On October 7, 2002 the  Des Moines City Council passed the Real Estate Installment Contract Sales Inspection Ordinance with much fanfare. In a nut shell, it requires contact sellers of property located in Des Moines and Windsor Heights to provide a written inspection report to buyers who purchase by land or installment contract. The are a few exceptions of course, some transfers exempt from the ordinance include those made pursuant to a court order, eminent domain, foreclosure or deed in lieu thereof, forfeiture, between joint owners, spouses, parents or descendants, involving a government or by quit claim deed. Ordinance 14,205 became fully effective January 1, 2003.

 So now any person seeking to sell residential real estate by installment-land contract is required to have an inspector who is certified by the city personally inspect the property and then provide the buyer with the written inspection report describing the inspection. The inspection at a minimum needs to include a review of the structural components, exterior, roofing, plumbing, heating, cooling, electrical, insulation and ventilation, interior, fireplace and solid fuel burning appliances. The report then must be on a form approved by the City Neighborhood Inspection Division [NID]. The inspection report costs about $120 to produce and is valid for 60 days. In a twist, to be eligible an inspector must be a member in good standing of a non-profit, professional association for home inspectors in order to be approved by the NID and the inspector cannot work for the seller. Click here for a list of approved inspectors.

 To make sure the seller complies, the report must be given to the buyer at least fourteen days before the transfer to the proposed buyer and the seller must then file the inspection report with the NID. After that hurdle and within seven days after the transfer, the seller has to file a signed copy of the Installment Purchase Contract with the NID and pay an additional administrative fee of $75.

 If a seller does not  comply with the ordinance it is considered a municipal infraction punishable by a civil penalty of up to $500.00 for each violation or, if the infraction is a repeat offense, by a civil penalty of not more than $750.00 for each occurance. The new rule provides all installment-land contract purchasers with extensive additional information regarding the physical condition of the property that is being purchased. In addition, the ordinance slows down the transaction process to allow the prospective purchaser a minimum of fourteen days to talk to contractors, relatives and anyone else about necessary repairs prior to purchasing the home.

 Furthermore, as of July 1, 2002, state law HF 2565 added further requirements for sales of residential real estate on an installment contract basis. Specifically if a seller makes four or more installment contract sales of residential real estate in a year, considerably greater information must be provided to the contract buyer before the sale.

 The law came about because between 1998 and the year 2000, Des Moines had an estimated 3,336 unregulated real-estate contract sales. The city considered appx. 25% of the homes involved to be in below normal, poor, or very poor conditions. In a few especially egregious cases, unethical contract sales companies sold properties which were condemned and slated for demolition. The most famous among these companies being the Wolford Group, whose owners Rod Wolford Sr and Jr were indicted for fraud related to installment contract sales by the attorney general in the spring of 2003. Wolford Sr. was convicted on 17 counts of fraud and was sentenced to 75 years in prison. Rod Wolford, Jr., pled guilty to two counts of theft in the first degree and one count of securities fraud, and was given a suspended sentence after giving testimony against his father. In 2006 the attorney general ordered over $3 million in civil penalties, restitution, and fees for investigation and attorney costs for the Wolford's many victims.

 Iowa Citizens for Community Improvement, or CCI were instrumental in bringing pressure on the BBB to first revoke the Wolford's affiliation, direct media attention to their activities and expose their practices in order to get the attorney general to indict the men. The CCI estimates that with the passing of the Ordinance and the indictment and conviction of the Wolford's, predatory contract sales have all but been eliminated in the Des Moines area.