Broker Janet in Minnesota enters into a net listing agreement with a seller, agreeing that Janet will keep everything above $300,000 as her commission. The property sells for $360,000, giving Janet a $60,000 commission. A competitor files a complaint with the MN DOC. Under Minnesota Statutes Chapter 82, which of the following is the most accurate assessment of Janet's conduct?
Correct Answer
B) The net listing is prohibited under Minnesota license law, and entering into such an agreement is a ground for disciplinary action against Janet
Net listings — in which the broker retains all proceeds above a specified amount as commission — are prohibited under Minnesota Statutes Chapter 82. They create an inherent conflict of interest because the broker's financial interest is directly opposed to the seller's interest in obtaining the highest price. Entering into a net listing agreement is a violation of Minnesota license law and is a ground for disciplinary action, regardless of the seller's written consent.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
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.
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