2013 Indiana Code TITLE 25. PROFESSIONS AND OCCUPATIONS ARTICLE 34.1. REAL ESTATE BROKERS AND SALESPERSONS CHAPTER 7. REAL ESTATE RECOVERY FUND
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IC 25-34.1-7
Chapter 7. Real Estate Recovery Fund
IC 25-34.1-7-1
Establishment of fund; administration; investments
Sec. 1. (a) The real estate recovery fund is established for the
purpose set out in this chapter. The fund shall be administered by the
real estate commission.
(b) The treasurer of state shall invest the money in the fund not
currently needed to meet the obligations of the fund in the same
manner as other public funds may be invested. Interest that accrues
from these investments shall be deposited in the fund.
(c) Money in the fund at the end of a state fiscal year does not
revert to the state general fund, except as provided in section 2.1 of
this chapter.
As added by P.L.255-1987, SEC.6. Amended by P.L.143-1990,
SEC.9.
IC 25-34.1-7-2
Surcharge; formula; assessment; application of section
Sec. 2. (a) If the total amount in the real estate recovery fund
(including principal and interest) is less than four hundred fifty
thousand dollars ($450,000) on June 30 in an odd-numbered year
after the payment of all claims and expenses, the real estate
commission shall assess a surcharge according to the following
formula in order to maintain the fund at an approximate level of six
hundred thousand dollars ($600,000):
STEP ONE: Determine the amount remaining in the fund on
June 30 of the current year after all expenses and claims have
been paid.
STEP TWO: Subtract the amount determined under STEP ONE
from six hundred thousand dollars ($600,000).
STEP THREE: Determine the number of licensees who had
licenses in effect on June 30 of the current year.
STEP FOUR: Divide the number determined under STEP TWO
by the number determined under STEP THREE.
(b) The real estate commission shall assess the surcharge
described in subsection (a) against each licensee who:
(1) receives an initial license; or
(2) receives a renewal license.
(c) The real estate commission shall assess the surcharge
described in subsection (a) for the two (2) year period beginning on
July 1 of the current year through June 30 of the next odd-numbered
year.
(d) The surcharge assessed under this section is in addition to any
other fee under this article.
(e) This section does not apply to a person who:
(1) receives an initial license or certificate; or
(2) receives a renewal license or certificate;
under the real estate appraiser licensure and certification program
established under IC 25-34.1-3-8.
As added by P.L.255-1987, SEC.6. Amended by P.L.143-1990,
SEC.10; P.L.183-1991, SEC.9.
IC 25-34.1-7-2.1
Reversion of excess funds
Sec. 2.1. If the total amount in the real estate recovery fund
(including principal and interest) exceeds seven hundred fifty
thousand dollars ($750,000) at the end of a state fiscal year after the
payment of all claims and expenses, the amount in excess of seven
hundred fifty thousand dollars ($750,000) reverts to the state general
fund.
As added by P.L.143-1990, SEC.11.
IC 25-34.1-7-3
Interest on investments; payment of expenses
Sec. 3. Any interest earned on investment of money in the real
estate recovery fund shall be credited at least annually to the fund.
No money may be appropriated from the general fund for payment
of any expenses incurred under this chapter, and none of these
expenses may be charged against the state.
As added by P.L.255-1987, SEC.6.
IC 25-34.1-7-4
Applications for order directing payment out of fund; amount of
loss; limitation on recovery
Sec. 4. (a) If any aggrieved person obtains a final judgment in any
court against a licensee to recover damages for any act of:
(1) embezzlement of money or property; or
(2) unlawfully obtaining money or property by false pretenses,
use of a device, trickery, or forgery;
that results in an actual cash loss to the aggrieved person (as opposed
to loss in market value), the person may, upon termination of all
proceedings including appeals and proceedings supplemental to
judgment for collection purposes, file a verified application with the
commission for an order directing payment out of the real estate
recovery fund of the amount of actual and direct loss in the
transaction that remains unpaid upon the judgment. The amount of
actual and direct loss may include court costs but may not include
attorney's fees or punitive damages awarded. The amount that may
be paid from the real estate recovery fund may not exceed twenty
thousand dollars ($20,000) per judgment and an aggregate lifetime
limit of fifty thousand dollars ($50,000) with respect to any one (1)
licensee.
(b) This section applies only to a final judgment that awards
damages for an act by the licensee described in subsections (a)(1)
through (a)(2) that arises directly out of any transaction:
(1) that occurred when the licensee was licensed;
(2) for which a license was required under IC 25-34.1; and
(3) that occurred after December 31, 1987.
As added by P.L.255-1987, SEC.6. Amended by P.L.134-2013,
SEC.17.
IC 25-34.1-7-5
Claims against single licensee in excess of dollar limitation;
distribution; joinder of claims; payment; insufficient funds
Sec. 5. (a) If the payment in full of two (2) or more pending valid
claims that have been filed by aggrieved persons against a single
licensee would exceed the fifty thousand dollar ($50,000) limit set
forth in section 4 of this chapter, the fifty thousand dollars ($50,000)
shall be distributed among the aggrieved persons in the ratio that
their respective claims bear to the aggregate of all valid claims or in
any other manner that the commission may determine equitable. This
money shall be distributed among the persons entitled to share in it
without regard to the order of priority in which their respective
judgments have been obtained or their claims have been filed.
(b) The commission shall consider pending applications filed by
all claimants and prospective claimants against one (1) licensee
jointly to the end that the respective rights of all the claimants to the
commission may be equitably adjudicated and settled.
(c) On June 30 and December 31 of each year, the real estate
commission shall identify each claim that the commission orders to
be paid during the six (6) month period that ended on that day. The
commission shall pay the part of each claim that is so identified
within fifteen (15) days after the end of the six (6) month period in
which the claim is ordered paid. However, if the balance in the fund
is insufficient to pay the full payable amount of each claim that is
ordered to be paid during a six (6) month period, the commission
shall pay a prorated portion of each claim that is ordered to be paid
during the period. Any part of the payable amount of a claim left
unpaid due to the prorating of payments under this subsection must
be paid (subject to the fifty thousand dollar ($50,000) limit described
in section 4 of this chapter) before the payment of claims ordered to
be paid during the following six (6) month period.
As added by P.L.255-1987, SEC.6. Amended by P.L.134-2013,
SEC.18.
IC 25-34.1-7-6 Version a
Agent for service of process
Note: This version of section effective until 7-1-2014. See also
following version of this section, effective 7-1-2014.
Sec. 6. Any broker or salesperson who is licensed or renews a
license under this article after December 31, 1987, and upon whom
personal service cannot be made with reasonable diligence shall be
considered to have appointed the commission as the licensee's agent
for service of process for purposes of actions filed under section 4 of
this chapter for recovery from the real estate recovery fund. Service
of process under this section shall be made as nearly as practicable
in the manner prescribed by the Indiana Rules of Trial Procedure for
service on corporations.
As added by P.L.255-1987, SEC.6.
IC 25-34.1-7-6 Version b
Agent for service of process
Note: This version of section effective 7-1-2014. See also
preceding version of this section, effective until 7-1-2014.
Sec. 6. Any broker who is licensed or renews a license under this
article after December 31, 1987, and upon whom personal service
cannot be made with reasonable diligence shall be considered to have
appointed the commission as the licensee's agent for service of
process for purposes of actions filed under section 4 of this chapter
for recovery from the real estate recovery fund. Service of process
under this section shall be made as nearly as practicable in the
manner prescribed by the Indiana Rules of Trial Procedure for
service on corporations.
As added by P.L.255-1987, SEC.6. Amended by P.L.127-2012,
SEC.32.
IC 25-34.1-7-7
Limitation of actions; notice of commencement of action
Sec. 7. An order for payment from the real estate recovery fund
may not be issued unless the action to recover from the real estate
recovery fund was commenced within one (1) year after the
termination of all proceedings against the licensee for embezzlement
of money or property, or unlawfully obtaining money or property by
false pretenses, use of a device, trickery, or forgery, including
appeals and proceedings supplemental to judgment. When any
person commences an action for a judgment that may result in an
order for payment from the fund, the person shall notify the
commission in writing of the commencement of the action.
As added by P.L.255-1987, SEC.6.
IC 25-34.1-7-8
Commission as defendant; hearings; orders directing payment
Sec. 8. (a) When any person files an application for an order
directing payment from the real estate recovery fund, the commission
shall promptly review and consider the application, and it may issue
an order directing payment out of the real estate recovery fund, as
provided in section 9 of this chapter, subject to the limitation of
section 4 of this chapter, if the commission finds:
(1) that there is no collusion between the judgment creditor and
the judgment debtor;
(2) that the judgment creditor is making application not more
than one (1) year after the termination of all proceedings in
connection with the judgment, including appeals and
proceedings supplemental to judgment for collection purposes;
(3) that the judgment creditor has diligently pursued all
available creditor's remedies, including proceedings
supplemental, against the licensee who is the subject of the
application filed under section 4 of this chapter, against all the
judgment debtors, and against all other persons liable to the
creditor in the transaction for which the creditor seeks recovery
from the real estate recovery fund, but that the diligent pursuit
did not result in satisfaction of the judgment;
(4) that the embezzlement of money or property, or the
unlawfully obtaining of money or property by false pretenses,
use of a device, trickery, or forgery, arose directly out of a
transaction that occurred when the judgment debtor was
licensed and acted in a capacity for which a license is required
under this article and that the transaction occurred after
December 31, 1987; and
(5) that, in the event of a default judgment or a judgment
entered upon stipulation of the parties, the judgment debtor's
acts constituted embezzlement of money or property, or the
unlawful obtaining of money or property by false pretenses, use
of a device, trickery, or forgery.
(b) A person who is dissatisfied by:
(1) an order issued under subsection (a) directing payment out
of the real estate recovery fund; or
(2) a denial of an application filed under section 4 of this
chapter;
may petition for review under IC 4-21.5-3-7.
As added by P.L.255-1987, SEC.6. Amended by P.L.134-2013,
SEC.19.
IC 25-34.1-7-9
Payment of claims
Sec. 9. Upon an order of the commission directing that payment
be made out of the real estate recovery fund, the commission shall,
subject to sections 4 through 5 of this chapter, make the payment out
of the real estate recovery fund as provided in section 5 of this
chapter.
As added by P.L.255-1987, SEC.6. Amended by P.L.134-2013,
SEC.20.
IC 25-34.1-7-10 Version a
Suspension of judgment debtor's license; repayment of fund;
interest
Note: This version of section effective until 7-1-2014. See also
following version of this section, effective 7-1-2014.
Sec. 10. (a) If the commission is required to make any payment
from the real estate recovery fund in settlement of a claim or toward
the satisfaction of an order under this chapter, the commission shall
suspend the judgment debtor's license and, if the judgment debtor is
licensed under IC 25-34.1-3-3.1, the license of the individual
designated broker, under this article. The licensee is not eligible to
be licensed again either as a broker or a salesperson until the licensee
has repaid in full the amount paid from the real estate recovery fund
with interest of twelve percent (12%) per annum.
(b) A license suspension issued under this section must be done
in accordance with IC 4-21.5-3-6. The licensee may petition for
review under IC 4-21.5-3-7.
As added by P.L.255-1987, SEC.6. Amended by P.L.134-2013,
SEC.21.
IC 25-34.1-7-10 Version b
Suspension of judgment debtor's license; repayment of fund;
interest
Note: This version of section effective 7-1-2014. See also
preceding version of this section, effective until 7-1-2014.
Sec. 10. (a) If the commission is required to make any payment
from the real estate recovery fund in settlement of a claim or toward
the satisfaction of an order under this chapter, the commission shall
suspend the judgment debtor's license and, if the judgment debtor is
licensed under IC 25-34.1-3-4.1, the license of the individual
designated broker, under this article. The licensee is not eligible to
be licensed again as a broker until the licensee has repaid in full the
amount paid from the real estate recovery fund with interest of
twelve percent (12%) per annum.
(b) A license suspension issued under this section must be done
in accordance with IC 4-21.5-3-6. The licensee may petition for
review under IC 4-21.5-3-7.
As added by P.L.255-1987, SEC.6. Amended by P.L.127-2012,
SEC.33; P.L.134-2013, SEC.21; P.L.134-2013, SEC.22.
IC 25-34.1-7-11
Subrogation
Sec. 11. When the commission has ordered and caused payment
to be made from the real estate recovery fund to a judgment creditor,
the commission is subrogated to the rights of the judgment creditor
with respect to the amount paid.
As added by P.L.255-1987, SEC.6. Amended by P.L.134-2013,
SEC.23.
IC 25-34.1-7-12
Expenditure of interest
Sec. 12. Subject to the approval of the budget agency, the real
estate commission may expend the interest earned by the real estate
recovery fund for:
(1) information concerning the commission's activities and
administrative rulings;
(2) other educational information concerning the real estate
industry; and
(3) expenses related to the continuing education program under
IC 25-34.1-9.
As added by P.L.255-1987, SEC.6. Amended by P.L.120-1992,
SEC.2.
IC 25-34.1-7-13
Attorney general; assistance; expenses
Sec. 13. (a) The office of the attorney general shall provide the
staff assistance necessary to:
(1) enable the real estate commission to perform its duties under
this chapter; and
(2) enforce this chapter.
(b) Expenses incurred by the office of the attorney general under
this section shall be paid from the real estate recovery fund.
As added by P.L.255-1987, SEC.6.
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