section 21 real estate licensing

Question 1

A license that when active authorizes a licensee to represent clients by performing real estate services.

Answer 1

Broker’s License:

Question 2

A license that when active allows a licensee to act as an agent of an employing broker.

Answer 2

Salesperson’s License:

Question 3

A real estate regulatory entity established to administer and enforce licensing legislation.

Answer 3

Real Estate Commission:

Question 4

The activation, deactivation, renewal, re-issue, suspension, and revocation of licenses managed by the real estate commission.

Answer 4

License Status:

Question 5

A reserve account established by the state that is funded through license fees and collected fines that pays portions of a money judgment on behalf of a licensee, up to a prescribed amount.

Answer 5

Recovery Fund:

Question 6

State real estate license laws set a minimal level of competence for real estate professionals and, in addition,

establish commission and fee schedules.

set ethical and professional standards.

limit the number of brokerages that may operate in the state.

prescribe methods of obtaining real estate business.

Answer 6

set ethical and professional standards.

Question 7

A particular real estate activity generally requires a license if it

involves a buyer and a seller.

concerns a transfer of title.

results in a taxable event that must be reported to state and federal revenue agencies.

is performed for another party for compensation.

Answer 7

is performed for another party for compensation.

Question 8

Mary is selling her house. Betty wants to buy it. Margaret intends to help Mary and Betty with the sale contract. In return, Mary will send her son to paint Margaret’s house. Which of the following circumstances will probably allow Margaret to help Mary and Betty without holding a real estate license?

Margaret and Mary are sisters.

Betty is Mary’s daughter.

Margaret is Mary’s attorney.

Margaret works in the office of a licensed broker.

Answer 8

Margaret is Mary’s attorney.

Question 9

An active broker’s license generally authorizes the holder to perform services

within the area administered by the local real estate board.

anywhere in the state.

anywhere in the country.

in neighboring states as well as in the issuing state.

Answer 9

anywhere in the state.

Question 10

Which of the following is the only capacity in which a licensed salesperson may act?

As agent for a seller.

As agent for a principal who has signed a listing agreement.

As agent for one or more licensed brokers, depending on the transaction.

As agent of an employing broker.

Answer 10

As agent of an employing broker.

Question 11

If a licensee’s license is voided,

the licensee may continue performing those services already in progress at the time of voiding.

the licensee may not practice real estate.

the licensee may never obtain another license in the same state.

the licensee may only work for another licensee with a valid license.

Answer 11

the licensee may not practice real estate.

Question 12

To obtain a real estate salesperson’s license, an individual must

pass a state license examination.

have previous experience as an assistant to a licensed salesperson.

be currently employed by a licensed broker.

be sponsored by a licensed salesperson.

Answer 12

pass a state license examination.

Question 13

Carl’s broker’s license is revoked by the state commission. Lily, a licensed salesperson working for Carl, must

continue to perform services for her clients pending Carl’s reinstatement.

cease performing real estate services.

go to work for another employing broker.

obtain a broker’s license.

Answer 13

cease performing real estate services.

Question 14

If the state licensing authority finds that a consumer’s complaint against a licensee is justified, the authority may

issue a money judgment against the licensee.

sentence the licensee to jail.

suspend or revoke the license as well as report the case to an appropriate judicial authority.

negotiate a financial settlement with the complainant on behalf of the real estate commission

Answer 14

suspend or revoke the license as well as report the case to an appropriate judicial authority.

Question 15

To maintain a valid license, a licensee needs to

generate a minimum number of transactions within the licensing period.

remain in the same agency affiliation for at least one year.

pass the licensing examination on a yearly basis.

satisfy educational requirements for license renewal.

Answer 15

satisfy educational requirements for license renewal.

Question 16

The purpose of a recovery fund is to

protect damaged licensees from clients who fail to pay earned commissions.

assist in the liquidity of a troubled brokerage through low-interest loans.

ensure that judgments against licensees will be collectible.

replenish losses in escrow accounts of brokerages found to have mismanaged impounded monies.

Answer 16

The outcome of many cases of license law violation is a negotiated financial settlement or a court-ordered money judgment against the violator. If the licensee lacks financial resources, the settlement or judgment may be to some extent uncollectible. To avoid this situation, many states require licensees to obtain a bond at the cost of a nominal annual fee. The bond covers the difference between a potential settlement amount and the licensee’s financial resources for satisfying the judgment or settlement.

Other states, rather than requiring a bond, establish a real estate recovery fund. The recovery fund is a reserve account funded through license fees and collected fines. The fund pays portions of a money judgment on behalf of a licensee, up to a prescribed amount. A licensee must repay all amounts so withdrawn, during which time the person’s license is suspended.