Affiliate Broker Greg holds an active Tennessee real estate license. Greg's brother-in-law, who is not a licensed real estate professional, helps Greg find buyers for several listings by making referrals and hosting open houses. Greg pays his brother-in-law a referral fee for each successful transaction. Under Tennessee license law, which of the following best describes the legality of this arrangement?
Correct Answer
C) The arrangement violates Tennessee license law because Greg is paying compensation to an unlicensed person for performing acts that require a real estate license.
Under Tenn. Code Ann. § 62-13-101 et seq., it is unlawful to pay compensation to an unlicensed person for performing acts that require a real estate license in Tennessee. Hosting open houses and actively finding buyers are activities that require a license. Greg's brother-in-law is performing licensed activities without a license, and Greg is paying him for those activities — both actions violate Tennessee license law. The form of payment (flat fee vs. percentage) and the family relationship are irrelevant to this analysis.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
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.
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?
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