Broker Frank is the principal broker of a large Maryland brokerage. One of his associate brokers, without Frank's knowledge, deposited client earnest money into the associate broker's personal account and then transferred it to the brokerage trust account four days later. Under Maryland license law, which of the following most accurately describes Frank's potential liability?
Correct Answer
B) Frank may be held responsible by MREC because principal brokers bear supervisory responsibility for the actions of licensees under their supervision
Under Md. Code Ann., Bus. Occ. & Prof. § 17-322 and COMAR 09.11.03, Maryland principal brokers bear supervisory responsibility for the conduct of all licensees operating under their license. A principal broker's lack of actual knowledge of a violation does not automatically eliminate their regulatory liability if MREC determines that adequate supervisory systems and policies were not in place. Frank may face disciplinary action for failure to supervise, even if he was personally unaware of the associate broker's conduct.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
Florida real estate licenses must be renewed biennially, and sales associates have specific post-license education requirements for their first renewal.
License requirements are the mandatory qualifications—including pre-licensing education, examination, and background checks—that a person must satisfy before legally practicing real estate. These requirements are established and enforced by each state's real estate commission.
More Practice Of Real Estate Questions
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