ARC 8102C - Iowa Administrative Rules

Adopted and Filed

Brokerage agreements; buyer’s representation agreements; compensation, 7.15, 11.1, 11.3, 11.6(2), 12.2

Untitled document

ARC 8102C

REAL ESTATE COMMISSION[193E]

Adopted and Filed

Rulemaking related to brokerage agreements,
buyer’s representative agreements, and compensation

The Real Estate Commission hereby amends Chapter 7, “Offices and Management,” Chapter 11, “Brokerage Agreements and Listings,” and Chapter 12, “Disclosure of Relationships,” Iowa Administrative Code.

Legal Authority for Rulemaking

This rulemaking is adopted under the authority provided in Iowa Code section 543B.9.

State or Federal Law Implemented

This rulemaking implements, in whole or in part, Iowa Code chapters 17A, 272C and 543B.

Purpose and Summary

This rulemaking updates practice standards, including brokerage agreements, buyer’s representation agreements, and compensation, that are enacted by 2024 Iowa Acts, Senate File 2291. These amendments will protect the public while also providing direction to licensees relating to national real estate compensation shifts.

Public Comment and Changes to Rulemaking

Notice of Intended Action for this rulemaking was published in the Iowa Administrative Bulletin on May 1, 2024, as ARC 7931C. A public hearing was held on the following date(s):

May 21, 2024

Six members of the public attended the public hearing, including five stakeholders from the Iowa Association of Realtors. Those who provided an oral comment were in support of the proposed changes.

No changes from the Notice have been made.

Adoption of Rulemaking

This rulemaking was adopted by the Commission on June 6, 2024.

Fiscal Impact

This rulemaking has no fiscal impact to the State of Iowa.

Jobs Impact

After analysis and review of this rulemaking, no impact on jobs has been found.

Waivers

Any person who believes that the application of the discretionary provisions of this rulemaking would result in hardship or injustice to that person may petition the Department of Inspections, Appeals, and Licensing for a waiver of the discretionary provisions, if any, pursuant to 481—Chapter 6.

Review by Administrative Rules Review Committee

The Administrative Rules Review Committee, a bipartisan legislative committee which oversees rulemaking by executive branch agencies, may, on its own motion or on written request by any individual or group, review this rulemaking at its regular monthly meeting or at a special meeting. The Committee’s meetings are open to the public, and interested persons may be heard as provided in Iowa Code section 17A.8(6).

Effective Date

This rulemaking will become effective on August 14, 2024.

The following rulemaking action is adopted:

ITEM 1.Amend subrule 7.15(1) as follows:

7.15(1) A customer’s agentclient’s broker seeking compensation from the listinganother broker cannot prepare an offer to purchase on the property without first obtainingwill obtain authorization and agreement from the listingcooperating brokerprior to closing of the real estate transaction.

ITEM 2.Rescind subrule 7.15(2).

ITEM 3.Renumber subrules 7.15(3) to 7.15(5) as 7.15(2) to 7.15(4).

ITEM 4.Rescind subrules 11.1(5) and 11.1(6).

ITEM 5.Amend paragraph 11.3(1)“a” as follows:

All listing contracts and all brokerage agency contractsagreements contain a statement disclosing the brokerage policy on cooperating with and compensating other brokerages whether the brokerage is acting as subagent or the other parties’ agent in the sale, lease, rental, or purchase of real estate, including whether the brokerage intends to share the compensation with other brokeragesand any other method for negotiating compensation for another party’s broker. Such disclosure serves to inform the client of any policy that would limit the participation of any other brokerage; and

ITEM 6.Amend paragraph 11.3(6)“c” as follows:

A broker may be compensated by more than one party for services in a transaction if the parties have consented in writing to such multiple payments prior to entering into a contract to buy, sell, lease, or exchange.

ITEM 7.Adopt the following new paragraph 11.3(6)“k”:

The seller or landlord may authorize a portion of the proceeds of the sale of real property or other negotiated term of an agreement or contract to pay compensation to other brokers who are part of the same real estate transaction as the seller or landlord, including a buyer’s or tenant’s broker solely representing the buyer or tenant. The payment of compensation may be a direct payment from the seller or landlord to the other brokers who are part of the same real estate transaction as the seller or landlord, including a buyer’s or tenant’s broker solely representing the buyer or tenant.

ITEM 8.Rescind subrule 11.3(9) and adopt the following new subrule in lieu thereof:

11.3(9) The seller or landlord may, in the brokerage agreement, authorize the seller’s or landlord’s broker to disburse part of the broker’s compensation to other brokers, including a buyer’s or tenant’s broker solely representing the buyer or tenant.

ITEM 9.Adopt the following new subrule 11.3(10):

11.3(10) Nothing contained in this rule shall obligate any buyer or tenant or seller or landlord to pay compensation to a licensee representing the buyer or tenant or seller or landlord in a real estate transaction unless the buyer or tenant or seller or landlord has entered into a written brokerage agreement with the broker specifying the compensation terms and conditions, in accordance with Iowa real estate license law and commission rules.

ITEM 10.Amend subrule 11.6(2) as follows:

11.6(2) In a listing contractbrokerage agreement, the broker is principal party to the contract. The broker may, with proper disclosure, pay a portion of the commission earned to an unlicensed seller,or landlord, buyer, or tenant that is a principal party to the listing contractbrokerage agreement. This will be deemed a reduction in the amount of the earned commission.

ITEM 11.Rescind subrules 12.2(5) and 12.2(6).

ITEM 12.Renumber subrules 12.2(7) to 12.2(19) as 12.2(5) to 12.2(17).

ITEM 13.Amend renumbered subrule 12.2(12) as follows:

12.2(12) The licensee retains a copy of the disclosure form signed by the prospective buyer, seller, landlord or tenant, or the documentation and copies as obligated in subrule 12.2(12)12.2(10) as follows:

and b.

No change.

[Filed 6/17/24, effective 8/14/24]

[Published 7/10/24]

EDITOR’S NOTE: For replacement pages for IAC, see IAC Supplement 7/10/24.