West Virginia Real Estate Broker Exam — All Questions

A West Virginia broker never holds money for another party, delivering every deposit straight to a neutral escrow depository. Under the license act, that broker:

• a.must still open a trust fund account and reconcile it monthly
• b.is not required to maintain a trust fund account✓
• c.must obtain the Commission's written waiver of the account requirement
• d.must maintain a trust fund account with a zero balance on file

W. Va. Code §30-40-18(a) requires a trust fund account of "[e]very person licensed as a broker under the provisions of this article who does not immediately deliver all funds received, in relation to a real estate transaction, to his or her principal or to a neutral escrow depository," and then adds the proviso that "nothing contained herein shall require a broker to maintain a trust fund account if the broker does not hold any money in trust for another party." The duty follows the money. A broker who routes every dollar to escrow has nothing to segregate, so an empty account, a waiver application, and a monthly reconciliation of nothing all impose paperwork the statute does not ask for. The moment such a broker does hold a deposit, the obligation to maintain and reconcile an account attaches.

The maximum amount of a West Virginia broker's own money that may be kept in the broker's trust fund account to maintain a minimum balance is:

• a.nothing, because any amount is commingling
• b.$100✓
• c.$50
• d.$500

W. Va. Code §30-40-18(f) forbids a broker to commingle his own funds with trust funds or to pledge the account as collateral, "Provided, That nothing contained herein prevents the broker from depositing a maximum of $100 of his or her own money in the trust fund account to maintain a minimum balance in the account." The allowance exists because banks impose minimum balances, and the figure is capped so the account cannot become a place to park brokerage money. Saying no amount is permitted reads the prohibition without its proviso. The $50 and $500 figures appear nowhere in the section. Related to the same cap, §30-40-18(i)(7) requires the financial institution to certify that it does not require a minimum balance in excess of the amount authorized.

Under the license act, a West Virginia broker's trust fund account may earn interest:

• a.only if specifically authorized by Commission rule✓
• b.whenever the broker's financial institution offers an interest-bearing option
• c.only on funds held longer than sixty days
• d.only if the broker credits the interest to the brokerage's operating account

W. Va. Code §30-40-18(e) provides that "[n]o trust fund account may earn interest or any other form of income, unless specifically authorized by commission rule." The Commission has authorized it narrowly. Rule 174-1-15.4 permits a transfer into an interest-bearing trust account only under a written agreement of all parties to the transaction that authorizes the transfer, identifies the financial institution and account type, states who earns the interest, and states how and when it will be disbursed. Rule 174-1-15.4.b then forbids any interest, privilege, or other compensation from the account to benefit the broker or any other licensee, which is what makes the last answer the exact conduct the rule prohibits. The bank's product menu and the length of the holding period are not the conditions the statute names.

A West Virginia broker opens a new trust fund account at a different bank. The broker must notify the Commission of the change within:

• a.three business days
• b.five business days
• c.ten days✓
• d.thirty days

W. Va. Code §30-40-18(k) requires that "[t]he broker shall notify the commission, within 10 days of the establishment of or any change to a trust fund account." The notice matters because §30-40-18(i) requires the financial institution holding the account to execute a Commission-prepared statement identifying the exact account title, the account number, everyone authorized to withdraw, and a certification that the bank will tell the Commission if any check drawn on the account is returned for insufficient funds. Ten days is also the period §30-40-17(a)(3) and rule 174-1-10.4 allow for notifying the Commission of an office address change. The three-day, five-day, and thirty-day figures do not appear in §30-40-18.

A West Virginia salesperson receives an earnest money check on Thursday afternoon. Under the Commission's rules, the salesperson must deliver it to the responsible broker:

• a.within three business days of receipt
• b.at the weekly office meeting following receipt
• c.immediately or by the next business day after receipt✓
• d.when the seller accepts the offer the check accompanies

Rule 174-1-15.2 requires every salesperson and associate broker who receives trust funds to "immediately or by the next business day following receipt pay over or deliver the trust funds to the responsible broker." Rule 174-1-15.3 imposes the matching duty on the broker, who must deposit the funds into the trust account immediately or by the next business day unless the signed purchase agreement directs or allows otherwise. Together the two rules keep client money in the brokerage's controlled account rather than a licensee's desk drawer. Three business days, a weekly meeting, and acceptance of the offer all describe delays the rules do not authorize, and W. Va. Code §30-40-19(a)(8) separately makes a failure to account for or remit money belonging to others a ground for discipline.

Under the license act, signature authority over a West Virginia brokerage's trust fund account is held by:

• a.any salesperson the broker designates in writing
• b.the brokerage's bookkeeper, under the broker's supervision
• c.the broker as trustee and at most one other licensed officer✓
• d.the broker and the closing attorney jointly on every disbursement

W. Va. Code §30-40-18(g) makes the broker "the designated trustee of the account" who "shall maintain complete authority and control over all aspects of each trust fund account, including signature authority," and then allows one narrow addition: "only one other member or officer of a corporation, association, or partnership, who is licensed under the provisions of this article, may be authorized to disburse funds from the account," with one further signatory permitted if disbursements require two signatures. Both limits matter: the second person must be a member or officer of the entity and must be licensed. That excludes a salesperson who is neither, and an unlicensed bookkeeper who may keep the ledgers but may not sign. The closing attorney has no role in the brokerage's account.

A West Virginia seller refuses to close through no fault of the buyer, and the contract dies. As to the earnest money the broker holds, the broker:

• a.must remit the full deposit to the Commission for disposition
• b.may retain the amount of the commission the sale would have produced
• c.may retain a reasonable sum for costs actually advanced on the listing
• d.has no right to any of it absent agreement of the parties or a court order✓

Rule 174-1-10.6 provides that when a seller "fails, refuses, neglects or is unable to consummate the transaction as provided for in the contract and, through no fault or neglect of the purchaser, the real estate transaction cannot be completed, the broker has no right to any portion of the earnest money paid by the purchaser except by agreement of the parties or by court order." The deposit is the buyer's money in the broker's trust, and a broker who takes any of it unilaterally is converting client funds under W. Va. Code §30-40-19(a)(8) and (9). A lost commission and advanced marketing costs may be claims against the seller, but they are not liens on the buyer's deposit. And the Commission is a regulator, not a stakeholder for disputed funds.

Under the license act, a West Virginia broker may transact real estate business at a second location in the state:

• a.only if the Commission has licensed it as a branch office✓
• b.if a licensed associate broker is present during business hours
• c.if the broker notifies the Commission of the additional location
• d.if the location is within the same county as the main office

W. Va. Code §30-40-17(a)(1) requires every broker to have and maintain a definite place of business in West Virginia, designated in the license certificate, and provides that "the broker may not transact business at any other location within this state, unless such other location is properly licensed by the commission as a branch office." A nonresident broker who maintains a definite place of business in his own jurisdiction is not required to keep a West Virginia office. Rule 174-1-14.1 requires an application and fee for a branch office license certificate for each such location, so a notification does not substitute for a license. County lines and staffing are not the test the statute uses; licensure of the location is.

A West Virginia broker sets up a temporary shelter in a subdivision she is selling, where licensees are not permanently assigned and no transactions are closed. Under the Commission's rules, that shelter:

• a.is a branch office and must be licensed before it opens
• b.is not considered a branch office✓
• c.is a branch office unless it operates for fewer than ninety days
• d.is not a branch office only if it displays no signage

Rule 174-1-14.1 requires a branch office license for any location other than the principal place of business, then carves out one case: "A temporary shelter in a subdivision being sold by the broker, for the convenience and protection of licensees, clients and customers and at which transactions are not closed and licensees are not permanently assigned, is not considered to be a branch office." The rule adds that "[t]he permanence, use and character of activities conducted at the office or shelter shall determine whether it must be registered," which is why the exemption turns on those facts and not on a day count or on signage. A shelter where closings happened, or where licensees were stationed, would fall outside the carve-out and need a license.

A West Virginia broker licenses a branch office and appoints a salesperson to manage it. Under the Commission's rules, that manager must be an active licensee with at least:

• a.six months of actual experience
• b.one year of actual experience
• c.five years of actual experience
• d.two years of actual experience✓

Rule 174-1-14.2 requires every broker who obtains a branch office license to "designate one associate broker or salesperson as manager of each branch office," and provides that if the broker appoints a manager rather than serving as manager himself, "the licensee must be an active licensee and have at least two (2) years actual experience." The rule lets the broker manage a branch personally if he is capable of adequately supervising everyone assigned to it. Six months, one year, and five years appear nowhere in the section. Note that the two-year figure here concerns who may run a branch, not who may be licensed as a broker; the broker qualification in W. Va. Code §30-40-12 is stated in closed transactions rather than years.

Under the Commission's rules, the sign at the entrance of a West Virginia brokerage office must display the broker's name, the term "Broker," and the company name in lettering of at least:

• a.three inches in height
• b.two inches in height
• c.one inch in height✓
• d.four inches in height

Rule 174-1-13.1 requires all brokers holding an active license to "erect and maintain a sign on or about the entrance of their principal office and each branch office, which shall be easily observed and read by persons about to enter any of the offices," and provides that "[e]very sign shall prominently display the name of the broker, the term 'Broker' and the company name, with all lettering not less than 1 inch in height." Salespersons' and associate brokers' names may be added below the broker's. Rule 174-1-13.2 extends the duty to a broker renting desk space in someone else's office, who must post a sign on the main entrance door or immediately adjacent to it. The two-, three-, and four-inch figures do not appear in the rule.

Under the license act and the Commission's rules, a West Virginia broker must preserve transaction and trust account records for at least:

• a.two years following consummation
• b.three years following consummation
• c.five years following consummation✓
• d.seven years following consummation

W. Va. Code §30-40-19(a)(28) makes it a ground for discipline to fail "to preserve for five years following its consummation, records relating to any real estate transaction," and rule 174-1-10.3 requires every broker to maintain all records required by the Commission for a minimum of five years, naming books, contracts, closing documents, and trust account records. The rule permits any electronic format accessible to the Commission and requires the records to be produced on request and open to inspection at the broker's usual place of business during regular business hours, with enough space for the inspection to proceed without interference. Two, three, and seven years are not the figure either text uses. Rule 174-1-18.4 applies the same five-year period to records of prize and gift promotions.

A West Virginia corporation seeks a broker's license through one of its officers. Under the Commission's rules, the corporation's governing body must execute:

• a.a certificate of good standing from the Secretary of State
• b.an indemnity bond naming the Commission as obligee
• c.a notarized resolution granting the officer full authority✓
• d.an operating agreement filed with the county clerk

Rule 174-1-10.1 provides that to be designated as broker for a partnership, association, corporation, or other business organization, "the governing body of the business organization must execute a subordination resolution which grants full authority to the partner/member/officer acting as the broker for the business organization," submitted on the Commission's form and sworn to and notarized. The resolution matches the definition of "designated broker" in W. Va. Code §30-40-4, a broker "to whom the partners, members, or board of directors have delegated full authority to conduct the real estate brokerage activities of the business organization." W. Va. Code §30-40-12(b) and (c) add that no entity broker's license issues except through a member or officer, and that each member or officer engaging in the business must be licensed. The other three documents are not what the Commission requires here.

A West Virginia sole proprietor broker dies with transactions pending. The Commission may permit an associate broker or designated salesperson to close the existing business for a temporary period not to exceed:

• a.the remainder of the license year in which the death occurred
• b.thirty days from the date of death
• c.one year from the date of Commission approval
• d.six months from the date of Commission approval✓

Rule 174-1-11.1.a lets the Commission, in its discretion and on the specific circumstances, "permit an associate broker or a designated salesperson licensed with the sole proprietor broker to complete and close the then existing business of that broker, including taking contracts then signed to closing, for a temporary period not to exceed six (6) months from the date of Commission approval of a non-broker licensee to serve in that capacity." The rule adds that the sole proprietor's licensees may instead transfer to a new broker. The clock runs from Commission approval rather than from the death, so thirty days from death and the balance of the license year both measure from the wrong event. A year exceeds the period the rule allows. For a designated broker rather than a sole proprietor, rule 174-1-11.1.b requires a new notarized subordination resolution naming a successor before any business is transacted.

A West Virginia broker wants to operate under a trade name. Under the Commission's rules, the broker may use a trade name:

• a.only if it appears on the broker's license certificate✓
• b.once it is registered with the Secretary of State's business division
• c.only if it is also the legal name of the broker's business organization
• d.at will, provided the responsible broker's name appears in all advertising

Rule 174-1-12.1 lets an individual broker use a trade name that is the name of the brokerage rather than of the broker's business organization, requires the trade name to be included in the broker license application, places it on the license certificate on Commission approval, and provides that "[a] broker shall not use any trade name not set forth on the license certificate." The same subsection bars a trade name already used by another broker in the same locality and does not require registration of a franchise organization's name. Rule 174-1-12.2 then requires that the company name on all advertising be the trade name appearing on the license, and rule 174-1-12.3 requires written notice to the Commission within thirty days of any change of business organization or trade name. Business registration elsewhere in state government does not put the name on the license certificate.

A West Virginia broker lets an affiliated salesperson keep working after that salesperson's license has expired. Under the Commission's rules, the broker has:

• a.committed no violation, because only the salesperson holds the lapsed license
• b.failed to supervise, which is a ground for discipline against the broker✓
• c.committed a violation only if a consumer suffered actual harm
• d.cured the problem by reporting the lapse at the next renewal

Rule 174-1-21.1 implements W. Va. Code §30-40-19(a)(30), which makes it a ground for discipline when a broker "fails to supervise all associate brokers and salespersons affiliated with him or her," and its first illustration is "[a]llowing a person to engage in activities requiring an active license issued by the Commission while that person's license is inactive, expired, cancelled, suspended, revoked, or otherwise invalid." W. Va. Code §30-40-19(a)(23) reaches the same conduct by making it a violation to continue in the capacity of, or accept the services of, a licensee who is not properly licensed. Rule 174-1-8.2 warns brokers of exactly this exposure. Consumer harm is not an element, and a later report does not undo the unlicensed practice the broker permitted.

A West Virginia broker supervises a salesperson who works from a town two hours away and is never in the main office. Under the Commission's rules, the broker's duty to supervise that salesperson is:

• a.unaffected by the distance between them✓
• b.transferred to the branch office manager nearest the salesperson
• c.satisfied by requiring the salesperson to carry errors and omissions coverage
• d.reduced to reviewing the salesperson's transaction files quarterly

Rule 174-1-21.2 states that "[t]he broker's duty to supervise all salespersons and associate brokers affiliated with him or her is not affected by the fact that the broker may not be physically located in the same office, location, or geographical area as the salesperson or associate broker." The rule anticipates remote and multi-market brokerages and declines to discount the duty for them. A quarterly file review is a practice a broker might adopt but is not a ceiling the rule sets. A branch manager designated under rule 174-1-14.2 assists the broker; the statutory duty in W. Va. Code §30-40-19(a)(30) still runs to the broker. And insurance shifts the cost of a loss without supervising anyone.

A West Virginia broker learns that an affiliated salesperson has been using advertising that omits the brokerage's name. Under the Commission's rules on supervision, the broker must:

• a.wait for the Commission to open a complaint before intervening
• b.promptly correct or mitigate the violation on learning of it✓
• c.document the conduct and address it at the salesperson's annual review
• d.terminate the affiliation, which is the only recognized corrective step

Rule 174-1-21.1.e treats "[f]ailing to promptly correct or mitigate a violation of license law or regulation committed by a salesperson or associate broker after learning of the conduct giving rise to the violation" as itself a failure to supervise under W. Va. Code §30-40-19(a)(30). Rule 174-1-21.1.h separately obliges the broker to ensure that affiliated licensees' advertisements conform to the Commission's rules, which is the underlying duty here. Waiting for a complaint inverts the sequence, since the broker's knowledge is what triggers the obligation. An annual review is not prompt. And termination is one option among many; the rule requires correction or mitigation, not a particular sanction.