Rhode Island Real Estate Broker Exam — All Questions

In advertising by a Rhode Island real estate team, how must the brokerage name appear?

• a.Anywhere on the piece, in whatever size the principal broker has approved
• b.On the reverse of the material only, so that the team name leads the front
• c.Larger and more prominent than the team name, and in close proximity to it✓
• d.In the advertisement only when it runs in a printed newspaper or magazine

230-RICR-30-20-2 § 2.25(C)(1)(a) states that “the name of the Brokerage shall be displayed so that it is larger and more prominent than any included name of a Licensee or Team” and “should be in close proximity to the Licensee's name and/or Team's name.” Subsection (b) adds that a licensee or team name, except on a business card, must be smaller and less conspicuous than the brokerage name. The rule is medium-neutral: § 2.25(A) sweeps in signs, billboards, email, websites, social media and broadcast, and § 2.25(E)(2) requires the brokerage name and contact information on the home page and every viewable page of a licensee or team website. A team name must also contain the word “Team” or “Group” and may not use words such as Realty, Agency, Associates or Company that would read as a brokerage name.

A Rhode Island salesperson runs a classified ad for a listing giving only her own mobile number. What is this?

• a.A prohibited advertisement, because it reads as a sale by a private party✓
• b.A compliant advertisement, because classified listings are exempt from the rules
• c.A compliant advertisement, so long as the seller approved its exact wording
• d.A compliant advertisement, because her license number appears in the listing

R.I. Gen. Laws § 5-20.5-14(29) makes it a ground for discipline to advertise the property of another “in a manner indicating that the offer to sell, buy, exchange, rent, or lease that property is being made by a private party not engaged in the real estate business, or inserting advertisements in any publication containing only a post office or other box number, telephone number, or street address,” and it closes with the flat rule that “no salesperson shall advertise the property of another under his or her own name.” 230-RICR-30-20-2 § 2.25(C)(1) requires the brokerage name in all advertising and creates no exemption for classified advertisements. A seller cannot consent the licensee out of a licensing rule, and a license number is not a substitute for the brokerage name the rule demands.

From whom may a Rhode Island salesperson accept a commission for licensed activity?

• a.Only from the licensed broker with whom the salesperson is affiliated✓
• b.From the cooperating broker who represented the buyer in the same transaction
• c.From any party to the transaction who agrees in writing to pay the salesperson
• d.From the seller directly, whenever the listing agreement expressly allows it

R.I. Gen. Laws § 5-20.5-14(12) makes it a ground for discipline for a salesperson to accept “a commission or any valuable consideration ... from any person, except the licensed real estate broker with whom he or she is affiliated.” The matching prohibition runs the other way in § 5-20.5-14(31), which bars a licensee from sharing a commission with anyone who is neither a licensed broker nor a salesperson employed by that licensee. Even a seller's extra incentive payment is routed through the broker: 230-RICR-30-20-2 § 2.21(C) requires a written agreement and requires the payment to be distributed to the licensee by the principal broker with whom he or she is affiliated. Cooperating brokers settle between brokers, not with the other firm's salesperson.

How long does a Rhode Island employing broker have to notify the director that a salesperson's affiliation has ended?

• a.Thirty days, in writing
• b.Ninety days, in writing
• c.Sixty days, in writing
• d.Ten days, in writing✓

R.I. Gen. Laws § 5-20.5-14(33) makes it a ground for discipline where there is a “failure of the employing broker to notify the director, in writing, within ten (10) days of the termination of a salesperson's employment or contractual relationship,” and it imposes the identical ten-day written duty on the salesperson for any change in broker affiliation. Ten days is the recurring interval in this scheme: 230-RICR-30-20-2 § 2.3 gives a licensee ten days to report a change of name, firm affiliation or address, § 2.4(E)(3) gives a principal broker ten days to report a change in that status, and § 2.11 gives ten days to return licenses on dissolution of a brokerage. On disaffiliation § 2.10 also requires the new brokerage's principal broker to sign and submit a transfer form.

Within what period must a Rhode Island principal broker account for and pay an affiliated licensee's share of a commission?

• a.Ten calendar days from the principal broker's receipt of the commission✓
• b.Thirty calendar days from the end of the month in which it was received
• c.Sixty calendar days from the recording of the deed in the land records
• d.Three business days from the closing of the underlying real estate sale

230-RICR-30-20-2 § 2.21(A) provides that unless a written agreement between the principal broker and the affiliated licensee, cooperating broker and referring broker expressly says otherwise, all commissions due “shall be subject to an accounting and payment ... no later than ten (10) calendar days from the receipt of such commission by the principal broker.” The clock therefore runs from the broker's receipt of the money, not from the closing or from the recording of the deed. A separate and longer clock covers departures: under § 2.21(B) every principal broker must have a written, signed policy on commissions payable after termination and must render a complete written accounting within thirty days of the termination.

An unlicensed person negotiates a Rhode Island sale, is not paid, and sues the seller for the fee. What follows?

• a.The action succeeds, because the seller accepted the benefit of his work
• b.The action fails, because he held no broker license when he did the acts✓
• c.The action succeeds if he obtains a broker license before the trial date
• d.The action is stayed until the Department decides whether to license him

R.I. Gen. Laws § 5-20.5-21 provides that “no person shall maintain an action in any court of this state for the recovery of a commission, fee, or compensation for any act done, the doing of which is prohibited under this chapter to other than licensed brokers, unless that person was licensed under this chapter as a broker at the time of the doing of the act.” The test is the licensing status at the time of the act, so a license obtained later does not revive the claim, and the seller's acceptance of the benefit does not cure it. Acting without a license is separately a misdemeanor under § 5-20.5-17(a), and § 5-20.5-17(b) exposes the unlicensed person to a penalty of up to three times any money actually received. The Department has no power to stay a civil action.

When must a Rhode Island licensee disclose in writing that he intends to buy part of the property he is selling?

• a.At the closing, when the settlement statement is signed by both parties
• b.At the first point of personal contact, and no later than making an offer✓
• c.Within ten days after the purchase and sale agreement has been executed
• d.Only if the seller asks the licensee whether he holds such an interest

230-RICR-30-20-2 § 2.21(G) requires that “in any real estate transaction, a licensee shall at the first (1st) point of personal contact, but no later than making an offer to purchase, disclose in writing” whether the licensee has an ownership interest in the property, will be purchasing any portion of it, has a business interest in a party, or is representing a family or household member. R.I. Gen. Laws § 5-20.5-14(13) reaches the same conduct from the discipline side, making it a ground for revocation to fail to disclose an intention to acquire, directly or through a third party, an interest in property listed with the licensee's office. The duty is affirmative, so it does not wait for the seller's question, and disclosure at the closing or ten days after the agreement comes far too late to inform the seller's decision.

May a Rhode Island licensee act for more than one party in the same transaction?

• a.Yes, provided the licensee tells each party orally before an offer is made
• b.Yes, with the knowledge and written consent of every party acted for✓
• c.Yes, provided the principal broker approves the arrangement in advance
• d.No, a licensee may not act for more than one party in any circumstance

R.I. Gen. Laws § 5-20.5-14(7) makes it a ground for discipline to act “for more than one party in a transaction without the knowledge and consent, in writing, of all parties for whom he or she acts,” so consent is required and it must be written rather than oral. Chapter 5-20.6 supplies the machinery: § 5-20.6-6(a) permits a licensee to assist both clients only as a neutral dual facilitator, and § 5-20.6-6(c) requires the informed written consent of the principal broker and of all parties before an offer is presented. The principal broker's approval is necessary but not sufficient, since the parties' own consent is what § 5-20.5-14(7) demands. And the arrangement is not forbidden outright — § 5-20.6-6(b) contemplates it, subject to the neutrality and confidentiality duties in § 5-20.6-6(c)(1) through (4).

What does the Department's regulation require of a Rhode Island client representative about property facts?

• a.Verifying facts only where the buyer pays for a separate investigation
• b.Repeating only what the seller has entered on the state disclosure form
• c.A diligent effort to learn them, and written disclosure of material facts✓
• d.Withholding facts likely to reduce the price the client would accept

230-RICR-30-20-2 § 2.22(B) requires every licensee to “make a diligent effort to ascertain all pertinent information and facts, including but not limited to lot size, zoning, presence or absence of town water or sewer connection,” and provides that the client representative “shall reveal, in writing, all information and facts material to any transaction to his or her client and when appropriate to any other party,” expressly including any conflicts of interest the licensee can reasonably anticipate. Section 2.22(A) adds that all licensees shall deal fairly with all parties. Passive repetition of the seller's form is not a diligent effort; the licensee's duty does not depend on who pays for an inspection; and suppressing a material fact to protect a price is the “bad faith, dishonesty, untrustworthiness, or incompetence” that § 5-20.5-14(20) punishes.

How does Rhode Island treat the fact that a homicide once occurred in a house being sold?

• a.It is a material fact that the seller's agent must disclose in writing
• b.It is a material fact that must be entered on the seller disclosure form
• c.It is not a material fact, so this chapter requires no disclosure of it✓
• d.It must be disclosed only to a buyer who intends to occupy the property

R.I. Gen. Laws § 5-20.8-6(a) provides that “the fact or suspicion that real property may be or is psychologically impacted is not a material fact requiring disclosure in any real estate transaction,” and it defines psychologically impacted to include property suspected of having been the site of “a homicide, other felony, or suicide” as well as occupancy by a person with HIV or AIDS or a similar condition unlikely to be transmitted by occupying a dwelling. Section 5-20.8-6(b)(1) bars any cause of action against the seller or agent for not disclosing it. The rule has one hard limit that candidates miss: § 5-20.8-6(b)(2) says the provision is never authorization “for an agent or seller to make any misrepresentation of fact or false statement,” so a licensee asked directly may not lie. The buyer's intended use makes no difference.

When must a Rhode Island licensee furnish a copy of a listing, sale, or lease contract to those who signed it?

• a.Within three days after its execution
• b.At the closing of the transaction
• c.Within ten days after its execution
• d.At the time the contract is executed✓

R.I. Gen. Laws § 5-20.5-14(9) makes it a ground for discipline to fail “to furnish a copy of any listing, sale, lease, or other contract relevant to a real estate transaction to all signatories of the contract at the time of execution.” The phrase is “at the time of execution,” so nothing later satisfies it, and the duty runs to every signatory rather than to the client alone. Related timing rules do use days, which is what makes the wrong answers tempting: § 5-20.5-14(37) gives a broker ten days from a written release signed by all parties to pay out escrowed money in a failed transaction, and § 5-20.8-4(a) gives a buyer a ten-day inspection period. Neither governs handing over the signed contract itself.

How long must a Rhode Island licensee preserve the records of a real estate transaction?

• a.Three years following its consummation✓
• b.Five years following its consummation
• c.Seven years following its consummation
• d.One year following its consummation

R.I. Gen. Laws § 5-20.5-14(6) makes it a ground for discipline to fail “to preserve for three (3) years following its consummation records relating to any real estate transaction as described in the regulations issued by the department.” The same three-year period governs escrow records under § 5-20.5-26(a)(1)(i) and under 230-RICR-30-20-2 § 2.20(A), which requires records of all funds and property of others to be kept for not less than three years from the date of receipt. Section 2.20(B) then lists what those records must include — bank statements, canceled checks, journals or check stubs, contracts and leases, and closing statements — and requires the ledgers to be reconciled to the bank statements monthly. Section 2.20(C) makes all escrow records available to the Department on demand.

At what point must a customer's deposit money reach a Rhode Island broker's escrow account?

• a.Upon execution of the purchase and sales agreement✓
• b.Upon the buyer's mortgage commitment being issued
• c.Upon the seller accepting the buyer's first written offer
• d.Upon the closing attorney requesting the deposit funds

R.I. Gen. Laws § 5-20.5-14(5) makes it a ground for discipline to fail to deposit customers' funds “into an escrow account maintained by the broker that complies with the requirements set forth in § 5-20.5-26, upon execution of a purchase and sales agreement.” 230-RICR-30-20-2 § 2.18(A)(4) tracks it: funds designated for escrow are deposited “promptly after the execution of the purchase and sales agreement” or, for a rental, promptly after receipt — and § 2.2(A)(10) defines “promptly” as not more than ten calendar days. Section 2.18(A)(3) sends the funds to the escrow account of the principal broker of the seller or landlord unless the parties agree otherwise in writing. Neither a mortgage commitment nor a request from the closing attorney has anything to do with the trigger.

A Rhode Island salesperson takes a buyer's deposit check. What does the regulation require her to do?

• a.Turn it over to her principal broker promptly, meaning within ten days✓
• b.Hold it in her own client account until the parties reach a closing date
• c.Deposit it with the buyer's attorney within three business days of receipt
• d.Endorse it to the seller as soon as the seller has signed the buyer's offer

230-RICR-30-20-2 § 2.18(B) is headed “Salespersons and Teams are Prohibited from Holding Client Funds,” and § 2.18(B)(1) requires an affiliated licensee to “turn over all deposit monies received promptly to his or her principal broker or, at the direction of the principal broker, deposit the funds in the principal broker's escrow account.” Section 2.2(A)(10) defines “promptly” as not more than ten calendar days. A salesperson may not run a client account of her own, and § 2.18(B)(2) forbids a team from keeping any escrow account separate from the principal broker's. Section 2.18(C)(3) is equally blunt about the last option: a licensee who receives deposit funds payable directly to him or her shall not turn the funds over to a seller.

What must every Rhode Island listing agreement say about when the listing ends?

• a.A rolling term renewing automatically unless the owner objects in writing
• b.A term running until the property sells at the price the owner has set
• c.A term fixed by the multiple listing service to which the broker belongs
• d.A definite expiration date requiring no notice of termination by the owner✓

R.I. Gen. Laws § 5-20.5-14(21) requires all listing agreements to be in writing, properly identifying the property and containing all the terms and conditions of the sale, the commission to be paid, the signatures of all parties concerned, and “a definite expiration date in that contract that shall not require an owner to notify a broker of his or her intention to terminate.” Section 5-20.5-14(10) states the same rule as a prohibition on failing to specify a definite termination date not subject to prior notice. That is precisely what rules out an automatically renewing term. The agreement must also indicate clearly whether it is an exclusive agency or an exclusive right to sell, and under 230-RICR-30-20-2 § 2.26(A) it may not carry a pre-printed commission rate or amount.

A Rhode Island seller asks the broker to keep everything above four hundred thousand dollars as the fee. What must the broker do?

• a.Accept it, provided the arrangement is written into the listing agreement
• b.Decline the arrangement, because a net listing is prohibited in this state✓
• c.Accept it, provided the seller signs a separate written acknowledgment
• d.Accept it, provided the broker discloses the arrangement to the buyer

R.I. Gen. Laws § 5-20.5-14(22) makes “accepting a listing based on ‘net price’” a ground for discipline and prescribes the cure: “in cases where the owner wishes to list in this manner, the agreed-upon commission is added and listings made in the usual manner.” 230-RICR-30-20-2 § 2.26(D) puts it flatly — “no licensee shall enter into a ‘net listing’ contract for the sale of real property, or any interest therein” — and § 2.2(A)(9) defines the term as an authorization to sell at a specified net return with the broker keeping the difference. Because the prohibition is on the arrangement itself, no amount of writing, acknowledgment or disclosure to the buyer makes it lawful. The broker converts it instead into an ordinary listing at a stated price with a stated commission.

A Rhode Island brokerage offers a prize drawing to anyone who tours its new subdivision. How is this treated?

• a.As allowed, if the drawing is open to buyers and sellers on equal terms
• b.As prohibited, being a contest used to influence prospective purchasers✓
• c.As allowed, if the value of the prize is under five hundred dollars
• d.As allowed, if the rules of the drawing are filed with the Department

R.I. Gen. Laws § 5-20.5-14(18) makes it a ground for discipline to solicit, sell or offer real property for sale “by offering free lots or conducting lotteries or contests or offering prizes for the purpose of influencing a purchaser or prospective purchaser of real property.” The statute attaches no value threshold, no filing procedure and no even-handedness exception, so none of the conditions offered rescues the drawing. The neighboring provisions police the same instinct from other directions: § 5-20.5-14(19) forbids paying, accepting or charging any undisclosed commission, rebate or profit, and 230-RICR-30-20-2 § 2.25(H)(7) bars advertising rebates, discount plans or coupons where the offer is likely to confuse or mislead a reasonable person.

A Rhode Island licensee talks a buyer into breaking a signed contract so he can write a replacement and earn the fee. What is this?

• a.Permissible conduct, because a buyer may cancel any contract before closing
• b.Permissible conduct, if the replacement contract is on better buyer terms
• c.A matter for the courts alone, and outside the Department's jurisdiction
• d.A ground for discipline, because the substitution serves his personal gain✓

R.I. Gen. Laws § 5-20.5-14(11) makes it a ground for discipline to induce “any party to a contract, sale, or lease to break that contract for the purpose of substitution in lieu of that contract a new contract, where that substitution is motivated by the personal gain of the licensee.” The licensee's motive is the whole of the test, so terms that happen to favor the buyer do not excuse it, and a buyer's general freedom to negotiate is not a licensee's freedom to procure a breach. The Department plainly has jurisdiction: § 5-20.5-14(a) lets the director act on his own motion and obliges him to act on a written verified complaint, and § 5-20.5-14(b) authorizes an administrative penalty of up to two thousand dollars in addition to any court remedy the injured party pursues.

A Rhode Island licensee tells a buyer she does not need a lawyer at the closing. What does the license law say?

• a.It is a ground for discipline to advise against the services of an attorney✓
• b.It is permitted where the licensee has completed an approved contracts course
• c.It is permitted where the brokerage supplies a standard form of agreement
• d.It is permitted where the buyer pays cash and takes no mortgage financing

R.I. Gen. Laws § 5-20.5-14(25) lists “advising against the use of the services of an attorney in any real estate transaction” among the acts for which the director may refuse, suspend or revoke a license. The prohibition is unqualified: it does not turn on the licensee's education, on the form of contract the office uses, or on whether the transaction involves a mortgage. It marks the boundary of the license, and the same boundary appears in 230-RICR-30-20-2 § 2.27, which forbids a licensee who is not a certified appraiser from calling any valuation an appraisal. Rhode Island reinforces the point on the other side of the line by exempting attorneys from the licensing requirement in § 5-20.5-2(b)(1).

May an attorney admitted by the Rhode Island Supreme Court sell real estate for others without a broker license?

• a.No, an attorney must first obtain a Rhode Island salesperson's license
• b.No, unless the attorney has also completed the ninety classroom hours
• c.Yes, because attorneys at law are excluded from the chapter's definitions✓
• d.Yes, but only when acting under a written power of attorney from the owner

R.I. Gen. Laws § 5-20.5-2(b)(1) provides that the chapter “is also not to be construed to include ... any attorney at law licensed by the supreme court of the state nor any person holding in good faith an executed power of attorney from the owner, authorizing the final consummation and execution for the sale, purchase, leasing, or exchange of real estate.” Those are two separate exemptions, so the attorney needs no power of attorney to rely on the first. An attorney who does want the credential gets it on easy terms rather than hard ones: § 5-20.5-4(d) grants a license without examination on application and payment of the fee, and 230-RICR-30-20-2 § 2.30(D)(2) exempts such an attorney from continuing education. The ninety classroom hours in § 5-20.5-4(b) apply to ordinary broker applicants.

How must a Rhode Island licensee who is not a certified appraiser label a value figure prepared for a listing?

• a.As an appraisal, provided the licensee holds a broker rather than a sales license
• b.As an appraisal, provided the seller asked the licensee for a value figure
• c.As a comparative market analysis or broker price opinion, not an appraisal✓
• d.As either term, because the two words carry the same meaning in practice

230-RICR-30-20-2 § 2.27(A) prohibits licensees who are not licensed or certified under chapter 5-20.7 “from describing or referring to any valuation of real estate as an appraisal,” and § 2.27(B) permits a broker price opinion or comparative market analysis provided the licensee discloses that it is not an appraisal conforming to the Uniform Standards of Professional Appraisal Practice and includes the disclaimer the regulation sets out word for word. The statutory definition agrees: § 5-20.5-1(3) defines a licensee's “opinion of value” and expressly excludes an appraisal prepared under chapter 5-20.7. Holding a broker rather than a salesperson license changes nothing, and a client's request cannot enlarge the scope of a license.

A Rhode Island licensee pleads nolo contendere to a misdemeanor. What does the regulation require?

• a.A written report to the Department within ten days of the arraignment date
• b.No report at all, unless the offense arose out of a real estate transaction
• c.A written report to the principal broker, who decides whether to report it
• d.A written report to the Department within sixty days of the final judgment✓

230-RICR-30-20-2 § 2.13 requires that “any licensee convicted of, or otherwise pleads guilty or nolo contendere to, any felony or misdemeanor, or is disciplined by any governmental agency in connection with any other occupational license, shall file with the Department a written report of such conviction or disciplinary action within sixty (60) days of the final judgment or final order in the case.” The trigger is the final judgment, not the arraignment; the report goes to the Department rather than to the principal broker; and the duty reaches any felony or misdemeanor, whether or not it arose from a real estate transaction. A separate provision, § 5-20.5-14(14), makes conviction of or a nolo plea to a felony involving dishonesty or breach of trust its own ground for discipline.