House Study Bill 750 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON HOLT) A BILL FOR An Act relating to business entity-owned residential 1 arrangements, and including effective date provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 6902YC (3) 91 lh/jh

H.F. _____ Section 1. Section 216.12, subsection 1, paragraph a, Code 1 2026, is amended to read as follows: 2 a. Any bona fide religious institution with respect to 3 any qualifications it may impose based on religion or sexual 4 orientation when the qualifications are related to a bona 5 fide religious purpose, unless the religious institution owns 6 or operates property for a commercial purpose or membership 7 in the religion is restricted on account of race, color, or 8 national origin. This paragraph does not apply to the sale, 9 rental, or occupancy of a dwelling that is a single-family 10 residence, duplex, triplex, or quadruplex located on a 11 subdivided lot within a parcel of land of twenty-five acres or 12 more that is owned by a religious organization, association, or 13 society, or a nonprofit institution or organization operated, 14 supervised, or controlled by or in conjunction with a religious 15 organization, association, or society. 16 Sec. 2. NEW SECTION . 558C.1 Definitions. 17 As used in this chapter, unless the context otherwise 18 requires: 19 1. “Business entity” means a partnership, corporation, joint 20 venture, limited liability company, trust, or other business 21 organization or business association, however organized. 22 2. “Managing entity” means a business entity that owns 23 residential property used in a residential arrangement. 24 3. “Residential arrangement” means an arrangement in which 25 the purchaser of an interest in a business entity is entitled 26 to exclusive possession of residential property owned by the 27 business entity if the purchaser holds the interest in the 28 business entity. 29 4. “Residential property” means real property and 30 improvements for a single-family residence, duplex, triplex, 31 or quadruplex. “Residential property” does not include a unit 32 as defined in section 557A.2. 33 Sec. 3. NEW SECTION . 558C.2 Disclosure requirements —— 34 prohibited actions —— enforcement. 35 -1- LSB 6902YC (3) 91 lh/jh 1/ 5

H.F. _____ 1. An agreement for the purchase of an interest in a 1 managing entity shall disclose to the purchaser that the 2 agreement is for the purchase of an interest in the business 3 entity and not for the purchase of any residential property. 4 2. A purchase agreement, operating agreement, bylaws, 5 rules, or other governing document relating to a residential 6 arrangement or the ownership interest in the managing entity 7 shall not require that a dispute arising from the arrangement 8 or ownership interest be resolved in a forum other than a court 9 established under the laws of this state or the United States. 10 3. A managing entity shall not take any action relating 11 to an interest in the managing entity in a manner that would 12 constitute a violation of chapter 216 if the interest in the 13 managing entity were an interest in real property, including 14 but not limited to any of the following: 15 a. Restricting or prohibiting the transfer of an interest. 16 b. Imposing discriminatory conditions to retain or maintain 17 an interest. 18 c. Refusing to grant an interest to an otherwise qualified 19 person. 20 4. Notwithstanding any provision in an agreement between 21 an owner of an interest and a managing entity, an owner may 22 transfer the interest without approval by the managing entity. 23 5. A managing entity shall not charge a fee or share in 24 the proceeds of the transfer of an interest from an owner to a 25 subsequent purchaser. 26 6. a. A violation of this chapter constitutes an unlawful 27 practice under section 714.16 and chapter 714H. 28 b. A court that finds a violation of this chapter may enjoin 29 a managing entity or a person affiliated with the managing 30 entity from taking any action in furtherance of development of, 31 or construction on, residential property used in a residential 32 arrangement subject to a civil action under this section, 33 including the following: 34 (1) Seeking to become or operating as a public utility as 35 -2- LSB 6902YC (3) 91 lh/jh 2/ 5

H.F. _____ defined in section 476.1. 1 (2) Receiving, directly or indirectly, any public moneys or 2 benefit. 3 Sec. 4. Section 714.16, subsection 2, Code 2026, is amended 4 by adding the following new paragraph: 5 NEW PARAGRAPH . t. It is an unlawful practice for a person 6 to violate chapter 558C. 7 Sec. 5. Section 714H.3, subsection 2, Code 2026, is amended 8 by adding the following new paragraph: 9 NEW PARAGRAPH . 0g. Chapter 558C. 10 Sec. 6. EFFECTIVE DATE. This Act, being deemed of immediate 11 importance, takes effect upon enactment. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanation’s substance by the members of the general assembly. 15 This bill regulates certain business entity-owned 16 residential arrangements. 17 The bill defines “business entity”, “managing entity”, 18 “residential arrangement”, and “residential property”. 19 The bill requires that an agreement for the purchase of an 20 interest in a managing entity must disclose to the purchaser 21 that the agreement is for the purchase of an interest in the 22 entity and not for the purchase of any residential property. 23 The bill prohibits a purchase agreement, operating 24 agreement, bylaws, rules, or other governing document relating 25 to a residential arrangement or ownership interest from 26 requiring that disputes be resolved in a forum other than a 27 court established under the laws of this state or the United 28 States. 29 The bill requires that a managing entity not take action 30 relating to an ownership interest in a manner that would 31 violate Code chapter 216 (Iowa civil rights Act) if the 32 interest is an interest in real property. Prohibited actions 33 include restricting or prohibiting the transfer of an interest, 34 imposing discriminatory conditions to retain or maintain an 35 -3- LSB 6902YC (3) 91 lh/jh 3/ 5

H.F. _____ interest, or refusing to grant an interest to an otherwise 1 qualified person. 2 The bill provides that, notwithstanding any agreement to the 3 contrary, an owner may transfer the ownership interest without 4 approval by the managing entity. 5 The bill prohibits a managing entity from charging a fee 6 or sharing in the proceeds of the transfer of an ownership 7 interest from an owner to a subsequent purchaser. 8 The bill provides that a violation of the bill constitutes 9 an unlawful practice under Code section 714.16 (consumer fraud 10 Act) and Code chapter 714H (consumer fraud —— private actions). 11 Several types of remedies are available if a court finds that a 12 person has committed an unlawful practice under Code section 13 714.16, including injunctive relief, disgorgement of moneys 14 or property, and civil penalties not to exceed $40,000 per 15 violation. In an action under Code chapter 714H, a court may 16 order equitable relief, including reasonable attorney fees 17 and injunctive relief. If the violation constitutes willful 18 and wanton disregard for the rights and safety of another, in 19 addition to an award of actual damages, statutory damages up 20 to three times the amount of actual damages may be awarded to 21 the prevailing consumer. A court that finds a violation of the 22 bill may enjoin a managing entity or a person affiliated with 23 the managing entity from further developing or constructing 24 residential property used in a residential arrangement subject 25 to a civil action under the bill, including seeking to become 26 or operating as a public utility, or receiving any public 27 moneys or benefit directly or indirectly. 28 Current law exempts certain entities from prohibited 29 unfair or discriminatory practices related to housing, 30 including certain religious institutions. The bill creates 31 an exception to the religious exemption, providing that 32 the sale, rental, or occupancy of a dwelling that is a 33 single-family house, duplex, triplex, or quadruplex located 34 on a subdivided lot with a parcel of land 25 acres or more 35 -4- LSB 6902YC (3) 91 lh/jh 4/ 5

H.F. _____ that is owned by a religious organization, association, or 1 society, or a nonprofit institution or organization operated, 2 supervised, or controlled by or in conjunction with a religious 3 organization, association, or society is subject to the unfair 4 or discriminatory practices prohibited by law. 5 The bill takes effect upon enactment. 6 -5- LSB 6902YC (3) 91 lh/jh 5/ 5