Authority: IC 25-34.1-2-5; IC 25-34.1-4-0.5

Affected: IC 25-34.1-3-4.1

Sec. 3. To comply with the requirements of section 2 of this rule to become a managing broker, a broker shall complete a total of twenty- four (24) hours of broker management courses consisting of the following instruction:

1. (1) Eight (8) hours of instruction in introduction to brokerage management that includes the following:

   1. (A) One-half (.5) hour in brokerage business to include:

      1. (i) Primary function of the firm.
      2. (ii) Residential, commercial, leasing, investment.
      3. (iii) Organization structure.
      4. (iv) Licensing (business).
      5. (v) Services to provide.

   2. (B) One-half (.5) hour of instruction in brokerage business models that includes the following:

      1. (i) Franchise vs. independent.
      2. (ii) Traditional model-commission split model.
      3. (iii) 100% commission model – desk fee model.
      4. (iv) Flat fee model.
      5. (v) Limited service model.
      6. (vi) Antitrust laws.

   3. (C) Two (2) hours of instruction in the law of agency and agency relationships that includes the following:

      1. (i) Common and statutory law as basis as follows:

         1. (AA) Basic terms.
         2. (BB) Agent.
         3. (CC) Principal.
         4. (DD) Client.
         5. (EE) Customer.
         6. (FF) Fiduciary.
         7. (GG) Subagent, prohibition.

      2. (ii) Creation of relationship as follows:

         1. (AA) Express or implied.
         2. (BB) Implications of inadvertent implied agency.

      3. (iii) Extent of authority as follows:

         1. (AA) Universal.
         2. (BB) General.
         3. (CC) Special.

      4. (iv) Compensation as follows:

         1. (AA) Fee agreement vs. listing agreement.
         2. (BB) Co-op fees.
         3. (CC) Does not determine agency.
         4. (DD) History and prohibition of subagency.
         5. (EE) Duties to principal.
         6. (FF) Care, including competence in particular activity.
         7. (GG) Obedience.
         8. (HH) Loyalty.
         9. (II) Disclosure.
         10. (JJ) Accounting.
         11. (KK) Confidentiality.
         12. (LL) Duties to third parties.
         13. (MM) Duties to affiliated brokers.
         14. (NN) Termination of relationship, including survival of confidentiality.
      5. (v) Seller and landlord representation.
      6. (vi) Buyer and tenant representation.

      7. (vii) Nonagency as follows:

         1. (AA) Transactional brokerage.
         2. (BB) Representing a buyer with a "for sale by owner".

      8. (viii) Dual/limited agency as follows:

         1. (AA) Disclosed and undisclosed agency.
         2. (BB) Required disclosures.
         3. (CC) Written informed consent.

      9. (ix) Team concept as follows:

         1. (AA) Compensation.
         2. (BB) Potential for confusion regarding agency.

      10. (x) In-house agency as follows:

          1. (AA) Role of managing broker.
          2. (BB) Creation of limited agency when managing broker or sales manager directly has the list or sell side.

      11. (xi) Written office policy on agency as follows:

          1. (AA) Development.
          2. (BB) Required content.
          3. (CC) Implementation policy.

      12. (xii) Required disclosures as follows:

          1. (AA) Agency.
          2. (BB) IN residential seller's disclosure.
          3. (CC) Lead-based paint disclosure.
          4. (DD) Other environmental disclosures.
          5. (EE) Caveat emptor and selling as is.
          6. (FF) Civil, criminal, and regulatory implications of failing to make proper disclosure.
          7. (GG) Document chain.

      13. (xiii) Statements as follows:

          1. (AA) Opinion vs. fact.
          2. (BB) Fraud.
          3. (CC) Intentional and negligent misrepresentation.
          4. (DD) Puffing.
          5. (EE) Willful and negligent omission.
          6. (FF) Latent defects.
          7. (GG) Civil, criminal, and regulatory liabilities.

      14. (xiv) Personal buying, selling, and leasing as follows:

          1. (AA) Required disclosures.
          2. (BB) Possible conflicts.

      15. (xv) Psychologically affected properties as follows:

          1. (AA) Subject properties and transactions.
          2. (BB) Disclosures.
          3. (CC) Implications when acting as limited agent.

   4. (D) One-half (.5) hours of instruction in errors and omissions insurance that includes the following:

      1. (i) Basic understanding.
      2. (ii) Policy coverage, including who, what, when is covered.
      3. (iii) Claims-made and first dollar defense.
      4. (iv) Office policy on errors and omissions insurance.

   5. (E) One-half (.5) hours of instruction in business insurance that includes the following:

      1. (i) Types of coverage including valuable papers, records, property, loss of business.
      2. (ii) General liability including worker's compensation.
      3. (iii) Automobile liability.

   6. (F) Two (2) hours of instruction in the legal environment of real estate brokerage that includes the following:

      1. (i) Antitrust laws as follows:

         1. (AA) Price fixing.
         2. (BB) Group boycotts.
         3. (CC) Allocation of customers or markets.
         4. (DD) Tie-in agreements.

      2. (ii) Fair housing laws as follows:

         1. (AA) Civil Rights Act of 1968.
         2. (BB) Equal Credit Opportunity Act.
         3. (CC) Americans with Disabilities Act.

      3. (iii) Real Estate Settlement Procedures Act as follows:

         1. (AA) Controlled business arrangements.
         2. (BB) Good faith estimate of settlement costs.
         3. (CC) Uniform settlement statement (HUD-1).

   7. (G) Two (2) hours of instruction in Indiana license law that includes the following:

      1. (i) License law as follows:

         1. (AA) Responsibility for actions of associated brokers.
         2. (BB) Maintenance of two (2) or more offices.
         3. (CC) Partnerships, corporations, and limited liability companies.
         4. (DD) Residency requirements.
         5. (EE) Death of an individual managing broker of termination of a partnership.
         6. (FF) Manager's role in "in-house agency relationships".

      2. (ii) The commission's rules as follows:

         1. (AA) Evidence of current licensure.
         2. (BB) Supervision of office by licensed broker.
         3. (CC) Termination of association with managing broker and broker company.
         4. (DD) Splitting commissions.
         5. (EE) Associating with unlicensed person.
         6. (FF) Advertising requirements.
         7. (GG) 876 IAC 8-2-7 Incompetent practices.

2. (2) Eight (8) hours of instruction in brokerage operations that includes the following:

   1. (A) Three (3) hours of instruction in office policy and procedures manuals including the following:

      1. (i) Independent contractor agreements.
      2. (ii) Employees.
      3. (iii) Office policies.
      4. (iv) Policy on social media.
      5. (v) Evaluation of personnel.

   2. (B) Three (3) hours of instruction in the basic financial concepts of budgeting, bookkeeping, and financial operations (internal controls) including the following:

      1. (i) Revenue, costs, income, profit, fixed costs, cash flow.
      2. (ii) Company dollar and profits.
      3. (iii) Profit analysis.
      4. (iv) Budgeting/financial controls.
      5. (v) Desk cost.
      6. (vi) Challenges that affect profitability.

   3. (C) Two (2) hours of instruction in earnest money accounts and trust account guidelines including the following:

      1. (i) General concepts and provisions, commingling, and conversion of the following:

         1. (AA) Earnest monies.
         2. (BB) Rent.
         3. (CC) Down payments.
         4. (DD) Monies received as part of settlement.
         5. (EE) Nontrust funds.
      2. (ii) Account requirements.
      3. (iii) Record keeping systems and retention requirements.

      4. (iv) Disbursements of the following:

         1. (AA) Sales transaction.
         2. (BB) Rental transaction.
         3. (CC) Disbursement deadlines.
      5. (v) Acting as escrow agent.

3. (3) Eight (8) hours of instruction in the role of the managing broker that includes the following:

   1. (A) Two (2) hours of instruction in recruiting, training, and retention including the following:

      1. (i) Recruiting agents including as follows:

         1. (AA) Big office vs. small office.
         2. (BB) New agents vs. experienced.
         3. (CC) Recruiting ideas (career nights, advertising, sphere of influence, etc.).

      2. (ii) Training agents in the following:

         1. (AA) Building a client base.
         2. (BB) Use of technology.
         3. (CC) Contracts used in real estate.

      3. (iii) Retention of agents with the following:

         1. (AA) Bonus programs.
         2. (BB) Office atmosphere.

   2. (B) One (1) hour of instruction in the professional development of sales force that includes the following:

      1. (i) Mentoring – agent training and development.

      2. (ii) Industry professional designations including the following:

         1. (AA) Appraisal.
         2. (BB) Commercial sales.
         3. (CC) Development/investment.
         4. (DD) Property management.
         5. (EE) REO/foreclosure.
         6. (FF) Residential sales.
         7. (GG) Sales management.

   3. (C) One (1) hour of instruction in types of fraud that includes the following:

      1. (i) Insurance fraud including the following:

         1. (AA) Occupancy fraud.
         2. (BB) Condition fraud.
         3. (CC) Valuation fraud.

      2. (ii) Mortgage fraud including the following:

         1. (AA) Fraud for housing.
         2. (BB) Foreclosure bailout.
         3. (CC) Forensic loan audit fraud.
         4. (DD) Fraud for profit.
         5. (EE) Property flipping.
         6. (FF) Silent second.
         7. (GG) Nominee loans/straw buyers.
         8. (HH) Fictitious/stolen identity.
         9. (II) Inflated appraisals.
         10. (JJ) Equity skimming.
         11. (KK) Short sale schemes.
         12. (LL) Predatory lending.
         13. (MM) Rental fraud.
      3. (iii) Craigslist scams.

   4. (D) One (1) hour of instruction in dispute resolution that includes the following:

      1. (i) Arbitration process.
      2. (ii) Mediation process.

   5. (E) One (1) hour of instruction in agent responsibilities and safety concerns that includes the following:

      1. (i) Fiduciary duties to listing clients.
      2. (ii) Fiduciary duties to buyer/tenant clients.

      3. (iii) Confidentiality issues including the following:

         1. (AA) Company.
         2. (BB) Client information.
      4. (iv) Client and personal safety.
      5. (v) Protecting and preserving listed properties.

   6. (F) One (1) hour of instruction in advertising issues and concerns that includes the following:

      1. (i) Review of Indiana real estate commission rules and regulations regarding advertising.
      2. (ii) Review of code of ethics articles and standard operating procedures that relate to advertising.
      3. (iii) Overview of fair housing regulations regarding advertising.
      4. (iv) RESPA Do's and RESPA Don'ts.
      5. (v) Antitrust rules and regulations.
      6. (vi) Advertising of listings.
      7. (vii) Personal advertising by agents and disclosure of relationship with managing broker/company.
      8. (viii) Internet advertising using websites, social media, widgets, apps, etc.
      9. (ix) For sale/for lease signs.
      10. (x) Can a broker sell the broker's own property?
      11. (xi) The managing broker's role in assuring that all advertising is compliant.
      12. (xii) Advertising case studies.

   7. (G) One (1) hour of instruction in business ethics that includes the REALTORS® code of ethics including the following:

      1. (i) A walk through the REALTORS® code of ethics.
      2. (ii) Preamble.
      3. (iii) The golden rule.

      4. (iv) Articles and standards of practice as follows:

         1. (AA) Duties to clients and customers.
         2. (BB) Duties to the public.
         3. (CC) Duties to realtors.
      5. (v) Best business practices - "Pathways to Professionalism" from the National Association of Realtors (NAR).
      6. (vi) Business ethics case studies.

(Indiana Real Estate Commission; 876 IAC 7-3-3; filed May 22, 2014, 11:50 a.m.: 20140618-IR-876140061FRA, eff Jul 1, 2014; readopted filed Nov 19, 2020, 9:56 a.m.: 20201216-IR-876200513RFA; readopted filed Mar 21, 2024, 4:07 p.m.: 20240417-IR-876230829RFA)