Senate Study Bill 3132 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON BROWN) A BILL FOR An Act relating to real estate brokers and brokerage 1 agreements. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5977XC (2) 90 nls/ko
S.F. _____ Section 1. Section 543B.3, subsection 9, Code 2024, is 1 amended to read as follows: 2 9. Prepares offers to purchase or purchase agreements, 3 listing contracts, buyers representation agreements, agency 4 disclosures, real property residential and agricultural rental 5 agreements, real property commercial rental agreements of one 6 year or less, and groundwater hazard statements, including 7 any modifications, amendments, or addendums to these specific 8 documents. 9 Sec. 2. Section 543B.5, subsections 2, 7, 9, and 10, Code 10 2024, are amended to read as follows: 11 2. Agency agreement Agency disclosure means a written 12 agreement disclosure between a broker and a client which 13 identifies the party the broker represents in a transaction. 14 7. Brokerage agreement means a contract between a broker 15 and a client which establishes the relationship between the 16 parties as to , and the brokers compensation for, the brokerage 17 services to be performed and contains the provisions required 18 in section 543B.56A . 19 9. Client means a party to a transaction who has an agency 20 a brokerage agreement with a broker for brokerage services. 21 10. Customer means a consumer who is not being represented 22 by a licensee under a brokerage agreement but for whom the 23 licensee may perform ministerial acts. 24 Sec. 3. Section 543B.5, Code 2024, is amended by adding the 25 following new subsection: 26 NEW SUBSECTION . 8A. Buyers representation agreement 27 means a brokerage agreement between a prospective buyer and a 28 broker. 29 Sec. 4. Section 543B.56, subsection 1, Code 2024, is amended 30 to read as follows: 31 1. Duties to all parties in a transaction. In providing 32 brokerage services to all parties a client to a transaction, a 33 licensee shall do all of the following: 34 a. Provide brokerage services to Treat all parties to the a 35 -1- LSB 5977XC (2) 90 nls/ko 1/ 4
S.F. _____ transaction honestly and in with honesty and good faith. 1 b. Diligently exercise reasonable skill and care in 2 providing brokerage services to all parties. 3 c. b. Disclose to each party all material adverse facts 4 that the licensee knows except for the following: 5 (1) Material adverse facts known by the party. 6 (2) Material adverse facts the party could discover 7 through a reasonably diligent inspection, and which would be 8 discovered by a reasonably prudent person under like or similar 9 circumstances. 10 (3) Material adverse facts the disclosure of which is 11 prohibited by law. 12 (4) Material adverse facts that are known to a person who 13 conducts an inspection on behalf of the party. 14 d. c. Account for all property coming into the possession 15 of a licensee that belongs to any party within a reasonable 16 time of receiving the property. 17 Sec. 5. Section 543B.56, subsection 2, paragraph c, Code 18 2024, is amended to read as follows: 19 c. Fulfill any obligation that is within the scope of the 20 agency brokerage agreement, except those obligations that are 21 inconsistent with other duties that the licensee has under this 22 chapter or any other law. 23 Sec. 6. Section 543B.56, subsection 2, Code 2024, is amended 24 by adding the following new paragraph: 25 NEW PARAGRAPH . e. Diligently exercise reasonable skill and 26 care in providing brokerage services. 27 Sec. 7. Section 543B.56A, subsection 2, Code 2024, is 28 amended by adding the following new paragraph: 29 NEW PARAGRAPH . e. Review the brokers compensation under 30 the brokerage agreement. 31 Sec. 8. Section 543B.56A, Code 2024, is amended by adding 32 the following new subsection: 33 NEW SUBSECTION . 3. A brokerage agreement must be signed by 34 both the broker and the client prior to the broker listing any 35 -2- LSB 5977XC (2) 90 nls/ko 2/ 4
S.F. _____ property for sale on behalf of a seller, or making an offer on a 1 property on behalf of a buyer. 2 Sec. 9. Section 543B.60, Code 2024, is amended to read as 3 follows: 4 543B.60 Licensees providing services in more than one 5 transaction. 6 A licensee may provide brokerage services simultaneously 7 to more than one party in different transactions unless the 8 licensee agrees with a client that the licensee is to provide 9 brokerage services only to that client. If the licensee and a 10 client agree that the licensee is to provide brokerage services 11 only to that client, the agency agreement disclosure required 12 under section 543B.57, subsection 1 , shall contain a statement 13 of that agreement. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanations substance by the members of the general assembly. 17 This bill relates to real estate brokers and brokerage 18 agreements. 19 The bill includes in the current definition of a real estate 20 broker a person acting for another for a fee, commission, 21 or other compensation or promise who prepares buyers 22 representation agreements, including any modifications, 23 amendments, or addendums. Buyers representation agreement 24 is defined by the bill. 25 The bill requires a licensee, when providing brokerage 26 services to a client, to treat all parties to a transaction 27 with honesty and good faith, disclose to each party all 28 material adverse facts as laid out in the bill, and to account 29 for all property coming into the possession of the licensee 30 that belongs to any party within a reasonable time. The bill 31 requires the licensee to place the clients interests ahead 32 of the interests of any other party, disclose to the client 33 all information known by the licensee that is material to the 34 transaction and that is not known by the client or could not 35 -3- LSB 5977XC (2) 90 nls/ko 3/ 4
S.F. _____ be discovered by the client through a reasonably diligent 1 inspection, fulfill any obligation that is within the scope of 2 the brokerage agreement, and diligently exercise reasonable 3 skill and care in providing brokerage services. 4 Under the bill, a brokerage agreement shall specify that a 5 broker shall review the brokers compensation. Additionally, 6 a brokerage agreement must be signed by both a broker and a 7 client prior to the broker listing any property for sale on 8 behalf of a seller or making an offer on a property on behalf 9 of a buyer. 10 The bill makes a conforming change to Code section 543B.60. 11 -4- LSB 5977XC (2) 90 nls/ko 4/ 4