Connecticut Real Estate Broker Exam — All Questions

A Connecticut broker must retain purchase contracts, listing agreements and trust account bank records for a period of not less than:

• a.Five years after the date on which the transaction closes
• b.Three years after the date on which the listing agreement is signed
• c.Seven years after the later of closing, disbursement or expiry✓
• d.Ten years after the last disbursement is made from escrow

C.G.S. Section 20-325m(a) requires the broker to retain the listed records "for a period of not less than seven years after any real estate transaction closes, all funds held in escrow for such transaction are disbursed or the listing agreement or buyer or tenant representation agreement expires, whichever occurs later." Two things decide the item: the number is seven, and the clock starts at the latest of three events rather than at any single one, which is why an answer running from the signing of the listing or from the closing alone misstates the rule even where the count is close. Ten years is longer than Connecticut requires. Subsection (c) adds that the records shall be kept in an electronic format capable of producing an accurate copy unless that is commercially impractical, and made available to the department on request.

The buyer and seller in a Connecticut transaction make conflicting demands for an escrow deposit the broker is holding. The broker should:

• a.Apply the deposit against the commission the broker earned
• b.Release the deposit to whichever party demands it first
• c.Hold the funds in escrow until the dispute is resolved✓
• d.Divide the deposit evenly between the two parties

A broker holding disputed escrow money is a stakeholder, and C.G.S. Section 20-324k(c) directs that the money be held "pending final legal disposition of such moneys in accordance with the instructions of the person legally entitled to such moneys." Connecticut gives the broker a way out of the middle: under Section 20-324k(d) the court may, on motion, order the broker to deposit the funds with the court, and on receipt it shall also dismiss any claim against the broker that rests solely on the broker's role as stakeholder. Paying whichever party asks first makes the broker the judge of a contract dispute. Taking the deposit for the commission converts client money and violates Section 20-320(a)(5) and (10). Splitting it without agreement decides the dispute just as surely, only in halves.

A Connecticut broker who has earned a commission on a sale and wants to claim the statutory broker's lien must record the claim for lien with the town clerk:

• a.At any time within one year after the closing
• b.Before the listing agreement is signed by the owner
• c.Within thirty days after the closing of title
• d.Before the actual conveyance of the real property✓

C.G.S. Section 20-325a(f) provides that the lien does not attach until the broker is entitled to compensation without contingencies other than closing or transfer of title "and the broker has recorded the claim for lien prior to the actual conveyance or lease of such real property with the town clerk of the town where such property is located." Recording after the closing is therefore too late in the ordinary sale, which is what makes the thirty-day answer wrong; the thirty-day period in subsection (i) applies to the different case of a lien claimed under a written contract with a prospective buyer. One year is the deadline in subsection (k)(2) for commencing foreclosure after the lien is recorded, and missing it extinguishes the lien. Recording before the listing is signed would claim a lien for compensation not yet earned. Subsection (r) also requires written notice to the owner at least three days before the conveyance.

To obtain the protection of C.G.S. Section 20-325k, a Connecticut broker must record a notice of commission rights in a commercial lease not later than:

• a.Thirty days after the date the tenant first occupies the leased premises
• b.Ninety days after the landlord and the tenant have executed the lease
• c.Sixty days after the latest of execution, occupancy or rent commencement✓
• d.Six months after the rent commencement date stated in the lease

Section 20-325k(b) says the broker is entitled to the protections of the section "only upon the broker's recording a notice of commission rights in the land records in the office of the town clerk in the town in which the real property or leasehold interest is located not later than sixty days after the execution of the lease, the tenant's occupancy of the leased premises, or the rent commencement date specified in the lease, whichever is later." Fixing the deadline to occupancy alone, or to execution alone, drops the "whichever is later" that decides most commercial deals, where those dates fall months apart. Six months is longer than the statute allows. The notice binds the landlord's or tenant's grantees, successors and assigns, but subsection (d) is explicit that nothing in the section creates a lien on the property, and subsection (c) requires a recordable termination statement within thirty days of final payment.

Under C.G.S. Section 20-325l, an out-of-state broker cooperating on a Connecticut commercial real estate transaction may not:

• a.Accompany a prospective buyer at the site of the property✓
• b.Receive any share of the Connecticut broker's compensation
• c.Advertise the property without naming the Connecticut broker
• d.Hold escrow funds under the terms of the written agreement

Section 20-325l(d) requires the out-of-state broker's advertising to name the licensed Connecticut broker, and then adds that "nothing in this section shall permit an out-of-state broker or out-of-state salesperson to accompany a prospective buyer at the site of commercial real estate pursuant to a real estate transaction in this state." Physical presence at the property is the line Connecticut draws. Compensation is expressly contemplated: subsection (a)(2) requires the written cooperation agreement to state any compensation the Connecticut broker will pay, and subsection (e) allows an out-of-state licensee to be paid for a referral. Advertising without naming the Connecticut broker is prohibited rather than permitted, so that option describes what the licensee may not do. And subsection (a)(4) contemplates escrow funds being held as provided in Section 20-324k unless the written agreement specifies otherwise.

C.G.S. Section 20-311(3) defines a Connecticut "associate broker" as a real estate broker who is affiliated with a supervising licensee and who:

• a.May supervise affiliated salespersons without holding a broker license
• b.Has authority to engage in the real estate business on that licensee's behalf✓
• c.Holds the license under which the brokerage entity itself operates
• d.Is limited to commercial transactions until the license is upgraded

Section 20-311(3), added by Public Act 23-84 effective April 1, 2024, defines an associate broker as a real estate broker who "(A) is affiliated with a supervising licensee as an independent contractor or employed by a supervising licensee, and (B) has the authority to engage in the real estate business on behalf of such supervising licensee." Connecticut therefore has three tiers: salesperson, associate broker and supervising licensee. The license under which a business entity operates belongs to the designated broker named under Section 20-312(c), which is a different role. Supervision is the supervising licensee's function and requires a broker license, so no one supervises without one. And nothing limits the associate broker to commercial work. Section 20-312c(a) adds that an associate broker may not engage in the real estate business unless the supervising licensee knows of and has consented to it, and subsection (c) gives fourteen calendar days to notify the department after an affiliation ends.

A Connecticut licensee who earns a commission on a residential sale also arranges the buyer's first mortgage. Under C.G.S. Section 20-325c, the mortgage brokerage fee must be:

• a.Paid directly by the buyer rather than out of the loan proceeds✓
• b.Waived unless the buyer has signed a separate listing agreement
• c.Deducted from the mortgage loan proceeds at the closing table
• d.Split with the lender that funds the buyer's first mortgage loan

Section 20-325c(a) allows the licensee to take a mortgage brokerage fee on the same residential sale only after making the prescribed disclosure, and requires that any such fee "(1) be related to the services actually performed, as determined by the Banking Commissioner by regulations, (2) not be imposed for the referral of the buyer to the mortgage lender by such real estate licensee, and (3) be paid directly to such real estate licensee by the buyer rather than from the mortgage loan proceeds at the time of closing." Taking the fee out of the loan proceeds is precisely what clause (3) forbids. Splitting a fee with the lender would be compensation for a referral, which clause (2) bars and which Section 20-320a reinforces by prohibiting referral fees for sending a buyer to a lender or attorney. And the fee is not conditioned on a listing agreement; the disclosure under subsection (b) must be acknowledged before the buyer signs the mortgage brokering contract.

A Connecticut broker dies and the department appoints a custodial broker on the executor's application. Under C.G.S. Section 20-329hh, that custodial broker serves a term not to exceed:

• a.Thirty days, after which the brokerage must close
• b.Ninety days, extendable only by order of the Probate Court
• c.One year, renewable once at the commission's discretion
• d.One hundred eighty days, extendable on a hardship application✓

Section 20-329hh(a) provides that each custodial broker appointed on the application of the executor or another person legally authorized to act for the deceased or incapacitated broker "shall serve for a term not to exceed one hundred eighty days," and subsection (b) lets the department extend that term in its discretion on a hardship application submitted in the prescribed form. The extension therefore comes from the department, not from the Probate Court, and no ninety-day or one-year term appears in the section. A thirty-day cut-off would defeat the purpose, since subsection (e) forbids a business entity from engaging in the real estate business while its designated broker is deceased or incapacitated unless a custodial broker has been appointed, and subsection (g) says the same of salespersons and team members under a deceased or incapacitated supervising licensee. Section 20-311(8) defines the role, and subsection (c) requires the custodial broker to act to preserve the financial interests of the broker or the estate.