Leasing License Practice Exam

What type of actions can lead to recovery from the Real Estate Recovery Fund?

1. Unethical treatment by a property manager

2. Conduct of a licensee or their unlicensed employees violating the License Act

3. Failure to disclose property defects

4. Disputes over lease terms

The correct answer is: Conduct of a licensee or their unlicensed employees violating the License Act

The correct response highlights the conduct of a licensee or their unlicensed employees that violates the License Act as a primary reason for recovery from the Real Estate Recovery Fund. This fund has been established to provide financial relief to individuals who have suffered losses due to the wrongful acts of real estate licensees. When a licensee behaves in a manner that contravenes the regulations set forth in the License Act, it can result in significant harm to clients or third parties. This might include instances of fraud, misrepresentation, or negligent conduct in their professional duties. Since such actions undermine the trust and integrity essential to real estate transactions, the Recovery Fund serves as a safeguard for those affected, allowing them to seek financial restitution for their losses. In contrast, while unethical treatment by a property manager may be serious and concerning, it doesn't automatically qualify for recovery unless it connects directly to a violation of the License Act. Failure to disclose property defects may also lead to legal consequences, but it may not directly invoke recovery from the fund unless it involves a licensee's misconduct. Disputes over lease terms, while potentially leading to disputes or legal action, typically do not fall within the scope of actions covered by the Recovery Fund because they often relate to contract interpretations rather than