Idaho Real Estate Practice Exam

Can a broker pay an inactive licensee a referral fee or commission?

1. Yes, if they are inactive for less than six months

2. No, all referral fees must be paid through licensee's brokerage firm

3. Yes, as long as the fee is under a certain amount

4. No, unless the real estate license is reinstated

The correct answer is: No, all referral fees must be paid through licensee's brokerage firm

In the context of real estate transactions, an inactive licensee is someone who holds a real estate license but is not currently authorized to engage in real estate activities, such as showing properties or negotiating sales. The regulation states that all compensation, including referral fees and commissions, must be processed through the brokerage firm under which the licensee is affiliated. When it comes to referral fees, the law is designed to protect the integrity of the industry and ensure that all commissions are handled appropriately through licensed entities. Since an inactive licensee cannot legally participate in real estate transactions, allowing direct payment of referral fees could create potential legal and ethical issues. Therefore, any compensation must go through the broker's firm, ensuring that the transaction complies with legal standards and maintains industry best practices. The limitation on the ability of inactive licensees to receive compensation reflects a clear intention to regulate the activities of those holding a real estate license, emphasizing the importance of active engagement in the industry to qualify for earnings.