Rhode Island Real Estate Salesperson Exam — All Questions

Real estate salespersons in Rhode Island are licensed and regulated by:

• a.The local city or town clerk
• b.The Rhode Island Real Estate Commission, within the Department of Business Regulation✓
• c.The Rhode Island Secretary of State
• d.The Rhode Island Association of Realtors

The Rhode Island Real Estate Commission, part of the Department of Business Regulation (DBR), licenses and disciplines real estate brokers and salespersons under R.I. General Laws Chapter 5-20.5. A trade association is a private membership group and does not issue licenses.

In Rhode Island, a licensed salesperson may conduct real estate brokerage activity:

• a.Independently, once the license is issued
• b.Only after also obtaining a broker license
• c.For any broker who agrees to pay a commission
• d.Only under the supervision of a sponsoring licensed broker✓

A Rhode Island salesperson may act only under the supervision of a sponsoring licensed broker and may not operate independently. The license is associated with one broker at a time, and that broker is responsible for the salesperson's real estate conduct.

A Rhode Island salesperson may lawfully accept a commission for a completed sale from:

• a.The buyer directly at closing
• b.The seller directly upon listing
• c.The broker who sponsors the salesperson✓
• d.The cooperating broker on the other side

A Rhode Island salesperson may be paid a commission only by the sponsoring broker, not directly by a buyer, seller, or another broker. Compensation flows through the sponsoring broker, who supervises the salesperson and is accountable for the transaction.

A Rhode Island broker's license has been expired for fourteen months. To be licensed again the former licensee must:

• a.Pay the renewal fee and a $100 late fee
• b.Request reinstatement and show current continuing education
• c.File a new application and retake the examination✓
• d.Apply to the Real Estate Commission for a hardship waiver

At no time may a license be renewed without examination if it has been expired beyond a period of one year, and the department's rule requires a new application and a new examination in that case. Cite: R.I. Gen. Laws Section 5-20.5-11(b); 230-RICR-30-20-2.6(C).

The Rhode Island Real Estate Commission, created within the Department of Business Regulation, consists of:

• a.Five members, all licensed brokers, appointed by the director
• b.Seven members elected by the state's licensees
• c.Three members appointed by the general treasurer
• d.Nine gubernatorial appointees, at least one from each county, plus two ex officio members✓

The governor appoints nine members, at least one from each county, of whom three are currently licensed brokers with five years in the state and four are members of the general public. The attorney general or a designee and the department director or a designee sit ex officio with full voting powers. Cite: R.I. Gen. Laws Section 5-20.5-12(a)(1).

Two Rhode Island buyers each hold a judgment against the same licensee for deceit. The real estate recovery account's total liability for that one licensee is:

• a.$50,000✓
• b.$50,000 each
• c.$100,000
• d.$200,000

The account may pay a claimant up to $50,000 in damages, but the liability of the account may not exceed $50,000 for any one licensee no matter how many claimants there are. Claims are paid in the order the judgments were awarded, the earliest first. Cite: R.I. Gen. Laws Section 5-20.5-5(a)(1) and (h).

The Rhode Island recovery account pays a judgment against a licensee. On the court's order authorizing payment, the licensee's license is:

• a.Suspended for one year, then restored automatically
• b.Automatically revoked, and no new license issues until the account is repaid in full plus twelve percent interest✓
• c.Placed on probation pending a department hearing
• d.Unaffected, since the account exists to protect the public

Payment from the real estate recovery account automatically revokes the broker's or salesperson's license on issuance of the court order. The person is ineligible for a new license until the amount paid is repaid in full plus interest at twelve percent a year, and a bankruptcy discharge does not relieve that obligation. Cite: R.I. Gen. Laws Section 5-20.5-5(c)(5).

A Rhode Island consumer plans to sue a salesperson for fraud and may later seek recovery account money. The consumer must:

• a.Obtain the department's written consent before filing suit
• b.File the suit in the county where the licensee resides
• c.Start the action within two years of the cause of action accruing and notify the department in writing at that time✓
• d.Exhaust an administrative hearing before the commission first

No action for a judgment that may later lead to collection from the account may be started later than two years from the accrual of the cause of action, and the aggrieved person must notify the Department of Business Regulation in writing when the action is commenced. Cite: R.I. Gen. Laws Section 5-20.5-5(c)(1).

If the Rhode Island real estate recovery account balance is below $200,000 on December 31, then during the following calendar year:

• a.Only brokers pay an extra $25 at renewal
• b.Renewals are suspended until the account balance is restored to $200,000
• c.The general treasurer advances the shortfall
• d.Every broker and every salesperson pays an extra $25 at renewal✓

The statute triggers on the December 31 balance: in the next calendar year every real estate broker and every real estate salesperson pays an additional $25 with the renewal fee for deposit in the recovery account. Cite: R.I. Gen. Laws Section 5-20.5-5(b).

Besides suspending or revoking a license, the Rhode Island director may levy an administrative penalty for a violation of Chapter 5-20.5 of up to:

• a.$2,000✓
• b.$500
• c.$5,000
• d.$10,000

The director is authorized to levy an administrative penalty not exceeding $2,000 for any violation of the section or of the department's regulations. Cite: R.I. Gen. Laws Section 5-20.5-14(b).

An individual sells houses in Rhode Island for commissions without ever holding a license. On a first conviction, the penalty is:

• a.A civil fine of $2,000, with no possibility of imprisonment
• b.A $100 to $500 fine, up to a year in jail, or both✓
• c.A fine of $1,000 to $2,000 and mandatory restitution to the buyer
• d.A felony conviction and a fine of not less than $5,000

Acting as a broker or salesperson without first obtaining a license is a misdemeanor punishable by a fine of not less than $100 nor more than $500, or imprisonment not exceeding one year, or both. A corporation pays $1,000 to $2,000, and second offences carry higher ranges. Cite: R.I. Gen. Laws Section 5-20.5-17(a).

Beyond the criminal penalty, a person who collected a commission through a violation of Rhode Island's license law is liable to an aggrieved person for:

• a.The amount of the commission actually received, and nothing beyond that
• b.Double the commission received, as liquidated damages
• c.Not less than the sum received and not more than three times that sum✓
• d.The aggrieved person's attorney fees only

The statute creates a separate civil penalty of not less than the amount of money received and not more than three times that sum, as the court determines, recoverable by any aggrieved person in a court of competent jurisdiction. Cite: R.I. Gen. Laws Section 5-20.5-17(b).

An unlicensed investor wants to buy a twenty percent stake in a Rhode Island real estate brokerage firm and take no part in its operations. Under Chapter 5-20.5 the investor:

• a.May do so if the principal broker discloses the stake to the department
• b.May do so because passive ownership is not licensed activity
• c.May do so only if the stake stays under twenty-five percent
• d.May not hold an ownership interest without a broker's license✓

No person, firm or corporation may have an ownership interest in a real estate brokerage firm, or participate in its operation, unless it holds a valid real estate broker's license issued under the chapter. Cite: R.I. Gen. Laws Section 5-20.5-27.

A resident Rhode Island broker must maintain a fixed office in the state. That requirement carries with it the duty to:

• a.Keep all business records relating to transactions and office management on the premises✓
• b.Staff the office during posted business hours
• c.Register the office address with the city or town clerk
• d.Maintain a separate office in each county where the broker lists property

The statute requires a fixed in-state office, requires all business records relating to real estate transactions and to the management of that office to be kept on the premises, and requires the original licenses of the broker and each affiliated salesperson to be prominently displayed there. Cite: R.I. Gen. Laws Section 5-20.5-7.

A Rhode Island salesperson leaves one brokerage for another. The employing broker and the salesperson must each notify the director in writing within:

• a.Five business days
• b.Ten days✓
• c.Thirty days
• d.Sixty days

Failure of the employing broker to notify the director in writing within ten days of the termination of a salesperson's employment, or failure of the salesperson to notify the director within ten days of a change in broker affiliation, is itself a ground for discipline. Cite: R.I. Gen. Laws Section 5-20.5-14(a)(33).