Broker Taro's Hawaii real estate license was revoked by the HREC following a disciplinary hearing. Taro subsequently forms a new LLC and hires licensed salespersons to conduct real estate transactions, with Taro managing all operations and receiving the majority of profits, while a licensed broker friend holds the principal broker designation in name only. Under HRS Chapter 467, which of the following most accurately describes this arrangement?
Correct Answer
C) The arrangement violates HRS Chapter 467 because it constitutes unlicensed practice and circumvention of the Commission's disciplinary order
Under HRS Chapter 467, using a licensed person as a nominal broker while a person with a revoked license actually controls real estate operations is a prohibited circumvention of the Commission's disciplinary authority. This arrangement constitutes both unlicensed practice by Taro (who is performing functions requiring a license through the LLC) and a violation by the nominal broker (who is allowing their license to be used to shield unlicensed activity). The HREC has authority to discipline the nominal broker and take action against the unlicensed entity. This type of arrangement is sometimes called a 'license in name only' or 'straw broker' scheme and is expressly prohibited.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
Continuing education (CE) refers to the ongoing coursework that licensed real estate professionals must complete during each renewal cycle to maintain an active license. CE ensures agents stay current with changes in laws, regulations, and industry practices.
More Practice Of Real Estate Questions
In Wyoming real estate practice, an associate broker or salesperson is not associated with a responsible broker at renewal. What should the licensee remember?
In Wyoming real estate practice, a first-time salesperson applicant completes coursework. What should the licensee remember?
A Wyoming licensee is reviewing an out-of-state salesperson applicant prepares for testing. What is the best answer?
In Wyoming real estate practice, a salesperson applicant age is reviewed. What should the licensee remember?
A responsible broker in Wyoming asks about a nonresident applicant provides home-state evidence. Which answer follows Wyoming law?
- → A responsible broker in Wyoming asks about a first-time salesperson applicant prepares for Wyoming-specific licensing. Which answer follows Wyoming law?
- → Which Wyoming rule applies when an out-of-state salesperson applies for Wyoming licensure?
- → A responsible broker in Wyoming asks about the Commission director receives a complaint about real estate practice. Which answer follows Wyoming law?
- → For the Wyoming salesperson state portion, a first-time Wyoming salesperson applicant starts the application process. Which statement is correct?
- → A Wyoming licensee is reviewing all first-time salesperson steps are otherwise complete. What is the best answer?
- → For the Wyoming salesperson state portion, a licensee asks how long Wyoming renewal periods are. Which statement is correct?
- → Which Wyoming rule applies when a licensee does not timely submit the complete renewal application, proof of CE, and renewal fees?
- → Which Wyoming rule applies when the Commission acts on license issuance and discipline?
- → In Wyoming real estate practice, a written sworn complaint or Commission motion starts a disciplinary matter. What should the licensee remember?
- → A Wyoming licensee is reviewing a first-time salesperson applicant asks which prelicense courses are required. What is the best answer?
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