Laws Covering Licensing

LAWS COVERING LICENSING

The real estate division within each state is responsible for creating specific laws and

requirements that every licensed real estate agent is subject to follow. Let’s take a moment and

review the underlying principles behind these laws.

• It is illegal to work as a sales associate or a broker without having a valid and active license.

• It is illegal to work as a broker if you only have a sales associate license.

• It is illegal for a broker to employ a sales associate who is not licensed.

• It is illegal for a broker to operate under an unregistered or unlicensed trade name, partnership, or corporation.

• It is illegal to attempt to obtain or renew a license by bribery or misrepresentation.

• It is illegal for a sales associate to collect money related to a real estate transaction unless it is in the name of the broker or the name of the licensed business.

• It is illegal to work in the real estate profession in a way that is fraudulent, deceptive, untrue, or misleading.

• It is illegal to share a commission or pay compensation to an unlicensed person for any services that would require that person to have a real estate license. That would include the referral of real estate business, clients, prospects, and customers.

• It is illegal to practice real estate that is beyond what is permitted under their license level.

• It is illegal to become involved in a real estate transaction when the licensee knows they are not competent or qualified to perform it.

• It is a license violation if a real estate agent renders an opinion on the salability of the title of a property without first consulting with a licensed attorney.

• It is a license violation if the real estate agent fails to immediately place in escrow any monies that have been entrusted to the agent while practicing real estate.

• It is a license violation if an agent fails to report in writing to their state board or department that the licensee has been convicted or found guilty of a crime in any jurisdiction.

• It is a license violation to exercise influence on a client for financial gain for the licensee or a third party.

DISCIPLINARY ACTION

If a licensee is found guilty of any of these aforementioned laws and regulations or any

other ones that have been set by their state, the licensing authority has the right to deny the

renewal of a license; place the license on probation; suspend the license for up to ten (10)

years; revoke the license entirely; or even impose a large fine on the licensee. This means that

all licensees need to be familiar with all the individual state laws that govern the real estate

profession and follow them to the letter.