Broker Nadia is affiliated with Sunrise Realty, whose designated broker is Frank. Nadia lists a property and, without Frank's knowledge, enters into a side agreement with the seller to receive an additional $3,000 'marketing fee' directly from the seller at closing, in addition to her share of the standard commission. This arrangement is never disclosed to Frank or to the buyer. After closing, the buyer's broker discovers the side payment and files a DOL complaint. Under RCW 18.85, which of the following most accurately describes the potential disciplinary consequences?
Correct Answer
A) Both Nadia and Frank may face discipline — Nadia for the undisclosed compensation and Frank for inadequate supervision.
Under RCW 18.85, receiving undisclosed compensation from a party to a transaction is an explicit ground for disciplinary action against Nadia. Additionally, the designated broker Frank has a supervisory duty over all affiliated licensees and firm transactions. If the DOL finds that Frank failed to implement adequate oversight procedures that would have detected or prevented such an arrangement, Frank may also face disciplinary action for supervisory failure — even though he had no actual knowledge of Nadia's side agreement. Both licensees face potential discipline on separate but related grounds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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?
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