Delaware Real Estate Broker Exam — All Questions

Two competing brokerages agree over lunch to both charge a 6% commission so neither undercuts the other. This agreement is:

• a.Legal, because commissions are customary
• b.Legal, if disclosed to clients
• c.Illegal price fixing under antitrust law✓
• d.Legal, because each firm sets its own policy

An agreement among competing firms to set commission rates is price fixing, a per se violation of federal antitrust law, and it is illegal regardless of custom or disclosure. Commission rates must always be negotiated independently between each broker and client and are never set by agreement among competitors. Other antitrust violations include market allocation, group boycotts, and tie-in arrangements. A broker must train agents never even to discuss setting rates with competitors, since such talk alone invites liability.

A broker discovers that earnest money was mistakenly deposited into the firm's operating account instead of the trust account. This error is an example of:

• a.Conversion
• b.Commingling✓
• c.Novation
• d.Subrogation

Commingling is mixing client or third-party trust funds with the broker's own operating or personal funds, which is exactly what happened here. Conversion is the more serious step of actually using those trust funds for the broker's own benefit. A broker must deposit trust funds into a proper trust account within the time the state requires, keep a ledger for each beneficiary, and reconcile regularly. Even an innocent commingling error is a violation, so brokers build office procedures to prevent it.

A broker directs an agent to show minority buyers homes only in certain neighborhoods and white buyers homes in others. This practice is called:

• a.Blockbusting
• b.Redlining
• c.Puffing
• d.Steering✓

Steering is directing prospective buyers toward or away from particular neighborhoods based on a protected class, and it violates the federal Fair Housing Act. Blockbusting is inducing owners to sell by suggesting a protected group is moving into the area. Redlining is denying loans or insurance in certain areas based on their composition. A broker is responsible for training and supervising agents to prevent all of these, since fair-housing violations create serious liability for the entire firm.

Two parties dispute who is entitled to the earnest money after a deal collapses. What should the broker holding the deposit generally do?

• a.Retain the funds in trust until the parties agree, a court orders release, or another lawful resolution occurs✓
• b.Release the funds to whichever party the listing agent believes is right
• c.Split the deposit evenly between the parties immediately
• d.Transfer the deposit into the brokerage's general operating account and hold it there until the parties settle the dispute in writing

When the parties dispute a deposit, the broker must not decide the dispute or pick a side. The broker holds the funds in the trust account until the parties reach a written agreement, a court orders release, or the broker uses a lawful procedure such as interpleader where available. The broker cannot release funds on an agent's opinion, split them unilaterally, or move them to the operating account. Proper handling of disputed deposits is a classic broker-level trust-account duty.

Which of the following is a core reason a brokerage maintains a written office policy manual and reviews transaction files?

• a.To guarantee every agent earns the same commission
• b.To supervise licensees and reduce the firm's risk of violations✓
• c.To eliminate the need for errors-and-omissions insurance
• d.To set commission rates jointly with other firms

Written policies and regular file review are supervision and risk-management tools: they help the broker ensure agents follow the law, deliver required disclosures, and handle funds correctly, reducing the chance of violations for which the broker could be liable. They do not standardize commissions (which are negotiable) or set rates with competitors (which would be illegal antitrust conduct), and they complement rather than replace errors-and-omissions coverage. Supervision is a defining broker responsibility.

Which federal law's protected classes are race, color, religion, sex, national origin, familial status, and disability?

• a.The Real Estate Settlement Procedures Act
• b.The Truth in Lending Act
• c.The federal Fair Housing Act✓
• d.The Sherman Antitrust Act

The federal Fair Housing Act prohibits housing discrimination based on race, color, religion, sex, national origin, familial status, and disability. RESPA governs settlement-cost disclosures and referral kickbacks; the Truth in Lending Act governs credit disclosures and advertising; and the Sherman Antitrust Act addresses price fixing and other anticompetitive conduct. Some state and local laws add protected classes such as age, marital status, sexual orientation, or source of income, which a broker must also enforce.

How long must a brokerage keep its transaction and trust-account records?

• a.For the retention period set by the state's license law✓
• b.Only until the transaction closes
• c.Exactly one year in every state, measured from the closing date
• d.There is no duty to retain records once the firm's annual audit is complete

Brokers must keep transaction and trust-account records for the retention period established by their state's license law, and those periods vary by state, which is why the safe answer is 'the period set by state law' rather than a specific national number. Records typically must be produced on request during audits or investigations. Because retention rules differ, a broker sets office procedures to keep complete files for the required time. This question also models why the exam avoids inventing a single nationwide figure.

A landlord refuses to rent a two-bedroom unit to a woman who is seven months pregnant, saying the building is 'for quiet adults only.' Which protected class is violated?

• a.Sex, since the refusal targets a pregnant woman
• b.Familial status, which covers pregnancy and children under 18✓
• c.Disability, because pregnancy limits major life activity
• d.None, because adult-only rental buildings are permitted

Familial status protects households with one or more children under 18, pregnant women, and anyone in the process of securing legal custody, so turning away an applicant because a baby is coming is familial status discrimination. Sex is a separate protected class, and the refusal here targets the coming child rather than the applicant's sex. Pregnancy is not treated as a disability under the Act. An 'adults only' policy is lawful only where the property qualifies under the Housing for Older Persons Act, and an ordinary rental building does not.

A tenant who uses a wheelchair asks the landlord to assign her the parking space nearest the entrance, although every space in the lot is unassigned. This request is:

• a.Allowed only with a physician's written diagnosis
• b.A reasonable modification the tenant pays to install
• c.A request the landlord may deny for convenience
• d.A reasonable accommodation the landlord must grant✓

Assigning an accessible space in an otherwise unassigned lot is a change in rules and services, which makes it a reasonable accommodation; the housing provider must grant it and absorbs the small administrative cost. A modification is a physical alteration of the premises, and the tenant usually pays for that, so the label does not fit a parking assignment. Ordinary inconvenience is no defense, since only a fundamental alteration of the program or an undue financial and administrative burden justifies refusal. A provider may seek verification of a disability-related need but may not demand a diagnosis or medical records.

A tenant with limited mobility asks permission to widen a bathroom doorway in his rented unit and offers to pay for the work himself. How does fair housing law treat this?

• a.The landlord must perform and pay for the doorway work
• b.The landlord may refuse because it alters the structure
• c.It is a modification made at the tenant's expense✓
• d.It is an accommodation that the landlord must fund fully

Widening a doorway physically alters the unit, so it is a reasonable modification. The landlord must permit it, and the tenant generally bears the cost, sometimes under an agreement to restore the interior at move-out where that is reasonable. Requiring the landlord to pay confuses modifications with accommodations, which are rule or policy changes the provider does absorb. Refusing outright because the work is structural is not allowed, since permission may not be withheld for a needed and reasonable alteration done in a workmanlike manner. Calling the request an accommodation misapplies a term reserved for changes to rules rather than to the building.

A building enforces a no-pets policy and collects a pet deposit. An applicant with a disability asks to keep a trained assistance animal. How must the managing broker respond?

• a.Waive the no-pets rule and charge no pet deposit✓
• b.Deny the request, since the policy applies to everyone
• c.Allow the animal but collect the standard pet deposit
• d.Allow it only if the animal is a certified dog

An assistance animal that performs work or provides disability-related support is not a pet, so a no-pets rule must be waived and no pet deposit or pet fee may be charged. Applying the policy uniformly is exactly what fair housing law forbids when the uniform rule blocks equal use of housing by a person with a disability. Collecting the usual deposit turns the accommodation into a paid privilege and is a violation, although the tenant remains liable for actual damage the animal causes. No federal law requires certification, registration, or any particular species or breed.

A developer client is planning a new four-story elevator apartment building. Which Fair Housing Act obligation applies to the way the dwelling units themselves are designed?

• a.Only buildings with an elevator and twenty units qualify
• b.Accessible design is required only in federally funded housing
• c.Covered multifamily dwellings need accessible design features✓
• d.The rules apply to all housing regardless of build date

Buildings with four or more units first occupied after March 13, 1991 are covered multifamily dwellings and must satisfy the Act's seven technical design and construction requirements, including accessible routes, usable doors, and reinforced bathroom walls for later grab bars. In elevator buildings all units are covered; in buildings without an elevator, the ground-floor units are. Federal funding is irrelevant, because the duty attaches to privately financed construction as well. There is no twenty-unit threshold. And the requirements are not retroactive, so older housing is judged by the accommodation and modification rules instead.

An owner lives in one unit of a four-unit building she owns and rents the other three herself, using no broker and no advertising. Which statement is correct?

• a.She is exempt from all federal fair housing requirements
• b.She is exempt from parts of the Act but never as to race✓
• c.The exemption fails because the building holds four units
• d.No exemption exists for owner-occupied rental property

The owner-occupied exemption, often called the Mrs. Murphy exemption, can reach a dwelling of up to four units where the owner actually occupies one of them. The no-broker condition belongs to the separate single-family exemption; the ban on discriminatory advertising applies to both. It is partial, not total: the Civil Rights Act of 1866 still bars racial discrimination absolutely, so the exemption never covers race. Four units is inside the exemption rather than outside it, so the unit count does not defeat her. Saying no exemption exists for owner-occupied rentals ignores the statute, while claiming complete immunity ignores the race limit that removes most of its value.

An owner of three rental houses wants to sell one himself and hires a broker for a flat fee to prepare and deliver the paperwork. What is the fair housing effect?

• a.Involving a licensee defeats the single-family sale exemption✓
• b.The owner keeps the exemption because the broker only files papers
• c.The exemption applies since a flat fee is not a commission
• d.The exemption is lost only when the broker advertises it

The single-family exemption is available only to an owner who uses no real estate broker, agent, salesperson, or their facilities in the sale. Hiring a licensee for any part of the transaction defeats it, so the form of compensation is beside the point and paperwork help is still help. The exemption also requires that the owner not own more than three such houses at a time and that no discriminatory advertising be used, which makes advertising one condition among several rather than the only one. Race discrimination remains prohibited even where the exemption otherwise applies.

An owner whose rental qualifies for a fair housing exemption places a newspaper ad reading 'Christian couple preferred, no children.' Is the advertisement lawful?

• a.Yes, because the property itself is exempt from the Act
• b.No, exemptions never permit discriminatory advertising✓
• c.Only the reference to children violates the fair housing rules
• d.Yes, provided the owner uses no broker or listing service

Every Fair Housing Act exemption is written subject to the advertising prohibition, so even an exempt owner may never publish a notice, statement, or advertisement indicating a preference or limitation based on a protected class. Both the religious preference and the exclusion of children are unlawful here, which is why treating only the children reference as a problem is wrong. Whether a broker or listing service was used affects the underlying exemption for the rental decision but never rescues the advertisement. A broker who accepts such copy for publication shares in the exposure.

A religious organization owns a lodge with rental units, operates it noncommercially, and gives preference to members of its own faith. How does the Fair Housing Act treat this?

• a.The preference is unlawful under all circumstances
• b.It is lawful only for buildings of four or fewer units
• c.A limited exemption allows preference by religion, not by race✓
• d.Religious owners may set any rental rule they choose

A religious organization or a related nonprofit may limit or prefer persons of the same religion in noncommercial housing it owns, provided membership in the religion is not itself restricted by race, color, or national origin; private clubs have a parallel narrow exemption for lodgings they own and operate noncommercially. An absolute prohibition therefore overstates the law. There is no four-unit ceiling on this exemption, which is a different rule from the owner-occupied exemption. And the exemption is narrow rather than a license to adopt any rental rule the owner wishes.

A community seeks the housing for older persons exemption from familial status. Which pair of standards may qualify it under federal law?

• a.At least half the units with a person 55, or all occupants 60
• b.At least 80% of units with a person 55, or every occupant 62✓
• c.Any community that markets itself to retirees qualifies
• d.Only communities the state licenses as senior housing qualify

The Housing for Older Persons Act offers two common routes out of familial status coverage: housing intended for and solely occupied by persons 62 and older, or housing where at least 80 percent of the occupied units have at least one occupant 55 or older, along with published policies and age verification procedures. The half-the-units and age-60 figures are invented. Marketing alone never qualifies a property, and no state license or certificate creates the federal exemption. Note that the exemption lifts only familial status, so race, disability, and the other classes still apply in full.

A seller otherwise entitled to a Fair Housing Act exemption rejects an offer solely because the buyers are Black. What is the seller's exposure?

• a.Liability under the Civil Rights Act of 1866✓
• b.None; the exemption applies
• c.Only a state law claim
• d.Liability only if a licensee handled any part of the sale

The Civil Rights Act of 1866 prohibits all racial discrimination in the sale or rental of real and personal property, and the Supreme Court upheld that reading in Jones v. Alfred H. Mayer Co. The 1866 Act contains no exemptions at all, so a Fair Housing Act exemption is no shield when race is the reason. Federal liability therefore does not depend on state law or on whether a licensee touched the transaction. A broker told that race motivated a rejection cannot help carry it out, whatever the seller believes about exempt status.

A broker learns that an affiliated licensee has mailed letters telling owners 'the neighborhood is changing fast, list now before values fall.' What must the broker do?

• a.Allow it, since market predictions are protected opinion
• b.Require a fair housing logo on the next mailing
• c.Halt the campaign and discipline the licensee for blockbusting✓
• d.Permit it if no protected class is named in the text

Telling owners to sell because the neighborhood is 'changing' is classic blockbusting, or panic selling, which the Act forbids whether or not a protected class is named, because the coded message is the violation. The broker must stop the campaign, retrain or discipline the licensee, and document the correction, since failure to supervise is itself an independent ground for discipline. Adding a fair housing logo decorates discriminatory content without curing it. Market commentary is protected only when it is genuine information, not an inducement to sell based on who is moving in.

A lender declines to write mortgages anywhere inside a mapped section of the city regardless of an individual applicant's credit. This practice is known as:

• a.Steering, since buyers are pushed toward other areas
• b.Blockbusting, because it targets a neighborhood
• c.Redlining, a denial of credit by geographic area✓
• d.Disparate treatment of every individual applicant

Refusing credit across a mapped area without regard to the individual borrower is redlining, historically drawn as a line around neighborhoods, and it is reached by both the Fair Housing Act and the Equal Credit Opportunity Act. Blockbusting works in the opposite direction, inducing owners to sell by suggesting who is moving in. Steering channels buyers toward or away from areas and is committed by licensees rather than lenders. Disparate treatment describes case-by-case unequal handling, which is precisely what a blanket geographic rule avoids doing, and that is why the harm here is measured area-wide.

A management client applies a blanket rule rejecting every applicant with any criminal record. No intent to discriminate is shown. Which fair housing exposure does this create?

• a.None, because the rule applies to everyone equally
• b.A disparate impact claim, without proof of intent✓
• c.A steering claim brought by the rejected applicants
• d.None, since criminal history is not protected by the Act

A neutral policy that disproportionately excludes members of a protected class can violate the Act under a disparate impact theory even without discriminatory intent, and blanket criminal-record bans are the leading example because arrest and conviction rates differ sharply by race. Saying the rule applies to everyone equally describes facial neutrality, which is where an impact claim starts rather than a defense to it. Criminal history is indeed not a protected class, but the effect of the screen is what matters. Steering involves channeling prospects by neighborhood, which did not happen here.

A licensee's listing flyer reads 'ideal for a young professional couple' and shows models drawn from a single racial group. How should the supervising broker treat the flyer?

• a.Approve it, since photographs cannot express a preference
• b.Approve it once the equal housing logo has been added
• c.Reject it; both the wording and the images signal preference✓
• d.Reject the wording only, because images are always neutral

Text and imagery can each express an unlawful preference. 'Ideal for a young professional couple' signals age and familial preferences, and using models from only one racial group signals a racial preference, so the broker rejects the whole flyer and has it redone. The claim that photographs are neutral has been rejected for decades, because human models in advertising are read as a statement about who is welcome. The equal housing logo is good practice but never cures discriminatory content. Firms often go further with affirmative marketing, deliberately advertising through channels that reach underserved groups.

A brokerage occupies a storefront office the public enters freely, and a single step sits at the front door. What does ADA Title III require of the firm?

• a.Nothing, because the ADA reaches only large employers
• b.Remove the barrier if removal is readily achievable✓
• c.Post a sign offering to meet clients outdoors instead
• d.Comply only after a client complains in writing

A real estate office open to the public is a place of public accommodation under ADA Title III, and in an existing facility the operator must remove architectural barriers such as an entry step when removal is readily achievable, meaning easily accomplishable without much difficulty or expense. The ADA is not limited to employers; that is Title I, a separate title with its own coverage. Offering to meet clients outside is an alternative method available only when removal is not readily achievable, not a first choice. The duty is affirmative, so it does not wait for a complaint, and the same analysis follows the firm's commercial clients into their own buildings.

A buyer client reports that a loan officer discouraged her from applying because part of her income comes from public assistance. What should the broker tell her?

• a.This violates HMDA reporting rules
• b.The Equal Credit Opportunity Act forbids this✓
• c.Lenders may discount that income
• d.Only state law reaches a lender's application practices

The Equal Credit Opportunity Act bars discrimination in any part of a credit transaction, including discouraging a reasonable applicant from applying, on the basis of race, color, religion, national origin, sex, marital status, age, or because income comes from a public assistance program. Public assistance income is expressly protected, so treating it as discountable is wrong. The Home Mortgage Disclosure Act requires covered lenders to report loan data and does not create this individual claim. Federal law plainly reaches the conduct, so pointing only to state remedies understates the buyer's options. The broker should document what the client reported.

A brokerage owner asks whether her firm must file Home Mortgage Disclosure Act reports on the loans her buyer clients obtain. What is the correct answer?

• a.Only for loans on properties with four or more units
• b.Yes, whenever the firm refers a buyer to a lender
• c.Yes, if the firm employs a licensed mortgage originator
• d.No; HMDA reporting falls on covered lenders, not brokerages✓

Home Mortgage Disclosure Act reporting obligations fall on covered financial institutions that originate or purchase mortgage loans, not on real estate brokerages, so the firm files nothing merely because its clients borrow. Referring a buyer to a lender does not convert the firm into a reporting institution, though referral arrangements raise separate RESPA questions about unearned fees. Employing a licensed loan originator implicates the SAFE Act and may make an affiliated lending entity a reporter, but that duty belongs to the lending entity. Property size does not determine coverage either.

Two competing brokerages agree that one will take listings north of the river and the other south of it, and neither will solicit in the other's area. This agreement is:

• a.An illegal market allocation among competing firms✓
• b.Lawful if the firms disclose the split to clients
• c.Price fixing, because it affects what consumers pay
• d.Lawful, since each firm may choose its own service area

Dividing territory between competitors is market allocation, a per se violation of the Sherman Act judged unlawful without any inquiry into whether it seemed reasonable. A firm may unilaterally decide where it wants to work; what is forbidden is the agreement with a rival to stay out of each other's territory. Disclosing the arrangement to clients does not cure it, because the injury runs to competition rather than to one client's information. Price fixing is a related but separate offense aimed at rates and fees, and this agreement restrains territory instead of price.

Several brokers agree among themselves to stop showing the listings of a discount firm, hoping it will leave the market. This conduct is best labeled:

• a.A lawful exercise of each broker's business judgment
• b.A tie-in arrangement among the cooperating firms
• c.Price fixing, because the target discounts its fees
• d.An illegal group boycott under antitrust law✓

A concerted refusal to deal with a competitor is a group boycott and a per se antitrust violation. Each broker deciding individually which properties to show is lawful business judgment; the agreement among rivals is what crosses the line, and that is the distinction candidates most often miss. A tie-in conditions the sale of one product on the purchase of another and is not present here. Price fixing means agreeing on what to charge, while these brokers are not setting their own rates but punishing a firm for setting lower ones.

A broker who owns vacant lots will sell a lot only to a buyer who agrees to list the finished house with the broker's firm. This condition is:

• a.A group boycott aimed at competing listing brokers
• b.A lawful contingency in the lot purchase contract
• c.Permissible if the listing terms remain negotiable
• d.An illegal tie-in arrangement, treated as a per se violation✓

Conditioning the lot sale on the buyer's promise to list the completed house ties two separate products together, making it a tie-in arrangement, one of the per se offenses alongside price fixing, market allocation, and group boycotts. Labeling it a contingency does not change its economic effect on the buyer. Negotiability of the listing terms is irrelevant when the buyer cannot obtain the lot at all without granting the listing. A group boycott requires an agreement among competitors to refuse to deal, and this broker is acting alone.

A seller asks the listing agent, 'Isn't six percent the standard commission around here?' Which response is both truthful and lawful?

• a.Confirm that six percent is customary in this market
• b.Explain that the rate is negotiable with this firm✓
• c.Say the local board publishes a recommended rate
• d.Decline to discuss commission with the seller at all

Commission is negotiable between each brokerage and its own client, so the honest answer states what this firm charges and that the rate is open to negotiation. Confirming a customary figure implies an industry-wide rate and invites a price-fixing inference against the firm. No board or association may publish or recommend a rate, and repeating such a claim compounds the problem. Refusing to discuss compensation at all fails the client and misreads the rule, which forbids agreement among competitors rather than conversation with a customer. Agents should also leave any board gathering where rivals begin comparing fees.

In one week a brokerage receives an earnest money check, a tenant's rent, an owner's repair advance, and a franchise rebate the firm earned. Which are trust funds?

• a.All except the firm's own franchise rebate✓
• b.All four of the items belong in the trust account
• c.Only court-ordered funds
• d.Only the earnest money check qualifies as trust money

Trust funds are money belonging to someone else that comes into the broker's hands in the course of the business, so earnest money, tenants' rent and deposits, and an owner's advance for repairs all qualify. The franchise rebate is the firm's own earned income and belongs in the operating account; putting it into trust is itself a form of commingling from the other direction. Limiting trust funds to earnest money ignores property management money entirely. And a court order is not what creates trust status; ownership of the money is.

A broker wants trust records that will stand up to a regulator's audit. Which set of practices best supports that goal?

• a.One combined ledger showing the account's running balance
• b.Monthly bank statements filed inside each transaction folder
• c.A ledger per property plus quarterly deposit slips
• d.A ledger per beneficiary reconciled to bank and book balances✓

Audit-ready trust records rest on a separate ledger for each beneficiary plus a routine reconciliation that ties three figures together: the bank statement balance, the broker's control or checkbook balance, and the total of all individual ledgers. A single running balance shows the account but never who owns what, so a shortage in one client's money can hide behind another's. Filing bank statements inside transaction folders scatters the record and defeats reconciliation entirely. A per-property ledger with deposit slips still leaves those three balances unproven, which is exactly what an examiner asks to see.

A bank charges a monthly service fee against a broker's trust account. May the broker keep any of the broker's own money in that account?

• a.Yes, a limited amount within the state's rules✓
• b.Only if every beneficiary signs a written waiver first
• c.No, personal funds in that account are always conversion
• d.Yes, up to a month of the firm's operating costs

Regulators commonly allow a broker to keep a small, documented amount of the broker's own money in the trust account, up to the limit the state sets, for the narrow purpose of covering bank service charges or meeting a minimum balance, and that limited exception is not commingling. Treating every personal dollar in the account as conversion overstates the rule, since conversion means actually using another's money for your own benefit. Client waivers cannot authorize what the rules do not permit. And parking a month of operating expenses there is precisely the abuse the narrow exception is written to prevent.

A broker withdraws $2,000 from the trust account to cover the firm's payroll, intending to replace it the following week. This act is properly called:

• a.Conversion of trust funds to the broker's use✓
• b.Commingling, because the funds were merely mixed together
• c.Permissible, since the money will be restored quickly
• d.A bookkeeping error cured by the later deposit

Taking trust money and spending it on the firm's own obligations is conversion, the most serious trust violation, and an intention to repay is not a defense. Commingling is the lesser offense of mixing trust and personal funds in one account without spending them, whereas here the money was actually used. Prompt restoration may reduce the harm but does not undo the violation or replace the missing funds in the meantime. Nor is this a posting mistake that a later deposit cures, because the withdrawal was deliberate. Regulators treat conversion as grounds for the harshest discipline available.

An office bookkeeper posts a deposit to the wrong client ledger, leaving one beneficiary short at month end. Who answers to the licensing authority?

• a.The broker, who remains responsible for the trust account✓
• b.The bookkeeper alone, as the person who made the error
• c.No one, because the shortage was entirely unintentional
• d.The bank, which processed the misposted deposit item

The trust account is the broker's account and the broker's responsibility, so delegating the bookkeeping never delegates accountability; the broker answers for the shortage and for restoring the beneficiary's funds. Blaming the employee alone misstates the law, because an unlicensed bookkeeper is not the regulator's licensee. Lack of intent may soften the severity of discipline but does not excuse a shortage in a client's money. The bank simply processed the item as instructed. This is why a broker reviews reconciliations personally and limits who may sign on the account under state rules.

A buyer and seller each demand the earnest money and refuse to sign any release. The broker wants a lawful way to be relieved of the deposit. What route exists?

• a.Return the deposit to whichever party first paid it
• b.Divide the funds evenly and close out the ledger
• c.Deliver the money to the party the listing agent favors
• d.File an interpleader action and let a court decide✓

Interpleader lets a stakeholder deposit disputed funds with a court, name the competing claimants, and step out of the fight, which is exactly the broker's position when both sides demand the same deposit. Returning the money to whoever paid it quietly decides the dispute in the buyer's favor. Splitting it evenly also decides the dispute, and neither party agreed to that outcome. Handing it to the party an agent believes is right substitutes the firm's judgment for the parties' contract. Until a release, a court order, or another lawful route resolves it, the money stays in trust.

A state investigator arrives at a brokerage and asks to review transaction files and trust records as part of a routine audit. How must the broker respond?

• a.Produce the records the investigator requests✓
• b.Require a subpoena first
• c.Provide only files the clients have authorized in writing
• d.Refer him to the firm's attorney

License law generally conditions the privilege of holding a license on making transaction and trust records available to the regulator, so the broker produces them; an audit is an administrative inspection rather than litigation. Demanding a subpoena treats the regulator as an adversary and is itself frequently charged as a violation. Client authorization is not required, because these are the firm's own business records kept under license law. Involving counsel makes sense when a matter turns serious, but a referral to the attorney is not a substitute for producing what the investigator may see.

A brokerage keeps every transaction file in a cloud service that all affiliated licensees can open. What is the supervising broker's chief compliance concern?

• a.Records must stay retrievable and access must be restricted✓
• b.Licensing authorities refuse to accept electronic files
• c.Cloud storage meets retention rules without any backup
• d.Confidentiality of a client file ends at the closing

Electronic recordkeeping is widely accepted, but the records must remain complete, legible, and retrievable for the period state law requires, and access must be limited to people with a business reason, because transaction files hold Social Security numbers, bank details, and confidential client information. Claiming regulators reject digital files is outdated. Cloud storage does not by itself satisfy retention, since a provider outage or a closed account can destroy the only copy, so a backup and an export plan matter. And the duty of confidentiality survives the closing rather than ending with it.

An affiliated licensee posts an online listing showing only her first name and cell number, with no mention of the brokerage anywhere. This advertisement is:

• a.Acceptable once she names the firm to a caller
• b.Acceptable, because personal branding is clearly permitted
• c.An unlawful blind ad concealing the firm's name✓
• d.Lawful for rental ads though not for sale listings

An advertisement that does not identify the brokerage is a blind ad, and advertising rules require the firm's name so consumers know who stands behind the offer. Naming the firm only when a caller asks comes too late, because the published ad is itself the violation. Personal branding is permitted, but it sits alongside the firm's name rather than replacing it. Nothing distinguishes rentals from sales for this purpose; a brokerage advertisement is a brokerage advertisement. A supervising broker should sweep the office's online and social content for the same defect.

A group of licensees within a firm advertises itself as 'Summit Elite Group' on social media and in text messages to prospects. What must the broker require?

• a.Nothing; team branding is exempt
• b.That the team register as a brokerage
• c.The firm's name in every team advertisement✓
• d.That team advertising run only on the firm's own website

A team is a marketing group inside the firm rather than a separate company, so every team advertisement must display the brokerage's name in whatever medium it appears, including social posts, text messages, signage, and video. Treating team branding as exempt is a common and expensive assumption. Registering the team as its own brokerage would require its own qualifying broker and is not what the team is asking to do. Confining team advertising to the firm's website is neither required nor practical, because the obligation is attribution, not a single channel.

A licensee posts 'JUST SOLD by our team!' beside a photo of a home her firm neither listed nor sold. What action should the broker take?

• a.Allow it if the post links to the listing broker
• b.Require only that the listing firm's name be added
• c.Allow it because closed sale data is public information
• d.Order it removed as a false and misleading advertisement✓

Claiming credit for a sale the firm neither listed nor sold is false advertising, and using another firm's listing in marketing without permission adds a second problem. The broker should have the post removed and the record corrected. A link to the listing broker does not repair a headline reading 'by our team.' Closed sale data may sometimes be shared where the source permits, but truthfulness still governs how it is presented. Adding the listing firm's name beneath a false claim of credit leaves the claim just as false.

A brokerage buys a list of expired listings and plans a telemarketing campaign to those owners. What does the federal Do-Not-Call Registry require?

• a.Calling freely, because real estate calls are exempt
• b.Nothing, since expired listings imply consent to be called
• c.Scrubbing the list and honoring internal opt-out requests✓
• d.Calling only owners who previously used the firm

Calls to expired-listing owners are telemarketing, so the firm must scrub its list against the national registry, maintain and honor its own internal do-not-call list, train its callers, and keep records of the process. An expired listing communicates nothing about consent. Real estate is not exempt as an industry; the exemptions that matter are an established business relationship and express written permission, and even those must be tracked and eventually expire. Limiting calls to former clients relies on that relationship, which is real but time-limited and does not describe a purchased list of strangers.

A homeowner advertises a house for sale by owner and publishes a phone number. A licensee wants to call and offer listing services. What does the rule allow?

• a.The published number permits any call to that owner
• b.The ad invites buyers, not solicitation calls✓
• c.Publishing a number creates an established relationship
• d.Registry rules never apply to residential sellers

A for-sale-by-owner advertisement invites inquiries about buying that specific property; it is not permission to call and solicit listing or other brokerage services, and regulators have treated that solicitation as covered telemarketing. Publishing a number does not create an established business relationship, which arises from a prior purchase, transaction, or inquiry with the firm itself. The registry rules apply to residential consumers generally, so sellers are not carved out of them. Before any such call the licensee should scrub the number and check the firm's own internal do-not-call list.

A brokerage emails a monthly commercial newsletter to thousands of past contacts. Which requirement does the CAN-SPAM Act place on that email?

• a.Prior written consent from every recipient
• b.Registration of the campaign with a federal agency
• c.Transmission only during ordinary business hours
• d.A working opt-out link and the sender's postal address✓

CAN-SPAM governs commercial email and requires a clear and conspicuous opt-out mechanism that keeps working for a period after the message is sent, a valid physical postal address, accurate header and routing information, and a subject line that is not deceptive. It uses an opt-out model rather than an opt-in one, so prior written consent is not the trigger, which is a frequent confusion with the text-message rules. No agency registration or filing exists for email campaigns. And time-of-day restrictions belong to telemarketing calls rather than to email.

A brokerage wants to send marketing text messages to consumer cell numbers using an automated dialing platform. What does the TCPA generally require first?

• a.Only that a number be absent from the state list
• b.Prior express written consent from each recipient✓
• c.Nothing, if a licensee personally drafts each message
• d.Merely a disclosure of the firm's name in the text

The Telephone Consumer Protection Act treats an autodialed or prerecorded marketing message to a cell number, a text included, as requiring prior express written consent from the recipient, and statutory damages run per message, which is why careless campaigns produce class actions. Screening against a state list addresses a different program and supplies no consent. Having a human draft the wording does not help when an automatic dialing platform sends it, because the statute focuses on the equipment and the consent. Identifying the firm is required in advertising generally but is not what makes the text lawful.

A buyer emails the broker's assistant that she just received revised wiring instructions from 'the title company' and is about to send her closing funds. What is the best response?

• a.Reply to that email to confirm
• b.Proceed, since the instructions came from the title firm
• c.Stop and verify by phone at a known number✓
• d.Refer her to the lender

A sudden change to wiring instructions is the signature of business email compromise, so the buyer should stop and confirm by telephone using a number she already had, never one supplied inside the suspect message. Replying to that same email reaches the criminal whenever the account is spoofed or compromised. Assuming the instructions are valid because they appear to come from the title company is exactly the trust the scheme exploits. And pushing the question to the lender abandons a client at the moment of greatest risk; brokers should warn clients about wire fraud in writing early and secure their own email.

A broker claims the firm's errors-and-omissions policy makes routine file review unnecessary. Why is that reasoning unsound?

• a.Coverage may pay some claims but never prevents violations✓
• b.Such policies cover only losses that clients cause
• c.Carriers contractually require weekly review of files
• d.A policy shifts license discipline onto the carrier

Errors-and-omissions coverage is a way to finance claims, not a control that stops them; it may fund a defense and a settlement but it cannot prevent a violation, and it does not answer license discipline, which is personal to the licensee and the broker. Saying such policies cover only client-caused losses inverts what the product insures. No carrier's contract substitutes a review schedule for the broker's own statutory duty to supervise. Insurers actually price on the quality of supervision, so weak oversight raises premiums or costs the firm its coverage.

A buyer's agent affiliated as an independent contractor asks the cooperating brokerage to pay her negotiated split directly at closing. How must the compensation flow?

• a.Directly from the cooperating firm, once the seller agrees
• b.Either way, since the split was already negotiated
• c.From the escrow account at her written direction
• d.Only through her own broker, who then pays her share✓

An affiliated licensee may accept compensation for licensed activity only from the broker who holds her license, so the cooperating firm pays her broker and her broker pays her, whatever her tax classification or how the split was negotiated. Consent from the seller or from the other firm cannot change that channel, because the rule preserves the supervising broker's accountability for the transaction and its money. A direction to escrow routes funds around the broker just as surely, and while some states let the broker pay the licensee's own licensed professional entity, the money still moves through her broker. And treating the negotiated split as authorization confuses the amount of the pay with its lawful source, a recurring cause of discipline.

A neighbor who holds no real estate license sends a broker three buyer referrals, and the broker offers him a share of each commission earned. This payment is:

• a.Allowed if no property is shown
• b.Allowed because a referral is not licensed activity
• c.Allowed when the buyer is told of it in writing
• d.Unlawful payment to an unlicensed person✓

Compensation for referring real estate business is compensation for licensed activity, so a broker generally may not pay a finder's fee or a commission share to an unlicensed person, and doing so exposes both the broker and the recipient. Whether the neighbor showed property is not the test; paying for the referral itself is. Disclosure to the buyer does not authorize a payment the license law prohibits. The narrow exceptions that do exist, such as a modest thank-you gift to a past client where state law permits, look nothing like a share of every commission earned.

A buyer is purchasing a home from a seller who is a foreign person for federal tax purposes. What should the broker flag about FIRPTA?

• a.The seller alone handles all federal withholding duties
• b.The buyer must generally withhold 15% of the amount realized✓
• c.The closing agent must withhold the full capital gain
• d.FIRPTA applies only to commercial income properties

Under FIRPTA the buyer is the withholding agent and must generally withhold 15 percent of the amount realized when the seller is a foreign person, remitting it to the IRS, with reduced rates or exemptions available in defined situations such as certain lower-priced residences the buyer will occupy. The duty does not rest on the seller, whatever the seller promises at the table. A closing agent often handles the mechanics, but the liability follows the buyer, and withholding is computed on the amount realized rather than on gain. FIRPTA is not limited to commercial property, so the broker should flag it early and send the parties to tax counsel.

At a residential closing, who ordinarily has the duty to report the gross proceeds of the sale to the IRS on Form 1099-S?

• a.The listing brokerage that earned the sale commission
• b.The settlement agent who closes the transaction✓
• c.The seller's own accountant after the year ends
• d.The buyer's lender that funded the purchase

Reporting gross proceeds on Form 1099-S is a settlement-agent function: the person responsible for closing the transaction files it, and the closing documents usually designate who that is. The listing brokerage reports its own commission income but never the seller's proceeds. The seller's accountant uses the form to prepare a return rather than issuing it. And a lender reports mortgage interest on a different form, not the sale price. A broker should confirm that someone has accepted the reporting role so the filing is not simply missed at the table.