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A real estate broker is subject to disciplinary action from the Department of Real Estate (DRE) if they:

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Question & Answer

Review the question and all answer choices

A

extract secret profits that are not disclosed.

A is incorrect because while extracting undisclosed secret profits is a serious violation of fiduciary duty, it's primarily a breach between the broker and their client rather than a direct violation that would automatically trigger DRE disciplinary action in this context.

B

commingle trust funds.

B is incorrect because commingling trust funds is a violation, but it's not the correct answer in this specific question. While it's a serious offense that can lead to disciplinary action, it's not the best answer when compared to C.

C

fail to supervise the salespeople they employ.

Correct Answer
D

b. commingle trust funds. c. fail to supervise the salespeople they employ. d. Any of the above.

D is incorrect because not all the listed options would necessarily result in DRE disciplinary action. While commingling funds (B) would likely lead to action, and failing to supervise (C) definitely would, extracting secret profits (A) might be handled through civil remedies rather than automatic DRE discipline.

Why is this correct?

C is correct because California law specifically holds brokers responsible for the actions of the salespeople they employ. The DRE requires brokers to maintain adequate supervision of licensees working under their license, making failure to supervise a direct violation that can lead to disciplinary action.

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