California Real Estate Salesperson Exam Practice - Quesiton 24

Question

Which one is considered unlawful compensation?

Selections

A. Agent received compensation directly from seller

B. Agent received compensation for consulting service provided to his friend on searching property

C. Agent received direct compensation in a sales transaction from a broker with whom agent has no employment relationship

D. None of the above

---

Answer: C

---

5 Keys Summary

• A real estate salesperson is legally required to be employed by and operate under the control and supervision of a licensed real estate broker.

• All compensation owed to a salesperson for services performed in a real estate transaction must be paid exclusively by their employing broker.

• Receiving direct compensation in a sales transaction from any broker or firm with whom the salesperson does not have an active employment relationship is considered unlawful compensation.

• This mandated structure ensures that the broker maintains required supervision and control over the salesperson's activities and income flow, making payment from any other entity a violation.

• The commission check is typically paid to the employing broker first, who then pays the salesperson according to their agreed-upon commission split.

Explanations

In California real estate law, a salesperson (often referred to simply as an "agent") cannot act independently and must be employed by a licensed broker.

All compensation for a salesperson's services in a real estate transaction must be paid by their employing broker. This means that a salesperson cannot receive payment directly from a seller.

Therefore, an agent (salesperson) receiving direct compensation in a sales transaction from a broker with whom they have no employment relationship is considered unlawful. This violates the established structure where a salesperson's earnings are channeled through their own employing broker, who then pays the salesperson according to their agreed-upon commission split.

Concepts Definitions

Unlawful Compensation: Receiving payment for real estate services in a manner that violates state real estate laws and regulations.

Broker-Salesperson Relationship: The legally defined employment relationship where a salesperson must be supervised by and compensated only by their employing broker.

Commission Payment Structure: The specific rules governing how real estate commissions are collected and distributed, emphasizing that salespersons receive compensation solely from their employing broker.

Affiliated Licensee: A real estate salesperson or associate broker employed by a broker.