A Utah Principal Broker is also a 40% owner of a title company. When his brokerage's transactions close, he routinely recommends this title company to his clients without disclosing his ownership interest. Several clients use the title company based on his recommendation. Under Utah Code Ann. § 61-2f and applicable federal law, which of the following best describes the broker's legal exposure?
Correct Answer
C) A RESPA violation and a Utah licensing violation for failing to disclose a material conflict of interest
The broker's conduct creates dual legal exposure. Under RESPA (12 U.S.C. § 2607), referring clients to a settlement service provider (including a title company) in which the referring party has an ownership interest without proper disclosure violates RESPA's affiliated business arrangement (AfBA) disclosure requirements. Separately, under Utah Code Ann. § 61-2f, a licensee's failure to disclose a material conflict of interest — including an ownership stake in a service provider being recommended to clients — violates the licensee's statutory duty of disclosure and constitutes grounds for disciplinary action by the UDRE.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
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