Question 7

The license of a person is suspended after a claim has been paid from the Real Estate Recovery Fund.

When a claim is paid from the Real Estate Recovery Fund to settle a claim against a licensee, that person's license is suspended as a consequence of the settlement.

A) Active

This option is incorrect because an active status indicates that the licensee is currently authorized to practice. However, the payment from the Real Estate Recovery Fund leads to a suspension, not an active status.

B) Inactive

This option is also incorrect as an inactive status suggests that the licensee is not currently practicing but may be reinstated without further penalties. A suspension due to a claim payment is a more severe consequence than merely being inactive.

C) Reinstated

This choice is incorrect because reinstated implies that the license has been restored after having been revoked or suspended. In this context, the license is not reinstated; it is suspended following the payment from the Real Estate Recovery Fund.

D) Suspended

This option is correct because a suspension occurs when a claim is paid from the Real Estate Recovery Fund. This action reflects a serious implication for the licensee, indicating a disciplinary measure rather than allowing continued practice.

Conclusion

The license is suspended after a claim has been settled through the Real Estate Recovery Fund, which signifies a disciplinary action against the licensee. Options A, B, and C do not accurately represent the consequences of such a settlement, as they suggest either continued practice or a lesser penalty, which is not the case in this situation. Thus, option D is the only correct answer.