Arkansas Real Estate Salesperson Exam — Study Guide

A supplement to the national real-estate manuscript. This chapter covers only what is different — or specifically regulated — in Arkansas. Study it alongside the national principles chapters, because the Arkansas portion of your license exam tests state law, and the national portion tests the broad principles.

How to use the "verify" flags. Real-estate license law has two kinds of facts. Some are stable rules that change only when the legislature rewrites the statute — whether a recovery fund exists, whether Arkansas taxes deed transfers, what the entry license is called. Those are stated here plainly. Others are moving numbers — fees, education hours, the passing score, tax rates — that the Arkansas Real Estate Commission or the legislature can adjust. Every one of those is flagged "verify current with the Arkansas Real Estate Commission (AREC)." Do not memorize a flagged number from any book (including this one) as gospel; memorize the rule, and confirm the figure before you rely on it in practice or on a renewal.

1. The licensing authority: the Arkansas Real Estate Commission (AREC)

Real estate brokerage in Arkansas is regulated by the Arkansas Real Estate Commission (AREC), a state agency created under the Arkansas Real Estate License Law (Arkansas Code Annotated Title 17, Chapter 42). The Commission administers the license law, adopts and enforces the AREC Rules, issues and renews licenses, investigates complaints, and disciplines licensees. It also administers the Real Estate Recovery Fund (discussed below).

AREC is composed of commissioners appointed by the Governor, including licensed real-estate professionals and at least one member representing the public. The agency operates out of Little Rock. Its practical footprint for a licensee is constant: you apply through AREC, you renew through AREC, your principal broker answers to AREC, and if a consumer files a complaint, AREC investigates.

Two points worth fixing in your mind for the exam:

• AREC is a licensing and enforcement body, not a court. It can deny, suspend, revoke, or refuse to renew a license, impose fines, and require education. It cannot award money damages to a wronged consumer the way a court can — but the Recovery Fund (Section 8) exists precisely to compensate certain consumers who win a court judgment they cannot collect.
• License law is administered by rule as well as statute. Many day-to-day duties (advertising, trust-account handling, disclosure timing) live in the AREC Rules rather than the statute itself. On the exam, "the Commission requires…" phrasing usually points to a rule.

2. License structure and the entry-license name

Arkansas issues real-estate licenses in a tiered structure. The entry-level license is the Salesperson license. That is the license a newcomer earns first, and it is the correct answer whenever the exam asks what license a person obtains to begin practicing real estate in Arkansas.

The Arkansas ladder, from entry upward:

1. Salesperson — the entry license. A salesperson may perform licensed real-estate activity (listing, selling, leasing, negotiating) only while affiliated with and supervised by a principal broker. A salesperson may not operate independently, may not hold escrow money in their own name, and may not directly employ other licensees.
2. Broker — a higher license requiring additional experience and education. Within the broker tier Arkansas recognizes distinct roles: - Executive Broker — a broker qualified to work under a principal broker (an "associate" broker), able to supervise salespersons as delegated but not the ultimate responsible party for the firm. - Principal Broker — the broker who is legally responsible for a brokerage firm, its trust accounts, its advertising, and the acts of the licensees affiliated with it. Every firm must have one principal broker. This is the person AREC holds accountable for the office.

For the exam, anchor two facts: the entry license is Salesperson, and every salesperson must hang that license with a principal broker who bears supervisory responsibility.

3. Getting licensed: pre-license education, exam, and post-license/CE

The path to an Arkansas Salesperson license follows the familiar national pattern — qualify by education, pass the exam, apply, and affiliate with a broker — but the specific hour counts and fees are Arkansas figures that move over time.

Eligibility and background. An applicant must meet the minimum age and legal-presence requirements and undergo a criminal background check (fingerprint-based). AREC reviews criminal history; certain convictions can bar or delay licensure, and AREC can issue guidance on eligibility before an applicant invests in coursework.

Pre-license education. Arkansas requires a set number of classroom (or approved distance-education) hours in an AREC-approved salesperson pre-license course before you may sit for the exam.

The required pre-license hour count is a changeable number — verify current with the Arkansas Real Estate Commission (AREC).

The licensing exam. Arkansas contracts the exam to a testing vendor (historically PSI). It has a national portion and an Arkansas state-law portion, and you must pass both.

The passing score and exam fee are changeable numbers — verify current with the Arkansas Real Estate Commission (AREC).

Application and affiliation. After passing, you apply to AREC for the Salesperson license and must place the license with a principal broker. A license issued but not affiliated with a broker cannot be used to conduct business; it is effectively inactive until a principal broker "holds" it.

Post-license education. Arkansas requires newly licensed salespersons to complete a post-license education requirement within their first license period (a first-year requirement separate from ordinary continuing education). Failing to complete it on time jeopardizes the license.

The post-license hour count and its deadline are changeable numbers — verify current with the Arkansas Real Estate Commission (AREC).

Continuing education (CE) for renewal. After the first cycle, licensees renew on Arkansas's schedule and must complete continuing education each cycle, including any AREC-mandated core/law topics.

The CE hour count, the renewal period, and the renewal fee are changeable numbers — verify current with the Arkansas Real Estate Commission (AREC).

The stable rule to carry into practice: education is continuous. You qualify with pre-license hours, prove competence on the exam, complete post-license education in year one, and then keep completing CE every cycle for as long as you hold the license. Only the counts move.

4. Broker affiliation and supervision

Arkansas is emphatic on this point, and the exam tests it: a salesperson cannot act alone. Every salesperson's license is held by a principal broker, and the principal broker is legally responsible for supervising that salesperson's real-estate activity.

Consequences of the affiliation rule:

• Compensation flows through the broker. A salesperson is paid by their principal broker, not directly by the buyer or seller. A licensee generally may not accept a commission or valuable consideration for licensed activity from anyone other than their own principal broker.
• The firm's money is the broker's responsibility. Earnest money and other trust funds are handled through the principal broker's trust account (Section 6), not the salesperson's personal account.
• Advertising runs under the firm. A salesperson's advertising must identify the brokerage firm; a licensee may not advertise property in a way that hides the affiliated firm ("blind ads" are prohibited).
• Transfer of affiliation is a formal act. When a salesperson leaves one firm for another, the change must be processed through AREC; the salesperson cannot simply carry the license to a new office informally.

5. Arkansas agency law and the required disclosure

Agency relationships in Arkansas are consensual and must be disclosed. A licensee owes their client the traditional fiduciary-type duties — loyalty, obedience to lawful instructions, disclosure of material facts, confidentiality, reasonable care and diligence, and accounting for money and property. To a non-client customer, the licensee still owes honesty and disclosure of known adverse material facts.

Agency-relationship disclosure. Arkansas requires licensees to disclose whom they represent in a transaction. The core rule is affirmative and stable: a licensee must make the agency relationship known — the consumer is entitled to know whether the licensee represents the seller/landlord, the buyer/tenant, both, or neither — and this disclosure must be made in a timely way.

Timing. The stable principle is that disclosure happens early — before the consumer discloses confidential information and before the parties become committed, i.e., at first substantive contact / before the customer begins sharing negotiating positions or personal financial details, and the representation is confirmed in the transaction documents. The exam-safe rule: disclose the agency relationship early and in writing, not at the closing table.

Dual agency. Arkansas permits dual agency with informed written consent. A dual agent represents both the buyer and the seller in the same transaction. Because the two clients' interests conflict, a dual agent's duties are necessarily limited — the agent cannot advocate one client's position against the other, cannot disclose one client's confidential negotiating information to the other (for example, the highest a buyer will pay or the lowest a seller will accept), and must remain neutral. Dual agency is not permitted without the knowing, written consent of both parties.

Designated agency (appointed licensees). Arkansas recognizes designated agency, sometimes called appointed agency. Here the principal broker appoints one licensee in the firm to represent the seller and a different licensee in the same firm to represent the buyer. Each appointed agent can then advocate fully for their own client, while the principal broker sits above them, typically in a dual-agency posture for the firm. This is a common way brokerages handle in-house transactions without collapsing everyone into pure dual agency. The consent and disclosure requirements still apply.

The takeaway: Arkansas is a disclosed-agency state. Undisclosed dual agency is a serious violation. Whatever the arrangement — single agency, dual agency, or designated agency — the consumer must be told, in writing, and must consent where consent is required.

6. Property disclosures: caveat emptor, material facts, and federal lead

This is one of the most tested — and most misunderstood — parts of Arkansas practice, so state the rule precisely.

Arkansas does not impose a mandatory statewide statutory seller property-condition disclosure form on ordinary residential sellers. Arkansas follows a caveat emptor ("let the buyer beware") posture for the seller as principal: the common-law starting point is that a seller of real property is not, by statute, required to complete and deliver a standardized state disclosure form the way sellers in many other states must. (Sellers and their agents commonly use a voluntary disclosure form as a risk-management practice, and a seller may not actively conceal or misrepresent a known defect — caveat emptor does not license fraud.)

That is the seller's baseline. The licensee's duty is different and stricter. Under AREC rules and Arkansas law, a licensee must disclose to all parties known adverse material facts about the property or the transaction that the licensee actually knows. A real-estate licensee cannot hide behind caveat emptor: if the agent knows the roof leaks, the foundation is cracked, or the basement floods, the agent must disclose it. So the exam-correct framing is a two-part rule:

1. The seller is generally under a caveat-emptor regime — no mandatory statutory disclosure form is imposed by Arkansas — but may not commit fraud or active concealment; and
2. The licensee must affirmatively disclose known adverse material facts to the parties regardless of the seller's silence.

Stigmatized-property and psychological facts. Like many states, Arkansas law generally does not treat certain "psychological" stigmas (for example, that a death occurred on the property, or a prior occupant's illness) as adverse material facts that must be volunteered. Physical/defect facts and legally material facts are the ones the licensee must disclose. Do not overstate this on the exam — the rule you must know is the affirmative duty to disclose known adverse material facts.

Federal lead-based paint (this is federal, and it applies in Arkansas). For housing built before 1978, the federal Residential Lead-Based Paint Hazard Reduction Act (Title X) applies nationwide, Arkansas included. Sellers and landlords of pre-1978 housing must:

• give the buyer/tenant the EPA lead-hazard pamphlet;
• disclose known lead-based paint and hazards and provide any records/reports; and
• give purchasers a 10-day opportunity to conduct a lead inspection or risk assessment (buyers may waive it in writing).

This federal requirement sits on top of Arkansas law and is fully testable on the state portion because it governs real Arkansas transactions.