Practice of Real Estate
This topic covers the professional and legal standards licensees must follow: fair housing law, ethical advertising, handling money properly, and the trust-account rules that protect the public.
Fair Housing
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, sex, national origin, familial status, and disability. Prohibited practices include steering (directing buyers toward or away from areas based on a protected class), blockbusting (inducing sales by claiming a protected group is moving in), and redlining (denying loans or insurance in certain areas). Reasonable accommodations and modifications must be allowed for persons with disabilities. Some state and local laws add protected classes such as age, marital status, sexual orientation, or source of income.
Advertising and Antitrust
Advertising must be truthful and not misleading; blind ads that hide the broker's identity are generally prohibited, and ads must comply with fair housing (no discriminatory preferences). Federal antitrust law forbids competitors from price fixing (agreeing on commission rates), market allocation (dividing territories), group boycotts, and tie-in arrangements. Commission rates are always negotiable between a broker and client and must never be set by agreement among competing firms.
Trust Funds and License Law
Money belonging to others, such as earnest money deposits and rents, must be kept in a separate trust or escrow account, not the broker's operating or personal account. Commingling (mixing client funds with the broker's own) and conversion (using client funds for the broker's benefit) are serious violations. Licensees must follow license-law duties of competence, honesty, and record-keeping, and disclose their licensee status when buying or selling for their own account.