Leasing License Practice Exam

What type of conduct can result in a claim against a licensee under the Recovery Fund?

1. The act of self-promotion

2. Misrepresentation or deceit

3. Overly aggressive marketing

4. Offering competitive pricing

The correct answer is: Misrepresentation or deceit

A claim against a licensee under the Recovery Fund can arise from misrepresentation or deceit because these actions violate the ethical and legal standards required of real estate professionals. Misrepresentation occurs when a licensee provides false or misleading information about a property or its condition, leading clients to make uninformed decisions. This form of conduct not only undermines the trust that is paramount in client relationships but can also result in significant financial harm to clients, thereby justifying a claim against the licensee in order to recoup their losses. In the context of the other choices, while self-promotion, overly aggressive marketing, and competitive pricing can impact a licensee's reputation or business practices, they do not typically rise to the level of deceit or misrepresentation that would warrant action under the Recovery Fund. These behaviors may be seen as a part of normal business practices as long as they do not involve misleading clients or misrepresenting facts related to real estate transactions.