83 terms

indiana real estate license law

Out of State Commercial Broker
Defined in 2005. This is a broker licensed in another state who does real estate other than 1-4 unit residential sales. They can legally practice real estate in Indiana without an Indiana license by following certain steps
Out of State Commercial Broker can legally practice real estate in Indiana without an Indiana license by following
a. Work with a Licensed Indiana Broker

b. Have a written agreement with this Indiana Broker that includes:

c. Provides the Indiana Broker with proof of a license in good standing in their home state.

d. Signs an Irrevocable written consent. (Like the out of state licensee working under an Indiana Principal Broker out of an Indiana office)
Out of State Commercial Broker
have long been allowed to operate in Indiana with the written consent of the IREC. Mostly these were non-residential brokers representing large business clients who operate nationally and either own or rent real estate. Often they did not get this authority.
Statue of Frauds
The ______ ____ __________requires the Contract of Sale to be in writing to be enforceable.
Offer To Purchase
License Law says the _______ ____ __________must be in writing. If the Offer is accepted without alteration it "ripens" (fancy way to say becomes) a Contract of Sale.
The OFFERS TO PURCHASE (Becomes the Contract of Sale)
a. In writing to be enforceable.

b. In Quadruplicate; 4 copies. This is that old NCR carbonless paper thing again. Original with the Buyer (Offeror), second to the Listing Principal Broker, copies three & four to the Seller (Offeree) who accepts or rejects on the 4th copy, which is returned to the buyer. If nothing is done the offer will expire by the passage of time.

c. Immediately communicated to seller.
4 copies
How many copies do you need to provide of the purchase agreement
These are properties with an emotional dimension that may cause discomfort to some people.
Included Properties:

a. Someone was infected with or died from HIV. (Federally protected class, can't talk about it)

b. Site of criminal gang activity, a felony, or illegal manufacture or sale of a controlled substance.

c. Discharge of firearm by law officer in the course of their duties.

d. Someone died on the property.
A b. Site of criminal gang activity, a felony, or illegal manufacture or sale of a controlled substance is what type of property?
Neither the Seller or Listing Broker is REQUIRED to disclose this information. License Law goes on to say, "the owner or agent may not misrepresent a fact ....in response to a direct inquiry from a transferee." In other words if asked tell the truth.
Seller must sign this & provide at time of offer to buyer, who is to sign and acknowledge receipt.
Seller is to disclose defects (significant adverse effect on value, useful life or wellbeing of future occupants) in major components of the home of which they are aware.
a. Not a warranty (guarantee) by the seller there are no problems it is just to disclose those things actually known to the seller.
. Must be signed by seller & presented to buyer at time the offer is made. It is signed (acknowledging receipt) by buyer to show they have seen it.
Any contract achieved without a signed _________ __________is not binding upon the buyer
2 business days
. If SALES DISCLOSURE is amended. Buyer has _____ days to rescind offer, which must be done in writing. If not done are again bound by contract of sale.
Does Not
After closing, the failure of the owner to have delivered a disclosure statement does or does not by itself invalidate the transaction?
_______ ________ is NOT REQUIRED for: Estate sales, foreclosure, bankruptcy, eminent domain, decree of specific performance, divorce, property settlement, guardianship, conservator-ship, trust, one co-owner to another, between spouses or to children, governmental transfer and sale of a new dwelling. In other words it applies only to a normal secondary market sale.
A document needed in For 1-4 residential sales
(Sale, exchange, installment sale or lease with option to buy - normal secondary market transation)
can and would not
Principal Brokers can or can not participate in, pay fees to and receive from referral companies? This would or would not violate Indiana License Law, the issue being that the out of state broker does not have an Indiana Real Estate License?
A Principal Broker is required to have and enforce a written ______ _____ ____ ________.
must describe the types of agency that may exist (Seller/Lessor, Buyer/Lessee, In-House, Limited) and if the Broker does or does not allow Disclosed Limited Agency. (Undisclosed Limited Agency is never allowed). This statement is to be presented to a client at the beginning of the agency relationship, before any confidential information is conveyed. It should disclose that/if compensation will be shared with other brokers, who might be representing a client opposite them in the transaction, even though that client's interest are potentially adverse to them.
This statement is to be presented to a client at the beginning of the agency relationship, before any confidential information is conveyed.
when agent's name appears on the State database of licensees
When do you have prook of licensing
purchased for an additional $10
A Pocket Card/Wall Certificate can be
Principal Broker must ur must not have proof of all licenses assigned to an office in that office and the same printout should suffice.
LISTING Contracts
Must be in duplicates
LISTING Contracts
Be signed by both Client and Agent (or an agent authorized by the Principal Broker to sign on their behalf)
LISTING Contracts
(Seller or Lessor as client, & Listing Principal Broker as agent)
Contracts of Agency:
(Buyer as client & Selling Principal Broker as agent, Lessee as client and Principal Broker as agent, or Owner as client and Property Management Company as agent)
Principal Broker
All advertising is to be in the name of the Principal Broker. (Natural or Legal - i.e. the PB could be XXX Corporation). The designated ____________ of entity license is responsible for supervising and making sure that advertising is compliant with all applicable laws.
FOR SALE Signs, (or For Lease etc): Principal Broker MUST have written authorization to put a sign on the property.True or Faulse
Advertising cannot be a display ad showing only the street address, PO box number or phone number. T or F
Associate licensees
The Principal Broker is the agent. _______ _________are independent contractors who contract their services to and represent the Principal Broker. Be aware verbal (radio) ads and web sites are advertising also)
closing statement
A Principal Broker who has a client at closing is responsible for providing that client a _______ _________. (The Title Company will usually prepare the actual statement, the HUD 1 in residential real estate, but legally it is the responsibility of the Principal Broker)
five (5) years.
Principal Broker must retain these closing statements for at least _____ years.
Termination of a Partnership Brokers License (due to the death of a partner)

Contracted but Unfinished Transactions & Status of Associate Licensees.

Sales Persons:
a. Have ______ days to finish contracted business of the deceased broker.
b. Must maintain their own _____account per terms found above.
c. No new business until associated with another Principal Broker and then only in new Principal Broker's name. Contracted business of the deceased broker can still be finished up to ______ days.
Becomes a Principal Brokers until they would elect to act as a Broker-Salesperson with another Principal Broker. Have the same 90 days to complete old business and must also have their own trust account. (Other administrative rules can come into play, i.e. a change of business address, etc)
All assets of the deceased broker's business would go into the deceased broker's ______ and compensation must flow through it (Unless contracts would dictate otherwise). Listings would normally be terminated.
60 day rule
Sometimes one party or the other will not sign the release, even if they should. Still, without both signatures the Broker cannot release the money. At some point the broker can use what is commonly called the ________________ to get the money out of the escrow account.
60 day rule
a. Certified or Registered Mail Return Receipt Requested to the last known address of each party
b. Written notice of what will be done with the escrow money, per documents and circumstances as the broker interprets the situation.
c. Allow the parties 60 days from the date of the notice for the them to do one of the following:
1. Sign the Release: Happy Days, money is sent to whom ever.
2. File a Lawsuit: Happy Days the Broker can turn money over to the Clerk of the Court.
In Either case the money is out of the Escrow Account.
. Death of Principal Broker (an Individual), General Partner in a Partnership, or expiration/revocation of Principal Broker license: The ______ will take custody of trust account. They may appoint a trustee to protect & distribute funds.
1. Transaction Closes: Closing Documents define. Money is Buyers and credited to them on the closing Statement.
2. Transaction Does not Close: A Mutual Release must be signed by both Parties.
a. With Cause: If a contingency cannot be removed, buyer normally would be entitled return of escrow.
b. Without Cause: Circumstances and Documents would dictate who should get escrow.
RELEASE OF EARNEST MONEY: Earnest Money stays in account until release authorized by:
Must maintain at least one insured __________. (Dedicated checking account for and only for client's money - up to $100 for service charges is ok). IREC has the power to, and does, audit accounts.
a. Use only for client funds (escrow, sale proceeds, any other money of clients), which can never go in another account. No personal or business funds can be placed into it - both are commingling. (the most common way to have a sanction imposed). Must have at least one account but could be more than one.

b. Can be interest bearing but any interest belongs to client. (If it is interest bearing and insignificant amounts accumulate making a payment impractical on given transaction a problem exits. Clearly the broker CANNOT keep the money)

c. Detailed records of monies in account must be kept.

d. Earnest Money other than Cash: Seller to know before accepting Offer.
c. Detailed records of monies in account must be kept.
Use only for client funds (escrow, sale proceeds, any other money of clients)
Independent Contractors
All Associated Licensees are considered _____________ of the Principal Broker. But if certain rules are not met these Associate Licensees can become EMPLOYEES - A PROBLEM.
A Natural Individual:
Associate licenses are held directly by the Broker as an individual
A Legal Individual (Entity
Must designate an individual human broker to be responsible to the IREC for it's actions
A Legal Individual (Entity):
Corporation: IN resident, IN Broker, Officer or highest ranking employee who can bind for RE
Partnership: All GP must be brokers, one must reside in Indiana.
Limited Liability Company:
Manager Managed: Like a Corporation
Member Managed: Like a Partnership.
Manager Managed and Member Managed
(These have only been around since 1993, after most of the License Law was written. So very little specific language mentions them and a lot of inferences have to be made about them as they can be a lot like partnership or a lot like corporations, depending on how they are setup within the rules which define this form of company):
a. A Licensed Indiana Broker who resides in Indiana
b. Is either a Manager, if there is one in Indiana OR
if no manager lives in Indiana the highest ranking company officer or employee in Indiana with the authority to bind the Company in a real estate transaction
a. All members must be brokers
b. At least one member must be a Designated Principal Broker and a resident of Indiana.
LIMITED LIABILITY COMPANYS (LLC): FEES of $?? Expiration June 30, same as corporations. No Investigation Fee.
PARTNERSHIP BROKERS LICENSE: (General or Limited Partnership)
1. All General Partners MUST be brokers.
2. One must be designated as the Principal Broker and be a resident of Indiana.
3. FEES: $50. Expiration is same as corporations. No Investigation Fee.
PARTNERSHIP BROKERS LICENSE: (General or Limited Partnership)
The expiration or revocation of any partner's license, (or the death of a General Partner as that usually terminates the Partnership) terminates the Partnership License. (The Partnership would have to be reformed, the license reapplied for and all licenses affiliated. This is why few companies are organized under this form of business.)
in the name of the Corporation (regardless of the state of incorporation): They can only be Principal Brokers. (There is an exception to this)

2. Must have at least one a human broker who qualifies as a designated responsible broker to be responsible for the licensees of the corporation who is:

a. A resident of Indiana. (There is one exception to this)
b. A licensed broker in Indiana.
c. An officer of the corporation if there is one in Indiana OR
if no officer resides in Indiana the highest ranking Indiana employee of the Corporation who can bind the company in real estate.
16 hours every 2 year renewel period
ONCE LICENSED, agents must take continuing education totaling ----- hours every _____ year renewal period:
Continuing Education: ______ Mandatory Hours - Minimum: (Antitrust, Indiana License & Escrow Law, IN agency law, Fair Housing & Civil Rights, Listing Contracts and Purchase Agreements, Settlement procedures, Environmental Issues, Ethics & Standards.)
and Up to 10 Elective Hours:
Continuing Education: and Up to ________Elective Hours: (Appraising, Property Management, Farm Property Management, Commercial Brokerage & Leasing, Financing, Residential Brokerage, Land development, Legislative Issues for real estate, other courses as approved by the IREC.)
Continuing Education:
Duplicate courses are not counted twice. Extra course do not carry over to the next period.
CE only by the end of the next renewal period.
License issued in 2nd year of renewal period:
License issued in 1st year of renewal period
16 hours by the end of that period.
As some agents have misrepresented meeting the requirement, the IREC, upon audit, acknowledges the suspension of the license as of the renewal date, makes the agent take all CE not taken for the prior period, can make the agent take all 16 hours of CE for the current period and impose a penalty up to _________. All the other sanctions are also available to the IREC)
All 16 hours have to be taken prior to activation. (If the licensee had previously taken CE for the renewal period and is activating in that same period, the CE has been met. Also if the initial licensing application was in the second year of that renewal period, the IREC should not require the CE as application is the second year as an Active licensee would not require CE. But check with the IREC for verification of this.
Reclassification of a "Referral" license, Unassigned to Active or Inactive to Active Status
Inactive Licensees
When an Active licensee's relationship with a Principal Broker has been terminated and a Notice of Termination sent to the IREC or at the REQUEST of the licensee this status exists. This Licensees cannot be actively engaged in the business, cannot receive fees, do not have to take Continuing Education (do have to take all 16 hours to activate depending on details - see the continuing education section for specifics) do have to pay renewal fees. Salespersons can only remain in this status for two full consecutive renewal periods.
These licensees DO NOT have to take continuing education but they MUST pay their renewal fees. This license, though considered an ACTIVE license for receiving payment, DOES NOT for a Salesperson CONSTITUE AN ACTIVE LICENSE FOR THE EXPERIENCE REQUIREMENT NEEDED FOR A BROKERS LICENSE. The two of the last five years as an active licensee waiver would still apply if the agent had been in an Active but non-referral status.
Not an actual license class but an active licensee who has decided and formally declared they will not actively engage in the real estate business: A licensee has met all qualifications, current on fees, associated with a Principal Broker (required for a Salesperson, optional as a Broker or are a Principal Broker under their own license), but Non-Practicing by choice and agreement. The licensee agrees not to actively engage in the Real Estate business (seek listings, clients, do open houses, etc) but can receive payment for referrals made to "practicing" agents.
A licensee has met all licensing qualifications, current on license fees, current on continuing education, associated with a Principal Broker (required for a Salesperson, optional as a Broker or are a Principal Broker under their own license) and have not declared their intent to be a non-practicing agent
Salesperson applies for a license WITHOUT a Principal Broker affiliation within one year of passing the state exam. They are not active, are unassociated, non-practicing (can't do licensed functions), and do not have to take Continuing Education (All 16 hours would have to be taken to activate license, depending on when activation occurred. See continuing education for details.) ,but must pay renewal fees. Limit for a Salesperson is two consecutive renewal periods. Once the license is assigned to a Principal Broker it is then an active license.
two consecutive renewal periods.
Unassigned License is Limitted for a Salesperson is _________________ Once the license is assigned to a Principal Broker it is then an active license.
next expiration date.
Currently if a license, either Sales or Brokers, is issued prior to January 1 of a renewal year a renewal fee will be due at the _________ If the license is issued between January 1 and June 30th of the renewal year the fee covers that fractional period and the next full renewal period. This is a policy which has changed frequently so make sure to verify specifics with the IREC when a license is issued.
A formal agreement between states to recognize each others license except for state license laws.
CURRENT STATES: ARK, CO, CONN, FL, GA, ILL, IA, KY, MA, MS, MO, NE, NC, OK, WI. Contact other states real estate commissions for details about their state.
Irrevocable Consent of Service
a. Out of state resident agrees for lawsuits to be brought in the Indiana County where the alleged offense occurred.
b. The notice of litigation (the Summons) can be delivered to the IREC, which constitutes service to the agent.
limit per judgment. Payment Limitations: of recovery fund
lifetime limit for a given licensee. Payment Limitations: ofrecovery fund
$750,000 and $450,000:
Fund Monetary Parameters: MAXIMUM: ________Any excess would flow to the General Fund.
MIMIMUM: __________ Short falls would result in a special assessment against all licensees, old and new.
The IRED is authorized to bring the recovery fund up to
recovery fund
Affect on Licensees: License(s) Suspended:
1. Violators License.
2. If the violator is a Salesperson, their designate Principal Broker's license is also suspended.
Until: Repayment to the Fund PLUS 12 percent interest.
: Individual can REAPPLY for a new license after seven (7) years. But the IREC is not OBLIGATED to grant a license to that individual.
a) Suspended licenses
can be reinstated by IREC if it is satisfied licensee can practice competently.
90 days
IREC can summarily (without a hearing) suspend a license for up to _______ if the licensee poses a "clear and immediate danger to the public" This suspension can be renewed. The intent is to stop the agent long enough to have a formal hearing.