Arkansas Real Estate License AREC Licensing and Regulations 5 — Questions and Answers
Question 1: What happens to a licensee's commission if they are found to have violated AREC regulations in connection with a transaction?
- The commission is automatically refunded to the client
- AREC may order forfeiture of the commission (Correct answer)
- The court must order the forfeiture before it takes effect
- The commission is held in escrow pending investigation
Correct answer: AREC may order forfeiture of the commission
AREC has authority to order a licensee to forfeit a commission as part of disciplinary action for regulatory violations.
Question 2: A broker's trust account in Arkansas must be reconciled at a minimum of:
- Weekly
- Monthly (Correct answer)
- Quarterly
- At the close of every transaction
Correct answer: Monthly
Arkansas requires brokers to reconcile trust accounts at least monthly to ensure proper handling of client funds.
Question 3: Which of the following persons is EXEMPT from Arkansas real estate licensing requirements?
- A property manager who collects rents for 10 different owners
- An attorney performing real estate duties as an incident of their practice (Correct answer)
- A licensed auctioneer who sells real estate
- A relocation company that buys and resells homes
Correct answer: An attorney performing real estate duties as an incident of their practice
Licensed attorneys acting within the scope of their legal practice are exempt from real estate licensing in Arkansas.
Question 4: Under Arkansas regulations, earnest money deposited with a broker must be placed into the trust account within:
- 24 hours of receipt
- 3 banking days of contract acceptance (Correct answer)
- 5 calendar days of receipt
- 10 days of closing
Correct answer: 3 banking days of contract acceptance
Arkansas requires earnest money to be deposited into the broker's trust account within 3 banking days of contract acceptance.
Question 5: An AREC disciplinary hearing in Arkansas is considered what type of proceeding?
- Criminal proceeding
- Civil court proceeding
- Administrative proceeding (Correct answer)
- Arbitration proceeding
Correct answer: Administrative proceeding
AREC disciplinary hearings are administrative proceedings governed by the Arkansas Administrative Procedure Act.
Question 6: When a licensed salesperson's broker dies or loses their license, the salesperson may:
- Continue practicing for up to 60 days under their own license
- Immediately transfer to a new broker without AREC notification
- Be issued a temporary license to transfer to a new broker (Correct answer)
- Apply for a provisional broker's license automatically
Correct answer: Be issued a temporary license to transfer to a new broker
AREC may issue a temporary license allowing the salesperson a grace period to affiliate with a new qualifying broker.
Question 7: Which of the following best describes 'commingling' as prohibited under Arkansas real estate law?
- Mixing listings from multiple brokerage firms
- Depositing client funds into the broker's personal or operating account (Correct answer)
- Sharing commissions between two brokers
- Advertising a property through multiple channels simultaneously
Correct answer: Depositing client funds into the broker's personal or operating account
Commingling is the illegal act of mixing client/escrow funds with the broker's own personal or business operating funds.
Arkansas Real Estate License AREC Licensing and Regulations 5
What happens to a licensee's commission if they are found to have violated AREC regulations in connection with a transaction?