Iowa Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

Which body licenses and regulates real estate brokers in Iowa?

• a.The county assessor's office
• b.The Iowa Real Estate Commission✓
• c.The Iowa Association of Realtors
• d.The Iowa Attorney General's real estate division

Real estate licensing in Iowa is administered by the Iowa Real Estate Commission, created within the Department of Inspections, Appeals, and Licensing under Iowa Code section 543B.8(1), with its rules at IAC 481 Chapters 2001 through 2022 (renumbered from the former 193E, which is now reserved); the Commission is what issues, renews, and disciplines broker and salesperson licenses. The county assessor's office values property for tax purposes and has no role in qualifying the people who sell it. The Iowa Association of Realtors is a private membership group whose standards bind only its voluntary members, and a trade association cannot grant or revoke the credential the statute creates. The Attorney General's office is the state's legal and enforcement arm rather than the occupational licensing body, so a real estate division there is not where a broker's license comes from.

To qualify for an Iowa broker license under Iowa Code section 543B.15(7), an applicant must have:

• a.Been an actively licensed salesperson for 24 months and completed 60 contact hours of education✓
• b.Been admitted to practice law in Iowa and completed 24 contact hours of broker education
• c.Been an actively licensed salesperson for 60 months and completed 24 contact hours of education
• d.Completed 60 contact hours of education and held any Iowa professional license for 24 months

Section 543B.15(7) sets two conditions: the person must "complete at least sixty contact hours of commission approved real estate education within twenty-four months prior to taking the broker examination," in addition to the salesperson prelicense course, and must "have been a licensed real estate salesperson actively engaged in real estate for a period of at least twenty-four months preceding the date of application," or have had substantially equal experience as a former broker or salesperson or as a manager of real estate. Reversing the two numbers describes no Iowa rule. Holding some other Iowa professional license is not the experience the statute counts, because the experience has to be active real estate practice. Admission to the Iowa bar exempts a lawyer from needing a license to act incident to the practice of law under section 543B.7(3), but it does not shorten the education or experience a broker applicant must show. Rule 481-2003.1(2) lets active salesperson experience from another jurisdiction count if that license has not been expired more than three years.

Iowa real estate broker licenses are issued for a term that:

• a.Runs two years and expires on the anniversary of the date the license issued
• b.Runs one year and expires on December 31 of the year the license issued
• c.Runs four years and expires on June 30 of the fourth year of the term
• d.Runs three years and expires on December 31 of the third year of the term✓

Rule 481-2003.3(2) issues broker, salesperson, trade name, branch office and firm licenses "for a three-year term, counting the remaining portion of the year issued as a full year," and rule 481-2016.4(1) repeats that all individual licenses expire on December 31 of the third year of the term. That is why the renewal deadline is a calendar date shared by every licensee rather than a personal anniversary, so a term keyed to the issue date describes a different state's system. Iowa has no four-year term and no mid-year expiration date. A one-year term would collide with the 36-hour continuing education requirement, which is measured across the whole three-year period. Branch office and trade name licenses run with, and expire with, the license they are assigned to.

An Iowa broker misses the December 31 renewal deadline. Under Iowa Code section 543B.28 and rule 481-2003.5, the broker may:

• a.Renew through March 31 by paying the renewal fee plus a $50 penalty
• b.Keep practicing for 90 days while a late renewal application is pending
• c.Renew through January 30 by paying the renewal fee plus a $25 penalty✓
• d.Renew at any time within one year with no fee beyond the renewal fee

Section 543B.28 lets a licensee who misses the expiration date renew "within thirty days following its expiration," with a reasonable penalty, and rule 481-2003.5(2)"b" fixes that penalty at $25 for an application received after midnight December 31 but before midnight January 30. Applications arriving after January 30 are treated as reinstatement under rule 481-2003.6, which costs the regular renewal fee plus $25 for each partial or full month since expiration and is available for three years; a broker who has not reinstated by December 31 of the third year following expiration is treated as never having been licensed and starts over by qualifying for a salesperson license. March 31 and the $50 figure appear nowhere in the Iowa rules. There is no grace period for practice: from the date of expiration to the date of reinstatement the broker is not authorized to act as a broker, and a lapse also terminates the authority of every salesperson assigned to that broker.

An Iowa broker files a timely, complete renewal with the proper fee but has not finished the required continuing education. The commission will:

• a.Deny the renewal and require the broker to retake the broker license examination
• b.Renew the license in active status and allow one year to make up the shortfall
• c.Suspend the license for the length of the continuing education deficiency
• d.Renew the license in inactive status until the deficient hours are completed✓

Rule 481-2003.5(4) provides that renewal applications which do not report completion of the required continuing education, but are otherwise timely and sufficient and accompanied by the proper fee, "are renewed in inactive status," and rules 481-2003.4(3) and 481-2016.6 require the licensee to submit evidence that all deficient hours have been completed before the license can be reactivated. Retaking the examination is the alternative to completing the hours only when reinstating a license that has already expired (rule 481-2003.6(1)), not when a live license is being renewed. There is no active renewal with a make-up year: an inactive licensee may not engage in any act requiring a license, which is what protects the public in the meantime. Suspension is a disciplinary sanction imposed after a contested case, and an education shortfall alone is handled as a status change instead.

Iowa's mandatory errors and omissions insurance requirement applies to:

• a.All active licensees, and self-insurance does not satisfy the requirement✓
• b.Only firms with eleven or more licensees, which may satisfy it by bond
• c.All licensees, whether active or inactive, unless the firm carries a bond
• d.Only designated brokers, who may self-insure the firm and its licensees

Section 543B.47(1) requires as a condition of licensure that all real estate licensees "except those who hold inactive licenses" carry errors and omissions insurance covering all activities under chapter 543B, and rule 481-2019.3(10) states flatly that "self-insurance does not comply with the provisions of the Iowa errors and omissions insurance law." The duty is not limited to designated brokers; every active broker, broker associate, salesperson and firm must be covered. Rule 481-2019.2(2) confirms that inactive licensees do not need coverage, so a rule reaching them as well misstates who is exempt. Firm size affects only the aggregate limit for an independently carried umbrella policy, not whether coverage is required, and a surety bond is not an accepted substitute. Independently obtained coverage must carry a per claim limit of at least $100,000, and failure to furnish proof within 20 calendar days of a commission request is prima facie evidence of a violation and grounds to deny, suspend or revoke a license (section 543B.47(6), rule 481-2019.6(6)).

Which of the following is a common ground for the Iowa Real Estate Commission to discipline a broker?

• a.Charging a negotiated commission the client agreed to in writing
• b.Completing more continuing education hours than a renewal requires
• c.Commingling trust funds or failing to supervise affiliated licensees✓
• d.Belonging to a local board of Realtors or a state trade association

The Iowa Real Estate Commission may discipline a broker for violations such as commingling or converting trust funds, failing to supervise affiliated licensees, misrepresentation, and other conduct prohibited by Chapter 543B and the Commission rules at IAC 481 Chapters 2001 through 2022. Belonging to a trade association, negotiating a commission, and exceeding CE minimums are lawful and not grounds for discipline.

Under Iowa Code section 543B.29(4), an Iowa licensee's real estate license must be revoked after:

• a.Any single violation for which a civil penalty of $2,500 is imposed
• b.Two violations of section 543B.29 or 543B.34 within a five-year period
• c.Four written consumer complaints filed against the licensee in a year
• d.Three violations of section 543B.29 or 543B.34 within a three-year period✓

Section 543B.29(4) is mandatory and specific: "A real estate broker's or salesperson's license shall be revoked following three violations of this section or section 543B.34 within a three-year period." Two violations in five years inverts both numbers and states no Iowa rule. A civil penalty is a separate sanction rather than an automatic revocation trigger, and section 543B.48 caps it at $2,500 per violation, which rule 481-2018.14(1)"l" repeats among the sanctions the commission may impose alone or in combination with revocation, suspension, probation, added continuing education, reexamination, a downgrade from broker to salesperson license, or a reprimand. Complaints are not violations: rule 481-2018.6(5) has staff screen every written complaint first, and rule 481-2018.11 lets the commission close a file, sometimes with a confidential letter of caution that is expressly not disciplinary action.

The Iowa Real Estate Commission may accept a licensee's voluntary surrender of a license. Such a surrender:

• a.Is a private resolution that is not published and is not disciplinary action
• b.Ends the matter permanently and bars any later application to reinstate
• c.Is available only after a contested case hearing has been fully decided
• d.Is disciplinary action and is published like any other disciplinary order✓

Rule 481-2018.14(3) says the commission may accept a voluntary surrender to resolve a pending disciplinary contested case or a pending investigation, but "cannot accept a voluntary surrender of a license to resolve a pending disciplinary investigation unless a statement of charges is filed along with the order accepting the voluntary surrender," and that "such a voluntary surrender is considered disciplinary action and is published in the same manner as is applicable to any other form of disciplinary order." That is the point of the rule, so treating surrender as a quiet private exit describes exactly what Iowa refuses to allow. It is available while a case or investigation is still pending rather than only after a decided hearing. And it is not permanent: rule 481-2018.15 treats reinstatement as covering a new license after a revocation, voluntary revocation or voluntary surrender, though rule 481-2018.14(4) makes strict compliance with the wind-down steps in rule 481-2007.3 a condition of applying.

An Iowa broker's license is revoked. Under rule 481-2007.3, the broker must:

• a.Keep the trust account open and disburse funds for thirty additional days
• b.Finish any closings already pending before the effective date of the order
• c.Remove or cover all advertising within ten calendar days of the effective date✓
• d.Assign the firm's listings to another broker without notifying the clients

Rule 481-2007.3(6) bars a broker whose license is suspended or revoked from advertising real estate in any manner as a broker and requires that all advertising, including signs, be "removed or covered within ten calendar days after the effective date," with the brokerage telephone no longer answered in a way suggesting the broker is still active. The broker may not finish pending closings: rule 481-2007.3(5) transfers that responsibility to another broker, an attorney, a financial institution or an escrow company, with the written approval of all parties and notice of where the trust and escrow money will be held. Listings cannot be quietly handed off either, because rule 481-2007.3(4) cancels the brokerage and management agreements, requires clients to be told they may engage a broker of their choice, and forbids selling or assigning those agreements without the client's written consent. Affiliated licensees are automatically placed on inactive status unless they transfer to another broker (rule 481-2007.3(2)).

To renew an Iowa broker license in active status, a licensee must complete, in each three-year renewal period:

• a.12 hours: 4 hours of law update, 4 hours of ethics, and 4 elective hours
• b.36 hours of electives, with law update and ethics counted as elective credit
• c.24 hours: 6 hours of law update, 3 hours of ethics, and 15 elective hours
• d.36 hours: 8 hours of law update, 4 hours of ethics, and 24 elective hours✓

Rules 481-2016.4(2) and 481-2003.4(2) set the same schedule for brokers and broker associates: a minimum of 36 hours of approved programs per three-year renewal period, made up of an 8-hour law update, a 4-hour ethics course, and 24 elective hours. The law update and ethics courses are named requirements, so treating the whole 36 hours as free electives would let a licensee renew without either one. The other totals are not Iowa's; the figure is tied to the three-year license term set by rule 481-2003.3(2). Two further limits apply: an "hour" means 50 minutes of instruction (rule 481-2016.1), and no more than 24 of the 36 hours may be taken by distance or online learning (rule 481-2016.4(4)). A course counts only once in a renewal period unless both the course number and the instructor differ (rule 481-2016.4(3)), and the licensee keeps documentation for six years.

An Iowa licensee completes more continuing education than a renewal period requires. The excess hours:

• a.Cannot be carried over to any later renewal period under any circumstances
• b.Carry over up to 18 hours, but not toward the law update or ethics courses✓
• c.Carry over in full to the next renewal period, including law update hours
• d.Carry over up to 18 hours, including the ethics course but not law update

Rule 481-2016.4(2) allows a licensee to apply up to 50 percent of the required hours to the following renewal period, sets the ceiling at "a maximum of 18 hours from the previous renewal period," and then closes the obvious loophole: "licensees cannot carry over any hours toward the mandatory eight-hour law update course nor the four-hour ethics course." Eighteen is simply half of the 36 required hours. Full carryover including the law update would defeat the purpose of an annual-style law refresher tied to each three-year cycle. Carrying the ethics course forward is barred by the same sentence that bars the law update, so a rule that separates them misreads it. And carryover is not prohibited outright; only one period's worth may be banked, and rule 481-2016.6 repeats the same ceiling for a licensee who is making up hours to reactivate an inactive license.

Under rule 481-2013.1, an Iowa broker must deposit trust funds into the trust account no later than:

• a.Ten calendar days after the offer to purchase is first presented
• b.Five banking days after the last signature of acceptance is obtained✓
• c.Three business days after the broker's salesperson receives the funds
• d.The banking day following receipt, whatever the contract may say

Rule 481-2013.1(1)"a" states that "all trust funds are deposited into the trust account no later than five banking days after the date indicated on the document that the last signature of acceptance of the offer to purchase, rent, lease, exchange, or option is obtained unless otherwise specified in the contract." The clock therefore starts at the last signature of acceptance, not at the moment a salesperson takes the check, and a three-day receipt rule moves the trigger to the wrong event. Ten days from presentation of an offer is longer than the rule allows and keys off an offer that may never be accepted. A next-banking-day rule ignores the closing words of the same sentence, which let the contract specify a different time. The account itself must be held at a federally insured depository institution with the word "trust" in its name.

An Iowa broker holds a disputed earnest-money deposit after a sale falls through and both buyer and seller claim it. The broker should:

• a.Keep the deposit as a cancellation fee
• b.Split the deposit evenly without either party's consent
• c.Keep the funds in trust until the dispute is resolved✓
• d.Release the money to whichever party asks first

Rule 481-2013.1(7) requires the broker to continue holding a disputed deposit in the trust account until one of four things happens: a written release from all parties, a final judgment of the court, a final decision of a binding alternative dispute resolution process or mediation, or the filing of a civil action, at which point the broker may seek authorization to pay the money into court. Rule 481-2013.1(10) allows the broker to file an interpleader action instead. Splitting the money or paying whoever asks first is a unilateral disposition the rule does not permit. Keeping it as a fee is barred outright by rule 481-2013.1(9): "under no circumstances is the broker entitled to withhold any portion of the earnest money when a transaction fails to consummate even if a commission is earned," and the broker must pursue any commission claim separately against the client. Rule 481-2013.1(8) does give a safe harbor for a good-faith disbursement to the buyer after 30 days from the dispute, or to the seller after six months, but only after 30 days' written notice by certified mail to all parties setting out the proposed action and its grounds.

A supervising Iowa broker reconciles the trust account monthly primarily to:

• a.Confirm the account holds what is owed to each client✓
• b.Allow the broker to borrow client funds between closings
• c.Increase the interest earned for the brokerage
• d.Avoid having to keep client ledgers

Rule 481-2013.1(6)"a"(3) requires the journal to provide "a means for monthly reconciliation on a written worksheet of the general ledger balance with the bank balance and with the individual ledger accounts to ensure agreement" - a three-way comparison whose whole purpose is to prove the account holds exactly what is owed to each client and to surface a shortage quickly. It cannot be a way to avoid keeping ledgers, because the reconciliation is only possible when the per-client ledgers required by rule 481-2013.1(6)"b" exist to be compared. It is an accuracy check rather than a way to generate a return, and under section 543B.46(1) the broker cannot benefit from interest on the funds of others in any event. And it certainly does not authorize borrowing client money between closings: rule 481-2013.1(1)"e" bars using the trust account as a business operating account or for personal use, and commissions, salaries and normal business expenses are never disbursed from it directly.

Interest earned on an Iowa broker's common trust account is:

• a.Paid to the listing client at closing and shown on the closing statement
• b.Retained by the broker to offset the cost of maintaining the account
• c.Remitted quarterly to the state unless the parties agree otherwise in writing✓
• d.Left in the account and reported to the commission once every three years

Section 543B.46(1) requires the common trust account to be an interest-bearing account and directs that "the interest on the account shall be transferred quarterly to the treasurer of state and transferred to the Iowa finance authority for deposit in the housing trust fund established in section 16.181 unless there is a written agreement between the buyer and seller to the contrary," adding that "the broker shall not benefit from interest received on funds of others in the broker's possession." That last sentence is why the broker cannot simply keep the interest, although rule 481-2013.1(2) does let the amount remitted be net of service charges attributable to maintaining the interest-bearing account and remitting the interest. Interest goes to a client only under the written agreement contemplated by rule 481-2013.1(3), and then out of a separate account. Nothing is reported to the commission on a three-year cycle; unclaimed trust funds instead go to the Treasurer's Unclaimed Property Division after three years under rule 481-2013.1(14). A broker may keep up to $1,000 of personal funds in the account solely to cover bank service charges (section 543B.46(4)).

Under Iowa Code section 543B.56A(3), a brokerage agreement must be signed by both the broker and the client before the broker:

• a.Delivers a written closing statement to the buyer and to the seller
• b.Advertises a listed property on the brokerage's website or social media
• c.Accepts an earnest money deposit from the buyer named in the contract
• d.Shows a property to a buyer, or lists a seller's property for sale✓

Section 543B.56A(3) now reads: "A brokerage agreement must be signed by both the broker and the client prior to the broker listing any property for sale on behalf of a seller, or before showing a property to a buyer, or if no property is shown to a buyer, before making an offer on a property on behalf of a buyer." The signature therefore has to come before the showing, which is far earlier in the relationship than a closing statement, an advertisement, or the taking of a deposit - all of which happen after a client relationship already exists and none of which is the statutory trigger. The provision has a three-bill history worth knowing: 2024 Iowa Acts ch. 1052 (SF 2291) created subsection 3 with only the listing and offer triggers, but 2024 Iowa Acts ch. 1072 (HF 2326, Division II) amended that subsection "if enacted by" SF 2291 in the same session, so the showing trigger has been part of the operative text from the day it took effect, and 2025 Iowa Acts ch. 83 (SF 314) added the exemptions. Rule 481-2011.1 adds that a buyer representation agreement is required for all residential properties.

The section 543B.56A(3) buyer signing requirement does NOT apply to:

• a.A customer at an open house or auction, or a property over four units✓
• b.A first-time buyer who has already been prequalified by a mortgage lender
• c.A buyer working with the listing brokerage on an in-house transaction
• d.A buyer of new construction being sold directly by the builder-developer

The second sentence of section 543B.56A(3) states that "the brokerage agreement requirements under this subsection that apply to a buyer shall not apply to customers attending an open house or auction, to a potential buyer of a property of more than four dwelling units, or to a property that is not intended for human inhabitance." Those three carve-outs, added by 2025 Iowa Acts ch. 83 (SF 314), are the whole list; before that Act only the open-house exemption existed. Prequalification says something about the buyer's financing and nothing about whether an agreement is required. An in-house transaction raises dual agency questions under section 543B.58 but does not remove the signing requirement. New construction is if anything more regulated, because rule 481-2011.7 treats a contract with a builder to improve real estate as a real estate transaction and requires written disclosure that the licensee and the brokerage will be compensated. Rule 481-2011.1 exempts the same open houses and auctions, plus commercial properties, from the buyer representation agreement.

Rule 481-2011.1 requires every Iowa brokerage agreement for residential property to contain:

• a.A definite expiration date no more than three years from the date it is signed
• b.A commission rate drawn from the schedule published by the local Realtor board
• c.A definite expiration date no more than one calendar year from the effective date✓
• d.An automatic renewal clause running until the property is sold or withdrawn

Rule 481-2011.1 requires all brokerage agreements to be in writing and to include the amount of compensation with a disclosure that compensation is negotiable and not set by law, the signatures of all parties, and "a definite expiration date not to exceed one calendar year in length from the effective date, for residential properties." A term of three years fails that limit, and an automatic renewal defeats the very idea of a definite expiration date. No commission schedule exists to copy from: section 543B.56A(2)"e" requires the agreement to review the broker's compensation and "conspicuously display a statement that the broker's compensation, fees, and commission are negotiable and not established by law," and rule 481-2011.2(5) makes any compensation in a brokerage agreement fully negotiable among the parties to it. The licensee must give the client a legible copy as soon as the client's signature is obtained, and rule 481-2011.2(2) ends the relationship at the agreed expiration or by written termination, never exceeding 12 months.

An Iowa seller offers to let the broker keep everything above $250,000 as the fee. The broker must:

• a.Decline, because a net listing agreement is barred and is unprofessional conduct✓
• b.Decline, unless the property is commercial and the excess is capped at ten percent
• c.Accept, provided the arrangement is disclosed in writing to any cooperating broker
• d.Accept, provided the seller signs a separate consent to the compensation formula

Rule 481-2011.1(5) is titled "Net listing barred" and provides that "no licensee makes or enters into a net listing agreement for the sale of real property or any interest in real property," defining such an agreement as one specifying a net sale price to the owner with the excess going to the broker as compensation, and declaring that taking one is unprofessional conduct and a violation of the license law. Because the prohibition is on making the agreement at all, neither disclosure to a cooperating broker nor a separate signed consent from the seller can cure it - the seller's agreement is what the rule forbids. There is no commercial exception and no percentage cap. Note the terminology: Iowa now calls the umbrella contract a "brokerage agreement" and uses "agency disclosure" where it once said agency agreement, but this rule still says "net listing agreement," so the rename was not global.

To enforce a protective clause after an Iowa exclusive brokerage agreement expires, the broker must have:

• a.Filed a copy of the expired brokerage agreement with the commission
• b.Delivered the protected names in writing before the agreement expired✓
• c.Recorded a notice of the protection period with the county recorder
• d.Obtained the client's written consent within ten days after expiration

Rule 481-2011.5 sets two conditions. The brokerage agreement must contain a provision for the protective clause establishing a definite protection period, and "in writing and prior to the expiration of the brokerage agreement, the broker furnishes to the party the names and available contact information of persons to whom the property was presented or a list of each property that was shown during the active term of the brokerage agreement and for whom protection is sought." Delivery must be by personal or electronic service with written acknowledgment of receipt, or by regular or certified mail postmarked before expiration with return receipt requested. Everything therefore has to be done while the agreement is still alive, which is why a consent obtained ten days afterward comes too late. Nothing is recorded with the county recorder, and nothing is filed with the commission; the broker simply retains the agreement and proof of delivery in the transaction file for five years.

Under Iowa law, a licensee who wishes to act as a disclosed dual agent representing both buyer and seller must:

• a.Represent only the seller's interests despite the arrangement
• b.Obtain approval from the county recorder
• c.Charge a reduced commission set by the Commission
• d.Obtain the written consent of both parties to the dual agency✓

Section 543B.58(1) provides that "a licensee shall not be the agent for both a buyer and a seller to a transaction without obtaining the written consent of both the buyer and the seller," and that the consent must state that the licensee has made full disclosure of the type of representation, recite the licensee's duties under section 543B.56, and record that the clients understand and consent. Rule 481-2012.5 adds that the brokerage must have a written company policy permitting disclosed dual agency, that the consent agreement must tell clients they are not obligated to consent, and that if any party refuses to sign, the licensee cannot act as a dual agent at all. No county officer approves the arrangement. Commission rates are never set by the Commission and are fully negotiable. And a dual agent does not quietly favor the seller: the licensee owes both clients the duties of a single agent except as the rule provides, and may not disclose one client's confidential information to the other.

Under Iowa Code section 543B.57 and rule 481-2012.2, a licensee's agency disclosure must be:

• a.Verbal when specific assistance begins, then written before any offer is made✓
• b.Verbal at the first showing, with a written version filed with the commission
• c.Written at the first contact and again verbally at the closing of the sale
• d.Written only if the client asks for it before the purchase agreement is signed

Iowa runs a two-step disclosure. Rule 481-2012.2(2) requires a verbal disclosure by the licensee before providing specific assistance to a client or an unrepresented customer, and rule 481-2012.2(3) requires the written disclosure to be made to the buyer or tenant before any offer, lease or rental agreement is made or signed by them and before the seller or landlord signs or accepts it, acknowledged by separate signatures. Section 543B.57(2)"b" states the same timing. The disclosure is therefore never optional and never dependent on the client asking for it. Nothing is filed with the commission; the broker retains the signed copy in the transaction file for five years, and rule 481-2012.2(12)"b" requires the same retention even where the offer was rejected. A change in representation that makes the initial disclosure incomplete, misleading or inaccurate requires an immediate new verbal disclosure followed by a new signed written one.

For agency-disclosure purposes, Iowa's definition of "specific assistance" does NOT include:

• a.Eliciting information about a buyer's motivation for moving to the area
• b.Accepting confidential information about a party's financial qualifications
• c.An open house showing or a preliminary talk about price range and location✓
• d.Accepting information about a preliminary offer on a specific property

Section 543B.57(2)"c" defines specific assistance as "eliciting or accepting confidential information about a party's real estate needs, motivation, or financial qualifications, or eliciting or accepting information involving a proposed or preliminary offer associated with specific real estate," and then excludes three things: "an open house showing, preliminary conversations concerning price range, location, and property styles, or responding to general factual questions concerning properties which have been advertised for sale or lease." The other three choices track the inclusions almost word for word, which is why each of them does start the disclosure clock. The distinction matters at an open house in particular, because a customer there is also outside the brokerage agreement requirement of section 543B.56A(3); the moment the conversation turns to what the visitor can afford or what they would offer, specific assistance has begun and disclosure is owed.

An Iowa designated broker appoints two affiliated licensees to represent the seller and the buyer in one transaction. The designated broker is:

• a.Barred from making the appointments unless the firm has two offices
• b.Not a dual agent merely because of the appointment under section 543B.59✓
• c.A dual agent automatically, because both clients are in the same firm
• d.Required to withdraw from the transaction and refer both clients out

Section 543B.59(2) provides that "a real estate brokerage agency and a designated broker are not considered to be dual agents solely because of an appointment under the provisions of this section," while an affiliated licensee who personally represents both the seller and the buyer in the same transaction is a disclosed dual agent and must follow the dual agency rules. That is the whole point of appointed agency: it lets one firm serve both sides without making the broker a dual agent by operation of law, and section 543B.59(3) adds that knowledge is not imputed among the clients, the agency and its appointed agents. The number of offices is irrelevant. Withdrawal is not required either, though rule 481-2012.6(4) provides that if a client refuses to consent to the appointment made for the other party, the broker and affiliated licensees cannot act as an appointed agent for that other party. Rule 481-2012.7(1) requires the brokerage, before entering into a brokerage agreement, to give the client written notice of its appointed agent policy and the named appointed agents with a place to consent or not consent.

Iowa requires the seller of most residential property (one to four units) to give the buyer a:

• a.Copy of the seller's original purchase contract and deed
• b.Waiver of all inspection rights
• c.Guarantee that the home has no defects
• d.Written property condition disclosure statement✓

Iowa Code chapter 558A applies to a transfer of real estate that "includes at least one but not more than four dwelling units," and section 558A.2(1) requires a written disclosure statement to be delivered to the prospective buyer before the transferor makes a written offer or accepts a written offer. It is a statement of what the seller knows, made in good faith under section 558A.3(1), so a guarantee that the home has no defects describes something the statute never asks a seller to give - the buyer's own acknowledgment in the commission's sample form says the statement is not a warranty and not a substitute for an inspection. A waiver of inspection rights is the reverse of a disclosure, withholding information rather than supplying it. The seller's old purchase contract and deed are title documents rather than condition disclosures. Rule 481-2014.1(2) requires the listing licensee to obtain the completed, signed and dated disclosure at the time the listing is taken, and to keep it for five years if the transaction closes.

An Iowa seller's disclosure statement is delivered late, by mail, after the buyer's offer was accepted. The buyer may:

• a.Revoke the acceptance without liability within five days of that delivery✓
• b.Demand that the seller repair every condition named in the statement
• c.Rescind the contract without liability at any time before the closing date
• d.Sue the listing broker for the full amount of the earnest money deposit

Section 558A.2(2) provides that "if the disclosure statement is not timely delivered, the transferee may withdraw the offer or revoke the acceptance without liability, within three days following personal delivery of the statement or five days following electronic delivery or delivery by mail." The remedy is therefore a short, dated window keyed to how the late statement arrived, not an open-ended right to rescind up to closing. Rule 481-2014.1(3) requires a licensee representing a buyer to notify the buyer of the seller's obligation and of this right, and rule 481-2013.4 then requires the earnest money to be returned promptly to the buyer without needing the seller's consent. Chapter 558A is a disclosure statute rather than a repair statute, so it creates no duty to fix what is disclosed. Damages are limited by section 558A.6 to the buyer's actual damages, and a broker or salesperson is not liable for an error or omission unless the person had actual knowledge of it or failed to exercise ordinary care in obtaining the information.

Under Iowa Code section 558.69, a groundwater hazard statement is:

• a.Required for commercial parcels over one acre and for floodplain property only
• b.Submitted to the county recorder with the declaration of value for the transfer✓
• c.Filed with the department of natural resources by the buyer after the closing
• d.Given to the buyer at the first showing of any property served by a private well

Section 558.69(1) provides that "with each declaration of value submitted to the county recorder under chapter 428A, except as specified in subsection 8, there shall be submitted a groundwater hazard statement" disclosing known private burial sites, wells, potentially hazardous solid waste disposal sites, underground storage tanks, hazardous waste, and private sewage disposal systems. It belongs to the recording step, not to a showing, and it is signed by at least one seller or the seller's agent, with the seller giving the buyer a copy. The buyer files nothing: under section 558.69(6) it is the county recorder who transmits the statements to the department of natural resources. The requirement attaches to the transfer itself rather than to acreage, use, or flood zone. Since 2022 Iowa Acts ch. 1028, if none of the listed conditions is present no statement is submitted at all; instead the deed must carry on its first page the exemption statement quoted in section 558.69(8)"a", and if neither the statement nor that language appears the recorder must refuse to record.

Which class is protected in housing by the Iowa Civil Rights Act but not by the federal Fair Housing Act?

• a.Familial status, such as a household that includes children
• b.Disability of a person who will live in the dwelling once sold
• c.National origin of the buyer, renter, or prospective lessee
• d.Sexual orientation of the buyer, renter, or prospective lessee✓

Section 216.8(1)"a" makes it an unfair or discriminatory practice to refuse to sell, rent, lease, negotiate for, or otherwise make unavailable any housing "because of the race, color, creed, sex, sexual orientation, religion, national origin, disability, or familial status of such person," and the same list runs through section 216.8A. Familial status, national origin and disability are all federal Fair Housing Act classes as well, so none of them is what Iowa adds; sexual orientation and creed are the Iowa additions. Currency matters here: 2025 Iowa Acts ch. 1 amended sections 216.8, 216.8A, 216.12 and 216.12A and removed gender identity from the Act, so prep material printed before 2025 recites a different list. Section 216.12(1) exempts an owner-occupied building of no more than two units, the rental of fewer than four rooms in an owner-occupied dwelling, and an owner-occupied building of no more than four units where the owner takes the homestead tax credit - but section 216.12(2) says those exemptions "do not apply to advertising related to those dwellings."

Which task may an unlicensed personal assistant lawfully perform for an Iowa licensee?

• a.Host an open house for the public when no licensee is able to attend
• b.Record and deposit earnest money and perform other bookkeeping duties✓
• c.Show a listed property for sale to a prospective buyer without a licensee
• d.Explain the terms of a purchase agreement to a buyer outside the firm

Rule 481-2007.13(4)"a" lists what unlicensed support personnel may do under a licensee's direct supervision, and item (9) expressly permits them to "record and deposit earnest money, security deposits, and advance rents, and perform other bookkeeping duties." The same list allows submitting listing data to a multiple listing service, assembling closing documents, placing signs, scheduling showings and closings, and acting as a courier. The other three choices come from the barred list in rule 481-2007.13(4)"b": showing property for sale independently (item 4), discussing or explaining a contract, listing or agreement with anyone outside the firm (item 7), and independently hosting open houses attended by the public (item 2). An assistant may accompany a licensee at an open house as a host, greeting prospects, handing out prepared material and having visitors sign a register, but must not answer questions about the material aspects of the house or its price and terms.

A nonlicensed employee of an Iowa broker may, for rental property under Iowa Code chapters 562A and 562B:

• a.Negotiate the rent and the lease term directly with a prospective tenant
• b.Show the property, collect rent and deposits, and complete form agreements✓
• c.Do nothing at all, because leasing requires an active real estate license
• d.Act only if the broker files a written authorization with the commission

Section 543B.7A(3), added by 2024 Iowa Acts ch. 1072, excludes from chapter 543B "a person who is a nonlicensed employee of a real estate broker and who engages in advertising, showing, listing, collection of rents and deposits, procuring of prospects, completing form agreements, and executing form agreements as it relates to the rental of real estate under chapter 562A or 562B," and rule 481-2007.13(4)"a"(23) to (26) mirrors it. That is a real carve-out, so treating all leasing activity as licensed work overstates the law. It is also a narrow one: the listed acts stop at completing and executing form agreements, and negotiating terms is separately defined as a licensed act by section 543B.3(4), so the same employee may not bargain the rent or the lease term and may not show property for sale. Nothing is filed with the commission; instead rule 481-2007.13(2) requires the brokerage to adopt a written company policy authorizing support personnel and specifying the duties they may perform, with copies given to the licensee and the assistant.

In Iowa, the licensee responsible for a brokerage firm's licensed activity and trust account is the:

• a.Listing coordinator for the office
• b.Most senior salesperson in the office
• c.Designated broker who acts for the firm✓
• d.Outside accountant retained by the firm

Section 543B.5(12) defines the designated broker as "a licensee designated by a real estate brokerage agency to act for the agency in conducting real estate brokerage services," and section 543B.62(3)"b" makes a broker responsible for supervising every salesperson or broker associate employed by or associated with the broker, adding that an independent contractor relationship or a special compensation arrangement does not relieve anyone of that duty. Section 543B.46 puts the common trust account in the broker's name and under the broker's control, and rule 481-2013.3 bars a salesperson from handling a closing except under the direct supervision or with the consent of the employing broker. Seniority confers nothing: a salesperson cannot hold the supervisory role no matter how experienced, and rule 481-2007.1(7) requires every actively licensed broker associate and salesperson to be licensed under a broker. A listing coordinator and an outside accountant are typically unlicensed support personnel, who under rule 481-2007.13 may perform only ministerial duties that require no discretion or licensee judgment.

A supervising Iowa broker discovers that a licensee failed to deliver the required property condition disclosure to a buyer. The broker should:

• a.Wait until after the closing to raise the issue with the licensee
• b.Do nothing, because the disclosure is solely the seller's concern
• c.Ensure the disclosure is delivered and address the licensee's conduct✓
• d.Cancel the transaction and hold the earnest money as a broker fee

Section 543B.62(3)"b" makes the broker responsible for supervising affiliated licensees, and rule 481-2014.1(2) puts the delivery duty squarely on the licensee representing the seller, so the right move is to get the disclosure delivered and then deal with the licensee's compliance failure. Doing nothing on the theory that disclosure is solely the seller's concern ignores both the licensee's part in delivering it and the broker's answerability for that licensee; rule 481-2018.14(5)"m" lists failure by a broker to supervise among the violations for which a civil penalty may be imposed. Canceling the transaction and keeping the earnest money would compound the problem, because rule 481-2013.1(9) forbids the broker from withholding any part of the earnest money when a transaction fails. Waiting until after closing destroys the buyer's statutory remedy: under section 558A.2(2) a late-delivered disclosure lets the buyer withdraw the offer or revoke the acceptance without liability within three days of personal delivery or five days of mail or electronic delivery.

An Iowa broker may pay an earned commission to a corporation wholly owned by an affiliated salesperson only if:

• a.The corporation performs no act that requires a real estate license✓
• b.The commission approves the arrangement in writing before it is paid
• c.The salesperson also holds a broker associate license under the broker
• d.The corporation is separately licensed as a real estate brokerage firm

Section 543B.34(1)"e" makes it sanctionable for a salesperson or broker associate to accept compensation for licensed acts from anyone except the employing broker, who must be a licensed real estate broker. Subparagraph 543B.34(1)"i"(2) creates the narrow exception and states its conditions: the corporation must be wholly owned by the salesperson or broker associate, or owned with a spouse; "the corporation does not engage in real estate transactions as a third-party agent or in any other activity requiring a license under this chapter"; the employing broker is not relieved of any obligation to supervise; and the licensee is not relieved of personal civil liability by interposing the corporate form. The corporation is precisely not licensed - licensing it would defeat the first condition. Nothing turns on which class of license the affiliated licensee holds, and the Iowa Real Estate Commission gives no advance written approval for the arrangement.