Arkansas Real Estate License AREC Rules and Regulations 5 — Questions and Answers
Question 1: Under AREC regulations, which entity has the authority to establish the Real Estate Recovery Fund?
- The Arkansas Legislature through statute (Correct answer)
- Individual brokers who voluntarily contribute
- AREC through administrative rulemaking alone
- The Governor's office by executive order
Correct answer: The Arkansas Legislature through statute
The Real Estate Recovery Fund is established by Arkansas statute, not by AREC rule, to compensate consumers harmed by licensee misconduct.
Question 2: A licensee is found guilty of blockbusting. Under AREC rules and federal fair housing law, this means they:
- Induced panic selling by representing that a protected class was moving into the neighborhood (Correct answer)
- Blocked buyers from viewing properties in certain areas
- Refused to show properties to buyers from certain income levels
- Discriminated by setting different commission rates by neighborhood
Correct answer: Induced panic selling by representing that a protected class was moving into the neighborhood
Blockbusting is inducing owners to sell by representing that protected-class members are moving in, which constitutes an illegal discriminatory practice.
Question 3: AREC's Rules and Regulations require that a net listing agreement:
- Be executed in writing and approved by AREC
- Is prohibited in Arkansas (Correct answer)
- Must disclose the minimum net amount to the seller
- Requires a fixed commission percentage above the net
Correct answer: Is prohibited in Arkansas
Net listings are prohibited in Arkansas because they create an inherent conflict of interest between the broker and the seller.
Question 4: Which of the following best describes AREC's 'designated agent' rule?
- One licensee in a dual-agency firm is designated to represent only the buyer and another only the seller (Correct answer)
- The principal broker designates which licensees may work with commercial properties
- AREC designates a supervising agent for new licensees
- Designated agents are not required to follow the Code of Ethics
Correct answer: One licensee in a dual-agency firm is designated to represent only the buyer and another only the seller
Designated agency allows one licensee within the same brokerage to represent the buyer and a different licensee to represent the seller, limiting the dual-agency conflict.
Question 5: Under AREC rules, when must a property management agreement be in writing?
- Only when the property has more than four units
- Only when the management fee exceeds $500 per month
- Always — all property management agreements must be in writing (Correct answer)
- Only if the management period exceeds one year
Correct answer: Always — all property management agreements must be in writing
All property management agreements must be in writing under AREC regulations to clearly define the scope of authority and compensation.
Question 6: A broker's license is placed on probation by AREC. During the probationary period, the broker:
- May not conduct any real estate transactions
- May continue practicing subject to AREC-imposed conditions (Correct answer)
- Must surrender their license until probation ends
- Is automatically required to take additional education
Correct answer: May continue practicing subject to AREC-imposed conditions
Probation allows the broker to continue practicing real estate but under specific conditions set by AREC as a form of monitored discipline.
Question 7: Under AREC rules, what is the maximum prison term that can result from practicing real estate without a license in Arkansas?
- 30 days
- 6 months
- 1 year (Correct answer)
- 5 years
Correct answer: 1 year
Practicing real estate without a license in Arkansas is a misdemeanor punishable by up to one year imprisonment and a fine.
Arkansas Real Estate License AREC Rules and Regulations 5
Under AREC regulations, which entity has the authority to establish the Real Estate Recovery Fund?