A Utah Principal Broker signs a listing agreement that includes a net listing provision, under which the broker will keep any amount above the seller's desired net proceeds as commission. The seller agrees to this arrangement in writing. Under Utah Code Ann. § 61-2f, this arrangement is:
Correct Answer
C) A violation because net listings create an inherent conflict of interest prohibited under Utah law
Under Utah Code Ann. § 61-2f and Utah Administrative Code R162-2f, net listings are prohibited in Utah because they create an inherent conflict of interest between the broker's financial interests and the broker's fiduciary duty to the seller. In a net listing, the broker profits more by selling the property for a higher price above the seller's net, which incentivizes the broker to maximize the sale price at the seller's expense — or alternatively, to disclose the seller's minimum price to buyers. This structural conflict is why net listings are banned.
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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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