Leasing License Practice Exam

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Can licensees pay their compensation to unlicensed individuals?

Yes, with proper documentation
No, it violates the License Act
Yes, if authorized by the sponsoring broker
No, but they can pay bonuses

The correct answer is: No, it violates the License Act

In the context of licensing laws governing real estate practices, it is prohibited for licensed individuals to pay compensation to unlicensed individuals. This restriction is rooted in the intention to ensure that only those with the requisite training and qualifications — those who have obtained their real estate licenses — engage in activities that require specific expertise, such as conducting real estate transactions. Allowing licensed individuals to pay unlicensed individuals could potentially undermine the integrity of the profession, create conflicts of interest, and expose clients to risks associated with insufficiently trained individuals offering advice or services related to real estate. The License Act is designed to protect consumers by clearly delineating the boundaries within which licensed professionals operate, emphasizing the importance of adhering to regulations that safeguard public trust and maintain professional standards. In summary, the prohibition against paying unlicensed individuals reflects the legal framework established to uphold the ethical standards of the real estate industry, ensuring that all compensation related to licensed activities is conducted in accordance with the established laws and practices.