Pennsylvania Real Estate Broker Licensing Examination

Key Concepts

Commission Structure & Duties (Chapter 4)

The State Real Estate Commission operates under the Real Estate Licensing and Registration Act (Act of Feb. 19, 1980, P.L. 15, No. 9). Its core powers and duties include:

• Section 401 — Duty to issue licenses and registration certificates to qualified applicants
• Section 402 — Approval of real estate schools
• Section 403 — Authority to examine applicants
• Section 404 — Power to promulgate regulations governing licensee conduct
• Section 404.1 — Continuing education requirements
• Section 406 — Administration and enforcement of the Act
• Section 407 — Setting and collecting fees
• Section 408 — Reporting to legislative committees

The Commission has broad enforcement authority, including the power to suspend, revoke, or refuse to renew licenses for violations.

Complaints, Investigations, Hearings & Appeals (Chapter 7)

• Section 701 — The Commission holds hearings on alleged violations. Formal proceedings follow administrative law procedures.
• Section 702 — Imputed knowledge and limitations: A broker is held responsible for the acts of licensees under their supervision. Knowledge of an associate or salesperson is imputed to the broker.
• Licensees have the right to appeal Commission decisions. Appeals follow the standard Pennsylvania administrative appeals process under the Administrative Agency Law.
• The Commission can impose civil penalties (Section 305) in addition to license suspension/revocation.
• Criminal penalties (Section 303) apply to…

Key Concepts

Activities Requiring a License (Section 301 & 201)

Any person who, for another and for a fee, commission, or other valuable consideration, performs the following must hold a license: - Negotiates or aids in locating/obtaining real estate for purchase, lease, or acquisition - Negotiates listings, sales, exchanges, leases, time shares, financing, or options - Manages real estate - Represents themselves as a real estate consultant, counselor, agent, or finder - Promotes sale, exchange, purchase, or rental of real estate - Performs a comparative market analysis (CMA) - Engages in or attempts to perform any of the above acts - Engages in a wholesale transaction (for themselves or another)

Types of Licenses — Broker Only

The Act distinguishes multiple broker license types: - Broker – The primary license for conducting real estate business - Associate Broker – A broker who is employed by another broker (holds broker qualifications but works under a broker) - Cemetery Broker – Specific to cemetery property transactions (Subchapter D, Section 531) - Rental Listing Referral Agent – Licensed to refer prospective tenants to rental listings (Section 561)

Key Concepts

Agency Relationships (Section 201 Definitions) An agency relationship exists when a broker or licensee acts as a fiduciary for a consumer by the consumer's express authority. There are five recognized relationship types under Chapter 6:

• Seller's Agent (§606.2): Fiduciary duties to the seller. Must disclose material facts about the buyer's ability to perform but cannot disclose seller's minimum acceptable price without authorization.
• Buyer's Broker (§606.3): Fiduciary duties to the buyer. Cannot disclose the buyer's maximum price without authorization.
• Dual Agent (§606.4): Represents both buyer and seller in the same transaction. Requires informed written consent from both parties. Duties are limited — cannot advise either party on price strategy.
• Designated Agent (§606.5): The broker assigns different licensees within the same firm to represent buyer and seller separately. The broker becomes a dual agent; the designated agents retain full fiduciary duties to their respective clients.
• Transaction Licensee (§606.6): Provides real estate services without an agency relationship. Owes honesty, good faith, and disclosure of material defects — but NOT fiduciary duties.

General Duties of All Licensees (§606.1) Regardless of relationship type, every licensee must: - Exercise reasonable professional skill and care - Deal honestly and in good faith - Disclose all known material defects - Account for all money and property received - Comply with state and federal laws

Key Concepts

Advertising (Act Section 604)

• All advertising must clearly identify the broker's name — a salesperson or associate broker cannot advertise independently under their own name alone.
• "Blind ads" (ads that omit the broker's name and imply the property is for sale by an individual) are prohibited.
• Internet/online listings are treated as advertising and must comply with the same disclosure requirements.
• Licensees may not advertise property without the written consent of the owner or the owner's authorized representative.

Broker/Salesperson Relations (Act Sections 603, 604)

• A salesperson must be employed by and operate under a licensed broker — they cannot act independently or receive compensation from anyone other than their employing broker (Section 603).
• An associate broker is a broker employed by another broker; the same supervision rules apply.
• The employing broker is responsible for the acts of their salespersons performed within the scope of employment (vicarious liability / imputed knowledge, Section 702).
• A salesperson cannot hold money in escrow under their own name — all deposits must be handled by the broker.
• Compensation flows only through the employing broker: a licensee cannot accept fees, commissions, or other valuable consideration directly from a buyer, seller, or another broker without going through their supervising broker.

Prohibited Conduct (Act Section 604)

Key prohibited acts under Section 604 include:

Key Concepts

Property Disclosures

• Seller's Property Disclosure Law requires sellers of residential property to complete a written disclosure statement before signing an agreement of sale. Buyers have the right to rescind the agreement within a specific period after receiving a late disclosure.
• Section 608.1 mandates a written agreement between broker and consumer before providing services. Oral agreements are not enforceable for commission purposes.
• Section 608.2 outlines mandatory provisions of sales contracts, including identification of parties, property description, purchase price, deposit terms, and financing contingencies.
• Section 608.3 requires a Comparative Market Analysis (CMA) disclosure — when a licensee performs a CMA, they must disclose in writing that it is not an appraisal and cannot be used as such.
• Section 608.6 governs Broker Price Opinions (BPOs): a BPO is a probable selling price estimate prepared by a broker, associate broker, or salesperson; it explicitly does not include an automated valuation model.

Documents, Contracts, and Forms

• Section 608.5 governs handling of deposits and escrows — brokers must place deposits in an escrow account promptly and cannot commingle with operating funds.
• Section 610 provides the right to cancel sales agreements for wholesale transactions within a statutory period.
• Section 609 grants buyers the right to cancel a time-share or campground membership purchase — typically within 5 calendar days of signing or receiving the public offering statement, whichever…

Key Concepts

Office Requirements (Section 601 — Broker Only)

• Every broker, cemetery broker, and rental listing referral agent must maintain a definite place of business in Pennsylvania. This is a broker-level obligation — salespersons do not have this requirement.
• The office must be open to the public and clearly identified as a real estate office.
• Each branch office must have a separate license issued by the State Real Estate Commission (SREC).
• The broker's license must be prominently displayed at the place of business.
• The SREC has authority to inspect broker offices to ensure compliance with the act. Only brokers (not salespersons or associate brokers) are subject to office inspections as a licensing compliance matter.
• A broker operating multiple offices must designate a licensed broker or associate broker to supervise each branch location.

Funds and Accounts (Section 608.5 — Handling of Deposits and Escrows)

• All deposits, down payments, and other escrow funds received by a broker must be placed in a separate escrow (trust) account — they must never be commingled with the broker's operating or personal funds.
• Commingling (mixing client funds with personal/business funds) is a prohibited act under Section 604 and grounds for license revocation.
• Conversion (using client funds for personal or business purposes) is a more serious violation and can result in criminal penalties under Section 303.
• The…