Arkansas Real Estate License AREC Rules and Regulations 4 — Questions and Answers
Question 1: Under AREC regulations, a principal broker is responsible for:
- Only their own personal transactions
- The real estate activities of all licensees affiliated with their brokerage (Correct answer)
- Filing tax returns on behalf of affiliated salespeople
- Setting commission rates for the entire market
Correct answer: The real estate activities of all licensees affiliated with their brokerage
The principal broker bears supervisory responsibility for all real estate activities conducted by licensees under their license.
Question 2: Which of the following changes requires a licensee to notify AREC within 10 days?
- Completion of a continuing education course
- A change of personal mailing address (Correct answer)
- Attendance at a national real estate conference
- Signing a buyer representation agreement
Correct answer: A change of personal mailing address
AREC must be notified of address changes within 10 days to ensure the Commission can contact licensees with regulatory notices.
Question 3: A seller instructs their agent to tell buyers the roof was replaced last year when it was not. The agent complies. Which AREC rule is violated?
- Only the seller has violated the law; the agent is following instructions
- The agent has violated rules against misrepresentation (Correct answer)
- No violation if the agent discloses they are following seller instructions
- This is a civil matter outside AREC's jurisdiction
Correct answer: The agent has violated rules against misrepresentation
Following a client's instruction to make false statements still constitutes a misrepresentation violation by the licensee under AREC rules.
Question 4: Under AREC rules, earnest money received by a salesperson must be delivered to the broker:
- Within 24 hours
- Within 3 banking days
- By the end of the same business day it is received (Correct answer)
- At or before closing
Correct answer: By the end of the same business day it is received
Earnest money must be delivered to the broker on the same business day it is received by the salesperson.
Question 5: A buyer's agent learns that the seller is under financial duress and must sell quickly. Under AREC agency rules, the agent must:
- Share this information with the buyer to help them negotiate (Correct answer)
- Keep this information confidential from the buyer
- Disclose it only if the seller consents
- Report it to AREC as a material fact
Correct answer: Share this information with the buyer to help them negotiate
A buyer's agent has a duty of loyalty to the buyer, which includes sharing information about the seller's motivation that could benefit the buyer's negotiation.
Question 6: Which of the following is grounds for AREC to revoke or suspend a real estate license?
- Failing to answer client calls within 24 hours
- Conviction of a crime involving moral turpitude (Correct answer)
- Charging a commission rate lower than the market average
- Representing both commercial and residential clients
Correct answer: Conviction of a crime involving moral turpitude
A conviction involving moral turpitude — crimes reflecting dishonesty or moral unfitness — is a statutory ground for license revocation or suspension.
Question 7: Under AREC rules, a licensee wishing to operate as an independent contractor rather than an employee of a broker must:
- Obtain a broker's license
- File a special independent contractor registration with AREC
- Still be affiliated with and supervised by a licensed broker (Correct answer)
- Establish their own separate escrow account
Correct answer: Still be affiliated with and supervised by a licensed broker
Regardless of their employment classification as independent contractor or employee, every salesperson must be affiliated with and supervised by a licensed broker.
Arkansas Real Estate License AREC Rules and Regulations 4
Under AREC regulations, a principal broker is responsible for: