Louisiana Real Estate Broker Exam — All Questions

In Louisiana, a licensed salesperson or associate broker may lawfully accept a real estate commission:

• a.From the LREC as a state disbursement
• b.Only from the sponsoring broker who holds their license✓
• c.From the escrow agent at closing without the broker's involvement
• d.Directly from any buyer or seller in the transaction

R.S. 37:1446(F) is the rule in one line: an active real estate licensee shall not accept a commission or other valuable consideration for licensed activity from any person except their sponsoring or qualifying broker. Subsection A completes the circuit from the other end by forbidding any licensee to pay a commission to a person who is not licensed. So a buyer or seller paying the licensee directly would bypass the broker who is answerable for the transaction, and an escrow agent cutting a separate check to the licensee at closing does the same thing at the settlement table — Subsection E requires even compensation earned under a former broker to be transmitted through the current one. Payment from the Commission is a category error: the Commission licenses and disciplines, while a commission is private compensation earned under a brokerage agreement, not a disbursement of state money.

A Louisiana broker who operates a firm and supervises affiliated licensees is responsible for all of the following EXCEPT:

• a.Supervising the licensed activity of affiliated salespersons
• b.Maintaining the firm's trust/escrow account
• c.Retaining transaction records for the period required by LREC
• d.Personally guaranteeing each client a profit on resale✓

R.S. 37:1455(A)(10) makes guaranteeing, or authorizing any person to guarantee, future profits that may result from the resale of real property a cause for censure, suspension or revocation — no broker can lawfully promise a client a profit on resale. The other three are duties the law does impose. LAC 46:LXVII Section 1801 requires a broker who sponsors licensees to hold written policies and procedures ensuring that each sponsored licensee stays active and complies with the advertising and recordkeeping rules, and to maintain the sales escrow, rental trust and security deposit accounts. R.S. 37:1435(F) requires money received on behalf of clients to sit in a separate account, uncommingled with the licensee's own funds. And R.S. 37:1449(D) requires the broker to retain escrow bank statements, deposit slips, canceled checks and transaction documents, readily available and properly indexed, for five years. That supervisory and recordkeeping accountability is what the mandatory 30-hour Real Estate 203 Broker Responsibilities course of LAC 46:LXVII Section 5331(B)(3) exists to teach.

Under the Louisiana Residential Property Disclosure Act, the seller of residential property must generally provide the buyer with:

• a.A parish certificate showing the property taxes are paid current
• b.A completed property disclosure document listing known defects✓
• c.A certified appraisal of market value paid for by the seller
• d.A home warranty policy covering the major systems for one year

The Louisiana Residential Property Disclosure Act, R.S. 9:3196 et seq., requires the seller of residential real property to complete a property disclosure document on the form the Louisiana Real Estate Commission prescribes, disclosing at a minimum the known defects the Act defines in R.S. 9:3196(1) — conditions actually known to the seller that substantially affect value, impair health or safety, or shorten the property's normal life. R.S. 37:1455(A)(33) makes a licensee's failure to provide it a disciplinary cause. What the document reports is knowledge of condition, which is where the alternatives fall down. A tax certificate speaks to what is owed on the property, not to what is wrong with it. An appraisal is an opinion of value prepared for a lender or a party. And a warranty is an optional service contract someone may buy, not a disclosure of what the seller already knows.

A Louisiana broker who receives a client's deposit money must:

• a.Place it in a designated sales escrow/trust account✓
• b.Forward it immediately to the LREC for holding
• c.Deposit it into the broker's general business account
• d.Keep it in a personal safe deposit box until closing

R.S. 37:1435(F) gives the commission the right to require every licensee to deposit all monies received on behalf of clients in a separate account at a legally chartered financial institution, not commingled with the licensee's personal funds, and LAC 46:LXVII Section 2717 directs those funds into the appropriate sales escrow, rental trust or security deposit checking account. Depositing them into the general business account is commingling, which R.S. 37:1455(A)(6) makes a cause for suspension or revocation even when nothing is ultimately lost; failing to account for or properly disburse the money is separately actionable under (A)(4) and (A)(5). A personal safe deposit box is no better than the business account, because cash held outside any designated account can be neither reconciled nor inspected under R.S. 37:1435(D). And the commission regulates and inspects how brokers handle trust money — it is a regulator, not a depository. Note that Section 2713 permits only up to $2,500 of the broker's own money in each account, identified and used solely for bank service charges.

When a Louisiana salesperson receives an earnest-money deposit, the salesperson should:

• a.Deliver it promptly to the sponsoring broker✓
• b.Hold it personally until the seller accepts the offer
• c.Endorse it over to the buyer's attorney
• d.Deposit it into the salesperson's own account

R.S. 37:1455(A)(17) makes it a disciplinary cause for an associate broker or salesperson to fail to place, as soon after receipt as practicable, in the custody of his licensed broker any deposit money or other funds entrusted to him by a person dealing with him as the broker's representative. The salesperson practices under that broker's license and has no authority to hold client funds himself. Holding the money personally until the seller accepts delays the transfer the paragraph requires and leaves client money outside the account where LAC 46:LXVII Section 2717 says it belongs. Depositing it into the salesperson's own account is worse still, mixing a client's money with a licensee's own — the commingling R.S. 37:1455(A)(6) forbids. And endorsing the check over to the buyer's attorney routes it to a third party the salesperson had no authority to choose, when LAC 46:LXVII Section 2715 permits withdrawal from the account only on mutual written consent, a court order, a concursus deposit, or the other narrow grounds it lists.

If a dispute arises between a buyer and seller over who is entitled to escrowed deposit money, a Louisiana broker generally should:

• a.Transfer the funds to the broker's operating account for safekeeping
• b.Hold the funds in escrow pending written agreement or a court order✓
• c.Split the deposit equally between the parties without their consent
• d.Release the funds to whichever party contacts the broker first

LAC 46:LXVII §2901 tells the broker what to do when entitlement to escrowed funds is disputed, and none of it involves deciding the dispute: the broker sends written notice to all parties and licensees and then, within sixty days of the scheduled closing or of learning of the dispute, disburses on the written mutual consent of the parties, disburses on a court order, or places the money in the registry of a court through a concursus proceeding. Holding pending agreement or a court order is that rule stated shortly. Releasing the money to whichever party makes contact first turns a legal question into a race, and splitting it in half without consent is still the broker adjudicating, merely adjudicating in halves. Moving disputed funds into the operating account is the gravest of the three: R.S. 37:1455(A)(6) makes commingling a client's money with the broker's own a cause for suspension or revocation.

LAC 46:LXVII §2507 requires every printed advertisement for the sale or lease of residential real estate to show:

• a.The month and year the advertisement is printed or published✓
• b.The license number of the sponsoring or qualifying broker
• c.The assessed value of the property as shown on the parish roll
• d.The expiration date of the listing agreement being advertised

LAC 46:LXVII §2507(A) requires all printed advertisements for the sale or lease of residential real estate to indicate the month and year the advertisement is printed, published, or distributed, and treats a newspaper or trade publication bearing its own issue date as already compliant. The rule exists so a reader can tell how stale a price is. A license number is not what this rule commands, although §2505 separately requires that advertising be accurate and not misrepresent terms, value, or services. Assessed value is a tax-roll figure that has no fixed relation to market price and would mislead rather than inform. And the listing's expiration date is a term of the broker's contract with the seller under R.S. 37:1449(C); it is required in the agreement, not in the advertisement.

The last party signs a purchase agreement. Under R.S. 37:1449(B), the licensee must furnish every signer a copy bearing all signatures within:

• a.Twenty-four hours
• b.Ten business days
• c.Thirty days
• d.Five days✓

R.S. 37:1449 sets two different duties and it is worth keeping them apart. Subsection A requires that a principal signing any document be given a copy immediately after signing it. Subsection B then addresses documents that pertain to more than one party and requires each signer to receive a copy bearing the signatures of all parties within five days after the final signature is affixed. Twenty-four hours is the immediate-copy duty of Subsection A read into the wrong provision; a fully executed copy cannot always be produced that fast when signatures are gathered at different times and places. Ten business days and thirty days both exceed the statutory period, and delay here matters because the fully signed document is what fixes the deadlines the parties must then meet.

Under R.S. 37:1449(C), a Louisiana listing agreement or property management agreement must contain:

• a.A renewal clause operating unless the owner objects
• b.A broker's right to extend the term once
• c.A definite expiration date, free of qualifying terms✓
• d.A term of no more than six months

R.S. 37:1449(C) is a single sentence: written agreements for the sale or management of real estate shall specify a definite expiration date that shall not be subject to qualifying terms or conditions. Both halves do work. The date must be definite, so a listing that runs 'until sold' does not comply; and it must not be conditional, which is precisely what an automatic renewal is — a term that extends itself unless the owner takes action, leaving the owner bound by inaction. A unilateral right in the broker to extend fails the same test, since the ending date would then depend on the broker's later choice rather than being fixed when the owner signs. The statute sets no maximum length at all: a term longer than six months is lawful so long as its ending date is certain.

Under LAC 46:LXVII §3901, written offers and counteroffers for the purchase of real estate must be presented to the buyer or seller:

• a.Within forty-eight hours of the licensee receiving them
• b.Immediately, without delay✓
• c.After the sponsoring broker has reviewed and approved them
• d.At the next scheduled appointment with the client

LAC 46:LXVII §3901(A) requires all written offers and counteroffers to be presented to all buyers or sellers for their consideration and decision immediately, without delay; Subsections B and C add that the licensee must record the time of day and date the document was signed and the time and date it was accepted, rejected, or countered. Those timestamps are what make the immediacy rule enforceable. A forty-eight-hour allowance would legitimize exactly the delay the rule forbids, and delay is how a competing offer gets in front of a seller first. Making presentation wait on the sponsoring broker's review inserts a step the rule does not permit; supervision under §1801 operates through written policies, not by holding offers. And postponing to the next appointment lets the licensee's calendar decide when a client learns of an offer.

A broker has registered a business address with the commission and then opens a second office in another parish. Under R.S. 37:1444, that second office:

• a.May operate under the license already issued for the main office
• b.Must be registered with the clerk of court of the second parish
• c.Requires a separate branch office license✓
• d.Is allowed only if a second qualifying broker is designated for it

R.S. 37:1444 treats the address a broker registers with the commission as the place of business from which he conducts licensed activity, and then provides that if a broker conducts business from more than one place of business, a branch office license is required for each place maintained. The requirement follows the location rather than the person, which is why the main office license does not stretch to cover a second address. A parish clerk of court records instruments affecting immovables; it has no role in licensing an occupational premises. And the statute asks for a license for the office, not a second qualifying broker — one qualifying broker remains responsible for the firm, and LAC 46:LXVII §1801(E) confirms that where the broker is a business entity, the qualifying broker carries the supervisory duties.

R.S. 37:1449(D) requires a Louisiana broker to keep escrow bank statements, deposit slips, canceled checks, and transaction documents readily available and properly indexed for:

• a.Two years
• b.Three years
• c.Seven years
• d.Five years✓

R.S. 37:1449(D)(1) requires individual brokers to retain, readily available and properly indexed, bank statements, copies of deposit slips, and canceled checks on all escrow or trust accounts, together with copies of every document pertaining to transactions in which the broker or his sponsored licensees appeared in a licensing capacity — for a period of five years. Subsection E imposes the same period on corporate and partnership brokers. Two years and three years both fall short, and the shortfall matters because the retention period has to outlast the time in which claims and commission complaints can still surface. Seven years overstates what this statute requires. Five years is also the period LAC 46:LXVII §3703(D) sets for keeping a signed agency disclosure form, so the same figure governs the disclosure file.

A house in which a homicide occurred years ago is listed for sale. Under R.S. 37:1468, the fact of the homicide is:

• a.Not a material defect that must be disclosed in the transaction✓
• b.A material defect requiring written disclosure
• c.Disclosable only if the buyer asks about it
• d.Reportable to the commission before marketing

R.S. 37:1468(A) states that the fact or suspicion that a property is psychologically impacted — including that it was or was suspected to have been the site of a homicide, another felony, or a suicide, and including circumstances involving an occupant's HIV or AIDS status — is not a material fact or material defect regarding the condition of real estate that must be disclosed. Subsection B goes further and bars any cause of action against the owner or the agent for not disclosing it. That is why the written-disclosure choice is wrong even though it sounds cautious: the statute removes the event from the category of things the disclosure regime reaches. Making the duty depend on the buyer asking would reintroduce through the back door the very obligation Subsection A removes, and there is no reporting duty to the commission at all.

A licensee holding a listing buys the property for himself without telling the seller that he is the purchaser. Under R.S. 37:1455(A)(9), this is:

• a.Permissible so long as the licensee pays fair market value for it
• b.Acting as agent and undisclosed principal, a disciplinary cause✓
• c.Permissible if the licensee first resigns the listing agreement
• d.A violation only if the seller can prove an actual financial loss

R.S. 37:1455(A)(9) makes acting in the dual capacity of agent and undisclosed principal in any transaction a cause for censure, suspension, or revocation. The defect is the concealment, not the price, so paying full market value cures nothing — the seller was denied the knowledge he needed to judge his own agent's advice. The same paragraph shows what disclosure does: it carves out the licensee who is the seller or lessor of property he owns, or whose sole-proprietor real estate business owns it, provided the fact is disclosed to the buyer or tenant. Resigning the listing does not by itself fix matters either, since the information the licensee gathered as agent goes with him. And no proof of loss is needed; the violation is complete when the licensee occupies both roles undisclosed.