The Yosha Snyder Group wants its clients to be aware that the House Enrolled Act 1068-2024, signed into law by Governor Holcomb on March 11, 2024, began July 1, 2024. This law introduces Indiana Code § 25-34.1-12, which mandates that all Indiana real estate licensees must use written representation agreements to formalize their agency relationships with both their listing (owner/seller) clients and buyer clients. Designed to protect buyers and sellers, the bill introduces and solidifies key points of these relationships.
Key points of House Enrolled Act 1068-2024 by section include:
- Establishing consistent, minimum requirements for listing agreements and buyer agreements.
- Requiring that agreements between real estate brokers and their clients (owners/sellers or buyers) be in written form, either on paper or electronically, and include a clear expiration date.
- Requiring real estate brokers to provide a copy of the agreement to the client within three business days of signing, and to retain the original agreement and all electronic files in their office.
- Listing agreements or any authorization to sell must clearly state an expiration date and be documented in writing, whether on paper or electronically. The listing broker must provide a copy to the property owner within three business days of signing, and keep the original and electronic files in their office.
- Buyer agency agreements or any authorization to represent a buyer must also clearly state an expiration date and be documented in writing, either on paper or electronically. The selling broker must provide a copy to the buyer within three business days of signing, and retain the original and electronic files in their office.
- “Solicitation” includes various methods such as televised ads, radio broadcasts, newspaper or magazine ads, billboards, mailers, yard signs, websites, electronic communication (emails, texts), phone calls, social media, and other print or electronic methods.
- “Unlicensed real estate solicitor” refers to someone without a valid real estate license under IC 25-34.1-3, excluding certain entities like home builders, non-profits, government bodies, and specific individuals.
- An unlicensed real estate solicitor cannot solicit the sale or purchase of a residential, single-family home without disclosing: “This solicitation is not from a licensed real estate professional.”
- Before entering into a written agreement, an unlicensed real estate solicitor must inform the homeowner if any details in the required disclosure under Section 4 have changed.
- Within two days of entering into an agreement with an unlicensed real estate solicitor, a homeowner can cancel the agreement by providing a written rescission if the required disclosure in Section 4 is inadequate. The homeowner is not liable for canceling under this provision.
Direct Impact on Buyers and Sellers
This new bill, which is designed to protect both buyers and sellers, has a direct correlation on the financial transaction between all involved parties since Listing Brokers in Indiana–and nationwide–will be required to use alternative methods to advertise the compensation they receive. This change does not prohibit sellers from offering commissions to Selling Brokers; it simply requires that the specifics be addressed in a different manner.
Going forward, the Selling Broker’s commission will be agreed upon in the purchase agreement. Additionally, buyers will need to sign a Buyer’s Exclusive Agency Contract before viewing listed homes. This contract not only allows Indiana REALTORS® to show buyers properties but also facilitates discussions regarding commission within the purchase agreement. The relationship between the broker and the seller becomes transactional and is a negotiation between all parties.
Typically, this transaction is funded by the buyer’s offer of money and, historically, includes the buyer’s agent commission to be paid. Without the buyer’s money, there is no financial transaction. The Yosha Snyder Group believes that, if they choose, the relationship established between a real estate professional and the buyers and sellers is an important financial investment to help understand the process.
As with any important legal document, please take the time to understand what you are signing. If you are confused about the new requirements, contact Cynthia and the Yosha Snyder Group to discuss your situation.
FREQUENTLY ASKED QUESTIONS
What is the House Enrolled Act?
The new law, effective July 1, 2024, aims to formalize agency relationships by requiring that all listing and buyer agreements be in writing, either on paper or electronically, and include a definitive expiration date. This change ensures consistency and clarity in real estate transactions across the state.
Do these requirements apply to all real estate transactions?
There might be questions about whether the new requirements apply universally to all real estate transactions or if there are exceptions based on transaction type or other factors.
What happens if a real estate broker fails to comply with these new requirements?
There could be concerns about potential penalties or consequences for non-compliance with the new law, such as fines, license suspension, or other regulatory actions.
How should disputes over representation agreements be resolved?
Questions may arise regarding the proper procedure for resolving disputes or misunderstandings that arise from the terms of these representation agreements.
How difficult will it be to negotiate this contract?
It should not be difficult to negotiate the dates and fees. But working with a real estate professional will simplify the process as REALTORS® are trained to understand the laws.