Arkansas Real Estate License AREC Rules and Regulations 3 — Questions and Answers
Question 1: A broker's trust account is examined by AREC investigators and found to be short by $500. The broker claims it was a bookkeeping error. Under AREC rules, this is:
- Excused if it was an honest mistake
- A violation regardless of intent (Correct answer)
- Only a violation if the amount exceeds $1,000
- Permitted if corrected within 30 days without penalty
Correct answer: A violation regardless of intent
Trust account shortages are violations regardless of intent because AREC holds licensees to a strict liability standard for client funds.
Question 2: Under AREC regulations, advertising by a salesperson must:
- Include only the salesperson's name and phone number
- Clearly identify the supervising broker's name (Correct answer)
- Be approved in writing by AREC before publication
- List the salesperson's license number prominently
Correct answer: Clearly identify the supervising broker's name
All advertising by a salesperson must clearly identify the broker under whom they are licensed to prevent consumer confusion.
Question 3: When a property is listed as 'exclusive right to sell,' which party is entitled to a commission if the owner finds a buyer independently?
- No commission is owed
- The owner owes half the commission
- The listing broker is still entitled to a commission (Correct answer)
- The commission is negotiated after the sale
Correct answer: The listing broker is still entitled to a commission
Under an exclusive right to sell listing, the broker earns a commission regardless of who procures the buyer, including the seller.
Question 4: AREC can take disciplinary action against a licensee for conduct that occurred:
- Only while the licensee was actively practicing real estate
- Only within the state of Arkansas
- Both inside and outside Arkansas if it relates to real estate practice (Correct answer)
- Only if the conduct resulted in a criminal conviction
Correct answer: Both inside and outside Arkansas if it relates to real estate practice
AREC's disciplinary authority extends to conduct related to real estate practice even if it occurred in another state.
Question 5: Which of the following is a duty a buyer's agent owes exclusively to their client under AREC's agency framework?
- Honesty and fair dealing
- Accounting for funds
- Loyalty to the buyer's interests (Correct answer)
- Disclosing material defects in the property
Correct answer: Loyalty to the buyer's interests
Loyalty — placing the client's interests above all others including the agent's own — is a fiduciary duty owed exclusively to the represented client.
Question 6: Under AREC rules, a licensee acting as a dual agent must:
- Reduce their commission by half
- Obtain informed written consent from both parties (Correct answer)
- Represent only the seller's interests for the transaction
- Notify AREC before proceeding with the transaction
Correct answer: Obtain informed written consent from both parties
Dual agency is permissible in Arkansas only with the informed written consent of both the buyer and seller.
Question 7: A licensee fails to renew their license by the expiration date. Under AREC rules, they may:
- Continue practicing for up to 60 days while renewing
- Not practice until the license is renewed and any penalties are paid (Correct answer)
- Practice under a temporary license issued automatically by AREC
- Transfer to inactive status without penalty
Correct answer: Not practice until the license is renewed and any penalties are paid
Practicing with an expired license is prohibited; the licensee must complete renewal and pay applicable late fees before resuming practice.
Arkansas Real Estate License AREC Rules and Regulations 3
A broker's trust account is examined by AREC investigators and found to be short by $500.
The broker claims it was a bookkeeping error.
Under AREC rules, this is: