Real Estate · State License Law and Commission

A salesperson moves to a different brokerage. What is typically required?

Correct answer

The salesperson must notify the state commission of the change, the new broker must accept sponsorship, the old broker must release the licensee (or commission processes the change), and the license must be updated to reflect the new affiliation; specific procedures and timeframes vary by state

  1. A Nothing — the salesperson can continue with no action
  2. B The salesperson must notify the state commission of the change, the new broker must accept sponsorship, the old broker must release the licensee (or commission processes the change), and the license must be updated to reflect the new affiliation; specific procedures and timeframes vary by state
  3. C Only the salesperson must notify their clients
  4. D Only the new broker must notify

Why this is the answer

BROKER CHANGES (also called sponsorship transfers) are routine events but require specific procedures. The salesperson's license is tied to their sponsoring broker; without a sponsoring broker, the license becomes INACTIVE or PARKED (no real estate activity permitted). PROCESS (state-specific but commonly): (1) DECISION/NOTIFICATION — salesperson notifies current broker of intent to move (may be subject to brokerage agreement terms); (2) RELEASE — old broker formally releases the license (signs release form, processes through commission); some brokerages require notice period; (3) ACCEPTANCE — new broker accepts sponsorship (signs acceptance, may require new agreement); (4) COMMISSION FILING — state commission updates the licensee's record; (5) FEE — some states charge transfer fees; (6) TIMING — license is typically inactive during the transition; activity is permitted only when properly transferred. DURING TRANSITION: salesperson should not engage in real estate activities until new affiliation is processed. WHAT TRANSFERS: (1) THE LICENSE itself (subject to broker acceptance); (2) GENERALLY NOT existing listings — those are owned by the brokerage (not the salesperson); listings stay with the old brokerage typically (subject to negotiation/contract terms in brokerage agreements); (3) CLIENT RELATIONSHIPS — depends on contractual terms; most brokerage agreements address whether salespersons can take clients with them or not (non-compete, customer non-solicitation clauses common). PENDING TRANSACTIONS: typically completed with the old broker; new broker doesn't inherit pending deals unless specifically transferred. COMPENSATION on pending transactions: usually per old broker agreement; salesperson typically gets their split per the old agreement when the deal closes (even after they've moved). NEW BROKER expectations: salesperson should understand new commission split, policies, branding, etc., before transferring. INACTIVE STATUS: if a salesperson chooses not to affiliate with a broker immediately, the license can be placed on inactive status; no real estate activity permitted; CE requirements still typically apply for renewal. The state portion exam tests YOUR state's specific transfer procedures and any unique requirements.
Source: Real Estate State Portion, Brokerage Changes

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