Iowa Real Estate Salesperson Exam — All Questions

Which body issues and regulates real estate salesperson and broker licenses in Iowa?

• a.The Iowa Association of Realtors
• b.The Iowa Department of Revenue
• c.The Iowa Real Estate Commission✓
• d.The county recorder where the licensee lives

Real estate licensing in Iowa is administered by the Iowa Real Estate Commission under Iowa Code Chapter 543B. The Commission issues, renews, and disciplines licenses and adopts the administrative rules that govern practice. A trade association such as the Iowa Association of Realtors is a private membership group with no licensing authority.

In Iowa, a licensed salesperson may lawfully perform real estate brokerage activity only when the salesperson is:

• a.Employed by and acting for a licensed Iowa broker✓
• b.Approved by the Commission for each individual sale
• c.A member of a local Realtor board
• d.Operating independently under the salesperson's own license

Under Iowa Code Chapter 543B, a salesperson's license is valid only while the salesperson is associated with and acting on behalf of a licensed broker. The broker supervises the salesperson and is responsible for trust funds. A salesperson may not accept compensation directly from a client; commissions are paid through the employing broker.

The Iowa Real Estate Commission may discipline a licensee for which of the following?

• a.Referring a client to a licensed home inspector
• b.Commingling client trust funds with the broker's personal or business funds✓
• c.Advertising a listed property with the seller's consent
• d.Belonging to more than one professional association

Commingling or converting client trust money is a serious violation of Iowa license law and a common basis for discipline, along with fraud, misrepresentation, and dishonest dealing. The Commission may reprimand, fine, suspend, or revoke a license after due process. Lawful advertising with consent and ordinary referrals are not violations.

Iowa, unlike many states, maintains no real estate recovery fund. Consumers harmed by a licensee are instead backed by:

• a.a bond posted by every broker with the county recorder
• b.a surcharge on transfer tax held in a state claims account
• c.mandatory errors and omissions insurance for active licensees✓
• d.a guaranty pool funded by multiple listing service dues

Iowa Code chapter 543B creates no recovery fund. Section 543B.47 instead directs the commission to require errors and omissions insurance of all licensees except those holding inactive licenses, and failure to carry it is grounds for denial, suspension or revocation. Cite: Iowa Code § 543B.47.

The Iowa Real Estate Commission is composed of:

• a.seven members: five licensed brokers and two members of the general public
• b.nine members: six licensees, two public members and a district judge
• c.five members: three brokers, one appraiser and one member of the public
• d.five members: four licensed under chapter 543B and one public member✓

The commission sits within the Department of Inspections, Appeals, and Licensing and consists of four members licensed under chapter 543B plus one member who is not licensed and represents the general public; at least one licensed member must be a licensed salesperson, and no more than one member may come from any one county. Cite: Iowa Code § 543B.8(1)-(2).

Iowa Real Estate Commission members are appointed by the governor for terms of:

• a.two years, with unlimited reappointment
• b.three years, capped at three terms or nine years✓
• c.four years, capped at two consecutive terms
• d.five years, renewable once with senate confirmation

Appointments are for three-year terms subject to senate confirmation, and a member may serve no more than three terms or nine years, whichever is less. Cite: Iowa Code § 543B.8(3).

The maximum civil penalty the Iowa Real Estate Commission may impose on a licensee, per violation, is:

• a.$2,500✓
• b.$1,000
• c.$5,000
• d.$7,500

Notwithstanding Iowa Code § 272C.3, licensee discipline may include a civil penalty not to exceed two thousand five hundred dollars per violation. Cite: Iowa Code § 543B.48.

An Iowa licensee is convicted of a felony. Iowa law requires the licensee to notify the commission within:

• a.30 days, after which the commission opens an investigation
• b.60 days, or at the next license renewal, whichever is sooner
• c.90 days, unless the conviction is reported by the court first
• d.10 days, and the license is immediately suspended pending hearing✓

A licensee must notify the commission of a conviction described in § 543B.15(3)“a” within ten days. Notification of a felony conviction results in immediate suspension pending a hearing, which must be held within thirty days of the notification. Cite: Iowa Code § 543B.29(1)“f”(1).

An Iowa seller says, “Get me $300,000 and keep anything above that.” The licensee should:

• a.accept if the excess is disclosed in writing
• b.refuse; a net listing is barred in Iowa✓
• c.accept if the seller signs a waiver at closing
• d.accept, but only for commercial property listings

A net listing specifies a net sale price to the owner with the excess over that price going to the broker as compensation. Taking a net listing is unprofessional conduct in Iowa. Cite: Iowa Admin. Code r. 481—2011.1(5); Iowa Code §§ 543B.29(3), 543B.34(8).

An Iowa licensee prepares a second, higher contract to show the lender so the buyer can borrow more. Under Iowa Code § 543B.45 this is:

• a.permitted once the lender is told
• b.a recordkeeping error, not a disciplinary matter
• c.a fraudulent practice under Iowa law✓
• d.allowed if both parties sign

A licensee may not knowingly make, issue, deliver, receive or permit the use of two or more contracts on the same parcel where one is concealed from the lender or loan guarantor to enlarge the loan or qualify the buyer; violation is a fraudulent practice. Cite: Iowa Code § 543B.45.

Who may lawfully engage in residential real estate wholesaling in Iowa?

• a.Only a licensed broker, or a person a broker represents✓
• b.Anyone at all, since an equitable interest is not real estate
• c.Only a person who first holds recorded legal title to it
• d.Only an attorney admitted to practice law in Iowa

A person must be licensed as a real estate broker, or be represented by a licensed broker, to engage in wholesaling — marketing and selling an equitable interest held under an assignable contract on property of one to four dwelling units. Cite: Iowa Code § 543B.6A(2) (2024 Iowa Acts ch. 1040, § 1); Iowa Admin. Code r. 481—2022.1.

An Iowa residential wholesaler fails to give the written disclosures required before contracting. The seller or buyer may:

• a.recover actual damages only after the sale has closed
• b.require the wholesaler to take legal title within 30 days
• c.ask the county recorder to cancel the recorded contract
• d.cancel before closing and keep the wholesaler's earnest money✓

If a wholesaler fails to make the required written disclosures, the seller or buyer may cancel the contract at any time prior to closing without penalty and may retain any earnest money the wholesaler paid, notwithstanding contrary contract terms. Cite: Iowa Code § 543B.6A(3)“c”; Iowa Admin. Code r. 481—2022.3.

Where must an Iowa salesperson's license be kept?

• a.On display in the salesperson's own home office at all times
• b.In the salesperson's possession while showing property
• c.In the custody and control of the employing broker✓
• d.On file with the recorder in the county of the broker

The license of a real estate salesperson is delivered or mailed to the employing real estate broker and is kept in the custody and control of that broker. Cite: Iowa Code § 543B.24.

An Iowa broker terminates a salesperson's association. Under Iowa Code § 543B.33 the salesperson may keep working:

• a.until the commission receives a copy of the license✓
• b.for 30 days while a transfer is pending
• c.until the current license term ends
• d.as long as the pending transactions were signed earlier

The designated broker must immediately deliver, mail or electronically submit to the commission a copy of the salesperson's license endorsed with the termination date, and it is unlawful for the salesperson to act under that license from the date the commission receives the copy. Cite: Iowa Code § 543B.33.