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Real Estate · License Law Violations and Discipline

What does it generally mean for a broker to face discipline for 'failure to supervise'?

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

The broker is held responsible because inadequate oversight allowed an affiliated licensee's violation to occur, even if the broker did not personally commit the underlying act

  1. A Only the agent can ever be disciplined
  2. B The broker personally committed fraud
  3. C The broker is held responsible because inadequate oversight allowed an affiliated licensee's violation to occur, even if the broker did not personally commit the underlying act
  4. D Failure to supervise is not a real violation

Why this is the answer

Failure to supervise is a distinct basis for discipline that targets the broker's oversight role rather than direct participation in wrongdoing. If an affiliated licensee commits a violation and the broker lacked reasonable systems to oversee transactions, trust funds, advertising, or disclosures, the broker can be disciplined for failing to supervise even without personally committing the underlying act. This holds brokers accountable for the gatekeeping function the license law assigns them. To guard against it, brokers maintain written policies, review files and trust accounts, and train and monitor agents. The state broker portion frequently tests this concept because it defines the broker's heightened responsibility.
Source: Failure to Supervise

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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.

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