Broker Helen in Rhode Island has a signed buyer representation agreement with client Tom, specifying a 3% buyer-broker commission to be paid by the seller through the MLS cooperative arrangement. The seller's listing offers only 2% to cooperating brokers. Tom agrees in writing to pay the 1% shortfall directly to Helen at closing. Under Rhode Island law, which statement best describes this arrangement?
Correct Answer
D) This arrangement is permissible because the buyer representation agreement discloses the compensation terms and Tom has provided written consent
Under R.I. Gen. Laws § 5-20.5 and § 5-20.6, buyers may lawfully compensate their broker directly when the compensation is disclosed in a written buyer representation agreement and the client provides informed consent. The buyer representation agreement specifying the 3% compensation and Tom's written agreement to pay the 1% shortfall satisfies Rhode Island's disclosure and consent requirements. This arrangement is transparent and contractually sound.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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