Arkansas Real Estate Broker Exam — All Questions

Real estate licensing in Arkansas is administered by the:

• a.Arkansas Secretary of State
• b.Arkansas Insurance Department
• c.Arkansas Realtors Association
• d.Arkansas Real Estate Commission (AREC)✓

The Arkansas Real Estate Commission administers the Arkansas Real Estate License Law, Ark. Code Ann. § 17-42-101 et seq., and the Commission Regulations promulgated under it. Section 17-42-203(a) authorizes the Commission to "do all things necessary and convenient for carrying into effect the provisions of this chapter" and to promulgate rules. The Realtors Association is a private trade group with no licensing power; the Secretary of State and the Insurance Department have no real estate licensing authority.

Under AREC Regulation 10.7(b)(3), the firm records a principal broker must keep are open to inspection by:

• a.any licensee of the firm, though not by the Commission absent a court order
• b.the Commission's investigative staff, but only at the Commission's office in Little Rock
• c.the Commission's investigative staff, but only after a verified complaint is filed
• d.the Commission's investigative staff, at the firm's office or another location it designates✓

Regulation 10.7(b)(3) says the records "shall be open to inspection by and made available to the investigative staff of the Commission at the firm's office or other location designated by the Commission." The power does not depend on a complaint having been filed: Ark. Code Ann. § 17-42-312(a)(1) lets the Commission investigate on its own motion. Nor is inspection confined to Little Rock, and no court order is required, because the records are made inspectable as a condition of licensure. The records may be kept electronically so long as copies can be produced.

Except where a license was obtained by false or fraudulent representation, AREC may not investigate a licensee's conduct or hold a disciplinary hearing on it unless the complaint is filed or the investigation begins within:

• a.one year of the actions complained of
• b.three years of the actions complained of✓
• c.ten years of the actions complained of
• d.six months of the actions complained of

Ark. Code Ann. § 17-42-314(b) bars the Commission from investigating or holding a disciplinary hearing "unless the complaint is filed or the investigation initiated within three (3) years from the date of the actions complained of." The one stated exception is a license obtained by false or fraudulent representation, which is not time-limited. One year, six months and ten years are not the figure the statute uses.

AREC's authority under Arkansas license law includes the power to:

• a.investigate complaints and suspend, revoke, or condition a license✓
• b.set the commission rate that every Arkansas broker must charge
• c.license the attorneys who close real estate transactions
• d.issue building permits for property a licensee has listed

Ark. Code Ann. § 17-42-312(a)(4) lets the Commission, on finding a violation, impose "suspension, revocation, or denial of his or her license," a penalty of not more than $1,000 per violation, required education or reexamination, conditions or restrictions on the license, or restitution. Note what the Commission also can do, which is often misstated: under § 17-42-406 it determines the aggrieved party's actual damages in a disciplinary hearing and directs the licensee to pay them, and § 17-42-407 limits that award to actual, compensatory damages, with no punitive damages and no interest. What the Commission cannot do is issue building permits, fix commission rates, or license attorneys.

When the Arkansas Real Estate Recovery Fund pays a claim caused by a licensee, that licensee's license is:

• a.suspended for exactly thirty days regardless of any repayment
• b.unaffected, because the fund's payment settles the claim in full
• c.immediately suspended until the Commission is reimbursed with interest✓
• d.revoked permanently, with no right to reapply at a later date

Ark. Code Ann. § 17-42-409(3) states the consequence precisely: in addition to any other disciplinary action, the licensee's "license shall be immediately suspended until he or she has completely reimbursed the commission for the payment, plus interest at a rate to be determined by the commission," and that rate "shall not exceed ten percent (10%) per annum." The fund's payment settles the injured consumer's claim; it does not settle the licensee's debt to the fund, which is why the license stays down until the money comes back. A fixed thirty-day suspension misses the mechanism, and the statute provides no permanent revocation for this.