Maryland’s Regulation of Licensee Activities

Question 1

A real estate broker may retain a real estate licensee

a. only as an independent contractor.
b. only as an employee.
c. only as a consultant.
d. as an independent contractor, employee, or otherwise.

Answer 1

(d) as an independent contractor, employee, or otherwise.

Real estate salespersons are typically retained as independent contractors, but they can be retained as
employees

Question 2

A real estate advertisement

a. must include the real estate licensee’s telephone number.
b. must include the real estate licensee’s license number.
c. must include the real estate licensee’s name or designated name.
d. must include the address of the subject property.

Answer 2

(c) must include the real estate licensee’s name or designated name.

A real estate licensee must include the licensee’s name and the name of the business with which the
licensee is affiliated in all ads.

Question 3

Before making a telephone solicitation a real estate licensee must

a. have written authorization from the Real Estate Commission to make telephone solicitations.
b. check the federal, state, and company do-not-call lists.
c. have written authorization from the real estate broker.
d. have an established business relationship with the person being called.

Answer 3

(b) check the federal, state, and company do-not-call lists.

Telephone solicitations are heavily regulated by federal and state do not call lists. At a minimum, a licensee
must ensure that the recipient’s name is not on one of the lists.

Question 4

The federal penalty for a “pattern of violations” of the CAN SPAM Act is

a. $11,000.
b. $11,000 per call.
c. $20,000.
d. $20,000 per call.

Answer 4

(b) $11,000 per call.

Violation of the CAN SPAM act can result in significant penalties.

Question 5

Trust money is

a. money that a person entrusts to a real estate licensee to hold for someone for the benefit of the owner.
b. a down payment made by a buyer.
c. the same as an earnest money deposit.
d. a good faith deposit made by a real estate licensee.

Answer 5

(a) money that a person entrusts to a real estate licensee to hold for someone for the benefit of the owner

Trust money is often an earnest money deposit.

Question 6

Homebuyer Bob gave earnest money to Sally Salesperson for the purchase of a house. Sally must

a. promptly deliver it to the seller.
b. deposit it with a title company.
c. place it in the office safe.
d. promptly deliver it to her broker.

Answer 6

(d) promptly deliver it to her broker.

Money received by a salesperson must be promptly delivered to the broker.

Question 7

A real estate broker who has received earnest money must deposit the money in a trust account within

a. 2 business days.
b. 5 business days.
c. 7 calendar days.
d. 7 business days.

Answer 7

(d) 7 business days.

A broker has 7 business days from the date of receipt within which to place earnest money into the trust account.

Question 8

A protest to a real estate broker’s proposed distribution of trust must be made within

a. 10 days.
b. 15 days.
c. 30 days.
d. 45 days.

Answer 8

(c) 30 days.

A broker must give the owner and beneficial owner notice of an intended distribution of trust money. The parties have 30 days to file a protest to stop the proposed distribution.

Question 9

When the duty to maintain trust money terminates, the real estate broker must

a. promptly account for all trust money.
b. send any remaining trust money to the Real Estate Commission.
c. distribute the trust fund money equally to the buyer and seller.
d. send a written notice to the Real Estate Commission.

Answer 9

(a) promptly account for all trust money.

Accounting for money and property received is a fiduciary duty of a broker.

Question 10

The record retention requirement for real estate licensees is

a. 1 year.
b. 3 years.
c. 4 years.
d. 5 years.

Answer 10

(d) 5 years.

All licensees must keep records of transactions for 5 years.

Question 11

Real estate licensee records

a. may not be stored electronically.
b. may be stored electronically if certain conditions are met.
c. may be stored electronically without conditions or restrictions.
d. may be stored electronically but a hard copy is also required.

Answer 11

(b) may be stored electronically if certain conditions are met.

Records may be stored electronically if the stored record cannot be erased or edited if the stored record is made or preserved as part of, and in the regular course of, the licensee’s business; the original record from which the stored record was copied was made or prepared by the licensee or the licensee’s employees at or near the time of the activity described in the record; and the custodian of the record is able to identify the stored record, the mode of its preparation, and the mode of storage.

Question 12

Real estate licensee records may be stored electronically if

a. a hard copy of the records is available.
b. a hard copy of the records is not available.
c. the stored records cannot be erased or deleted.
d. electronic storage is the most reasonable means of storage available.

Answer 12

(c) the stored records cannot be erased or deleted.

Se explanation for 11 above.

Question 13

When the Real Estate Commission requests a document from a real estate salesperson, the document must be provided at the expense of the

a. Real Estate Commission.
b. real estate salesperson’s broker.
c. real estate salesperson.
d. relevant client.

Answer 13

(c) real estate salesperson.

Documents “requested” by the Real Estate Commission must be provided at the expense of the licensee.

Question 14

A real estate broker must exercise reasonable and adequate supervision over

a. all affiliated licensees.
b. affiliated employees, but not independent contractors.
c. affiliated independent contractors, but not employees.
d. affiliated salespersons, but not associate brokers.

Answer 14

(a) all affiliated licensees.

Brokers must exercise reasonable and adequate supervision over all affiliated licensees. A branch manager only supervises the licensees working at the branch.

Question 15

A branch office manager

a. is not responsible for any supervision.
b. is only responsible for the supervision of unlicensed personnel.
c. must exercise reasonable and adequate supervision over all brokerage services at the branch office.
d. is only responsible for supervision duties delegated by the broker.

Answer 15

(c) must exercise reasonable and adequate supervision over all brokerage services at the branch office.

A branch office manager must exercise reasonable and adequate supervision over all activities and licensees at the branch office.

Question 16

The supervision responsibilities of a branch office manager

a. are in lieu of the broker’s supervision responsibilities.
b. are in addition to the responsibilities of the broker.
c. apply only to real estate salespersons and not associate brokers.
d. apply only to new real estate licensees.

Answer 16

(b) are in addition to the responsibility of the broker.

The ultimate responsibility for supervision lies with the broker. Supervision assigned to a branch office manager is in addition to the broker’s responsibilities not in lieu of them.

Question 17

The supervision responsibilities of a real estate broker

a. can be delegated to a real estate salesperson.
b. create an employer/employee relationship with licensees.
c. do not create an employer/employee relationship with licensees.
d. create an independent contractor status for a real estate salesperson.

Answer 17

(c) do not create an employer/employee relationship with licensees.

At common law the right to control the manner in which work is done i.e. supervision, is a key factor in determining if there is an employer-employee relationship. This factor is negated in Maryland where the supervision assigned to a broker or a branch office manager does not give rise to an employer-employee relationship.

Question 18

One factor to be considered in determining whether broker supervision is reasonable and adequate is

a. the availability of training or education sessions at least once every 2 months.
b. a performance evaluation at least once every month.
c. the length of time the broker has been in business.
d. whether there are weekly office meetings.

Answer 18

(a) the availability of training or education sessions at least once every 2 months.

The availability of training or education is one factor used by the Real Estate Commission to determine if there has been reasonable and adequate supervision.

Question 19

Which of the following is NOT an area which requires written procedures and policies?

a. The proper handling of deposits and other money
b. Compliance with applicable fair housing laws and regulations
c. An office dress code
d. The unauthorized practice of law by a real estate licensee

Answer 19

(c) An office dress code

The law requires a real estate brokerage firm to have certain office policies and procedures. An office dress
code is not required.

Question 20

Which of the following is NOT a reason for which a real estate licensee may be disciplined?

a. Acting as a dual agent without the proper consent
b. Charging a commission in excess of 35%
c. Knowingly making a false promise
d. Fraudulently using a license

Answer 20

(b) Charging a commission in excess of 35%

Commission rates are negotiable between the broker and the client and are not regulated by the Real estate Commission.

Question 21

Which of the following is NOT something for which a real estate licensee may be disciplined by the Commission?

a. Failing to put a definite termination date in a listing contract
b. Entering a net listing contract
c. Failing to account for the firm’s real estate signs
d. Failing to keep a copy of a listing contract

Answer 21

(c) Failing to account for the firm’s real estate signs

Signage inventories are not regulated or enforced by the Real Estate Commission.

Question 22

When advertising property for sale a real estate salesperson must include the

a. name of the real estate firm with whom the real estate salesperson is associated.
b. address of the subject property.
c. listed price of the subject property.
d. real estate salesperson’s telephone number.

Answer 22

(a) name of the real estate firm with whom the real estate salesperson is associated.

The real estate broker’s name is legally required. Some of the other information might be desirable but is not legally required.

Question 23

All advertising done by a real estate firm must include the firm’s

a. logo.
b. name.
c. telephone number.
d. street address.

Answer 23

(b) name.

All advertising, including internet advertising, must include the firm’s name. Other elements, including a logo, telephone number, and street address are often included, but not specifically required.

Question 24

Which of the following is something for which a real estate licensee may be disciplined?

a. Failing to specify the square footage of residential property offered for sale
b. Charging a commission in excess of 35%
c. Exceeding the speed limit while driving to a listing appointment
d. Accepting compensation from someone other than the broker with whom the licensee is affiliated

Answer 24

(d) Accepting compensation from someone other than the broker with whom the licensee is
affiliated

When providing real estate brokerage services, a licensee can only accept compensation from the real estate broker with whom the licensee is affiliated.

Question 25

An unlicensed real estate assistant may NOT engage in which of the following?

a. Answering the telephone and forwarding calls to a real estate licensee
b. Showing property
c. Submitting listings and changes to a multiple listing service
d. Having keys made for company listings

Answer 25

(b) Showing property

An unlicensed personal assistant may not legally show property. Unlicensed assistants must be careful
about their activities.

Question 26

An unlicensed real estate assistant may

a. prepare flyers and promotional information for approval by licensee and supervising broker.
b. answer questions regarding a listing.
c. discuss the attributes of a property with a prospective buyer.
d. discuss the terms and conditions of the real property offered for sale or lease with the owner of the property.

Answer 26

(a) prepare flyers and promotional information for approval by licensee and supervising
broker.

An unlicensed assistant may prepare flyers and promotional information for approval by a licensee and
supervising broker.

Question 27

A real estate salesperson must have how many years’ experience to become a team leader?

a. 5 years’ experience
b. 4 years’ experience
c. 3 years’ experience
d. 2 years’ experience

Answer 27

(c) 3 years’ experience.

A real estate salesperson must have at least three years’ experience to be a team leader. In addition, the salesperson must have completed a course in real estate approved by the Commission and have passed the real estate broker’s examination.

Question 28

Who is responsible for supervising the members of a real estate team?

a. The team leader
b. The branch manager
c. The broker
d. The team leader, branch manager, and broker

Answer 28

(d) The team leader, branch manager, and broker

The members of a team have 3 levels of supervision, the team leader, a branch manager if any, and the
broker.

Question 29

A broker may designate two members of the same team as intra-company agents for the seller and the buyer in the same transaction if

a. the parties have first been advised, in writing, that the licensees are part of the same team.
b. one of the licensees is an associate broker.
c. the broker is one of the designated licensees.
d. neither party objects within 5 days.

Answer 29

(a) the parties have first been advised in writing, that the licensees are part of the same team.

Two members of a team may not be intracompany agents, for the same transaction, unless the parties have first been advised, in writing, that the licensees are part of the same team.

Question 30

To operate a real estate brokerage firm as a business entity the broker must

a. obtain a business entity certificate from the Commission.
b. notify the Commission that the firm is operating as a business entity.
c. submit proof of errors and omissions insurance.
d. post a bond.

Answer 30

(b) notify the Commission that the firm is operating as a business entity.

To operate a brokerage firm as a business entity, for example a limited liability company or a corporation,
the broker must notify the Real Estate Commission.

Question 31

All advertising by a team must

a. not include the name of any team member.
b. include the names of all team members.
c. include the name of at least one team member.
d. include the team name.

Answer 31

(c) include the name of at least one team member.

All licensee advertising must include the name of the brokerage firm. In addition, advertising by a team must include the name of at least one team member.

Question 32

A Maryland real estate broker must maintain

a. at least 1 branch office.
b. an office within the city where the broker operates.
c. an office within the county where the broker operates.
d. an office within the state.

Answer 32

(d) an office within the state.

A Maryland real estate broker must maintain at least one office within the state.

Question 33

A broker may retain a salesperson as

a. an independent contractor or employee.
b. only an independent contractor.
c. only an employee.
d. only a part-time employee.

Answer 33

(a) an independent contractor or employee.

A real estate broker may retain a salesperson as an independent contractor, or an employee, or other. Most real estate salespersons are retained as independent contractors.

Question 34

When a complaint is filed against a broker alleging a failure to provide reasonable and adequate supervision of affiliated licensees, who has the burden of proof?

a. The Real Estate Commission
b. The person who filed the complaint
c. The Attorney General
d. The broker

Answer 34

(d) The broker

Unlike most disciplinary actions the burden of proof in this case rests with the broker. The broker must prove, by a preponderance of the evidence, that the broker did provide reasonable and adequate supervision.

Question 35

Broker Bob left home without his wallet and needed to conduct some business that required his pocket card. He explained the situation to Broker Bernie who then loaned his pocket card to Broker Bob. Which statement is TRUE?

a. Broker Bernie is subject to discipline.
b. Broker Bernie is not subject to any discipline. There is no harm because Broker Bob has a
license.
c. Broker Bernie is not subject to discipline if he can retrieve the card before Broker Bob uses it.
d. Discipline depends on Broker Bernie’s intent

Answer 35

(a) Broker Bernie is subject to discipline.

Broker Bernie loaned his pocket card to Broker Bob and that makes him subject to discipline. Although no harm occurred that is not an element of disciplinary actions. Harm might be taken into consideration for the penalty assessed but not for whether there was a violation. Similarly, Broker Bernie’s intent is not relevant.

Question 36

The Commission has established a Real Estate Guaranty Fund to compensate, if necessary, parties damaged by the improper actions of licensees

Answer 36

▪ Fund minimum balance: $250,000 required.
▪ Licensee fee: $20 paid upon license issuance.
▪ Claim requirements:
Act/omission in real estate brokerage services. Involves theft, embezzlement, false pretenses, forgery, fraud, or misrepresentation.
▪ Maximum recovery from the fund: $50,000 per claim.
▪ Licensee responsible for reimbursement to the fund with 10% interest.
▪ Offender’s license suspended until reimbursement and reinstatement application.