Indiana Real Estate License Law Review

Comprehensive practice flashcards covering Indiana Real Estate License Law, including definitions, IREC regulations, agency relationships, the Recovery Fund, and continuing education requirements.

Commission

Refers to the Indiana Real Estate Commission (IREC).

Broker

A person with a Broker's License who, for consideration, sells, buys, trades, exchanges, options, leases, rents, manages, lists, or appraises real estate under the auspices of a managing broker.

Listing Broker

The individual or entity that represents the Seller in a real estate transaction.

Selling Broker

The individual or entity that represents the Buyer in a real estate transaction.

Managing Broker

The person or entity responsible for the actions of Brokers acting under it; requires at least two years of active broker experience and passing a 24-hour course.

Licensing Agency

The Indiana Professional Licensing Agency (IPLA), which oversees several professions including Real Estate.

IREC Composition

Consists of 12 members: 9 from Indiana's Congressional Districts and 3 Members at Large (1 Broker and 2 Citizens), all appointed by the Governor for 4-year terms.

IREC Quorum

A majority of the 12 members of the Commission, which is necessary to transact business.

Minimum Salary Per Diem

Commission members receive a minimum salary of $50$ per day while performing their duties, plus reimbursement for travel and related expenses.

12-Unit Exception

A license is not required for the rental of apartment units owned and managed by a person if there are no more than 12 units on one parcel or on contiguous parcels.

Broker License Age Requirement

An individual must be at least $18$ years old before applying for a license.

One-Year Licensing Deadline

Applicants must pass the state licensing exam and submit the state application form within one year of passing the broker pre-licensing course.

Inactive License

A license status where a person may not perform licensing activities but must still pay required fees; continuing education is not required until reactivation.

Managing Broker Trust Account

A trust account (interest or noninterest bearing) used to hold funds belonging to others, such as earnest money deposits and closing escrows; no personal funds may be deposited.

90-Day Continuation Rule

If a Managing Broker dies or loses their license, associated brokers may continue to carry out previously contracted business for up to 90 days but may not undertake new business.

Class A Infraction

A criminal offense for performing acts of a Broker without a license or operating a school without course approval.

Agency Relationship

A relationship in which a licensee represents a client in a real estate transaction.

Client

A person who has entered into an agency relationship with a licensee.

Customer

A person who is provided services by a licensee in the ordinary course of business but has not entered into a client relationship.

In-house Agency Relationship

An agency relationship involving two ($2$) or more clients who are represented by different licensees within the same real estate firm.

Limited Agent

A licensee who, with written and informed consent of all parties, represents both the seller and buyer (or landlord and tenant).

Subagency

A broker engaged to act for another broker in performing services for a client; this practice is now illegal in Indiana.

Real Estate Recovery Fund Balance

The fund, established with $600,000$, must maintain a balance of at least $450,000$ or a surcharge is assessed to licensees; excesses above $750,000$ revert to the State General Fund.

Recovery Fund Payment Limits

Payments are limited to $20,000$ per judgment and an aggregate lifetime limit of $50,000$ per licensee.

Recovery Fund Repayment

A licensee must pay back all money paid from the fund on their behalf plus $12\%$ interest; the licenses of the broker and their managing broker are suspended until repayment.

Residential Real Estate Disclosure Scope

Applies to the sale, exchange, land contract, or lease with option to buy residential real estate with no more than four ($4$) units.

Defect

A condition that would have a significant adverse effect on the value of the property, impair health or safety of occupants, or significantly shorten the normal life of the property.

Psychologically Affected Property

Property where facts such as a death, felony, or illegal drug manufacture occurred; owners and agents are not required to disclose these unless directly asked.

Permanent Revocation

A sanction where a licensee may not apply for a new license for at least $7$ years.

IREC Civil Penalty

A fine of up to $5,000$ per offense that the Commission may assess against a licensee.

Summary Suspension

A $90$-day suspension issued if a practitioner is a danger to public health or refuses a physical or mental examination during a disciplinary proceeding.

Earnest Money Deposit Deadline

A listing broker or escrow agent must deposit funds in a trust account on or before the next two ($2$) banking days after final acceptance of the offer.

Net Listing

A listing contract that must provide for a maximum commission to be paid by the seller to the Managing Broker.

Closing Statement Retention

Listing and Selling Managing Brokers must keep copies of complete closing statements for $5$ years.

Broker Continuing Education (CE)

Every licensed real estate broker must complete at least $12$ hours per continuing education year.

Managing Broker Continuing Education

At least $4$ of the required $12$ annual hours of CE must be dedicated to business and management skills and legal knowledge needed by a managing broker.

Homeowners Association (HOA) Disclosure

The seller must provide a disclosure that the property is in a community governed by an HOA no later than ten ($10$) days before the sale closes.