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Real Estate · License Law Violations and Discipline

In general, may a broker pay a commission or referral fee to an unlicensed person for performing licensed real estate activity?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

No — paying an unlicensed person for activity that requires a license is generally prohibited and is a violation for the broker

  1. A No — paying an unlicensed person for activity that requires a license is generally prohibited and is a violation for the broker
  2. B Only with the buyer's permission
  3. C Yes, to anyone who refers business
  4. D Yes, if the amount is small

Why this is the answer

State license laws generally prohibit paying a commission or fee to an unlicensed person for performing activities that require a real estate license — such as negotiating, listing, or soliciting clients. A broker who pays an unlicensed individual for licensed activity, or who allows an unlicensed person to perform such activity, commits a violation. There are limited exceptions in some states (for example, a property owner selling their own property, or modest, non-commission referral incentives to past clients where permitted), but these are narrow and vary by state. The core rule — no compensation to the unlicensed for licensed work — is a consistent state broker-portion principle.
Source: Compensation to Unlicensed Persons

Practice more questions

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About this topic: License Law Violations and Discipline

License law violations and discipline cover the grounds for discipline, the complaint and hearing process, penalties (fines, suspension, revocation), and the recovery fund. This is one of 20 Broker (State Law) questions on license law violations and discipline, each with a full explanation on a single study page.

New to this exam? Our Real Estate exam guide explains the format, scoring, and how to prepare.

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State-specific guides

Need information for your state? Our state guides cover local requirements, fees, and what to expect on exam day.

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