22. A 'For Sale by Owner' property owner has offered a flat fee to any licensee who procures a buyer. The owner's terms specify that 50% of the fee is payable upon contract acceptance, with the other 50% payable upon transfer of title. A CORRECT statement about this arrangement is that it:
Answer: A
This arrangement is acceptable if the fee is paid to the employing broker.
The proposed commission structure by the 'For Sale by Owner' property owner is acceptable, provided that the fee is directed to the employing broker of the licensee who procures the buyer. This aligns with the regulations governing real estate transactions.
A) acceptable if the fee is paid to the employing broker
This option is correct because real estate licensees must receive their commissions through their employing broker, as stipulated by licensing laws. The arrangement outlined by the property owner complies with this requirement, thereby making it an acceptable practice.
B) acceptable if the fee does not exceed the prevailing commission rate
This option is incorrect. While commission rates may vary, the key factor is not the amount of the fee but rather the compliance with the structure of payment to the licensee's broker. Simply adhering to the prevailing commission rate does not address the legality of the payment terms.
C) in violation of license law since all compensation must be paid at closing
This option is incorrect. License law does not mandate that all compensation must be paid at closing; rather, it allows for payment structures as long as they are compliant with brokerage agreements and state regulations. Hence, it is permissible to have a fee structure that includes payments at different stages.
D) in violation of license law since compensation for real estate sales can come only from listed properties
This option is incorrect. Compensation for real estate transactions can come from various sources, including private agreements between sellers and brokers. The key is that the broker must be involved in the transaction, which is satisfied in this scenario.
Conclusion
The arrangement is permissible under real estate licensing laws as long as the fee is directed to the employing broker of the licensee. Options B, C, and D misinterpret the regulations regarding commission structures and payment timing, while Option A correctly identifies the acceptable condition for this arrangement. Thus, it stands as the definitive correct answer.