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Rule Changes --193E Real Estate Brokers and Salespersons

R97-02


1997
Commission Approved for Notice of Intended Action: June 6, 1997
Filed as Notice of Intended Action: June 13, 1997
Published as ARC 7345: July 2, 1997
Public Hearing: July 22, 1997
Commission Adopted: August 21, 1997
Adopted Filing Deadline: August 22, 1997
Adopted Published as ARC 7496A: September 10, 1997
Effective Date: October 15, 1997

IOWA REAL ESTATE COMMISSION [193E]

Adopted and Filed

Pursuant to the authority of Iowa Code sections 543B.9, 543B.18, and 543B.55, the Iowa Real Estate Commission hereby amends Chapter 1, "Business Conduct," Iowa Administrative Code.

In accordance with authority granted to the Commission, it amends rules 193E--1.37(543B), 1.41(543B), and 1.49(543B) to reflect changes in Iowa Code section 543B.57, subsections 1 and 2, that eliminated the requirement that the agency disclosure made prior to or at the time of providing specific assistance be written. The affirmative written agency disclosure, acknowledged by the separate signatures of the parties, is not required to be written until prior to an offer being made or accepted by any party to a transaction. Additionally, rules 193E--1.41(543B) and 1.49(543B) are rescinded and reserved to clarify by consolidation, as the disclosure requirements provided in these rules are now incorporated in rule 193E--1.37(543B).

Notice of Intended Action was published in the Iowa Administrative Bulletin on July 2, 1997, as ARC 73454A.

A public hearing was held on July 22, 1997. No one attended and no written comments were received.

These amendments are identical to those published under Notice of Intended Action.

These amendments were adopted by the Iowa Real Estate Commission on August 21, 1997.

These amendments shall become effective September 10, 1997.

These amendments are intended to implement Iowa Code sections 543B.9, 543B.18, 543B.55, and 543B.57.

The following amendments are adopted.

Item 1. Amend rule 193E--1.1(543B), definition of "Specific assistance," as follows:

193E—1.1(543B) Definitions.

"Specific assistance" means any communication beyond casual conversation concerning the facts and features of a property, which occurs prior to the point of discussing any specific financial qualifications of the buyer or tenant, selling or buying motives or objectives of the seller or buyer, or tenant or landlord, or eliciting or accepting information involving a proposed or preliminary offer associated with a specific property, in which the person may unknowingly divulge any confidential personal or financial information, which if disclosed to the other party, could harm their bargaining position. For the purposes of this rule, specific assistance shall not include a bona fide "open house" showing, preliminary conversations or "small talk" concerning price range, location and property styles, or responses to general factual questions from a potential buyer or tenant concerning properties which have been advertised for sale or lease.

Item 2. Amend rule 193E--1.37(543B), introductory paragraph, as follows:

193E--1.37(543B) Disclosure of agency. Enforcement of this rule and its subrules commenced January 1, 1990.

Item 3. Amend 193E--subrule 1.37(1) as follows:

1.37(1) No person licensed pursuant to Iowa Code chapter 543B A licensee shall not represent any party or parties to a real estate transaction or otherwise act as a real estate broker or salesperson unless that person makes an affirmative written disclosure to all parties to the transaction identifying which party that person represents in the transaction. The disclosure shall be acknowledged by separate signatures of the buyer and seller.

Item 4. Amend 193E--subrule 1.37(2) as follows:

1.37(2) The disclosure required by this rule section 1.37(1) must be made by the licensee prior to any offer being made by the buyer or accepted by the seller. at the time the licensee provides specific assistance to the client. A change in licensee's representation that makes the initial disclosure incomplete, misleading, or inaccurate requires that a new disclosure be made at once immediately.

Item 5. Adopt new subrule 1.37(3) and renumber subrule 1.37(3) as 1.37(4) as follows:

1.37(3) A written agency disclosure must be made by the licensee to all parties to a real estate transaction identifying which party the licensee represents in the transaction 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. A change in the licensee's representation that makes the initial disclosure incomplete, misleading, or inaccurate requires that a new disclosure be made and signed by all parties as soon as practical.

1.37(3) 1.37(4) The seller may, in the listing agreement, authorize the seller's broker to disburse part of the broker's compensation to other brokers, including a buyer's broker solely representing the buyer. A broker representing a buyer shall inform the listing broker (if there is one) or, if there is no listing broker, the seller, either verbally or in writing, of the agency relationship before any previewing, showing or negotiations are initiated, whichever comes first. The obligation of either the seller or buyer to pay compensation to a broker is not determinative of the agency relationship.

Item 6. Rescind subrule 1.37(5) and renumber subrule 1.37(4) as1.37(5) and amend as follows:

1.37(4) 1.37(5) A licensee may not be agent for both the buyer or tenant and the seller or landlord without obtaining the written consent of both the buyer or tenant and the seller or landlord in compliance with 193E IAC 1.45. The written consent shall state that the licensee made a full disclosure of the type of representation the licensee will provide and shall briefly describe the type of representation the licensee will provide to the buyer and to the seller. A general statement in the consent signed by the buyer and seller that the licensee represents both buyer and seller is not sufficient.

Item 7. Adopt new subrules 1.37(6) to 1.37(15) as follows:

1.37(6) Nothing contained in this rule shall obligate any buyer or tenant, or seller or landlord to pay compensation to a licensee unless the buyer or tenant, or seller or landlord has entered into a written agreement with the broker specifying the compensation terms in accordance with Iowa real estate license law and Commission rules. Further, nothing shall prohibit a party from entering into a written agreement which contains duties, obligations, and responsibilities which are in addition to those specified in Iowa real estate license law and Commission rules.

1.37(7) A licensee may work with a single party in separate transactions pursuant to different relationships including but not limited to selling one property as a seller's agent and working with that seller in buying another property as a buyer's agent, or as an agent or subagent representing the seller, or as dual agent, if the licensee complies with the requirements of Iowa Code chapter 543B and this rule in establishing the relationships for each transaction. If the brokerage has a company policy of disclosed dual agency for in-house transactions, the disclosure of agency relationship shall comply with Iowa law and commission rules including, but not limited to, the requirement to inform the prospective clients that they are not required to consent to dual agency representation as provided by subrule 1.45(2). A general statement in the consent signed by the buyer and seller that the licensee represents both buyer and seller is not sufficient.

1.37(8) An agency relationship disclosure is not required when the licensee is acting solely as a principal and not as an agent for another; or a written communication from the licensee is a solicitation of business.

1.37(9) If the seller, landlord, buyer, or tenant rejects representation, or refuses to sign the agency disclosure document, or refuses to sign acknowledging receipt of the disclosure, the licensee shall note that fact on a copy of the agency disclosure document and obtain other documentation establishing delivery of the disclosure and maintain the written documentation in the transaction file.

1.37(10) If any seller, landlord, buyer, or tenant rejects dual agency, or refuses to sign a consent to dual agency, the broker cannot act as a dual agent. If any seller, landlord, buyer, or tenant who is a client of the broker refuses to sign a consent to appointed agency by that same broker with respect to the other party to the transaction, then the broker and affiliated licensees cannot act as an appointed agent for such other party to the transaction.

1.37(11) A licensee who is offering real estate brokerage services as an auctioneer, shall make the written disclosure to the buyer and obtain the acknowledgment of receipt required by law and rules, not later than prior to the buyer entering into a written purchase agreement for the property. For the purposes of this rule, the identification of the successful bidder shall constitute the first meaningful contact with a buyer when specific assistance is provided. After the first meaningful contact, the first practical opportunity to make the required disclosures to the buyer shall depend upon the circumstances. While it is not required, it is recommended that licensees disclose in all advertisements and flyers that they are licensed agents representing the seller and, prior to crying the auction, announce that they are a licensed real estate agent representing the seller.
a. Disclosure under this rule only applies to the day of the auction.

b. If the licensee provides brokerage services prior to the auction, the disclosure would need to be made either orally or in writing prior to or at the time of specific assistance being provided.

1.37(12) The licensee shall retain a copy of the disclosure form signed by the prospective buyer, lessee, seller, or lessor.

a. If an offer is accepted, the signed or noted copy shall be retained by the broker in the closed transaction file for a period of five years from the date of the signature or note.

b. If the offer is not accepted, a signed and noted copy shall be retained with the rejected offer for a period of five years.

1.37(13) Failure of a licensee to comply with this rule is prima facie evidence of a violation of Iowa Code subsection 543B.34(4).

1.37(14) Failure of a licensee to act consistent with disclosure representations made pursuant to this rule is prima facie evidence of a violation of Iowa Code subsection 543B.34(4).

1.37(15) Nothing in this rule shall affect the validity of title to real property transferred based solely on the reason that any licensee failed to conform to the provisions of this rule.

Item 8. Rescind and reserve rule 193E--1.41(543B). [See rule 193E--1.37(543B).]

Item 9. Rescind and reserve rule 193E--1.49(543B). [See rule 193E--1.37(543B).]

updated: 9-23-97

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