CHAPTER 7. REAL ESTATE RECOVERY FUND

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 thepurpose set out in this chapter. The fund shall be administered by thereal estate commission.
    (b) The treasurer of state shall invest the money in the fund notcurrently needed to meet the obligations of the fund in the samemanner as other public funds may be invested. Interest that accruesfrom these investments shall be deposited in the fund.
    (c) Money in the fund at the end of a state fiscal year does notrevert to the state general fund, except as provided in section 2.1 ofthis 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 fiftythousand dollars ($450,000) on June 30 in an odd-numbered yearafter the payment of all claims and expenses, the real estatecommission shall assess a surcharge according to the followingformula in order to maintain the fund at an approximate level of sixhundred thousand dollars ($600,000):
        STEP ONE: Determine the amount remaining in the fund onJune 30 of the current year after all expenses and claims havebeen paid.
        STEP TWO: Subtract the amount determined under STEP ONEfrom six hundred thousand dollars ($600,000).
        STEP THREE: Determine the number of licensees who hadlicenses in effect on June 30 of the current year.
        STEP FOUR: Divide the number determined under STEP TWOby the number determined under STEP THREE.
    (b) The real estate commission shall assess the surchargedescribed 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 surchargedescribed in subsection (a) for the two (2) year period beginning onJuly 1 of the current year through June 30 of the next odd-numberedyear.
    (d) The surcharge assessed under this section is in addition to anyother 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 fiftythousand dollars ($750,000) at the end of a state fiscal year after thepayment of all claims and expenses, the amount in excess of sevenhundred fifty thousand dollars ($750,000) reverts to the state generalfund.
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 realestate recovery fund shall be credited at least annually to the fund.No money may be appropriated from the general fund for paymentof any expenses incurred under this chapter, and none of theseexpenses 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 ofloss; limitation on recovery
    Sec. 4. (a) If any aggrieved person obtains a final judgment in anycourt 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 opposedto loss in market value), the person may, upon termination of allproceedings including appeals and proceedings supplemental tojudgment for collection purposes, file a verified application in thecourt in which the judgment was entered for an order directingpayment out of the real estate recovery fund of the amount of actualand direct loss in the transaction that remains unpaid upon thejudgment. The amount of actual and direct loss may include courtcosts but may not include attorney's fees or punitive damagesawarded. The amount that may be paid from the real estate recoveryfund may not exceed twenty thousand dollars ($20,000) per judgmentand 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 awardsdamages 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.

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 validclaims that have been filed by aggrieved persons against a singlelicensee would exceed the fifty thousand dollar ($50,000) limit setforth in section 4 of this chapter, the fifty thousand dollars ($50,000)shall be distributed among the aggrieved persons in the ratio thattheir respective claims bear to the aggregate of all valid claims or inany other manner that a court of record may determine equitable.This money shall be distributed among the persons entitled to sharein it without regard to the order of priority in which their respectivejudgments have been obtained or their claims have been filed.
    (b) Upon petition of the commission, the court may require allclaimants and prospective claimants against one (1) licensee to bejoined in one (1) action, to the end that the respective rights of all theclaimants to the commission may be equitably adjudicated andsettled.
    (c) On June 30 and December 31 of each year, the real estatecommission shall identify each claim that the court orders to be paidduring the six (6) month period that ended on that day. Thecommission shall pay the part of each claim that is so identifiedwithin fifteen (15) days after the end of the six (6) month period inwhich the claim is ordered paid. However, if the balance in the fundis insufficient to pay the full payable amount of each claim that isordered to be paid during a six (6) month period, the commissionshall pay a prorated portion of each claim that is ordered to be paidduring the period. Any part of the payable amount of a claim leftunpaid due to the prorating of payments under this subsection mustbe paid (subject to the fifty thousand dollar ($50,000) limit describedin section 4 of this chapter) before the payment of claims ordered tobe paid during the following six (6) month period.
As added by P.L.255-1987, SEC.6.

IC 25-34.1-7-6
Agent for service of process
    Sec. 6. Any broker or salesperson who is licensed or renews alicense under this article after December 31, 1987, and upon whompersonal service cannot be made with reasonable diligence shall beconsidered to have appointed the commission as the licensee's agentfor service of process for purposes of actions filed under section 4 ofthis chapter for recovery from the real estate recovery fund. Serviceof process under this section shall be made as nearly as practicablein the manner prescribed by the Indiana Rules of Trial Procedure forservice on corporations.
As added by P.L.255-1987, SEC.6.

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 fundmay not be issued unless the action to recover from the real estaterecovery fund was commenced within one (1) year after thetermination of all proceedings against the licensee for embezzlementof money or property, or unlawfully obtaining money or property byfalse pretenses, use of a device, trickery, or forgery, includingappeals and proceedings supplemental to judgment. When anyperson commences an action for a judgment that may result in anorder for payment from the fund, the person shall notify thecommission 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. When any person files an application for an order directingpayment from the real estate recovery fund, the commission shall bemade a party defendant to the proceedings. The court shall conducta hearing on the application, and it may issue an order directingpayment out of the real estate recovery fund, as provided in section9 of this chapter, subject to the limitation of section 4 of this chapter,if the court finds:
        (1) that there is no collusion between the judgment creditor andthe judgment debtor;
        (2) that the judgment creditor is making application not morethan one (1) year after the termination of all proceedings inconnection with the judgment, including appeals andproceedings supplemental to judgment for collection purposes;
        (3) that the judgment creditor has caused to be issued a writ ofexecution on the judgment and the officer executing the writhas made a return showing that no personal or real property ofthe judgment debtor liable to be levied upon in satisfaction ofthe judgment could be found or that the amount realized on thesale under the execution was insufficient to satisfy thejudgment;
        (4) that the judgment creditor has diligently pursued thecreditor's remedies against all the judgment debtors and allother persons liable to the creditor in the transaction for whichthe creditor seeks recovery from the real estate recovery fund;
        (5) that the embezzlement of money or property, or theunlawfully obtaining of money or property by false pretenses,use of a device, trickery, or forgery, arose directly out of atransaction that occurred when the judgment debtor waslicensed and acted in a capacity for which a license is requiredunder this article and that the transaction occurred afterDecember 31, 1987; and
        (6) that, in the event of a default judgment or a judgmententered upon stipulation of the parties, the judgment debtor'sacts constituted embezzlement of money or property, or theunlawful obtaining of money or property by false pretenses, use

of a device, trickery, or forgery.
As added by P.L.255-1987, SEC.6.

IC 25-34.1-7-9
Payment of claims
    Sec. 9. Upon a final order of the court directing that payment bemade out of the real estate recovery fund, the commission shall,subject to sections 4 through 5 of this chapter, make the payment outof the real estate recovery fund as provided in section 5 of thischapter.
As added by P.L.255-1987, SEC.6.

IC 25-34.1-7-10
Suspension of judgment debtor's license; repayment of fund;interest
    Sec. 10. If the commission is required to make any payment fromthe real estate recovery fund in settlement of a claim or toward thesatisfaction of a judgment under this chapter, the commission shallsuspend the judgment debtor's license and, if the judgment debtor islicensed under IC 25-34.1-3-3.1, the license of the individualdesignated broker, under this article. The licensee is not eligible tobe licensed again as either a broker or a salesperson until the licenseehas repaid in full the amount paid from the real estate recovery fundwith interest of twelve percent (12%) per annum.
As added by P.L.255-1987, SEC.6.

IC 25-34.1-7-11
Subrogation
    Sec. 11. When upon order of any court, the commission hascaused payment to be made from the real estate recovery fund to ajudgment creditor, the commission is subrogated to the rights of thejudgment creditor with respect to the amount paid.
As added by P.L.255-1987, SEC.6.

IC 25-34.1-7-12
Expenditure of interest
    Sec. 12. Subject to the approval of the budget agency, the realestate commission may expend the interest earned by the real estaterecovery fund for:
        (1) information concerning the commission's activities andadministrative rulings;
        (2) other educational information concerning the real estateindustry; and
        (3) expenses related to the continuing education program underIC 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 thestaff assistance necessary to:
        (1) enable the real estate commission to perform its duties underthis chapter; and
        (2) enforce this chapter.
    (b) Expenses incurred by the office of the attorney general underthis section shall be paid from the real estate recovery fund.
As added by P.L.255-1987, SEC.6.