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9 chapters
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about 15 min read
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free
Most of real estate practice is state law written fifty ways, so no national guide can give you your state's deadlines or forms. What the states share is a set of questions: whom do you represent, what earns the fee, is there a binding contract, what must you disclose, and whose money are you holding. These chapters teach those shared concepts and the few federal rules that apply everywhere. A legal deadline or limit appears here only when a federal text states it; otherwise your state sets it. The state-law teaching is general professional knowledge, not a reading of any state's statute, so check your own. Orientation for study, not legal advice, and not affiliated with any state real estate commission or exam vendor.
Each chapter opens with the short version. Tap one to read the detail.
Every duty follows one question: is this person your client?
~2 min
Agency is a relationship, not a payment. Name the relationship first, because it decides who gets your loyalty and advice and who gets only your honesty.
A client is someone you represent, and that tie carries fiduciary duties: obedience, loyalty, disclosure, confidentiality, accounting and reasonable care, often remembered as OLD CAR. A customer is a person you deal with without representing them. You owe that person honesty and fair dealing, which in most states reaches the material facts you know. So a roof leak you know about goes to both people, while your advice on price goes to your client alone.
Paperwork does not settle which one you have. An agency can come from a written agreement, from conduct on both sides, from a principal approving your act afterward, or from estoppel, when a principal's own conduct led someone to rely on you. Picture a listing agent at an open house telling an unrepresented buyer, "Leave the negotiating to me, I'll get you a good price." Nothing was signed, yet that can be an implied agency, and with the listing in place it looks like an undisclosed dual agency.
Payment does not settle it either. A buyer's agent whose fee comes out of the seller's proceeds still works for the buyer.
States decide which structures exist: a dual agent serving both sides with informed consent and pushing for neither, designated agents inside one firm, or a transaction broker who assists without being anyone's advocate. When an agency ends, a client's confidences generally stay protected.
Rule: before you advise anyone or share anything, name the relationship, and let the agency you actually formed decide your duties rather than the party writing the check.
A listing answers one question: what earns the fee?
~2 min
The three listing types differ only in who can sell without paying you. Earning a fee and collecting it are separate events, and the contract controls both.
Learn the types as a test. Suppose the owner's sister buys the house with no help from anyone. Under an exclusive right to sell, your brokerage is still paid. Under an exclusive agency, the owner pays nothing, having kept the right to sell personally. Under an open listing, nobody is owed either. Now change one fact, so that another broker brings the buyer: both exclusive forms still pay your brokerage, and an open listing pays only that broker. A net listing, where you keep everything above the owner's figure, rewards you for what the owner does not know about value, so many states ban or discourage it.
Earned and paid are different moments. The classic rule says a fee is earned when you bring a ready, willing and able buyer who meets the owner's terms, and the money moves later at closing. When a deal dies in between, read the contract, since many forms make the fee depend on closing and some state case law does too. A protection clause keeps your claim alive after expiration for a buyer you introduced.
A commission is generally negotiated with the client rather than set by law, in a listing or a written buyer agreement alike. A multiple listing service (MLS) is a private organization whose rules bind participants, not the public. Those rules have changed, including on compensation, so check the current ones.
Rule: for any fee dispute, ask what the contract says earns the fee, then who produced the buyer, then whether payment depends on closing.
Ask in order: was it formed, is it enforceable, was it performed?
~2 min
Most contract errors come from mixing up labels that answer different questions. Test formation first, then enforceability, and only then what a breach allows.
Formation takes offer and acceptance, capacity, consideration and a lawful purpose, and acceptance has to match. Say a buyer offers $300,000, the seller counters at $310,000, the buyer refuses, and the seller then writes, "Fine, I accept your $300,000." There is still no contract. The counter ended the first offer, so that message is a new offer the buyer may ignore. Earnest money plays no part in this: the mutual promises are the consideration, and a deposit only shows good faith.
Void means no contract ever existed to enforce, as with an illegal purpose. Voidable means it stands until the protected party cancels: a minor may walk away, while the adult generally stays bound. Unenforceable means a court will not hold the parties to it, as with an oral sale of land, which the statute of frauds generally requires in writing. Federal law adds one point: a contract cannot lose its effect solely because it is electronic.
After signing, the buyer holds equitable title, an enforceable claim to ownership, until the deed passes, and a time-is-of-the-essence clause makes each date strict. On breach, the menu runs from compensatory damages to specific performance, an order forcing the sale through, which courts may grant because every parcel counts as unique.
Two pairs catch people. An assignment hands over your rights while you generally stay liable, and a novation, which everyone must agree to, swaps in a new party and ends your duty. An option binds the owner to sell if the holder exercises it, while a right of first refusal only lets its holder match a deal the owner chose to make.
Rule: when a contract question feels slippery, decide which stage it concerns and answer only that stage.
A federal floor with narrow gaps, and hiring a broker closes one
~2 min
Seven classes are protected, and steering, blockbusting and discriminatory ads are barred, with a kind motive no defense. The owner exemptions are small and never cover an ad, and the 1866 Act has no exemption for race.
Seven classes have federal fair housing protection: race, color, national origin, religion, sex, familial status and disability, which the regulation calls handicap. States and cities may add more, so treat the list as a floor. Steering narrows a home seeker's choices because of a class, and kindness is no defense: "You'd feel more comfortable across town" counts. Blockbusting urges owners to sell, for the speaker's profit, by talking about which class of people is moving in. Redlining refuses or reprices credit or insurance for an area because of the protected classes living there, and any housing ad that signals a preference is its own violation.
The two owner exemptions are narrow. One covers an owner holding at most three single-family houses, selling or renting with no broker or agent. The other covers units in an owner-occupied building for up to four families, and the no-broker condition is written only into the first. Neither lifts the ban on discriminatory ads. Religious groups, private clubs and older-persons housing have separate, limited rules.
So take an owner of one house who tells you, "Don't show it to families with kids." Using your services removes her exemption, you cannot follow the instruction, and a person is vicariously liable for an agent's or employee's discrimination even without knowing of it. Race adds a second statute: the Civil Rights Act of 1866, read in Jones v. Alfred H. Mayer Co. (1968) to reach private sales, has no exemptions.
For disability, an accommodation changes a rule, while a modification changes the premises, generally at the resident's expense. The Department of Housing and Urban Development's current rule also allows liability for a discriminatory effect without intent. The department proposed in 2026 to remove it and leave the question to the courts, so check its status.
Rule: an owner's instruction is never cover, so test the class, then the exemption, and remember the ad ban survives both.
What you say, what you stay silent about, and whose money you hold
~2 min
Liability grows from sales talk to careless error to fraud, and it does not require bad intent. Known material facts generally come out whatever the contract calls the sale, and trust money is never yours to mix.
Statements sit on a scale. Calling a home charming is puffing, which no reasonable buyer treats as fact. A false statement of material fact that someone relies on is misrepresentation, and fraud adds knowledge and intent. Say you tell a buyer the roof dates from 2019, copying an old listing, and it is far older. You believed it, but you did not check, and that can make you liable for negligence.
Silence has limits too. Most states have narrowed buyer beware for hidden defects in home sales, and you generally must disclose the material ones you know, even to someone you do not represent. An as-is clause shifts repairs but generally does not erase that duty. Whether a past death on site must be volunteered depends on your state.
One federal rule is fixed. For most homes built before 1978, the seller or landlord must act before the buyer or tenant is bound: hand over an approved pamphlet and reveal any lead paint or lead hazard they know of, plus available reports. A purchaser gets a 10-day inspection opportunity unless the parties agree in writing on another period or the purchaser waives it in writing. The rule itself requires no testing or removal. Agents must ensure compliance, except a buyer's representative paid entirely by the buyer.
Commingling mixes client funds with your own, a violation even if nothing is lost, and conversion uses them for something they were not held for. When both parties claim a deposit, the broker generally does not choose a winner: a signed release, a court order, an interpleader (a suit that hands the money to a court) or a procedure your state provides decides.
Rule: before you state a fact, ask whether you checked it and whether it would change a reasonable buyer's decision, and before you move money, ask whose it is.
How does the lease end, who pays what, and whom do you serve?
~2 min
The estate tells you how a tenancy ends, the lease type tells you who carries the costs, and the management agreement tells you whose agent you are. Most leasing confusion comes from answering one of these with another.
Start with how it ends. An estate for years has a fixed end and stops by itself, however short the term. A periodic tenancy rolls over until someone gives notice. A tenancy at will lasts while both sides want it, and a tenancy at sufferance describes a holdover with no remaining right to stay.
Then ask who pays. A gross lease bundles operating costs into the rent, and a net lease moves some or all of them to the tenant. A percentage lease charges extra once sales pass a breakpoint. With base rent of $36,000 and 5% overage, the natural breakpoint is $36,000 divided by 0.05, or $720,000. On $800,000 of sales the overage is 5% of $80,000, so the year totals $40,000. Adding 5% of all sales on top of base rent is the classic slip, and it gives $76,000.
An assignment transfers everything left of the term and a sublease only part, yet the original tenant usually stays liable either way. In a constructive eviction nobody removes the tenant: the landlord's failures make the place unusable, and a tenant who stays put generally cannot claim it. Most states also bar residential lockouts, so removal runs through a court. Your state sets deposit rules and notice periods.
A manager is usually a general agent, loyal to the owner up to the point the owner asks for something unlawful. If a tenant screening report is used to deny housing, federal law requires telling the applicant and naming the company that made it. The applicant must also hear of the right to dispute it and to request a free copy within 60 days.
Rule: classify the estate, the cost split and your own role before you answer anything about a lease.
The license runs through the broker, and so does the responsibility
~2 min
A salesperson acts only through a sponsoring broker, so client agreements, fees and supervision all run through the firm. Being a contractor for tax purposes changes none of that.
States license this work to protect the public. The rest follows from one structure: a salesperson acts only through a sponsoring broker. Client agreements run to the firm, so a listing generally stays behind when an agent leaves. Fees run to the firm too, then to the agent under their written agreement. If a grateful client hands an agent cash after closing, that money should go through the broker, because license law generally bars a salesperson from taking a fee directly.
The trap is reading a tax rule as a supervision rule. Federal tax law treats a licensed agent as a non-employee when substantially all pay depends on sales or output instead of hours, under a written contract saying so. "I'm an independent contractor, so my broker can't check my files" confuses two systems. That statute decides federal tax treatment, and your state's license law generally still requires supervision.
The same structure sorts everyday cases. Paying another licensed broker for a referral is generally fine, while paying an unlicensed person generally is not. An unlicensed assistant can generally schedule and prepare files but not solicit, show or negotiate. A license stops at the state line unless reciprocity or a cooperating local broker covers you. A broker price opinion is not an appraisal, and when a consumer buys a principal dwelling, federal law bars resting the mortgage on one as the primary basis of value.
Discipline climbs from reprimand to revocation, usually after notice and a hearing. A trade association's code binds its members privately, and the association cannot revoke a state license.
Rule: when you ask who may do something, also ask whose license it runs through.
A closing is a neutral holder, a federal clock and two columns
~2 min
The escrow holder follows joint instructions rather than either party. The loan disclosure runs on a federal waiting period with only three restarts, and every settlement line lands in a column for a reason.
The holder is neutral. An escrow holder acts on instructions both parties signed. If an unhappy buyer asks for the deposit back, one signature generally does not move it. Do not confuse this with the account a loan servicer runs for taxes and insurance once the loan is in place.
The clock is federal. On a typical consumer mortgage, the Closing Disclosure must reach the borrower at least three business days ahead of consummation, the point of becoming bound on the loan. For this rule Saturdays count, while Sundays and legal public holidays do not. The wait restarts for only three changes: an annual percentage rate (APR) that becomes inaccurate, a changed loan product, or an added prepayment penalty.
The columns follow the money. A debit is a charge to that party, and a credit is something received or already paid. The price hits both sides, but the buyer's new loan touches only the buyer and the seller's payoff only the seller. A proration divides a recurring cost at the closing date: taxes the seller prepaid mean a seller credit and buyer debit, and unpaid taxes reverse it. Contract, state law and local custom decide day counts and who pays which fee.
The Real Estate Settlement Procedures Act (RESPA) makes it unlawful to give or accept anything of value in exchange for referrals of settlement business on a federally related loan. Fee splits among real estate agents and brokers are excepted. Under the Foreign Investment in Real Property Tax Act (FIRPTA), a buyer generally withholds 15% of the amount realized from a foreign seller, not 15% of the gain. And wire instructions that arrive by email get confirmed through a number you already trust.
Rule: for any closing problem, ask who may act, which clock is running, and which column it belongs in.
Truth depends on what you say, antitrust on whom you agreed with
~2 min
Two separate bodies of law meet in marketing. Antitrust asks whether competitors reached an agreement, and advertising rules ask whether a claim is true and who is behind it.
Antitrust starts from one word: agreement. The Sherman Act reaches competitors who fix prices or divide customers and markets. They need not charge the same price, and arguing that the agreed price was reasonable does not help. Your firm can set its fee alone and say so, because stating what your firm charges is not itself the problem. Trouble starts with wording that hints at an outside or agreed rate, such as "the standard commission", and with rate talk among rivals.
Two brokers at lunch agreeing to stop showing a flat-fee firm's listings is a group boycott, and federal agencies name certain boycotts among restraints that may be treated as automatically unlawful. One broker deciding that privately raises a different question. Market division needs no mention of price: "you take the east side" is enough. Price fixing and market division are crimes reaching individuals as well as firms, and injured parties can seek up to three times their damages.
Bait advertising is an insincere offer meant to pull in leads and switch them. An edited photo or an unsourced square footage can mislead as much as a false sentence. Most states also require ads to show the licensed brokerage, so a blind ad can be a violation there.
Contact rules have a federal floor. Telephone solicitations to residential subscribers must stay between 8 a.m. and 9 p.m. at the called person's location and, with limited exceptions, respect the Do Not Call registry. Commercial email needs a working opt-out and a valid postal address, and an opt-out must be honored within 10 business days.
Rule: run two checks on any message, whether it is true and whether it reflects a decision your firm made alone.
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