Licensed Oregon Broker Chen has been approached by his neighbor, who wants to sell her home. The neighbor offers Chen a $5,000 referral bonus if he brings a buyer directly to her without listing the property. Chen is currently affiliated with Mountain View Realty under Principal Broker Diane. Chen accepts the arrangement, shows the property to a buyer from his personal network, and the sale closes. Chen collects the $5,000 directly from the neighbor. Under Oregon law, which of the following best describes the legal issue with this arrangement?
Correct Answer
C) The arrangement violates Oregon law because Chen received compensation directly from a party to the transaction rather than through his Principal Broker
Under ORS Chapter 696, a licensed Oregon Broker may only receive compensation for real estate activities through their affiliated Principal Broker. It is a violation of Oregon license law for a Broker to receive compensation — whether called a commission, referral fee, bonus, or any other name — directly from a party to a real estate transaction. All compensation must flow through the Principal Broker. Chen's direct receipt of the $5,000 from the neighbor violates this rule, regardless of how the payment is labeled.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Market allocation is an illegal antitrust practice in which competing real estate brokerages agree to divide markets among themselves by geographic area, property type, or price range, thereby eliminating competition.
Price fixing is an illegal antitrust practice in which competing real estate brokerages agree to charge the same commission rates, fees, or other pricing for their services. It is a per se violation of the Sherman Antitrust Act.
More Practice Of Real Estate Questions
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