any offer being made or accepted by any party to a transaction.
   c.  For purposes of this section, “specific assistance” means eliciting or accepting confidential information about a party’s real estate needs, motivation, or financial qualifications, or eliciting or accepting information involving a proposed or preliminary offer associated with specific real estate. “Specific assistance” does not mean an open house showing, preliminary conversations concerning price range, location, and property styles, or responding to general factual questions concerning properties which have been advertised for sale or lease.
   3.  The written agency disclosure form shall contain all of the following:
   a.  A statement of which party is the licensee’s client or, if the licensee is providing brokerage services to more than one client as provided under section 543B.60, a statement of all persons who are the licensee’s clients.
   b.  A statement of the licensee’s duties to the licensee’s client under section 543B.56, subsections 1 and 2.
   c.  Any additional information that the licensee determines is necessary to clarify the licensee’s relationship to the licensee’s client or customer.
   4.  This section does not prohibit a person from representing oneself.
   5.  The seller, in the listing agreement, may authorize the seller’s licensee brokerage to disburse part of the licensee’s brokerage’s compensation to other licensees brokerages, including a buyer’s licensee solely representing the buyer brokerage. A licensee representing a buyer shall inform the listing licensee, if there is a listing licensee, either verbally or in writing, of the agency relationship before any negotiations are initiated. The obligation of either the seller or the buyer to pay compensation to a licensee brokerage is not determinative of the agency relationship.
    Sec. 34.  Section 543B.59, Code 2017, is amended to read as follows:
   543B.59  Appointed agents within a firm.
   1.  Appointed agents.  A real estate brokerage agency entering into a brokerage agreement, through a designated broker, may notify a client in writing of those affiliated associated licensees within the real estate brokerage agency who will be acting as appointed agents of that client to the exclusion of all other affiliated associated licensees within the real estate brokerage agency.
   2.  Dual agent.  A real estate brokerage agency and a designated broker are not considered to be dual agents solely because of an appointment under the provisions of this section. However, an affiliated associated licensee who personally represents both the seller and the buyer in a particular transaction is considered to be a disclosed dual agent and is required to comply with the provisions of this subchapter governing disclosed dual agents.
   3.  Actual knowledge —— information.  A client, a real estate brokerage agency, and its appointed agents are deemed to possess only actual knowledge and information at the time the appointed agents are appointed. Knowledge or information is not imparted by operation of law among the clients, the real estate brokerage agency, and its appointed agents.
   4.  Appointments —— roles.  The commission shall define by rule the methods of appointment and the role of the real estate brokerage agency and the designated broker. The rules must include a requirement that clients be informed as to the real estate brokerage agency’s brokerage’s appointed agent policy and be given written notice of that policy in advance of entering into a brokerage agreement.
    Sec. 35.  Section 543B.60A, subsections 3 and 9, Code 2017, are amended by striking the subsections.
    Sec. 36.  Section 543B.60A, subsection 5, Code 2017, is amended to read as follows:
   5.  This section does not address relationships between a designated broker and the broker associates or salespersons licensees licensed under, employed by, or otherwise associated with the broker in a real estate brokerage agency.
    Sec. 37.  Section 543B.62, subsection 3, paragraph b, Code 2017, is amended to read as follows:
   b.  A designated broker is responsible for supervising a salesperson or broker associate licensee employed by or otherwise associated with the broker as a representative of the broker brokerage. The existence of an independent contractor relationship or any other special compensation arrangement between the broker brokerage and the salesperson or broker associate licensee does not relieve the designated broker, salesperson, or broker associate licensee of the duties and responsibilities established by this chapter. A salesperson or broker associate licensee shall keep the employing designated broker fully informed of all activities being conducted on behalf of the broker brokerage and any other activities that might impact on the broker’s brokerage’s responsibilities. However, the failure of the salesperson or broker associate licensee to keep the employing designated broker fully informed does not relieve the broker brokerage of the duties and responsibilities established by this chapter.
    Sec. 38.  REPEAL.  Section 543B.25, Code 2017, is repealed.
DIVISION II
REAL ESTATE DISCLOSURES

    Sec. 39.  Section 136B.2, subsection 2, Code 2017, is amended to read as follows:
   2.  a.  Notwithstanding the requirements of this section, disclosure to any person of the results of a test performed on a nonpublic building for the presence of radon gas and radon progeny is not required if the results do not exceed the currently established United States environmental protection agency action guidelines, except as required during a real estate transaction pursuant to section 558A.4, subsection 2 558A.4A.
   b.  A person who tests a nonpublic building which the person owns is not required to disclose to any person the results of a test for the presence of radon gas or progeny if the test is performed by the person who owns the nonpublic building, except as required during a real estate transaction pursuant to section 558A.4, subsection 2 558A.4A.
    Sec. 40.  Section 558A.1, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  01.  “Agent” means an individual designated by a transferee to accept delivery of a disclosure statement from a transferor.
    Sec. 41.  Section 558A.1, subsection 4, paragraph e, Code 2017, is amended to read as follows:
   e.  A transfer made to a spouse, or to a person in the lineal line within the third degree of consanguinity or affinity of a person making the transfer.
    Sec. 42.  Section 558A.2, subsection 2, Code 2017, is amended to read as follows:
   2.  The disclosure statement shall be made by personal delivery, or by certified or registered mail, or electronic delivery to the transferee or to the transferee’s agent. The delivery may be made to the spouse of the transferee, unless otherwise provided by the parties. If the disclosure statement is not timely delivered, the transferee may withdraw the offer or revoke the acceptance without liability, within three days following personal delivery of the statement or five days following electronic delivery or delivery by mail.
    Sec. 43.  Section 558A.4, Code 2017, is amended to read as follows:
   558A.4  Required information.
   1.  a.  The disclosure statement shall include information relating to the condition and important characteristics of the property and structures located on the property, including significant defects in the structural integrity of the structure, as provided in rules which shall be adopted by the real estate commission pursuant to section 543B.9. The rules may require the disclosure to include information relating to the property’s zoning classification; the condition of plumbing, heating, or electrical systems; or the presence of pests.
   b.  The disclosure statement may include a report or written opinion prepared by a person qualified to make judgment based on education or experience, as provided by rules adopted by the commission, including but not limited to a professional land surveyor licensed pursuant to chapter 542B, a geologist, a structural pest control operator licensed pursuant to section 206.6, or a building contractor. The report or opinion on a matter within the scope of the person’s practice, profession, or expertise shall satisfy the requirements of this section or rules adopted by the commission regarding that matter required to be disclosed. If the report or opinion is in response to a request made for purposes of satisfying the disclosure statement, the report or opinion shall indicate which part of the disclosure statement the report or opinion satisfies.
   2.  a.  A transferor subject to the requirements of section 558.70 shall recommend in writing that the transferee obtain an independent home inspection report to provide full and complete information as required to be disclosed under this section and under rules adopted by the real estate commission pursuant to section 543B.9.
   b.  A transferor subject to section 558.70 shall provide the real estate disclosure statement required by this chapter at least seven days before the real estate installment sales contract is executed by all parties to the contract.
    Sec. 44.  NEW SECTION.  558A.4A  Installment sales contracts —— required disclosures.
   1.  A transferor subject to the requirements of section 558.70 shall recommend in writing that the transferee obtain an independent home inspection report to provide full and complete information as required to be disclosed under this chapter and under rules adopted by the real estate commission pursuant to section 543B.9.
   2.  A transferor subject to section 558.70 shall provide the real estate disclosure statement required by this chapter at least seven days before the real estate installment sales contract is executed by all parties to the contract.
    Sec. 45.  Section 558A.6, Code 2017, is amended to read as follows:
   558A.6  Liability under the chapter.
   A person who violates this chapter shall be liable to a transferee for the amount of actual damages suffered by the transferee, but subject to the following limitations:
   1.  The provided, however, that the transferor, or a broker or salesperson, shall not be liable under this chapter for the error, inaccuracy, or omission in information required in a disclosure statement, unless that person has actual knowledge of the inaccuracy, or fails to exercise ordinary care in obtaining the information.
   2.  The person submitting a report or opinion within the scope of the person’s practice, profession, or expertise, as provided in section 558A.4, for purposes of satisfying the disclosure statement, shall not be liable under this chapter for any matter other than a matter within the person’s practice, profession, or expertise, and which is required by the disclosure statement, unless the person failed to use care ordinary in the person’s profession, practice, or area of expertise in preparing the information.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to real estate professionals and real estate disclosures.
   REAL ESTATE LICENSEES. The bill modifies several provisions in Code chapter 543B, dealing with the licensure of real estate brokers and salespersons.
   The bill changes references to “real estate broker”, “broker associate”, or “salesperson” throughout Code chapter 543B to “real estate licensee” or “licensee”.
   Code section 543B.1 prohibits a person from doing any act as a real estate broker or representing oneself as a licensee without obtaining a license. The bill changes the prohibition against doing any act as a real estate broker to a prohibition against doing any act constituting dealing in real estate. 
   The bill removes the requirement that at least one member or officer of a licensed brokerage be a real estate broker and changes references to specified forms of business entities being granted a license to “brokerage” in Code section 543B.2.
   Current Code section 543B.3 defines “real estate broker” and lists the acts that a real estate broker engages in. The bill modifies this provision to include the same list of acts as the definition of “brokerage services”. The bill removes the definition of “brokerage services” in Code section 543B.5. The bill makes conforming changes to the use of this terminology in Code chapter 543B. The bill makes other changes to the definitions listed in Code section 543B.5.
   Code section 543B.15(3) prohibits an applicant convicted of certain offenses from being considered for licensure until certain time periods have elapsed. The bill provides that for an applicant convicted of an offense classified as a felony, or involving forgery, embezzlement, false pretenses, theft, arson, extortion, conspiracy to defraud, or other similar offense, or any other offense involving a criminal breach of fiduciary duty, the applicant must wait five years. An applicant convicted of any other offense involving moral turpitude must wait one year. The bill provides that a copy of the record of an applicant’s conviction is conclusive evidence of the conviction. 
   The bill prohibits the real estate commission from requiring an applicant to disclose criminal background information on an application except for a copy of conviction of certain prescribed offenses. The bill requires an application to include an applicant’s present mailing address and electronic mail address. A salesperson’s application must include a written statement from a designated broker. The bill eliminates an applicant’s ability to immediately apply to take the next available licensure examination after failing a licensure examination. 
   Code section 543B.21 allows a nonresident to become licensed as a broker or salesperson in Iowa if certain conditions are met. The bill specifies that the person must hold a valid and active license to engage in brokerage services in another state. The bill changes “nonresident” to “out-of-state licensee” with respect to such persons. 
   Code section 543B.24 requires a salesperson’s license to be delivered to the salesperson’s employing broker for custody. The bill broadens this to any license, and requires a license to be delivered to and in the custody of a licensee’s brokerage. 
   The bill repeals Code section 543B.25, which requires a licensed broker to display their license in the broker’s place of business.
   Code section 543B.29(2) provides for the automatic suspension of a license granted by virtue of a person’s employment with a broker whose license is revoked. The bill amends this provision to provide that the revocation of a designated broker’s license automatically suspends a license granted to a person associated with the brokerage. 
   Code section 543B.29(4) provides that a license must be revoked following three violations of Code section 543B.29 or 543B.34 within a five-year period. The bill changes this to a three-year period. 
   Code section 543B.31 requires a licensed broker to maintain a place of business in this state and allows a broker to obtain a duplicate license for each additional branch office. The bill changes “broker” to “brokerage” and specifies that a brokerage may maintain more than one place of business in the state. The bill requires a brokerage to obtain a branch license, instead of a duplicate license, for each additional branch office. 
   The bill allows a licensee to provide electronic notification to the real estate commission for a change to a licensee’s principal place of business location, as required in Code section 543B.32. 
   Code section 543B.33 requires a broker to notify the real estate commission of any change of employment for a licensed salesperson and mail the salesperson’s license to the commission. The bill broadens this to include a change of employment or association for any licensee at a brokerage, and requires the designated broker to provide such notice. The bill allows the designated broker to send a copy of the licensee’s license, rather than the actual license, which can be delivered, mailed, or submitted electronically. 
   The bill provides that the real estate commission may assess civil penalties against any person or entity for conducting investigations pursuant to Code section 543B.34. 
   Code section 543B.46 requires a licensed broker to maintain a common trust account in a bank or other similar entity. The bill changes this to require a brokerage in the practice of depositing funds in a trust account to maintain a common trust account in such an entity. A brokerage not in the practice of depositing funds in a trust account is not required to do so. 
   Code section 543B.53 provides that education requirements for licensure as a salesperson do not apply to salespersons licensed on July 1, 1976, or to the issuance of new licenses to such salespersons upon renewal. The bill removes reference to salespersons licensed on July 1, 1976, providing that the education requirements do not apply to licensed salespersons seeking license renewal. 
   Code section 543B.57 requires licensees to provide written agency disclosure statements when representing a party to a real estate transaction. The bill specifies that such disclosure must be made to a brokerage client prior to an offer being made or accepted. The bill removes the requirement for a disclosure to be signed by all parties prior to an offer being made or accepted. The bill provides that a seller may authorize the seller’s brokerage to disburse the brokerage’s compensation to other brokerages. 
   The bill strikes Code section 543B.60A(3), which prohibits licensees from participating in certain conditional marketing plans. The bill also strikes Code section 543B.60A(9), which requires licensees to provide business referral disclosures.
   Code section 543B.62(3)(b) provides that a broker is responsible for supervising a salesperson or broker associate employed by or associated with the broker. The bill amends this paragraph to provide that a designated broker is responsible for a licensee employed by or associated with the brokerage.
   REAL ESTATE DISCLOSURES. The bill modifies provisions in Code chapter 558A, which requires real estate disclosures to be made before the transfer of certain real estate property. 
   The bill defines “agent” in Code section 558A.1 to mean an individual designated by a transferee to accept delivery of a disclosure statement from a transferor. The bill changes the exemption to the definition of “transfer” for spouses or related persons to specify that the exemption applies to persons within the third degree of consanguinity or affinity. 
   The bill allows a real estate disclosure statement to be made by electronic delivery in addition to personal delivery, or by mail, and to the transferee’s agent in addition to the transferee.
   The bill removes the provision allowing a disclosure statement to include a report or written opinion by a qualified professional from Code section 558A.4(1)(b). The bill removes the limitation on liability for a qualified professional who submitted a report from Code section 558A.6.
   The bill strikes Code section 558A.4(2), which requires the transferor in an installment sales contract to provide certain disclosures. However, the language of Code section 558A.4(2) is incorporated into new Code section 558A.4A.