Arkansas Real Estate Broker Exam — All Questions

AREC Regulation 10.14 makes it the duty of each licensee to report to the Commission:

• a.in writing, only violations the licensee personally witnessed at a closing
• b.orally at the next Commission meeting, any violation by a competing firm
• c.in writing, only violations by licensees affiliated with the licensee's own firm
• d.in writing, any information that is or may be a violation of the law or rules✓

Regulation 10.14 provides that "it is the duty of each licensee to report in writing to the Commission any information coming to the licensee's knowledge which is or may be (1) a violation of the Arkansas Real Estate License Law; or (2) a violation of the Commission Regulations." The duty is not limited to what the licensee saw first-hand, is not limited to the licensee's own firm, and is not discharged by speaking at a meeting. Note the standard is "is or may be" a violation, so the licensee does not have to be certain before reporting.

Ark. Code Ann. § 17-42-302(a) lists what an applicant must show to be issued an Arkansas real estate license. Membership in a trade association such as the Arkansas REALTORS Association is:

• a.not on that list, and is voluntary for a licensee✓
• b.required only of principal broker applicants
• c.required only of nonresident applicants
• d.required before the license may be issued

Section 17-42-302(a) directs that the Commission "shall issue a license to any applicant who meets the following requirements," then lists age of majority, the education and experience requirements, the examination, no record of unprofessional conduct, evidence of good reputation, and the criminal background check under § 17-42-315. Trade association membership appears nowhere in that list, and § 17-42-302(b) lets the Commission deny a license only to an applicant who fails those requirements or the fees. Association membership is a private matter; Regulation 7.3(a) does allow the marks REALTOR and REALTIST on a firm sign for those who are entitled to use them.

Under AREC Regulation 13.4, a purchaser may cancel a contract to buy a time-share interest from a developer within:

• a.five days after signing, though the right to cancel may be waived
• b.three days after signing, and the right to cancel may not be waived
• c.ten days after signing, though the right to cancel may be waived
• d.five days after signing, and the right to cancel may not be waived✓

Regulation 13.4(a) provides that "a purchaser may cancel any contract for the purchase of a time-share interest from a developer within five (5) days after execution of the contract. The purchaser's right to cancel a contract for purchase shall not be waived." Regulation 13.4(d) extends the fifth day to the next day that is not a Saturday, Sunday, or legal holiday, and notice is deemed given when postmarked. Regulation 13.4(c) requires a "NOTICE TO PURCHASER" of the same right immediately above the signature line of the contract, in at least 10-point boldface.

The "IMPORTANT NOTICE" that Regulation 13.4(b) requires to be attached to the front of a time-share public offering statement must state that payments made before cancellation will be refunded within:

• a.thirty days of receipt of the notice of cancellation✓
• b.sixty days of receipt of the notice of cancellation
• c.ninety days of receipt of the notice of cancellation
• d.fifteen days of receipt of the notice of cancellation

The prescribed language in Regulation 13.4(b) reads in part: "I UNDERSTAND THAT CANCELLATION IS WITHOUT PENALTY AND ALL PAYMENTS MADE BY ME BEFORE CANCELLATION SHOULD BE REFUNDED WITHIN THIRTY (30) DAYS OF RECEIPT OF THE NOTICE OF CANCELLATION." The notice must be in duplicate, in at least 10-point boldface, attached to the front of the public offering statement, with the original retained by the developer and the copy given to the purchaser, and it must carry no other printing or writing.

AREC Regulation 15.2(a) provides that a real estate auction is with reserve unless:

• a.the seller signs a listing agreement naming a minimum bid the auctioneer must get
• b.the property has been advertised for at least thirty days before the auction date
• c.the real estate is offered using terms such as "absolute" or "without reserve"✓
• d.the auctioneer announces a reserve price to those attending before bidding opens

Regulation 15.2(a) provides that an "auction shall be with reserve, unless the real estate is offered without reserve using explicit terms such as 'absolute' or 'without reserve.'" The consequence matters: in an auction with reserve the auctioneer may withdraw the real estate at any time until announcing completion, while in an absolute auction the real estate cannot be withdrawn once bids are called for unless no bid is made within a reasonable time. Regulation 15.2(b) requires an absolute auction agreement to carry a 14-point boldface acknowledgment that the seller has no right to refuse to convey to the high bidder.

Regulation 15.4 requires an auctioneer who advertises real estate to disclose the existence of a buyer's premium:

• a.only to the winning bidder, before the closing statement
• b.in all published advertising, but not orally at the auction
• c.before the auction starts, but not in published advertising
• d.in all published advertising and before the auction starts✓

Regulation 15.4(3) requires that an auctioneer "disclose the existence of any buyer's premium to be charged to a buyer at an auction sale. Such disclosure shall be made in all published advertising and disclosed prior to the start of an auction." Both channels are required, not one or the other, and the disclosure is owed to everyone bidding rather than only to the buyer who wins. Regulation 15.1(h) defines a buyer's premium as "an advertised percentage of the high bid or flat fee added to the high bid to determine the total contract price to be paid by the buyer," and Regulation 15.4(1) separately requires the advertisement to name the real estate firm and the auctioneer licensed with it.

Regulation 15.1 defines a "shill" at an Arkansas real estate auction as a person who:

• a.pretends to have no association with the auctioneer or seller and puffs a bid✓
• b.bids for an absent buyer under a written absentee bid authorization
• c.records the winning bids and prepares the closing statement afterward
• d.inspects the property before the auction for a prospective bidder

Regulation 15.1(l) defines a shill as "a person who falsely pretends to have no association with the auctioneer or seller and gives the impression of being an enthusiastic bidder by puffing of a bid," and Regulation 15.1(j) defines a rafter bid or puffing as "a fictitious bid used to increase the final sales price." Regulation 15.7(1) makes knowingly receiving or using a rafter bid, puffing, or the services of a shill a prohibited act. Under Regulation 15.8, an unlicensed person who acts as a shill is engaged in unlicensed real estate activity and faces the civil penalties in Ark. Code Ann. § 17-42-109.