Arkansas License Test Arkansas Real Estate License 5 — Questions and Answers
Question 1: Under Arkansas law, how long must a broker retain transaction records after a real estate sale closes?
- 1 year
- 3 years (Correct answer)
- 5 years
- 7 years
Correct answer: 3 years
Arkansas real estate law requires brokers to retain all transaction-related records for a minimum of three years.
Question 2: A licensed salesperson in Arkansas receives a referral fee directly from an out-of-state broker. This is:
- Permitted if both parties are licensed in their respective states
- Prohibited; payment must go through the salesperson's sponsoring broker (Correct answer)
- Permitted only if the fee is under $500
- Prohibited unless AREC approves the referral in writing
Correct answer: Prohibited; payment must go through the salesperson's sponsoring broker
In Arkansas, a salesperson may only receive compensation through their sponsoring broker; they cannot accept fees directly from third parties.
Question 3: Which of the following is an example of 'misrepresentation' under Arkansas real estate law?
- Describing a home as 'charming and cozy'
- Stating a home has a new roof when it is 10 years old (Correct answer)
- Advertising a price slightly below market value
- Failing to mention the seller's motivation for moving
Correct answer: Stating a home has a new roof when it is 10 years old
Stating a false material fact—such as the age of the roof—constitutes misrepresentation, which is a violation of Arkansas license law.
Question 4: In Arkansas, the Real Estate Recovery Fund is designed to:
- Pay broker commissions when buyers default
- Compensate consumers harmed by licensee misconduct after other remedies are exhausted (Correct answer)
- Cover AREC's operating expenses
- Reimburse lenders for foreclosure costs
Correct answer: Compensate consumers harmed by licensee misconduct after other remedies are exhausted
The Recovery Fund compensates consumers who have suffered actual monetary losses due to a licensee's fraudulent or dishonest conduct after civil remedies have been exhausted.
Question 5: An Arkansas licensee who wishes to sell their own property must:
- Surrender their license during the transaction to avoid conflict
- Disclose their licensed status in any advertising and to all parties (Correct answer)
- Obtain written permission from AREC before listing
- Have another broker handle the transaction entirely
Correct answer: Disclose their licensed status in any advertising and to all parties
When a licensee sells property in which they have an ownership interest, they must clearly disclose their licensed status to all parties in all advertisements and communications.
Question 6: Under Arkansas license law, a 'designated broker' (also called principal broker) is best described as:
- Any licensee who holds both a broker and appraiser license
- The individual broker responsible for all licensees operating under the brokerage (Correct answer)
- A broker who specializes exclusively in commercial real estate
- A salesperson who has passed the broker exam but not yet applied
Correct answer: The individual broker responsible for all licensees operating under the brokerage
The designated (principal) broker is legally responsible for supervising all affiliated salespersons and associate brokers within the brokerage.
Question 7: A buyer in Arkansas makes an offer that the seller accepts, but the buyer later wants to back out without a valid contingency. What typically happens to the earnest money?
- It is automatically returned to the buyer
- It may be forfeited to the seller as liquidated damages (Correct answer)
- It is split equally between buyer and seller
- It is returned to the buyer after a 30-day waiting period
Correct answer: It may be forfeited to the seller as liquidated damages
When a buyer defaults without a valid contingency, the earnest money may be forfeited to the seller as liquidated damages per the terms of the purchase agreement.
Arkansas License Test Arkansas Real Estate License 5
Under Arkansas law, how long must a broker retain transaction records after a real estate sale closes?