Iowa Real Estate Broker Exam — All Questions

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.