Arkansas Real Estate License License Law and Disclosures Questions and Answers — Questions and Answers
Question 1: An active Arkansas real estate agent decides to purchase an investment property for themselves. The property is listed for sale by owner (FSBO). What is the agent's primary disclosure obligation in this situation according to Arkansas law?
- Disclose their licensed status to the seller in writing before or at the time of signing the purchase offer. (Correct answer)
- Inform their principal broker only after the transaction has closed.
- Verbally mention they have a real estate license during initial negotiations.
- Place their license on inactive status for the duration of the transaction.
Correct answer: Disclose their licensed status to the seller in writing before or at the time of signing the purchase offer.
AREC Regulation 10.11 requires licensees to make a full written disclosure of the fact they are a licensed agent when they are a principal party (buyer or seller) in a transaction. This disclosure must be made before a contract is entered into.
Question 2: For how long must a principal broker in Arkansas maintain complete records of their real estate transactions, including trust account files and closing statements?
- Three years from the date of the transaction. (Correct answer)
- One year from the date of the transaction.
- Seven years from the date of the transaction.
- Indefinitely.
Correct answer: Three years from the date of the transaction.
According to Arkansas Code of Rules § 220-1006, principal brokers must maintain complete records of all real estate business, including transaction files and property management records, for a period of three years.
Question 3: A new salesperson at a brokerage, eager to make a sale, significantly exaggerates the potential for commercial rezoning of a residential property to a potential buyer. The principal broker was unaware of this specific conversation. If the buyer files a complaint with the AREC, who is ultimately responsible?
- Only the salesperson, as they made the statement directly.
- Neither, as the buyer is responsible for their own due diligence.
- Both the salesperson for making the misrepresentation and the principal broker for failure to adequately supervise. (Correct answer)
- Only the principal broker, as they hold the ultimate responsibility for the firm.
Correct answer: Both the salesperson for making the misrepresentation and the principal broker for failure to adequately supervise.
While the salesperson is directly responsible for their misrepresentation, Arkansas law holds the principal broker responsible for exercising strict and adequate supervision over the activities of their associated licensees. Failure to do so is a violation, meaning both parties can be subject to disciplinary action.
Question 4: Which of the following is a requirement for a principal broker's real estate office in Arkansas?
- The office must be located in a commercially zoned district.
- A sign must be permanently attached and easily visible, identifying the location as a real estate office. (Correct answer)
- The principal broker must personally be present in the office at all times during business hours.
- All agent licenses must be physically displayed in the office lobby.
Correct answer: A sign must be permanently attached and easily visible, identifying the location as a real estate office.
Arkansas law requires that every principal broker maintain a place of business and display a permanently attached sign that clearly indicates to the public that they are engaged in the real estate business. There are no specific rules about commercial zoning or the broker being present at all times.
Question 5: Which of the following statements is TRUE regarding a real estate license on inactive status in Arkansas?
- An inactive licensee is exempt from all license renewal fees.
- An inactive licensee is not required to complete continuing education for the annual renewal of the inactive license. (Correct answer)
- To reactivate the license after one year, the licensee must retake the state licensing exam.
- An inactive licensee may still perform real estate activities, such as hosting an open house, as long as they are not compensated.
Correct answer: An inactive licensee is not required to complete continuing education for the annual renewal of the inactive license.
A licensee on inactive status in Arkansas must still pay renewal fees but is not required to complete the annual continuing education (CE) to renew on inactive status. To reactivate, they must complete the CE that would have been required (up to a maximum of 30 hours). They are strictly prohibited from engaging in any real estate activities.
Question 6: A listing agent receives a second, higher written offer on a property that is already under a binding contract with a buyer. According to Arkansas Real Estate Commission regulations, the listing agent should:
- Return the offer to the buyer's agent, explaining that the property is already sold.
- Advise the seller that they cannot consider the offer under any circumstances.
- Hold the offer and present it only if the first contract terminates.
- Promptly present the second offer to the seller for consideration as a potential backup offer, unless the seller has provided written instructions not to. (Correct answer)
Correct answer: Promptly present the second offer to the seller for consideration as a potential backup offer, unless the seller has provided written instructions not to.
AREC Regulation 10.12(a) requires a licensee to promptly present ALL offers received to the seller. The acceptance of a primary offer does not remove the obligation to present subsequent offers, which could be accepted as backup offers, unless the client provides written instructions to the contrary.
Arkansas Real Estate License License Law and Disclosures Questions and Answers
An active Arkansas real estate agent decides to purchase an investment property for themselves.
The property is listed for sale by owner (FSBO).
What is the agent's primary disclosure obligation in this situation according to Arkansas law?