House
Study
Bill
175
-
Introduced
HOUSE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
COMMERCE
BILL
BY
CHAIRPERSON
LUNDGREN)
A
BILL
FOR
An
Act
relating
to
unfair
residential
real
estate
service
1
agreements,
providing
penalties,
and
making
penalties
2
applicable.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
TLSB
1944YC
(2)
90
ko/ns
H.F.
_____
Section
1.
NEW
SECTION
.
558B.1
Definitions.
1
As
used
in
this
chapter,
unless
the
context
otherwise
2
requires:
3
1.
“Consumer”
means
a
natural
person
being
provided
a
4
service
under
a
service
agreement,
or
the
natural
person’s
5
legal
representative.
6
2.
“Record”
means
presentation
of
a
document
to
a
county
7
recorder
in
this
state
for
official
placement
in
the
public
8
land
records.
9
3.
“Residential
real
estate”
means
real
property
located
10
in
this
state
which
is
used
primarily
for
personal,
family,
11
or
household
purposes
and
is
improved
by
one
to
four
dwelling
12
units.
13
4.
“Service
agreement”
means
a
contract
under
which
a
person
14
agrees
to
provide
a
service
in
connection
with
the
maintenance
15
of,
the
purchase
of,
or
the
sale
of,
residential
real
estate.
16
Sec.
2.
NEW
SECTION
.
558B.2
Unfair
service
agreements
——
17
penalties.
18
1.
A
service
agreement
shall
be
considered
unfair
under
this
19
section
if
a
service
that
is
covered
by
the
service
agreement
20
is
not
required
to
be
completely
performed
within
one
year
21
after
the
date
on
which
the
service
agreement
is
executed,
and
22
the
service
agreement
has
any
of
the
following
characteristics:
23
a.
The
service
agreement
purports
to
run
with
the
land
or
24
to
be
binding
on
future
owners
of
interests
in
the
residential
25
real
estate
that
is
the
subject
of
the
service
agreement.
26
b.
The
service
agreement
permits
assignment
of
the
right
to
27
provide
service
under
the
service
agreement
without
requiring
28
notice
to,
and
the
consent
of,
the
owner
of
the
residential
29
real
estate
that
is
the
subject
of
the
service
agreement.
30
c.
The
service
agreement
purports
to
create
a
lien,
31
encumbrance,
or
other
real
property
security
interest
on
the
32
residential
real
estate
that
is
the
subject
of
the
service
33
agreement.
34
2.
If
a
service
agreement
is
unfair
under
this
section,
the
35
-1-
LSB
1944YC
(2)
90
ko/ns
1/
4
H.F.
_____
service
agreement
shall
be
unenforceable.
1
3.
If
a
person
enters
into
an
unfair
service
agreement
2
with
a
consumer,
the
person
commits
an
unlawful
practice
under
3
section
714.16.
4
4.
a.
A
person
shall
not
record,
or
cause
to
be
recorded,
5
an
unfair
service
agreement,
or
a
notice
or
memorandum
of
an
6
unfair
service
agreement.
7
b.
A
person
who
records,
or
causes
to
be
recorded,
a
8
notice
or
memorandum
of
an
unfair
service
agreement
commits
an
9
aggravated
misdemeanor.
10
c.
A
county
recorder
may
refuse
to
record
an
unfair
service
11
agreement.
12
d.
If
an
unfair
service
agreement
is
recorded,
the
recorded
13
service
agreement
shall
not
provide
actual
or
constructive
14
notice
against
an
otherwise
bona
fide
purchaser
or
creditor,
15
or
actual
or
constructive
notice
against
heirs
or
other
16
successors-in-interest
to
the
residential
real
estate
that
is
17
the
subject
of
the
recorded
service
agreement.
18
e.
If
an
unfair
service
agreement
or
a
notice
or
memorandum
19
of
an
unfair
service
agreement
is
recorded,
any
person
with
an
20
interest
in
the
residential
real
estate
that
is
the
subject
21
of
the
service
agreement
may
apply
to
a
district
court
in
the
22
county
in
which
the
service
agreement
is
recorded
for
a
court
23
order
declaring
the
service
agreement
unenforceable.
24
f.
If
an
unfair
service
agreement
or
a
notice
or
memorandum
25
of
an
unfair
service
agreement
is
recorded,
any
person
with
an
26
interest
in
the
residential
real
estate
that
is
the
subject
27
of
the
recorded
service
agreement
may
recover
actual
damages,
28
costs,
and
attorney
fees
as
may
be
proven
against
the
person
29
who
recorded
the
service
agreement.
30
5.
This
section
does
not
apply
to
any
of
the
following:
31
a.
A
home
warranty
or
similar
agreement
that
covers
the
32
cost
of
maintenance
for
a
fixed
period
of
time
of
a
major
home
33
system
including
but
not
limited
to
plumbing,
electrical,
34
heating,
ventilation,
or
air
conditioning.
35
-2-
LSB
1944YC
(2)
90
ko/ns
2/
4
H.F.
_____
b.
An
insurance
contract.
1
c.
An
option
or
a
right
of
refusal
to
purchase
residential
2
real
estate.
3
d.
A
mortgage
loan,
or
a
commitment
to
make
or
to
receive
a
4
mortgage
loan.
5
e.
A
security
agreement
under
the
uniform
commercial
code
6
related
to
the
sale
or
rental
of
personal
property
or
fixtures.
7
f.
Water,
sewer,
electrical,
telephone,
cable,
or
any
other
8
regulated
utility
service
providers.
9
6.
This
section
shall
not
be
construed
to
impair
a
person’s
10
rights
established
by
a
mechanics’
lien
under
chapter
572.
11
Sec.
3.
Section
714.16,
subsection
2,
Code
2023,
is
amended
12
by
adding
the
following
new
paragraph:
13
NEW
PARAGRAPH
.
q.
It
shall
be
an
unlawful
practice
for
a
14
person
to
violate
section
558B.2,
subsection
3.
15
EXPLANATION
16
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
17
the
explanation’s
substance
by
the
members
of
the
general
assembly.
18
This
bill
relates
to
unfair
residential
real
estate
service
19
agreements
(agreement).
20
An
agreement
shall
be
considered
unfair
under
the
bill
if
a
21
service
that
is
covered
by
the
agreement
is
not
required
to
be
22
completely
performed
within
one
year
after
the
date
on
which
23
the
agreement
is
executed,
and
the
agreement
has
any
of
the
24
characteristics
detailed
in
the
bill.
“Service
agreement”
is
25
defined
in
the
bill
as
a
contract
under
which
a
person
agrees
26
to
provide
a
service
in
connection
with
the
maintenance
of,
27
the
purchase
of,
or
the
sale
of,
residential
real
estate
(real
28
estate).
“Residential
real
estate”
is
also
defined
in
the
29
bill.
30
If
an
agreement
is
unfair,
the
agreement
shall
be
31
unenforceable.
If
a
person
enters
into
an
unfair
agreement
32
with
a
consumer,
the
person
commits
an
unlawful
practice.
33
Several
types
of
remedies
are
available
if
a
court
finds
that
a
34
person
has
committed
an
unlawful
practice,
including
injunctive
35
-3-
LSB
1944YC
(2)
90
ko/ns
3/
4
H.F.
_____
relief,
disgorgement
of
moneys
or
property,
and
a
civil
penalty
1
not
to
exceed
$40,000
per
violation.
2
The
bill
prohibits
a
person
from
recording
or
causing
to
be
3
recorded
an
unfair
agreement,
or
a
notice
or
memorandum
(memo)
4
of
an
unfair
agreement.
A
person
that
records,
or
causes
to
5
be
recorded,
a
notice
or
memo
of
an
unfair
agreement
commits
6
an
aggravated
misdemeanor.
An
aggravated
misdemeanor
is
7
punishable
by
confinement
for
no
more
than
two
years
and
a
fine
8
of
at
least
$855
but
not
more
than
$8,540.
9
A
county
recorder
may
refuse
to
record
an
unfair
agreement.
10
If
an
unfair
agreement
is
recorded,
the
recorded
agreement
11
shall
not
provide
actual
or
constructive
notice
against
an
12
otherwise
bona
fide
purchaser
or
creditor,
or
against
heirs
13
or
other
successors-in-interest
to
the
real
estate
that
is
14
the
subject
of
the
agreement.
If
an
unfair
agreement
or
a
15
notice
or
memo
of
an
unfair
agreement
is
recorded,
any
person
16
with
an
interest
in
the
real
estate
that
is
the
subject
of
17
the
agreement
may
apply
to
a
district
court
in
the
county
in
18
which
it
is
recorded
for
a
court
order
declaring
the
agreement
19
unenforceable,
and
any
person
with
an
interest
in
the
real
20
estate
that
is
the
subject
of
the
agreement
may
recover
actual
21
damages,
costs,
and
attorney
fees
as
may
be
proven
against
the
22
person
that
recorded
the
agreement.
23
The
bill
does
not
apply
to
a
home
warranty
or
similar
24
agreement,
an
insurance
contract,
an
option
or
right
of
refusal
25
to
purchase
real
estate,
a
mortgage
loan
or
a
commitment
to
26
make
or
receive
a
mortgage
loan,
a
security
agreement
under
27
the
uniform
commercial
code
relating
to
the
sale
or
rental
of
28
personal
property
or
fixtures,
or
to
regulated
utility
service
29
providers.
The
bill
shall
also
not
be
construed
to
impair
a
30
person’s
rights
established
by
a
mechanics’
lien.
31
-4-
LSB
1944YC
(2)
90
ko/ns
4/
4