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Real Estate · State License Law and Commission

What is a 'designated broker' and why is the role critical?

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 individually licensed broker who is responsible for all real estate activities conducted through the brokerage — they bear personal legal responsibility for the conduct of their agents and for the brokerage's trust accounts

  1. A The individually licensed broker who is responsible for all real estate activities conducted through the brokerage — they bear personal legal responsibility for the conduct of their agents and for the brokerage's trust accounts
  2. B The broker with the most experience
  3. C The managing partner of a real estate investment trust
  4. D The broker designated to handle commercial listings only

Why this is the answer

DESIGNATED BROKER (also called Principal Broker, Managing Broker, or Responsible Broker depending on the state) is the individual who: holds the brokerage licence; bears legal responsibility for all licencees operating under their licence; is personally responsible for trust account maintenance and reconciliation; must supervise salespersons and ensure they comply with state law; is the named responsible party in any brokerage disciplinary action. If a salesperson under their supervision violates fair housing, mishandles client funds, or engages in fraud, the designated broker can face their own disciplinary action under their supervisory responsibility. This is why the broker's supervision of agents is a fiduciary obligation — not just an administrative one.
Source: Real Estate State Exam, Designated Broker Responsibility

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About this topic: State License Law and Commission

State license law and commission questions cover who must be licensed, exemptions, license types and renewal, continuing education, the real estate commission's powers and the grounds for discipline. This is one of 34 Salesperson (State Law) questions on state license law and commission, each with a full explanation on a single study page.

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