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HF 475 – Real Estate Service Agreements, Enforceability and Recording (LSB1944HV.1)
Staff Contact: Eric Richardson (515.281.6767) eric.richardson@legis.iowa.gov
Fiscal Note Version – Final Action
Description
House File 475 relates to unfair residential real estate service agreements. Provisions in the Bill
include:
• Defining a service agreement as unfair if a service covered by the agreement is not required
to be completely performed within one year of the start of the agreement.
• Establishing that entering into an unfair service agreement with a consumer is an unlawful
practice, which may carry a civil penalty not to exceed $40,000 per violation.
• Prohibiting a person from causing to be recorded an unfair service agreement or a notice or
memorandum of an unfair service agreement. The Bill creates an aggravated
misdemeanor, which is punishable by no more than two years in jail and a fine of at least
$855 but not more than $8,540.
• Allowing a county recorder to refuse to record an unfair agreement.
• Allowing any person with an interest in residential real estate that is the subject of an unfair
service agreement to apply to a district court for an order declaring the agreement
unenforceable.
Background
An aggravated misdemeanor is punishable by a fine of at least $855 but not more than $8,540
and up to two years in prison. Iowa Code section 714.16, referred to in Section 2 of the Bill,
details consumer frauds and establishes various unlawful practices defined in connection with
the lease, sale, or advertisement of any merchandise, whether or not a person was misled,
deceived, or damaged.
Assumptions
• The following will not change over the projection period: charge, conviction, and sentencing
patterns and trends, prisoner length of stay (LOS), revocation rates, plea bargaining, and
other criminal justice system policies and practices.
• A lag effect of six months is assumed from the effective date of this Bill to the date of first
entry of affected offenders into the correctional system.
• Marginal costs for county jails cannot be estimated due to a lack of data. For purposes of
this analysis, the marginal cost for county jails is assumed to be $50 per day.
Correctional Impact
House File 475 establishes a new criminal offense. As a result, the correctional impact cannot
be estimated for this Bill due to the lack of existing conviction data. Figure 1 shows estimates
for sentencing to State prison, parole, probation, or Community-Based Corrections (CBC)
residential facilities; LOS under those supervisions; and supervision marginal costs per day for
all convictions of aggravated misdemeanors for nonviolent offenses. Refer to the Legislative
Services Agency (LSA) memo addressed to the General Assembly, Cost Estimates Used for
Correctional Impact Statements, dated January 20, 2023, for information related to the
correctional system.
Fiscal Note
Fiscal Services Division 2
Figure 1 — Sentencing Estimates and Length of Stay (LOS)
Minority Impact
House File 475 establishes a new offense. As a result, the Criminal and Juvenile Justice
Planning Division (CJJP) of the Department of Human Rights cannot use prior existing data to
estimate the minority impact of the Bill. Refer to the LSA memo addressed to the General
Assembly, Minority Impact Statement, dated January 20, 2023, for information related to
minorities in the criminal justice system.
Fiscal Impact
House File 475 establishes a new offense, and the fiscal impact cannot be estimated due to the
lack of existing conviction data. The average State cost per offense for an aggravated
misdemeanor ranges from $5,000 to $9,600. The estimated impact to the State General Fund
includes operating costs incurred by the Judicial Branch, the Indigent Defense Fund, and the
Department of Corrections. The cost would be incurred across multiple fiscal years for prison
and parole supervision. Additional revenue due to the civil penalty established in the Bill cannot
be estimated.
Sources
Criminal and Juvenile Justice Planning Division, Department of Human Rights
Department of Corrections
Legislative Services Agency
/s/ Jennifer Acton
May 12, 2023
Doc ID 1373788
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov Conviction Offense
Class
Percent
Ordered to
State
Prison
FY 22 Avg
LOS in
Prison in
Months (All
Releases)
FY 22
Marginal
Cost Per
Day
Prison
Percent
Ordered to
Probation
FY 22 Avg
LOS on
Probation
in Months
FY 22 Avg
Cost Per
Day
Probation
Percent
Sentenced to
CBC
Residential
Facility
FY 22
Marginal
Cost Per
Day
CBC
Percent
Ordered
to County
Jail
Avg Length
of Stay in
County Jail
Marginal
Cost Per
Day Jail
FY 22
Avg LOS
on
Parole in
Months
FY 22
Marginal
Cost Per
Day
Parole
Aggravated
Misdemeanor
(Nonviolent Offense)
31.4% 7.5 $23.4245.6% 20.7 $7.27 3.3% $20.6772.2% N/A $50.00 8.2 $7.27