Real Estate Law and Regulation
This domain tests the statutory and regulatory frame around practice: licensing, money handling, antitrust, RESPA, and privacy. Items are usually enforcement-flavored - who violated what, and what follows.
Licensing and trust accounts
Licensees work under a supervising broker. Unlicensed assistants may perform administrative work but may not negotiate, advise on terms, or be paid on a per-transaction basis for brokerage activity. Earnest money and rents must be deposited promptly into a dedicated trust account. Commingling mixes client funds with operating funds; conversion is the actual use of client money. Both are grounds for discipline, as is failing to retain transaction records for the required period.
Antitrust
Section 1 of the Sherman Act prohibits contracts, combinations, and conspiracies in restraint of trade - price fixing, group boycotts, market allocation, and tying. Commission discussions among competitors are treated as per se violations regardless of good intentions. Section 2 addresses monopolization. Penalties are criminal and severe, and a brokerage's participation can be inferred from parallel conduct plus evidence of agreement.
RESPA and referrals
Section 8 prohibits fees for the referral of settlement service business, and disclosure does not cure a fee-for-referral. Section 9 bars a seller from requiring title insurance from a particular provider; Section 10 limits escrow deposits. The affiliated business arrangement safe harbor requires written disclosure of the affiliation and an estimate of the charge, no required use, and no payment other than for goods actually furnished.
Worked example
A title agency pays a brokerage $500 per closed referral, and no services are performed for the $500. Both parties have violated RESPA Section 8, even though the brokerage discloses the arrangement on its website, because disclosure is not a defense to a fee-for-referral. If instead the brokerage owned the title agency and disclosed the affiliation in writing at the time of referral, with no required use, a distribution of profits would be permissible.
Traps
Thinking disclosure cures a kickback; assuming an affiliated business arrangement is automatically illegal; believing antitrust reaches only large firms; confusing commingling with conversion; and assuming a license transfers automatically - reciprocity requires an application and some states offer none.