Broker Only: Office, Supervision, Escrow, and Discipline
Area V is twelve scored items that appear on the broker examination and not the salesperson examination. It is the law of running a brokerage.
Place of business, records, and supervision
A resident broker must maintain a fixed office in Rhode Island, keep all business records on its premises, and prominently display the original license of the broker and of every affiliated salesperson (§ 5-20.5-7). The principal broker acts in a supervisory capacity for every transaction an affiliated licensee participates in and is responsible for the compliance of both affiliated licensees and non-licensed employees (regulation § 2.4). Failing to exercise adequate supervision is itself a ground for discipline (§ 5-20.5-14(16)) — though under § 5-20.5-15(b) a salesperson's violation is not cause to suspend the broker's own license unless the broker knew of it. Escrow ledgers are reconciled to the bank statements monthly, on a worksheet (regulation § 2.20(B)(6)). On dissolution the principal broker notifies the Department and returns the license within ten days (regulation § 2.11).
Commingling and escrow accounts
Client funds sit in a separate account at a federally insured Rhode Island institution, designated as a trust or escrow account on the deposit tickets, the checks and the monthly statement, and a licensee may not commingle them with his own or use them as his own (§ 5-20.5-26(a); regulation § 2.18(A)). A nominal amount of the licensee's own money to keep the account open or meet bank service charges is not commingling. Releasing a forfeited deposit to a seller requires sixty days' certified-mail notice to the buyer; returning one to a buyer requires twenty-one days' notice to the seller (regulation § 2.19(A), (B)). Where ownership of a deposit is genuinely disputed, the broker transmits it to the general treasurer within 180 days of the original deposit, after at least thirty days' written warning to the parties (§ 5-20.5-26(a)(1)(iv); regulation § 2.19(C)).
Ownership, investigations, and sanctions
Only a holder of a valid Rhode Island broker's license may have an ownership interest in, or participate in the operation of, a brokerage firm (§ 5-20.5-27). Any person may file a written complaint, and the Department may also investigate on its own authority against licensees, applicants and unlicensed persons (regulation § 2.16). Before refusing, suspending or revoking a license the Department gives notice; the licensee has twenty days to answer and gets at least twenty days' notice of the hearing (§ 5-20.5-15). An aggrieved party may appeal to a court of competent jurisdiction within thirty days of service of notice, posting a $1,000 cost bond (§ 5-20.5-16). Sanctions include refusal, suspension, revocation, probation of up to one year, and an administrative penalty of up to $2,000 per violation (§ 5-20.5-14).
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State-specific details
State exam facts
- Exam vendor
- Pearson VUE
- Prelicensing education
- 90 classroom hours
- Passing score
- Scaled score of 70
- Scored questions
- 140
- Time limit
- 240 minutes
Who regulates real estate brokers in Rhode Island?
The Rhode Island Department of Business Regulation, through the Real Estate Section of its Division of Commercial Licensing, sets the qualification requirements and licenses real estate brokers and salespersons under R.I. Gen. Laws chapter 5-20.5 and regulation 230-RICR-30-20-2. A nine-member Rhode Island Real Estate Commission sits inside the Department and has a policy-making role in the examinations. The Department contracts with Pearson VUE to deliver the exams, and your license application must be filed within one year of the date you pass.
What experience and education do I need before the Rhode Island broker exam?
R.I. Gen. Laws 5-20.5-4(b) requires a broker applicant to have been engaged full time as a real estate salesperson for at least the two years immediately before applying, and to have completed at least 90 hours of approved classroom study. The 45 hours used to qualify for your salesperson license cannot be counted toward the 90, and classroom hours more than four years old do not count (230-RICR-30-20-2 s 2.7(C)). The application also needs the names of three unrelated Rhode Island residents who have known you for three years and will attest to your reputation for honesty.
How is the Rhode Island broker exam structured?
Two separately scheduled and separately scored parts: a national/general section of 80 scored items in 2.5 hours, and a Rhode Island state section of 60 scored items in 1.5 hours, so the full exam runs about four hours. Each part also carries unscored pretest items (5 national, 10 state). Scores are scaled and 70 passes at all exam levels. The state section is weighted 3% duties and obligations, 10% licensing requirements, 37% statutory requirements governing licensee activities, 30% additional topics, and 20% broker-only material.
Does Rhode Island require errors and omissions insurance?
Yes. R.I. Gen. Laws 5-20.5-25 makes carrying and maintaining errors and omissions insurance a condition of retaining a broker's or salesperson's license, and a certificate of coverage must be filed with the Department by each annual renewal date. Regulation 230-RICR-30-20-2 s 2.28 sets the minimum for an individual licensee at $50,000 per claim and $150,000 in the aggregate; if your coverage lapses you must stop all licensed activity immediately and notify the Department within five business days.
What continuing education do Rhode Island licensees need?
Twenty-four clock hours of Department-approved courses in each two-year renewal period. At least nine of the 24 must come from the listed core subjects, and at least three of those nine must be federal, Rhode Island and local fair housing law (R.I. Gen. Laws 5-20.5-6(b); 230-RICR-30-20-2 s 2.30). Licensees first licensed before 12 December 1984, and Rhode Island attorneys licensed under 5-20.5-4(d), are exempt.
Sources: https://dbr.ri.gov/real-estate-and-commercial-licensing/real-estate, https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/094000.pdf, https://www.pearsonvue.com/content/dam/VUE/vue/en/documents/publications/094001.pdf, https://webserver.rilegislature.gov/Statutes/TITLE5/5-20.5/INDEX.htm, https://rules.sos.ri.gov/regulations/part/230-30-20-2
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