Code Cleanup Bill Effective July 1

A bill was passed to clean up various part of the code as it pertains to real estate. This is a summary of House File 541.

The bill was signed by the Governor and will be effective July 1, 2017.

Topics addressed in this Code Cleanup Bill. Read details below. 

  • Removes ban for simple misdemeanor
  • License law change – 3 violations in 3 years
  • Civil penalties for non-licensees acting as real estate professionals
  • Brokers manage more than 1 office
  • Disclosures delivered electronically
  • Agency disclosure now only with your client
  • 543B.15  - Iowa Code § 543B.29(1)(f) already defines “conviction” as including only indictable offenses.  This amendment brings consistency to the definition of “conviction” throughout the whole of Iowa Code chapter 543B.

As defined by Iowa Code § 801.4(8) “indictable offense” means “an offense other than a simple misdemeanor.”  Under present law, persons convicted of relatively minor or petty indiscretions in their youth – such as shoplifting a pack of gum – are prevented from receiving a real estate license for a mandatory five-year term.  By removing simple misdemeanors from the list of offenses subject to the mandatory bar, the amendment gives the Real Estate Commission the ability to license otherwise qualified applicants who are now arbitrarily prohibited from receiving a license for five years.

In addition to reviewing the statutorily mandated FBI background check, Real Estate Commission staff currently must undertake searches of Iowa Courts Online and other court dockets to verify the information submitted by applicants because some simple misdemeanor convictions that can disqualify an applicant from receiving a license are not always reported to the FBI.  This amendment will alleviate the need for Commission staff to conduct such supplemental background investigations resulting in greater efficiencies in the application process for both the Commission and applicants. 

  • 543B.16 - This amendment restores the Real Estate Commission’s ability to receive all necessary information from an applicant so that the Commission may accurately measure that applicant’s statutory eligibility to receive a real estate license.  Employing real estate brokers also review and sign off on the applications submitted by the persons they are sponsoring for licensure.  By requiring applicants to disclose all crimes other than simple misdemeanors, this amendment helps facilitate a broker’s thorough vetting of potential employees without clouding the process with the unnecessary disclosure of petty crimes – such as public intoxication or underage alcohol possession. 
  • 543.29 - 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 change is 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. 
  • 543B.31 - 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 home town 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.
  • 543B.32 - Allows a broker or salesperson to give electronic notice to the real estate commission of change of business location
  • 543B.34 - Will 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. 
  • 543B.46 - 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.
  • 543B.57 - Includes language that clarifies that an agency disclosure should be given to the primary client of the licensee. 
  • Repeal of 543B.25 - 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. 
  • 558A. 1 and 558A.2 - Allows for delivery of a sellers 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.  

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