Broker Elena has a listing agreement with seller Mr. Park that includes a 5% commission. The property is also listed on the MLS with a 2.5% cooperative compensation offer to buyer's brokers. Mr. Park's neighbor, who is an unlicensed individual, refers a buyer to Elena who ultimately purchases the property. Mr. Park asks Elena to pay the neighbor a $500 referral fee as a thank-you. Under Michigan law, which statement is most accurate?
Correct Answer
C) Elena cannot pay the neighbor any referral fee because paying compensation to an unlicensed person for real estate referral activity violates the Michigan Occupational Code
Under MCL 339.2512 and the Michigan Occupational Code, a licensed broker may not pay any compensation — including referral fees, finder's fees, or bonuses — to an unlicensed person for activities that constitute real estate services, including referring buyers or sellers. The prohibition applies regardless of the amount of the payment, the informality of the referral, or the seller's authorization. Paying an unlicensed person for a real estate referral exposes Elena to disciplinary action by LARA-BPL.
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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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