SSB 3132 (LSB 5977XC (2) 90)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON BROWN)

A BILL FOR

An Act relating to real estate brokers and brokerage agreements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 543B.3, subsection 9, Code 2024, is amended to read as follows:
   9.  Prepares offers to purchase or purchase agreements, listing contracts, buyer’s representation agreements, 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. 2.  Section 543B.5, subsections 2, 7, 9, and 10, Code 2024, are amended to read as follows:
   2.  “Agency agreement” “Agency disclosure” means a written agreement disclosure between a broker and a client which identifies the party the broker represents in a transaction.
   7.  “Brokerage agreement” means a contract between a broker and a client which establishes the relationship between the parties as to, and the broker’s compensation for, the brokerage services to be performed and contains the provisions required in section 543B.56A.
   9.  “Client” means a party to a transaction who has an agency a brokerage agreement with a broker for brokerage services.
   10.  “Customer” means a consumer who is not being represented by a licensee under a brokerage agreement but for whom the licensee may perform ministerial acts.
    Sec. 3.  Section 543B.5, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  8A.  “Buyer’s representation agreement” means a brokerage agreement between a prospective buyer and a broker.
    Sec. 4.  Section 543B.56, subsection 1, Code 2024, is amended to read as follows:
   1.  Duties to all parties in a transaction.  In providing brokerage services to all parties a client to a transaction, a licensee shall do all of the following:
   a.  Provide brokerage services to Treat all parties to the a transaction honestly and in with honesty and good faith.
   b.  Diligently exercise reasonable skill and care in providing brokerage services to all parties.
   c.  b.  Disclose to each party all material adverse facts that the licensee knows except for the following:
   (1)  Material adverse facts known by the party.
   (2)  Material adverse facts the party could discover through a reasonably diligent inspection, and which would be discovered by a reasonably prudent person under like or similar circumstances.
   (3)  Material adverse facts the disclosure of which is prohibited by law.
   (4)  Material adverse facts that are known to a person who conducts an inspection on behalf of the party.
   d.  c.  Account for all property coming into the possession of a licensee that belongs to any party within a reasonable time of receiving the property.
    Sec. 5.  Section 543B.56, subsection 2, paragraph c, Code 2024, is amended to read as follows:
   c.  Fulfill any obligation that is within the scope of the agency brokerage agreement, except those obligations that are inconsistent with other duties that the licensee has under this chapter or any other law.
    Sec. 6.  Section 543B.56, subsection 2, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  e.  Diligently exercise reasonable skill and care in providing brokerage services.
    Sec. 7.  Section 543B.56A, subsection 2, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  e.  Review the broker’s compensation under the brokerage agreement.
    Sec. 8.  Section 543B.56A, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  3.  A brokerage agreement must be signed by both the broker and the client prior to the broker listing any property for sale on behalf of a seller, or making an offer on a property on behalf of a buyer.
    Sec. 9.  Section 543B.60, Code 2024, is amended to read as follows:
   543B.60  Licensees providing services in more than one transaction.
   A licensee may provide brokerage services simultaneously to more than one party in different transactions unless the licensee agrees with a client that the licensee is to provide brokerage services only to that client. If the licensee and a client agree that the licensee is to provide brokerage services only to that client, the agency agreement disclosure required under section 543B.57, subsection 1, shall contain a statement of that agreement.
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 brokers and brokerage agreements.
   The bill includes in the current definition of a real estate broker a person acting for another for a fee, commission, or other compensation or promise who prepares buyer’s representation agreements, including any modifications, amendments, or addendums. “Buyer’s representation agreement” is defined by the bill.
   The bill requires a licensee, when providing brokerage services to a client, to treat all parties to a transaction with honesty and good faith, disclose to each party all material adverse facts as laid out in the bill, and to account for all property coming into the possession of the licensee that belongs to any party within a reasonable time. The bill requires the licensee to place the client’s interests ahead of the interests of any other party, disclose to the client all information known by the licensee that is material to the transaction and that is not known by the client or could not be discovered by the client through a reasonably diligent inspection, fulfill any obligation that is within the scope of the brokerage agreement, and diligently exercise reasonable skill and care in providing brokerage services.
   Under the bill, a brokerage agreement shall specify that a broker shall review the broker’s compensation. Additionally, a brokerage agreement must be signed by both a broker and a client prior to the broker listing any property for sale on behalf of a seller or making an offer on a property on behalf of a buyer.
   The bill makes a conforming change to Code section 543B.60.