Carlos is a licensed Massachusetts real estate salesperson affiliated with Metro Realty. He receives a $500 referral fee from an out-of-state mortgage lender for referring clients to that lender. Carlos does not disclose this arrangement to his clients. Under Massachusetts law and applicable regulations, which of the following best describes the legal consequences Carlos may face?
Correct Answer
B) Carlos may face disciplinary action by the Board of Registration and potential liability under MGL Chapter 93A for undisclosed receipt of compensation from a third party
Under Massachusetts Board of Registration regulations and MGL Chapter 93A, a real estate licensee who receives undisclosed compensation from a third party such as a mortgage lender engages in conduct that is both a regulatory violation and potentially an unfair or deceptive act or practice. The failure to disclose the referral fee to clients creates a conflict of interest and violates the licensee's duty of loyalty and disclosure. Carlos may face Board disciplinary action including license suspension or revocation, as well as civil liability under Chapter 93A, which allows for double or treble damages and attorney's fees. Additionally, undisclosed referral arrangements may implicate RESPA at the federal level.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
The National Do Not Call Registry is a federal program administered by the FTC that allows consumers to opt out of receiving unsolicited telemarketing calls, including calls from real estate agents soliciting business.
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
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?
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In Wyoming real estate practice, a salesperson applicant age is reviewed. What should the licensee remember?
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