Licensing Law, Regulation, and Professional Conduct
What this domain tests
This domain tests license types, broker supervision, escrow handling, advertising, discipline, and antitrust rules. Questions often ask what an unlicensed assistant may do or what conduct triggers discipline.
Licensing rules
Salespersons work under a broker, and the broker is responsible for supervision. Written agency agreements are required where state law provides. Escrow funds must be held in a separate trust or escrow account and not commingled with business funds. Records must be maintained. Advertising must include the brokerage firm name. Unlicensed assistants may not negotiate, show property, or discuss terms. Referral fees to unlicensed persons are generally prohibited, with limited state-law exceptions.
Conduct and discipline
Grounds for discipline include fraud, misrepresentation, undisclosed dual agency, commingling, failure to disclose material facts, discriminatory conduct, and accepting undisclosed compensation. Continuing education and renewal are required. Antitrust law prohibits price fixing, group boycotts, and market allocation. Commissions are negotiable.
Worked example
A salesperson accepts a $2,000 referral fee from a mortgage broker for sending a buyer. If the fee is undisclosed and not permitted by law, it is an undisclosed kickback that violates license law and RESPA. The salesperson must disclose compensation and follow brokerage policy.
Traps
Do not assume a license is portable across states. Do not forget broker supervision duties. Do not assume referral fees are always legal. Do not overlook advertising rules for team names and firm names.