2.1 Iowa Agency Relationships

Where Iowa Agency Law Comes From

Iowa real estate agency is governed by Iowa Code Chapter 543B (the licensing statute) and Iowa Administrative Code 193E, Chapter 12, titled Disclosure of Relationships. The Iowa Real Estate Commission (IREC) administers these rules. The state portion of the PSI exam (40 questions, 28 correct to pass) leans heavily on which brokerage relationship a licensee has formed and which duties survive in each one.

A brokerage relationship is created by a written brokerage agreement (listing or buyer-agency agreement). Until that agreement is signed, a consumer is a customer, not a client — the licensee owes honesty and material-fact disclosure but not full fiduciary loyalty.

Single Agency (193E-12.3 and 193E-12.4)

A single agent represents exactly one party and owes that party undivided loyalty.

Worked example: Maria signs a listing agreement with broker Dan. Dan is a single agent for the seller. When buyer Tom calls about the house, Tom is a customer — Dan must answer honestly and reveal known material defects, but Dan still works for Maria and cannot advise Tom on what to offer.

Appointed (Designated) Agency — 193E-12.7

Iowa's rule on appointed agent procedures is what most courses call designated agency. The broker appoints one in-house licensee to the seller and a different in-house licensee to the buyer in the same transaction.

1. The firm/broker becomes a dual agent for the transaction.
2. Each appointed agent remains a single agent for the one client assigned to them.
3. Each client keeps full representation, including confidentiality.

Key Point: In appointed agency the company is a dual agent, but the individual appointed salespersons are single agents — confidential information of one client is not shared with the other appointed agent.

Disclosed Dual Agency — 193E-12.5

A disclosed dual agent is one licensee who personally represents both the buyer and the seller in the same in-house transaction. It is lawful only with the written informed consent of all parties obtained in advance.

Trap: A dual agent is not prohibited from disclosing material defects of the property — honesty about the home is never suspended. What is suspended is advocacy on price and terms.

Fiduciary Duties Owed to Clients

Once a brokerage agreement exists, an Iowa licensee owes the client these client-level (fiduciary) duties:

Memory aid: LOCDAR — Loyalty, Obedience, Confidentiality, Disclosure, Accounting, Reasonable care.

Duties Owed to ALL Parties (Even Customers)

The following duties are owed to everyone in the transaction, client or customer:

• Treat all parties honestly.
• Disclose known material facts about the property's condition that are not reasonably ascertainable.
• Account for funds and present all written offers promptly.
• Never misrepresent a material fact or knowingly conceal one.

Scenario for the exam: A buyer-customer asks the seller's single agent, "Will the seller take less?" The agent must stay honest but should not answer — revealing the seller's bottom line would breach confidentiality (a client duty). Correct response: refer the customer to make a written offer.

Transaction Broker (Non-Agency)

Iowa also recognizes a non-agent transaction facilitator who helps a transaction close without representing either side. A transaction broker owes honesty, accounting, and material-fact disclosure but not loyalty or confidentiality of negotiating position.

Exam Tip: Iowa has largely moved away from automatic subagency (a cooperating broker working for the seller through the listing broker) toward buyer agency and appointed agency. If a question describes a buyer's broker being paid by the listing side, remember compensation does not determine agency — the brokerage agreement does.