Part 2 Indiana License Law

Real Estate Commission Oversight and Licensing Fees

• Administrative and Licensing Fees:

  • Notary fees.

  • ALJ (Administrative Law Judge) fees.

  • Review appraisals.

• Disciplinary Authority: The Commission has the power to grant or deny a new license if the applicant has been disciplined in another state.

• Military Exceptions: The military is granted specific exceptions regarding licenses, temporary licenses, and Continuing Education (CE).

Broker Company Management and Association Rules

• Purpose: The core purpose of the Commission is to safeguard the public interest.

• Supervision and Management:

  • Every broker company must be directed, supervised, and managed by a broker.

  • For entities, the broker designated to the IREC (Indiana Real Estate Commission) must use that broker company as their sole place of real estate business.

  • The broker is primarily responsible for the actions of the broker company and may also serve as a branch manager.

• Branch Offices:

  • Must be managed by a branch manager.

  • A Branch Office Registration form must be submitted.

  • The broker company must notify the IREC if a new branch manager is named or if a broker moves between branches.

• Association and Reassignment:

  • New licensees must choose to associate with a broker company or remain unassigned.

  • If associating, a proper broker company representative must sign the application.

  • Changing Companies: The licensee must have a reassignment application signed by the new broker company. This applies to those with inactive, expired, and referral licenses.

  • Notification Timeline: When changing companies, the Broker must notify the IREC within $5$ business days by filing a reassignment application. Signatures from both the former and new broker are required, alongside a fee.

  • Exclusivity: Licensees may only work for exactly $1$ INDIANA broker company at any given time.

• Office Compliance:

  • Offices must maintain evidence of licensure for all associated licensees.

  • Managing Brokers must provide a list of all associated licensees and evidence of licensure upon request by the Commission.

  • Each office must be managed by a licensed broker. This is the only permitted location for the broker's real estate business.

  • If a Managing Broker manages multiple offices, they must provide the Commission with the name and address of the BRANCH MANAGER for each office.

  • Internal moves (office-to-office within the same Managing Broker) require notification from the Branch Manager to the Commission.

• Termination of Affiliation:

  • Licensees must turn all listings over to the Managing Broker unless a written contract provides otherwise.

  • The Managing Broker must submit a termination form to the Commission within $5$ business days.

  • If moving to a new broker, the licensee is responsible for getting the new form to the Commission.

  • Inactive Status: Until the new Managing Broker requests the license, the licensee is considered inactive and cannot perform duties requiring a license.

  • Licensees must inform the Commission of any change of address.

Listing Contracts and Escrow/Trust Account Regulations

• Commission Payments:

  • A Listing Managing Broker may offer a Selling Managing Broker a share of the commission.

  • Payments must be made directly to the Selling Managing Broker and never directly to a licensee.

  • Penalty: Managing Brokers guilty of associating with an unlicensed person face license suspension or revocation.

• Listing Contract Requirements:

  • All contracts must be in writing (or electronic).

  • Must show a definite expiration date.

  • Must be in duplicate: the original is kept by the Managing Broker, and a copy must be given to the Seller within $3$ business days.

  • Net Listings: These must provide for a maximum commission to be paid by the seller to the Managing Broker.

• Offers and Escrow Procedures:

  • All written offers/authorizations must be communicated to the seller immediately for formal acceptance or rejection.

  • Requirement Timeline: Within $2$ banking days after final acceptance, the listing broker or escrow agent must:         (1) Deposit money into the listing broker's escrow/trust account.         (2) Deposit money with the party indicated in the purchase agreement. The broker with whom money is deposited is held responsible by the Commission.

  • Non-Cash Deposits: If earnest money is not cash/check, this must be communicated to the seller before acceptance and shown in the receipt.

• Escrow Funds and Interest:

  • Money must remain in the designated account until proper disbursement is authorized.

  • Beneficiary Agreement: With written consent from the beneficiary, a broker may transfer earned interest to a fund for affordable housing in Indiana, meeting Internal Revenue Code $501(c)(3)$ requirements.

Earnest Money Release and Closing Procedures

• Handling Non-Consummated Transactions:

  • Brokers are not required to pay parties unless there is a mutual release or a court order, except under specific release processes.

• Earnest Money Release Process:

  • Brokers may initiate the release if a party intends not to perform.

  • The broker must notify all parties via certified mail at their last known address.

  • The letter specifies distribution unless: (1) parties enter a mutual release, or (2) litigation is initiated within $60$ days of the mailing date.

  • If no action is taken within $60$ days, the broker may release funds to the party identified in the letter.

• Closing Requirements:

  • Managing Brokers must deliver a complete closing statement to their respective clients and retain copies for $5$ years.

  • Managing Brokers or their licensed associates must attend all closings.

  • Exemptions to Attendance:         (1) Commercial property (defined as property other than $1$ to $4$ family residential).         (2) Institutional clients (e.g., financial institutions).         (3) When the represented party or their representative does not personally appear.

  • Brokers may designate a broker from another company to attend (though noted as "NOT A GOOD IDEA").

• Financial Oversight:

  • Escrow summaries must be provided to the Commission or Attorney General upon request.

  • Escrow accounts must be opened in federally insured financial institutions.

Advertising Guidelines and Professional Disclosures

• Advertising Rules:

  • All advertising (written, internet, oral) must be in the Managing Broker's name with the name CLEARLY VISIBLE.

  • Must be supervised by the Managing Broker.

  • Electronic forms (text/thumbnails) must include a link to the proper display if full details are impractical.

  • Prohibited: Advertising property as if for sale by a private party not in the real estate business.

  • Prohibited: Using only a P.O. Box, Phone Number, or Street Address in ads.

  • Prohibited: Placing signs or advertising without written consent from the owner or agent.

• Crimes and Convictions:

  • Convictions involving dishonesty, false statements, fraud, or conspiracy require a Commission hearing to determine if the licensee should be entrusted to sell real estate.

  • A license application cannot be denied SOLELY due to a conviction.

• Conflict of Interest and Disclosure:

  • Licensees cannot buy or sell property for themselves (listed with them or their broker) without making their true position known to the owner.

  • Licensees must disclose their licensed status in writing to all parties when they own an interest in the property being bought or sold.

  • Referrals: Managing Brokers may participate in referrals given there is a written referral agreement.

Definitions of Incompetent Practices

The following are legally defined as incompetent practices:

1. Failing to account for or remit funds/documents belonging to others.

2. Accepting/offering inducements or rebates to obtain a listing or sale without full written disclosure to all parties at the time of offer/acceptance.

3. Receiving or giving undisclosed direct profit on expenditures related to a transaction.

4. Acting as both broker and undisclosed client in a transaction.

5. Guaranteeing or permitting anyone to guarantee future profits from the resale of real property.

6. Listing property without written consent or on terms not authorized by the owner.

7. Inducing a party to breach a written agency agreement or contract to substitute it with a new one.

8. Accepting employment/compensation contingent on an appraisal at a predetermined value.

9. Issuing an appraisal on property where the broker has an interest without written disclosure.

10. Negotiating directly with a party known to have an exclusive agency contract with another broker, unless initiated by that party in writing prior to expiration.

11. Attempting to represent more than $1$ Indiana broker company (except as allowed by $876$ IAC $8-1-1(a)$).

12. Compensating an unlicensed person for services that require a license.

13. Committing fraud or material deception in licensed acts.

14. Violating IC $25-34.1$.

15. Engaging in unlawful discriminatory practices under the Indiana Civil Rights Act (IC $22-9$).

Rules for Unlicensed Assistants

Unlicensed Assistants are strictly prohibited from:

1. Preparing marketing materials without licensee review.

2. Showing real property.

3. Answering listing questions EXCEPT for: List Price, Address, How to Get There, and Property Features.

4. Discussing or explaining legal documents with anyone outside the broker company.

5. Conducting Open Houses.

6. Telemarketing or telephone canvassing for listing appointments.

7. Negotiating commissions, splits, management fees, or referral fees.

Continuing Education (CE) and License Status Management

• General Broker Requirements:

  • Must complete at least $12$ hours per CE year.

  • Must present government-issued photo ID and proof of licensure for inspection at courses.

• Instruction Standards:

  • $1$ hour equals a $50$ minute instruction period.

  • Minimum course length is $2$ instruction hours.

  • Daily limit: $2$ to $8$ hours (except for distance learning, which can exceed $8$).

  • No partial credit: brokers must complete the entire course.

  • No carryover: excess hours do not apply to the next year.

  • No repeat credit: attending the same course twice in one year counts only once.

• Instructor Credits:

  • Instructors get credit for courses they teach but are limited to $12$ hours per $3$ year licensure period.

  • Instructors cannot receive credit for repeated courses or count instruction toward instructor-specific CE.

• Specific CE Requirements:

  • Managing Brokers: $4$ of their $12$ annual hours must be dedicated to business/management skills and legal knowledge.

  • Instructors: Must complete $4$ hours of CE specific to providing real estate instruction per CE year (counts toward broker CE).

• Renewal and Verification:

  • Approved subjects: Indiana agency law, licensure and escrow law, environmental issues, ethics, time-shares/condos/co-ops, and investment analysis.

  • Non-qualifying: Exam prep, sales meetings, in-house training, correspondence, and motivational classes.

  • Record Retention: Brokers must keep course attendance verification for $3$ years after the end of the licensure period.

• License Status Changes:

  • Inactive Status: Can be requested by assigned/unassigned brokers; requires certifying no intent to perform licensed acts.

  • Reactivating (at Renewal): Must obtain all CE hours that would have been required for an active license.

  • Reactivating (during a Period): Must obtain $12$ hours for the current year and pay the activation fee.

  • Reinstating Expired Licenses: Requires $36$ hours of CE within the $3$ years prior to application. If within $3$ years of expiration, CE from the last licensed period may count.

Homeowners Association (HOA) Disclosure Requirements

• Application: Applies to property title transfers after June $30$, $2015$.

• Disclosure Timeline: Sellers must provide specific information to purchasers no later than $10$ days before closing.

• Required Documents/Information:     (1) Disclosure that the property is in an HOA-governed community.     (2) Recorded governing documents.     (3) Statement of assessments and their amounts.     (4) Names and contact info (business/home address) of board members or management agents.

• Fees: An HOA or agent can charge no more than $\$250$ for a statement of unpaid assessments.

• Enforcement: Failure to provide these documents does not prevent the HOA from enforcing governing documents.