Broker Chen operates a real estate company in Lafayette. One of her salespersons, David, has been negotiating a lease on commercial property and accepted a referral fee directly from the landlord without disclosing it to the tenant-client he was representing. Under Louisiana license law, which of the following most accurately describes the consequences of David's action?
Correct Answer
B) David's action is a violation of his fiduciary duty and Louisiana license law, and both David and Broker Chen may face disciplinary action by the LREC
Under Louisiana license law, accepting undisclosed compensation from a party other than the client is a violation of the licensee's fiduciary duty and a breach of the duty of loyalty. David was representing the tenant, so accepting an undisclosed fee from the landlord creates an undisclosed conflict of interest. Both David and his supervising broker, Chen, may face LREC disciplinary action — David for the direct violation and Chen for failure to supervise.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
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