Real Estate Broker License Exam Professional Ethics, Antitrust, and Specialized Practice Syllabus

Professional Ethics, Antitrust, and Specialized Practice syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Professional Ethics, Antitrust, and Specialized Practice in Real Estate Broker License Exam, not a summary of it.

1. 1

   Ethics and Professional Conduct

   5 topics

   • Standard of care and competency
   • Code of ethics principles and complaint procedures
   • Misrepresentation, fraud, and puffing
   • Conflicts of interest and self-dealing
   • Anti-money laundering (AML) awareness and reporting
2. 2

   Antitrust and Advertising Law

   3 topics

   • Sherman and Clayton Act violations
     • Price fixing and commission collusion
     • Group boycotts, market allocation, and tie-ins
   • Truthful advertising and team/brokerage name rules
   • Digital marketing, social media, and online listing compliance
3. 3

   Property Management and Leasing

   4 topics

   • Leasehold estates and lease types
     • Gross, net, and percentage leases
     • Estate for years vs. periodic tenancy
   • Landlord-tenant law and security deposits
   • Property management agreements and broker duties
   • Fair housing in rentals and habitability standards
4. 4

   Real Estate Investment and Taxation

   3 topics

   • Investment analysis
     • Cap rate, cash-on-cash, and gross rent multiplier
     • Leverage and return on investment
   • Tax considerations
     • Depreciation and cost recovery
     • Capital gains and primary residence exclusion
     • 1031 like-kind exchanges
   • Construction, new development, and warranties

Professional Ethics, Antitrust, and Specialized Practice flashcards for Real Estate Broker License Exam

22 of 61 cards from the Professional Ethics, Antitrust, and Specialized Practice deck — real questions with worked answers.

1. What is the "standard of care" a real estate broker owes a client?

   The duty to act with the skill, knowledge, diligence, and competence that a reasonably prudent broker would exercise under similar circumstances, in the client's best interest.

2. Under most real estate license laws, what must a licensee do when a transaction requires expertise beyond their competence?

   Decline the engagement or advise the client to seek a qualified professional (e.g., attorney, accountant, engineer); practicing outside one's competence breaches the standard of care.

3. List the core fiduciary duties (often summarized as OLD CAR) a broker owes a principal.

   Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care and diligence.

4. What is the difference between negligent misrepresentation and innocent misrepresentation?

   Negligent misrepresentation is a false statement made carelessly without reasonable basis; innocent misrepresentation is a false statement made in good faith believing it true. Both can rescind a contract, but negligence may also create liability for damages.

5. Define "puffing" and explain why it is generally not actionable.

   Puffing is an exaggerated opinion or sales talk (e.g., "best view in town") rather than a statement of fact. It is not actionable because a reasonable buyer would not rely on it as a factual representation.

6. What three elements distinguish fraud from simple misrepresentation?

   Fraud requires (1) a false statement of material fact, (2) made knowingly or recklessly with intent to deceive, and (3) justifiable reliance causing harm. Misrepresentation lacks the intent-to-deceive element.

7. What is the difference between actual fraud and constructive fraud?

   Actual fraud involves intentional deception; constructive fraud is a breach of duty (e.g., failure to disclose by a fiduciary) that misleads, even without intent to deceive.

8. Under the NAR Code of Ethics, what are the three categories of duties a REALTOR owes?

   Duties to clients and customers, duties to the public, and duties to other REALTORS.

9. What is the procedural difference between an ethics complaint and an arbitration request filed with a local REALTOR association?

   An ethics complaint alleges a violation of the Code of Ethics (resulting in discipline); an arbitration request resolves a monetary dispute (typically over commissions) between members.

10. What body within a REALTOR association first reviews ethics complaints to decide if a hearing is warranted?

    The Grievance Committee, which screens complaints (like a grand jury) before forwarding meritorious ones to the Professional Standards Committee for a hearing.

11. What is a conflict of interest in a real estate transaction, and what is the licensee's primary obligation regarding it?

    A conflict of interest exists when the licensee's personal interest could compromise duties to the client. The licensee must fully disclose the conflict and obtain the client's informed written consent.

12. Define "self-dealing" by a real estate agent.

    Self-dealing occurs when an agent uses their position for personal gain at the client's expense, such as secretly buying the client's property (directly or through a relative/entity) or profiting from undisclosed markups.

13. When a licensee buys property listed by their own brokerage or sells their own property, what disclosure is required?

    They must disclose in writing that they hold a real estate license and their interest as a principal in the transaction, before or at the time of the offer.

14. What is an undisclosed dual agency and why is it prohibited?

    Representing both buyer and seller without both parties' informed written consent. It is prohibited because the agent cannot fully advocate for opposing interests, breaching loyalty and creating a conflict of interest.

15. What U.S. law established anti-money laundering (AML) requirements, and which industry first carried most reporting burdens?

    The Bank Secrecy Act (BSA), expanded by the USA PATRIOT Act; financial institutions (especially banks) carry the primary Suspicious Activity Report obligations, with FinCEN as the enforcing agency.

16. What are common "red flags" of money laundering in a real estate transaction?

    All-cash purchases (especially via shell companies/LLCs), buyers indifferent to price or property condition, funds from third parties, unusual wire transfers from high-risk jurisdictions, and reluctance to provide identity information.

17. What is FinCEN's Geographic Targeting Order (GTO) in real estate?

    An order requiring title companies to identify and report the beneficial owners behind all-cash purchases of high-value residential property by legal entities in designated metropolitan areas.

18. What is the purpose of a Suspicious Activity Report (SAR) and a key rule about it?

    A SAR reports potentially illicit transactions to FinCEN. It is confidential—"tipping off" (disclosing to the subject that a SAR was filed) is illegal.

19. What does the Sherman Antitrust Act prohibit in real estate?

    Contracts, combinations, or conspiracies that restrain trade—chiefly price-fixing of commissions, group boycotts, market allocation, and tie-in arrangements among competing brokerages.

20. Define commission price-fixing and explain why brokers must never discuss it with competitors.

    Price-fixing is an agreement among competing brokerages to set, standardize, or maintain commission rates. Even casual discussion can imply conspiracy; commissions must always be set independently and are negotiable.

21. What is a "group boycott" under antitrust law in real estate?

    An agreement among competitors to refuse to do business with (or to disadvantage) a particular broker—often a discount or non-traditional brokerage—to restrain competition. It is a per se violation.

22. What is "market allocation" and why is it illegal?

    An agreement among competing brokers to divide territories, customers, or property types to avoid competing. It is a per se antitrust violation under the Sherman Act.

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