Real Estate Practice curriculum

A client is traditionally owed six duties, remembered as OLD CAR: follow lawful instructions, put the client's interest ahead of your own, share material facts, guard confidences, account for money and property, and work with reasonable care and skill. Most end when the agency ends, though confidentiality is the classic one that keeps going. Some states restate the list by statute.

Agency types differ by how much authority you hold. A universal agent can act for the principal in nearly everything, a general agent handles a range of matters in one line of business, as a property manager does, and a special agent handles one task, as a listing broker does. A listing normally lets you market and find a buyer, not sign the sale for the owner.

You might act for the seller, for the buyer, or for both as a dual agent with informed consent, usually in writing. A subagent helps the seller's broker serve the seller. In designated agency, a firm assigns different licensees to each side. A transaction broker assists without full representation. Which of these your state allows, and what it calls them, is set by state law.

Whoever pays your fee does not decide whom you represent. A buyer's agent can be paid out of funds from the seller's side and still owe loyalty only to the buyer. Representation comes from the agency relationship you formed, so look to the agreement and the conduct, never the source of the check.

An agency can begin four ways. Express agency comes from an agreement in words or in writing. Implied agency comes from conduct showing both sides treated you as the agent. Ratification happens when a principal approves an unauthorized act afterward. Estoppel applies when a principal led a third party to rely on your authority and cannot deny it later.

Actual authority is what the principal really gave you, in words or by necessary implication. Apparent authority is what a third party reasonably believes you hold because of the principal's own words or conduct. It is the principal's conduct that counts: you cannot create apparent authority by claiming it yourself. A principal can be bound by an act never actually authorized.

Even toward a person you do not represent, you owe honesty and fair dealing. In most states that includes disclosing material facts you know about the property, such as known defects. What you do not owe that person is loyalty, advice on price, or confidentiality. Being on the other side never licenses a misstatement.

States generally require you to tell people whom you represent, so nobody mistakes you for their own advocate. Your state's law sets the moment and the form: some tie it to first substantive contact and want it in writing, while others allow it later in the deal. Before someone shares confidences about price or motive, make sure they know whom you represent.

As a dual agent you owe duties to both sides, so you can no longer push for either one. Without that party's consent you cannot tell the buyer the seller's lowest price or the seller the buyer's highest, and you cannot advise one against the other. Some states ban dual agency. Elsewhere it needs informed consent, and hiding it denies each side that choice and can cost the commission and the license.

In designated agency, one firm assigns one licensee to the seller and another to the buyer, so each client has an advocate while the firm holds both relationships. The broker over both licensees must keep each side's confidences apart and is often treated as a dual agent. Only some states recognize it, and their rules differ.

A transaction broker helps one or both parties complete a deal without acting as an advocate for either. Some states treat this as a non-agency role, others as limited representation, and not every state offers it. Either way, duties of honesty, care and proper handling of funds remain, and disclosing known material facts usually does too. A party who assumes this broker is fighting for them has misread the role.

A subagent is a cooperating broker who works for the seller through the listing broker, even while showing homes to a buyer. That left the buyer without an advocate, and it could expose the seller and listing broker to liability for another firm's acts. Buyer representation gained legal footing in most states during the 1990s, and subagency became far less common, though your state may still allow it.

A principal can answer for what an agent does within the scope of the agency, and a broker can answer for licensees working under the broker, even without personal fault. State law and the facts decide how far this reaches. Federal fair housing rules separately hold a person liable for an agent's or employee's discrimination, whether or not that person knew.

An agency ends by its own terms or by what happens to it. The term can expire, the purpose can be achieved, or the parties can agree to end it. Either side can usually walk away, by revocation or renunciation, though that may be a breach with damages. Death or incapacity of a party and destruction of the property generally end it by operation of law.

An agency coupled with an interest exists when the agent holds a stake in the property itself, not merely a right to a fee. Because the power protects that stake, the principal cannot revoke it alone, and death or incapacity does not usually end it either. A broker expecting a commission does not qualify: hoping to earn a fee is not an interest in the property.

A client's private facts, such as finances, motives or how low they would have gone, generally stay confidential after the deal closes and after the agency ends, unless the client agrees or the law compels disclosure. Some things were never confidential: public records, and material facts your state requires you to disclose. Confidentiality also never lets you conceal a known defect or help with fraud.

Documents, keys and money you handle for a client belong to the client. You must keep them safe, report on them on request, and hand them over or return them on time. Client funds go into the trust or escrow account your state requires, never into your own or the firm's operating money. Mixing the two is commingling, and taking the funds for your own or another unauthorized use is conversion.

A client is a person you represent under an agency relationship, so you owe loyalty, advice and confidentiality. A customer is someone you deal with but do not represent, owed honesty and fair dealing. Ask whether an agency exists before deciding how much to share. Calling someone a client, or acting as their advisor, can itself create an implied agency.

Loyalty bars you from quietly profiting from a client. If you, a relative, or a company you control want to buy the property, say so and get informed consent, as your state's license law may require in writing. Any other benefit you receive from the deal must be disclosed too, and disclosure does not make every payment lawful. An undisclosed gain can cost you the commission.

People should always know who they are dealing with. Your state's license law usually requires your advertising to show the licensed brokerage, and often restricts how a team name may appear so it is not mistaken for a firm. In negotiation, tell the other side you are a licensee, including when you buy or sell for your own account.

Commission rates are generally not set by law: each brokerage sets its own fee, and the client and broker agree on it. Competing brokers cannot agree on commissions, because an agreement among competitors to fix prices violates the federal antitrust laws. A firm may still refuse to discount: negotiable means open to bargaining, not that a lower fee is guaranteed.

Three listing types differ on who can earn the fee. Under an exclusive right to sell, the listing broker earns it no matter who finds the buyer, including the owner. Under an exclusive agency, the owner can sell alone and pay nothing, but another broker's sale still pays the listing broker. An open listing pays only the broker who produces the buyer. Many states ban or discourage net listings.

A listing spells out what the owner authorized: the property, the price, the term with its end date, the fee, and when that fee is owed. The fee is set by negotiation between owner and broker. A protection clause, if included, keeps the broker's claim alive for a set period after expiration. Check your state's required terms and your brokerage's form.

Ask who produced the buyer and what kind of listing is in force. If the owner finds the buyer, an exclusive right to sell still pays the broker, while an exclusive agency or open listing does not. If another broker finds the buyer, an exclusive form still pays the listing broker, and an open listing pays only the broker who produced the buyer. The contract may add its own conditions.

An open listing gives you a non-exclusive right to earn a fee if you produce the buyer, while the owner and other brokers remain free to sell. Joining an MLS is separate: an MLS is a private organization, and its rules, not agency law, decide what a participant must submit or share. Those rules have changed and differ by MLS, so check the current ones for your market rather than assume.

In a net listing, the owner names the amount they want, and the broker keeps whatever the sale brings above it. That ties your pay to the owner's lack of information: the less the owner knows about value, the more you can earn. Many states ban or discourage it for that reason. Where it is allowed, your price advice is likely to draw closer scrutiny.

A listing is generally expected to identify the parties and the property, state the price and the fee, run for a stated term, and carry the signatures your state requires. Your state's law decides which of these are essential to enforce it. A definite end date matters because it stops an owner being tied to a broker indefinitely, and many states require one. Without it, a listing can fail or expose you to discipline.

A listing ends when its term runs out, the property sells, both sides sign a release, or generally by law on a party's death or the property's destruction. An owner usually has the power to revoke early yet may not have the right: revoking without cause can leave the owner owing damages or the fee, and a broker who walks away can owe too. The contract and your state's law govern.

A protection clause, also called a carryover clause, keeps your claim alive for a set period after a listing expires, if the owner sells to someone you introduced during the term. It stops an owner waiting out the term to dodge the fee. Many clauses fall away once the owner signs a new exclusive listing with another broker, so the owner does not pay twice. Read the clause itself.

Procuring cause identifies the broker whose efforts actually brought about the sale, not merely who first mentioned the property. Disputes tend to ask whether an unbroken chain of events runs from that broker's work to the closed deal, or whether the buyer dropped away and someone else restarted it. Brokers may have to arbitrate such a dispute under rules they agreed to, and each case turns on its facts.

A commission is generally earned when you do what the listing requires, classically producing a ready, willing and able buyer on the owner's terms or a deal the owner accepts. Payment usually comes later, at closing. The contract, and in some states the case law, can change this, for example by making the fee depend on closing, so do not assume a failed sale leaves a fee owed.

A buyer representation agreement is a written contract setting out your role as the buyer's agent. It states the term, the services, and how and how much you are paid, all negotiated. Exclusive forms commit the buyer to you for the term, and non-exclusive forms do not. The buyer may pay you directly, or your fee may come from the seller's side. MLS rules on these have changed and state law may add its own, so check both before relying on a form.

An MLS is a private organization whose rules bind its participants, and it is not a government body. Its rules cover things like data accuracy, cooperating with other brokers, and the timing of marketing and submitting a listing. Those rules have changed, including on compensation, and they differ by MLS, so check the current ones for your market before acting on what you learned earlier.

Many brokers give the owner a property-condition questionnaire at listing, and some states make a form of it mandatory. It gathers what the owner knows while there is time to address problems, before a buyer relies on it. The owner answers it, not you. Its answers do not excuse you from disclosing a material fact you already know, and you should never coach a false answer.

The listing is your permission to enter and market the property, so each step should trace back to it. Yard signs, lockboxes, photos and showings, along with any limits on them, belong in the agreement or a signed addendum. An owner can restrict access or refuse a lockbox. Acting beyond what was authorized exposes you and your broker, even if the marketing helped.

An expired listing ran out its term and a canceled one was ended early, so the broker no longer holds it, though a protection clause may survive. A withdrawn listing is off the market while the contract often continues, and approaching that owner can interfere with it. Status names vary by MLS, and do-not-call rules can still govern your phone calls.

Under the federal E-SIGN Act, a contract or signature cannot be denied effect solely because it is electronic, so an e-signed purchase contract can bind. The Act does not make private parties use e-signatures, and a consumer must consent before a required written notice goes electronic. It does not reach wills, court papers, or foreclosure and eviction notices on a primary residence. State law and your county recorder decide what a deed needs.

A valid contract needs offer and acceptance, consideration, capacity and a lawful purpose. Acceptance must match the offer exactly: change one term and you have made a counteroffer, which ends the original. To be enforceable, a contract to sell real property generally must also be in writing and signed by the party being held to it, under the statute of frauds.

These labels answer different questions. Bilateral trades promise for promise; unilateral binds one side, as an option does. Express is stated; implied is shown by conduct. Executory still has work to do, so a signed sale stays executory until closing, when it is executed. Valid binds both sides, void has no effect, voidable lets one party cancel, and unenforceable may look fine but no court will order it performed.

A purchase agreement sets the sale terms and gives the buyer equitable title on signing, while legal title waits for the deed at closing. Earnest money shows good faith but is not needed for validity. Contingencies tie a party's duty to an event, and a time-is-of-the-essence clause makes the dates strict.

After a breach, the other party may seek compensatory damages for actual loss, or specific performance, a court order to complete the sale, available because each parcel of land is treated as unique. Liquidated damages are a sum agreed in advance, and rescission unwinds the deal. The contract itself may narrow these options.

An assignment transfers your rights, but you usually stay liable unless released; a novation replaces the party or contract and ends the old duty. An option is a paid right to buy that binds only the owner. Under a land contract, or contract for deed, the seller keeps legal title until the buyer finishes paying.

An offer can generally be withdrawn any time until acceptance is communicated, even if it promised to stay open, unless the other side paid to hold it through an option. A counteroffer can be pulled the same way. The counteroffer already killed the original offer, so the party who countered cannot go back and accept it unless it is made again.

Signing an offer does not by itself form a contract: the acceptance must be communicated in the way the offer requires, which is why delivery of the signed document matters. Purchase forms usually define delivery, including whether an email or notice to an agent counts. That wording can override a default such as the mailbox rule, under which a mailed acceptance takes effect when sent.

Consideration is what each side gives up to make the deal binding, usually the buyer's promise to pay and the seller's promise to convey. Earnest money is a deposit showing good faith. A seller may insist on one, but a contract with no deposit can still be valid, because the mutual promises are the consideration.

In most states a contract with a minor is voidable, and only the minor may disaffirm it, before or within a reasonable time after reaching adulthood. The adult stays bound unless the minor does. A minor who disaffirms can generally recover the deposit, though a few states treat a minor's contract about land more strictly. Voidable is not void: the contract stands until the minor acts.

A contract with an illegal purpose is void from the start, so a court generally will not help either side enforce it, and agreeing to go ahead anyway cures nothing. Compare an unenforceable contract, such as an oral sale of land, which is valid but cannot be upheld in court.

A contingency ties a party's duty to an event such as loan approval, an inspection, an appraisal or the sale of the buyer's home, usually with a deadline and a notice step. Waiving one strengthens an offer but gives up that exit. Silence at the deadline may satisfy the condition or end the contract, depending on the form.

An inspection contingency gives the buyer time to inspect and then respond. You may ask the seller to repair or give a credit, but a request is not a right: the seller may agree, counter or refuse, depending on the contract and the market. A contract conditioned on a satisfactory inspection lets the buyer walk away without penalty, as long as the contract's response window is met.

A lender generally bases the loan on the lower of the price and the appraised value, so a low appraisal leaves a gap someone must cover. The usual moves are to renegotiate the price, have the buyer pay the difference in cash, or cancel. Whether the buyer can leave at no cost depends on the contract, which is what an appraisal contingency is for.

Once a sale contract is signed, the buyer holds equitable title and the seller keeps legal title until closing. The traditional common-law rule therefore put risk of loss on the buyer from signing. A number of states have shifted it to the seller until title or possession passes, and most contracts allocate the risk expressly, so check the casualty clause and your state's rule.

A time-is-of-the-essence clause makes each stated date a strict term. Without it, courts commonly tolerate a reasonable delay; with it, missing a deadline by even a day can be a breach that lets the other side cancel or claim default. If a date has to move, get a signed written extension before it passes.

An addendum adds terms that become part of the contract at signing, such as a special condition. An amendment changes a contract already in force, such as a new closing date, and every party must sign it. Timing is the test. Because a real estate contract must be written, an oral change is risky and may not hold.

If the buyer defaults, the seller may keep the deposit where the contract calls it liquidated damages, or otherwise sue for loss. If the seller defaults, the buyer may seek the deposit back, damages or specific performance. Earnest money settles only what the contract says it settles, and a disputed deposit usually needs a signed release or court order to move.

A liquidated damages clause fixes the amount owed on breach in advance, often the earnest money. Courts generally enforce it when actual harm was hard to estimate at signing and the sum was a reasonable forecast, and refuse it when the amount works as a penalty. Some states add limits. It usually replaces, rather than adds to, a suit for more.

Rescission unwinds a contract and tries to put both parties back where they started, usually returning deposits. It usually comes by mutual agreement or by court order for grounds such as fraud or material mistake. Cancellation ends what is still owed going forward but does not itself undo the past, so a deposit may stay in dispute.

Two rules that sound alike do different jobs. The statute of frauds says which agreements must be written and signed to be enforced, such as a sale contract or a longer lease. The statute of limitations says how long you have to sue, which varies by state and type of claim. Meeting one tells you nothing about the other.

An option is a paid, one-way right to buy on set terms within a set period: the owner must sell if the holder exercises, and the holder may walk away. A right of first refusal usually fixes no price and cannot force a sale. It applies only if the owner decides to sell, when the holder may match a real offer from someone else.

The federal Fair Housing Act protects seven classes: race, color, religion, sex, national origin, disability and familial status. Familial status means a household with a child under 18, and it covers someone pregnant or securing custody. Age, income and marital status are not on the federal list, though your state may add them.

Steering pushes a buyer or renter toward or away from an area because of a protected class. Blockbusting urges owners to sell by citing who is moving in. Redlining denies or reprices credit or insurance because of an area's racial or other protected-class makeup. An ad stating a preference is a separate violation of its own.

An accommodation changes a rule, policy or service, such as reserving a parking space or allowing an assistance animal in a no-pets building. A modification changes the premises, usually at the resident's expense, such as grab bars. Separately, familial-status rules do not apply to qualifying older-persons housing: 62 and over, or 55 and over with at least 80 percent of occupied units holding someone 55 or older.

The Fair Housing Act exempts an owner of no more than three single-family houses on a sale or rental made with no broker or agent, and only one such sale in 24 months if the owner was not the latest resident. It also exempts units in a building for up to four families where the owner lives, the so-called Mrs. Murphy exemption. Neither covers a discriminatory ad, and the 1866 Act, which has no exemptions, still bars racial discrimination.

Disability means a physical or mental impairment that substantially limits a major life activity, a record of one, or being regarded as having one. Current illegal drug use is excluded. A request needs no special wording, as long as it makes clear a change is sought because of a disability. You may not probe an applicant's diagnosis or its severity, though a provider may ask for limited verification when the need is not apparent.

Buildings of four or more units built for first occupancy after March 13, 1991 must include accessibility from the start. With an elevator, every unit is covered; without one, only ground-floor units are. Features include an accessible route and entrance, usable common areas, wide doors, reachable controls and walls reinforced for grab bars.

An ad may not indicate a preference or limit based on a protected class, whatever the writer meant. Words, photos, symbols and even where you advertise can send the signal. Describe the property, not the ideal occupant: adults only and perfect for a young couple point at people. The ban reaches otherwise exempt owners too.

Steering does not require hostility. Telling a family they would be more comfortable elsewhere, or leaving an area off a showing list, restricts choice because of a protected class, however kindly meant. Let the client set the search criteria, show what matches, and point them to public data to judge an area themselves.

Blockbusting is urging owners to sell or rent, for profit, by claiming that people of a protected class are moving in, or that values or schools will fall as a result. The profit need not arrive; it only has to be a motive. Keep the target straight: steering works on buyers and renters, blockbusting on current owners.

Redlining means refusing or repricing loans or insurance because of an area's protected-class makeup rather than the applicant or the property. The Fair Housing Act reaches lenders, and the Equal Credit Opportunity Act adds a second federal lending rule. Declining a loan on documented credit grounds is not redlining.

An appraiser may weigh many factors but not a protected class, and using an appraisal you know or should know is tainted is itself a violation. Bias often surfaces by comparison, such as a very different second value. A borrower on a first-lien home loan gets a copy, can ask the lender to review it, and can file a fair housing complaint.

A facially neutral practice can violate the Fair Housing Act through its discriminatory effect, without intent: the Supreme Court recognized such claims in Inclusive Communities (2015). HUD's 2023 rule set a three-step test: the challenger proves the effect, the defendant proves a substantial, legitimate need, and the challenger can still win with a less discriminatory alternative. In 2026 HUD proposed removing that rule, so check its status.

A court can award actual and punitive damages, injunctions and attorney fees, and civil penalties can apply in government cases, climbing for repeat violations. A broker is vicariously liable for an agent or employee's discrimination, whether or not the broker knew, so a clean personal record is no shield.

An injured person can file a HUD complaint within one year, or sue in federal or state court within two, and neither route requires the other. The Attorney General can sue over a pattern or practice. Testers, who pose as home seekers with no plan to buy or rent, are legal, and giving them false availability information because of a protected class is a violation.

A HUD complaint goes to investigation, often referred to a certified state or local agency. Conciliation runs alongside it, aiming at a voluntary written agreement. If HUD finds reasonable cause it issues a charge, and either side can elect federal court instead of an administrative hearing, with the Attorney General bringing that suit.

The Sherman Act bars agreements among competitors that unreasonably restrain trade. Brokers who fix a commission rate or divide territories or customers risk felony prosecution, with fines and prison, and an agreement to shun a discount firm invites antitrust liability too. Each firm sets its own fees, and a commission stays negotiable with the client, so never discuss a standard rate with competitors.

The Civil Rights Act of 1866, now 42 U.S.C. 1982, gives all citizens the same property rights as white citizens. It reaches race and has no exemptions. Jones v. Alfred H. Mayer Co. (1968) held that it bars private as well as public racial discrimination in property sales, so an owner exempt under the 1968 Act can still be sued over race.

The Fair Housing Act reaches dwellings: any building used or meant as a residence, plus vacant land offered for residential building. It covers sale, rental, advertising, lending and brokerage, not commercial property. Narrow carve-outs cover small owners, older-persons housing, a religious group's noncommercial housing and a private club's lodging.

The 1968 Act covered race, color, religion and national origin. A 1974 amendment added sex. The Fair Housing Amendments Act of 1988 added disability and familial status, along with an accessibility rule for new multifamily buildings and a HUD administrative process of charges and hearings.

A no-pets rule does not settle a request for an assistance animal, because the animal is a disability accommodation rather than a pet. The provider weighs it like any accommodation, and refusal rests on narrow grounds such as a direct threat or an undue burden. The ADA's narrower service-animal definition is a separate rule for businesses open to the public.

The federal list is a floor, not a ceiling. The Act leaves in place state and local laws protecting the same rights, and many add classes, such as marital status, source of income or age. Check your state and city law, because conduct that is legal federally can still be illegal where you practice.

Commercial property answers to a different law. Title III of the ADA requires businesses serving the public to give people with disabilities equal access, and commercial facilities such as offices must meet its design standards when built or altered. For a place serving the public, landlord and tenant both carry the duty; a lease can only divide it between them. The Fair Housing Act governs dwellings instead.

For most housing built before 1978, a seller or landlord must give an EPA-approved pamphlet and disclose known lead paint and available reports before the other party is bound. A buyer, not a tenant, gets 10 days to inspect unless the parties agree otherwise or the buyer waives in writing. This rule makes no one test or remove paint. Agents on the seller's side must ensure compliance; a buyer's agent paid only by the buyer is outside the rule.

If you or your firm has an ownership tie to a settlement provider such as a title or mortgage company, federal RESPA rules allow the referral only on conditions. You give written disclosure of the relationship and estimated charges on a separate page by the time of the referral, you do not require use of that provider, and the only extra value you receive is a return on ownership, never one that tracks referrals.

RESPA bars giving or accepting a fee, kickback or other thing of value for referring settlement business on a federally related mortgage loan. Thing of value is broad: discounts, trips and credits all count, and an agreement can be inferred from a pattern of conduct. A referral on its own is not a service you can be paid for. Pay for work actually performed is allowed, as are cooperative splits among real estate brokers and agents.

A material fact is one likely to affect a reasonable person's decision to buy or the price they would pay. A latent defect is hidden from an ordinary look. You generally must disclose known ones, even to a party you do not represent. An event with no physical effect, such as a past death on site, depends on your state.

Earnest money and other funds you hold for others belong in a separate trust account. Commingling is mixing them with your own or the firm's money, a violation even when nobody loses a cent and no bad intent exists, though some states allow a small broker balance for bank fees. Conversion goes further: spending them on something they were not held for, which can be treated as a crime.

Puffing is sales talk no reasonable buyer treats as fact, like calling a home charming. A misrepresentation is a false statement of material fact, or the concealment of one, that the other party reasonably relies on. Fraud adds intent: you know it is false and mean to induce reliance. Ask whether it could be checked and shown false; a roof's age can.

Many states use a standard property-condition form the seller completes from the seller's own knowledge. Your job is to get it to the buyer as the law requires, not to fill it out or reword it. If you know an answer is wrong, your own disclosure duty still applies, so raise it with the seller and your broker.

You generally must disclose material defects you know about, and some states add those that visible warning signs should have led you to. A condition a buyer could reasonably find may reduce your duty to point it out, where your state recognizes that limit. It does not excuse a false answer, concealment, or silence about a hidden defect you know of. The exact standard varies by state.

You can be liable for a false statement you honestly believed, if you failed to use reasonable care in checking and the buyer reasonably relied on it to their harm. Repeating a square footage from an old listing is the classic case. No intent is needed, which separates it from fraud. Verify before you state a fact.

Caveat emptor, or buyer beware, once left nearly all risk with the buyer. Most states have narrowed it: a seller who knows of a latent defect the buyer could not reasonably discover must generally disclose it, and licensees carry duties of their own. Buyers still need to inspect, since conditions they can see remain theirs to check.

A stigmatized property has no physical defect, only a reputation from an event such as a death, a crime or a rumor. States differ sharply on whether you must volunteer this, and some protect a licensee who stays silent, so learn your own state's rule. Silence where allowed is different from a false answer to a direct question.

Sex-offender registries are public and change often, so anything you recall can be out of date. When a buyer asks whether an offender lives nearby, point them to the official state registry or the national public search site. Do not vouch for a neighborhood as safe or unsafe, which can also drift into steering. Some states add a required notice.

An as-is clause means the seller will not repair or stand behind the property's condition. It generally does not cancel the seller's duty to disclose known material defects, excuse a false statement, or protect a licensee who hides a problem. Nor does it mean no inspection: a buyer may still inspect if the contract allows it.

A home warranty is a service contract that pays toward repairing listed systems and appliances, usually with a service fee and exclusions such as prior conditions. It does not replace disclosure or an inspection. Federal rules count homeowner's warranties as settlement services, so on a federally related loan you may not take a fee for the referral itself, and telling the client about the fee does not fix that. Ask your broker first.

Your state's license law sets how quickly a deposit must reach the trust account and when that clock starts. Regulators generally expect a ledger for each transaction, a running balance, and a regular reconciliation of the statement to those records. A record that does not reconcile can be a violation even when no money is missing.

When both parties claim a deposit and neither will sign a release, the broker holding it generally should not pick a winner. The usual ways out are a mutual written instruction, a court order, or a procedure your state or the contract provides. Interpleader is a suit in which the holder pays the money into court and asks the court to decide.

Errors and omissions insurance is professional liability coverage for claims arising from your licensed work, such as a negligent mistake or a missed disclosure, and it often pays defense costs. Policies typically exclude intentional fraud and dishonest acts, and commonly misuse of client funds. Terms vary, and some states require it.

Scammers break into real estate email accounts, watch for closings, then send buyers fake last-minute wiring changes that look genuine. Teach clients never to act on wire instructions in an email: confirm the account details in person or by a phone number agreed earlier, not one in the message. Keep financial details out of email. If money went out, call the sending institution at once to ask for a recall and report it to the FBI.

Your state's license law sets what a brokerage must keep and for how long, generally covering listings, contracts, disclosures, closing statements and trust records. Federal rules add periods of their own: lead-paint disclosure records stay at least 3 years from the sale or lease start, and documents under RESPA's kickback and affiliated-business sections 5 years from execution. Keep to the longest that applies.

Giving legal advice or drafting legal documents without a law license is unauthorized practice. Most states let you fill in the blanks on an approved form for a deal you are handling. Writing new legal clauses, or telling a client what a term legally means for them, generally crosses the line, and that is the moment to refer them to counsel.

A tenant screening report is a consumer report, and a rental application gives you a business reason to pull one. If it leads you to deny the unit or offer worse terms, such as a larger deposit, federal law requires an adverse action notice naming who supplied it, plus the right to a free copy and to dispute it.

Write your rental criteria down and run every applicant through the same steps, because different standards by protected class are discrimination. Reasonable government limits on occupants stay allowed. A cap of your own, tighter than those limits, can shut out families with children and invite a familial-status claim.

An estate for years runs for a set period and stops on its own at the end, even if that period is only a few months. A periodic tenancy renews each period until someone gives notice. A tenancy at will has no set term and lasts while both sides agree. A tenancy at sufferance is a holdover whose right to possess has ended.

A gross lease charges flat rent and the owner pays operating costs. A net lease shifts costs to the tenant: usually taxes in a single net, adding insurance in a double net and maintenance in a triple net, though the lease wording controls. A percentage lease adds a share of sales. A graduated lease raises rent on a schedule.

An assignment transfers the tenant's whole remaining interest; a sublease transfers only part. Either way the original tenant usually stays liable. Actual eviction removes the tenant. Constructive eviction is landlord-caused conditions that make the place unusable, and the tenant generally must leave within a reasonable time to claim it. A deposit secures the tenant's performance.

A property management agreement usually creates a general agency: you act for the owner on a range of ongoing tasks, not one transaction. You owe the owner fidelity, but that never reaches an instruction to screen out a protected class. Fair housing duties run to every applicant, and your own discriminatory act is your liability.

A workable lease names the parties, describes the premises, and states the term and rent. The writing requirement comes from your state's statute of frauds: a lease longer than a set period must be in writing, and state law sets that line. A short oral lease can be valid, though it is harder to prove.

These protect different things. The implied warranty of habitability, recognized for residential leases in most states, concerns condition: no heat or water can breach it. The covenant of quiet enjoyment concerns possession: the landlord may not interfere with the tenant's use, so a lockout or repeated intrusion can breach it.

A residential landlord usually must keep the structure and essential systems working, while the tenant keeps the unit clean and reports problems; a commercial lease often shifts more to the tenant. A landlord may generally enter for repairs, inspections or showings. Your state sets any required notice, and emergencies are the usual exception.

Treat a deposit as the tenant's money: hold it as your state requires, often apart from operating funds. At move-out, deductions generally cover unpaid rent and damage beyond normal wear and tear, itemized in writing. Your state sets any cap and the return deadline. In some states, missing that deadline forfeits the landlord's right to keep any of it.

A step clause fixes raises in advance: $2,000 monthly rent rising $100 a year is $2,200 in year three. An index clause follows a published measure: a 3% rise on $2,000 adds $60 a month. A pass-through bills a share of cost increases: 10% of a $20,000 rise is $2,000 a year. Only the step shows the cost up front.

Say base rent is $48,000 a year plus 6% of sales above a breakpoint. Base rent divided by the percentage gives the natural breakpoint, $800,000. On $1,000,000 in sales, the overage is 6% of $200,000, or $12,000, for $60,000 total. The classic error applies 6% to all sales and adds base rent, giving $108,000.

In a ground lease the tenant rents only the land, often for decades, and builds or owns the building on it. The owner keeps title and collects rent; the tenant avoids buying the land. When the term ends, the improvements generally pass to the landowner unless the lease says otherwise, so the tenant's position shrinks with the term.

An option to renew lets the tenant extend on stated terms. An option to purchase lets the tenant buy at a stated price within a stated period, and only the owner is bound unless the tenant exercises it. A right of first refusal usually names no price and cannot force a sale: if the owner takes a third party's offer, the tenant gets the first chance to match it.

A fixed-term lease ends on its expiration date, generally with no notice. Surrender is an early end by mutual agreement: the tenant gives possession back and the landlord accepts. A serious breach may let the other side end it, subject to notice and cure terms. The lease or state law usually decides what happens if the premises are destroyed.

Eviction runs through a court: required notice, then an unlawful detainer or similar action if the tenant stays, then a judgment, then removal by a sheriff or other officer. Changing locks, cutting utilities or moving belongings out is self-help, which most states bar for residential tenants. Notice periods differ by state.

Most states bar a landlord from evicting, raising rent or cutting services because a tenant complained to a code agency or requested repairs. The tenant raises this as a defense. Many statutes presume retaliation when the landlord acts soon after the complaint, so the landlord must show a real reason. Your state sets that window.

A management plan starts from what the owner wants: steady cash flow, appreciation, or readying to sell. It turns that goal into decisions on rents, staffing, maintenance, capital projects and the budget, based on the market and the building. The same building can warrant different plans for different owners, so it is more than a maintenance schedule.

A stabilized budget shows a typical year, leaving out one-time swings. Reserves save for big, predictable replacements: a $60,000 roof with a 20-year life needs $3,000 a year. Variance reporting compares actual to budget and explains the gap: $12,000 spent against $10,000 budgeted is $2,000 over, or 20%.

Every risk gets one of four answers. Avoid it by removing the activity, such as closing a pool. Control it by lowering the odds, such as adding lighting. Transfer it to an insurer or by contract. Retain it, often through a deductible. A managed property commonly carries property, general liability and loss-of-rents coverage.

Licensing exists to protect the public, not the profession. A license sets a minimum standard of competence through education and an exam, and it gives the state a hook: it can investigate a licensee and take the license away for misconduct. Each state writes its own law, and a license marks a floor rather than excellence.

A broker can operate independently: run a firm, hold client money in a trust account, and take listings in the firm's name. A salesperson works only under a sponsoring broker, and a listing the salesperson brings in belongs to the broker. Brokers usually need more education and experience. Titles vary by state.

A salesperson's license usually sits under one sponsoring broker, and licensed work happens only through that broker. Client agreements run to the broker, who answers for what affiliated licensees do within that work, and most states require reasonable supervision. When a salesperson changes firms, listings generally stay behind.

For federal tax, a licensed agent is a statutory nonemployee when substantially all pay is tied to sales or output rather than hours, and a written contract says the agent will not be treated as an employee for federal tax. That answer stops at tax. State license law generally still requires the broker to supervise.

An employer withholds income, Social Security and Medicare taxes from wages, pays its matching share and unemployment tax, and often adds benefits. A contractor generally gets none of that and handles their own tax. Outside the statutory rules, the label does not decide it: the IRS looks at who has the right to control the work.

Commission belongs to the brokerage, because the client's agreement runs to the broker. The client or the closing pays the broker, who then pays the salesperson under their written agreement. A salesperson who takes a fee directly from a customer, even a thank-you, is generally violating license law. Amounts and splits are negotiated.

A broker may generally pay a referral fee to another licensed broker, and federal settlement rules carve out cooperative brokerage arrangements like that. The carve-out stops at brokerage fee splits, so money for steering a client to a lender is a different problem. Paying an unlicensed person for a lead is generally barred by state law.

A broker price opinion is a licensee's estimate of probable selling price. It is not an appraisal. Federal law bars using one as the primary basis of value for a mortgage on the purchase of a consumer's principal dwelling. Your state decides whether a licensee may give one for a fee, and appraisals belong to licensed appraisers.

A written policy manual is how a broker supervises more people than one person can watch. It sets procedures for trust money, advertising, fair housing, agency disclosure and file review, and it shows a regulator a system existed. The trap is treating the document as the supervision: a manual nobody is trained on protects little.

Regulators generally expect a broker to keep transaction files, such as listings, contracts, disclosures and closing statements, plus trust account records, such as ledgers and reconciliations. An audit may be routine or follow a complaint. Your state sets how long you keep them, and the files belong to the broker rather than the agent.

A license runs for a renewal cycle your state sets. You keep it by renewing on time, paying the fee and usually finishing continuing education, because rules and practice change after the exam. Working after a license lapses is unlicensed activity, which can also cost you the right to collect a commission.

A regulator can respond on a rising scale: reprimand, fine, required education, suspension, then revocation. Because a license is a valuable right, due process generally requires notice and a chance to be heard first, and the decision can usually be appealed. Discipline does not depend on a criminal conviction.

Many states keep a recovery or guaranty fund, paid for by licensee fees. It compensates a member of the public, usually one holding an uncollectable court judgment against a licensee for fraud or similar misconduct, up to limits your state sets. When it pays, the licensee typically must reimburse it, and many states suspend or revoke the license until that happens.

An unlicensed assistant can handle administrative work: scheduling, ordering documents, updating files, and preparing marketing for a licensee to review. The line falls at anything needing a license, such as soliciting, showing, discussing terms or negotiating. Your state draws the exact line, and the licensee and broker answer for the assistant.

A branch office extends the same firm rather than starting a new business. Many states require it to be registered and placed under a named managing broker who supervises it day to day. That manager takes on a real duty, and the principal broker generally remains responsible. Distance does not excuse thinner supervision.

A corporation, LLC or partnership generally may do brokerage only if the entity holds a license, and a person with a broker license qualifies it as the designated broker answering for its conduct. Officers or partners who do licensed work generally need licenses too. Forming an entity does not shield that broker from license discipline.

A license works only in the state that issued it. To do licensed work elsewhere, you generally need that state's license, sometimes eased by reciprocity, or you work with a local broker under a cooperative agreement. Doing neither is unlicensed activity, even on one deal, and it can cost you the fee.

License law is public law: the state writes it, a regulator enforces it, and sanctions reach the license. A trade association's code binds members like a contract, enforced by the association's own panels with fines, training or loss of membership. One act can trigger both, but an association cannot revoke a license.

RESPA bars paying or accepting anything of value for referring settlement business on a federally related mortgage loan, and bars splitting a fee unless services were actually performed. A seller also cannot require the buyer to use a particular title insurer. Ordinary commission splits between brokers remain lawful.

The borrower must receive the Closing Disclosure at least three business days before consummation, the moment of becoming bound on the loan. Saturdays count here; Sundays and federal holidays do not. Only three changes restart the wait: an APR gone inaccurate, a new loan product, or an added prepayment penalty. Other changes are corrected without a new wait. A borrower can waive the wait only for a genuine personal financial emergency.

The person responsible for closing generally reports the sale on Form 1099-S, with exceptions such as a certified principal residence. When the seller is a foreign person, FIRPTA generally makes the buyer the withholding agent: 15 percent of the amount realized, not of the gain. A buyer who fails to withhold may owe the tax. Exceptions exist, so send specifics to a tax adviser.

Escrow puts a neutral third party between buyer and seller. The holder keeps funds and documents and releases them only when every condition is met, favoring neither side. Do not confuse this with a mortgage escrow account, which pays taxes and insurance after closing. Who serves as escrow holder varies by state.

Escrow instructions are the written directions both parties sign, and they define what the holder may do. The holder cannot act on one side's request alone, even to fix an obvious problem, and a change needs both signatures. If the parties dispute a deposit, the holder normally keeps it until they agree or a court decides.

A typical sequence: accepted offer and earnest money, disclosures and inspection, loan application and appraisal, title search and commitment, loan approval, Closing Disclosure, walk-through, signing, funding, recording. The contract sets the real deadlines and they vary, so track each contingency date, not only closing.

A title commitment is an insurer's conditional promise to issue a policy on stated terms. On the common form, Schedule A names the insured, the property, the estate and the amount. Schedule B lists requirements to meet before closing, such as paying off a lien, and exceptions the policy will not cover, such as an easement. Forms vary by state. Clear the requirements; have the buyer weigh the exceptions.

A contract usually gives the buyer a window to object in writing to title defects and the seller a period to cure them. If the seller cannot or will not cure, the buyer typically chooses between taking title as it stands and terminating with the deposit returned. The dates vary, and missing one can waive the objection.

The closing agent orders a written payoff statement from each lienholder, good through a stated date. At closing, those liens are paid from the seller's proceeds. The lienholder then issues a satisfaction or release, which must be recorded. Paying the debt does not by itself take the lien off the public record.

A walk-through shortly before closing confirms the agreed condition: vacant if promised, repairs done, included items present, no new damage. It is not a second inspection and does not reopen price or terms. A real problem goes back to the contract, often ending in a repair, a credit or an agreed holdback.

A debit is what a party is charged at closing; a credit is what that party receives or has already paid. The sale price is a buyer debit and a seller credit. The buyer's deposit and new loan are buyer credits. A seller's loan payoff is a seller debit only. So some items hit both columns and some touch just one.

A proration splits a recurring cost at the closing date. If the seller prepaid taxes or left fuel in the tank, the buyer reimburses the unused share: seller credit, buyer debit. Taxes still unpaid, interest accrued on an assumed loan and rent collected in advance go the other way: seller debit, buyer credit. Day counts and who owns closing day come from the contract or local custom.

Who pays transfer tax, title insurance, recording and surveys is set by the contract first and local custom second. Custom differs by state and even by county, so one line can fall to the seller in one market and the buyer in the next. Almost all of it is negotiable unless a law or the loan program says otherwise.

Funding means the lender's money reaches the closing agent, who can then pay it out. In wet funding, money moves at or right after signing. In dry funding, signing comes first and funds follow lender review, so the seller waits. Once the lender's conditions are met, the agent disburses per the settlement statement, paying liens and costs and sending the seller the net. State law and lender practice decide which applies.

Recording puts a deed or mortgage in the public record and gives notice to everyone. Lien priority generally follows recording order, subject to exceptions such as property tax liens and to your state's recording law. So the deed and new mortgage go to record promptly. An unrecorded deed can bind the parties but stays at risk against a later good-faith buyer.

Possession normally passes at closing or at a time the contract states. If the seller needs to stay, a written post-closing occupancy agreement, often called a rent-back, sets the term, rent, deposit, insurance and what happens on a late move-out. A loan's occupancy terms can limit how long this works.

A holdback lets a deal close with one item unfinished, such as a repair. The parties and any lender agree in writing on the amount withheld, the work, the deadline and who releases the money, and the escrow holder keeps the funds until then. It takes everyone's consent, and lenders may limit or refuse it, so raise it early.

A missing signature usually means re-signing, or a valid power of attorney the lender and title insurer accept. A late wire usually holds disbursement until the funds land, and any change in wire instructions gets confirmed by calling a known number, since scammers target closings. A last-minute lien needs a payoff, a release or the title insurer's agreement. Take any dispute to your broker or counsel.

Federal law bars deceptive advertising, so have the evidence for a claim before it runs. An omission can mislead as much as a false statement when it hides a fact your claim makes important. Bait advertising is an insincere offer meant to draw leads and switch them, such as promoting a home you know is already sold.

A commercial email needs a clear opt-out and a valid physical postal address, and it must identify itself as an ad unless the recipient gave prior consent. Headers and subject lines cannot mislead. Honor an opt-out within 10 business days. Messages mainly completing an agreed deal are transactional and escape most of this.

Before prospecting by phone, check the national Do Not Call registry and your firm's own list. Solicitation calls to homes cannot run before 8 a.m. or after 9 p.m. at the called person's location, and FCC rules extend these limits to texts to wireless numbers. Autodialed marketing to cell phones and prerecorded marketing calls generally need prior written consent. Prior permission and existing-relationship exceptions exist, with limits.

Your firm may set its fees and policies alone; the law targets agreement between competitors. So avoid wording that suggests a rate comes from outside the firm, such as the going rate or what everyone charges. Saying what your own firm charges is fine when it is plain the fee is your firm's own decision. Keep your rates out of talk with competitors, apart from the split on a specific deal.

Price fixing is any agreement among competitors that restricts price competition, and for brokers that reaches commission rates, splits and fee structures. Nobody has to charge the identical price, and no written deal is needed. Arguing that the agreed price was reasonable is no defense. Telling a client your own fee is fine.

Market allocation is an agreement among competing firms to divide business rather than compete for it, by territory, price range or type of customer: you keep the east side, they keep luxury homes. No price needs to be mentioned. A firm deciding alone to focus on one neighborhood is ordinary strategy.

A group boycott is an agreement among competitors to refuse to deal with a rival, such as brokers agreeing not to show a discount broker's listings. A single firm deciding alone whom to work with is treated very differently, because the problem is the agreement. A casual remark at a meeting can be evidence of one.

A Sherman Act violation is a felony, and both firms and individuals can be prosecuted, so an agent cannot hide behind the brokerage. Prison time is possible for individuals. Injured parties can also sue and recover three times their damages plus attorney fees, which is what treble damages means.

Most states require advertising to show the brokerage's licensed name, and many also expect the agent's name, so readers know a licensed firm stands behind the ad. Hiding that a licensee is behind an ad, a blind ad, is the classic violation. The same idea covers websites, profiles and social posts.

A team name can imply something untrue. A name ending in Realty or Properties may read as an independent brokerage when the team is part of one firm, so states that regulate team names generally want the sponsoring broker shown clearly. Calling yourself a broker, or using a credential you have not earned, is misrepresentation.

Square footage changes with the measuring method, so state your source rather than vouching for a number. School assignments change, so point buyers to the district. A photo edited to hide power lines or a defect misleads like a false statement. Repeating a seller's claim does not protect you when you know, or should know, it is wrong.

Listing data flows from an MLS or your own feed to portals you do not control, and copies can lag or go wrong. You generally answer for what you enter, so correct errors at the source and ask a portal to fix a known error. MLS display rules are private rules, and they have changed, so check the current ones.

A tie makes one product available only if the buyer also takes a second. A developer who sells a lot only if the buyer lists a future home with the developer's brokerage is the textbook picture. The harm comes when strength in the first product forces the second. A second service the buyer can freely decline is not a tie.

A per se violation is illegal once the agreement is shown: price fixing and market division cannot be excused by arguing the result was reasonable. Other restraints get the rule of reason, which asks whether a restraint likely harms competition and, if so, whether its benefits outweigh that harm. Only certain group boycotts are per se.