Restricted License

Definition

A restricted license refers to a limited form of a real estate license granted to an agent or broker who has been found in violation of state real estate laws or regulations. This type of license allows the individual to perform only specific activities set forth by the state’s real estate commission while under probationary status. The restriction is typically imposed as a disciplinary measure, and may include limitations on certain kinds of transactions, requirements for additional training, supervision mandates, or periodic reviews.

Examples

Example 1:

Becky was found in violation of state real estate law in conducting her brokerage business. She was allowed to conduct a few prescribed activities under a restricted license until such time as the state real estate commission decided to reinstate her license.

Example 2:

John, a real estate agent, was accused of unethical practice. The state real estate board investigated the claims and decided to place John’s license under restriction, allowing him only to conduct property appraisals while requiring additional ethics courses.

Example 3:

Samantha breached advertising regulations for her listings. As a result, the state’s real estate regulatory body imposed a restricted license upon her, limiting her activities to property management under close supervision.

Frequently Asked Questions (FAQs)

What is a restricted license in real estate?

A restricted license in real estate allows an agent or broker to practice in a limited capacity, with specified restrictions as imposed by a state real estate commission due to a violation of laws or ethical guidelines.

How does one get a restricted license in real estate?

A restricted license is typically issued after a disciplinary action taken by the state’s real estate regulatory body due to violations such as unethical practices, legal infractions, or professional misconduct.

Can a restricted license be reinstated to a full license?

Yes, after fulfilling the terms of probation and any other conditions imposed by the real estate commission, the licensee can apply for the reinstatement of their full license status. This process usually involves a thorough review and approval by the commission.

What types of restrictions might be placed on a real estate licensee with a restricted license?

The restrictions can vary but common types include limitations on the kinds of transactions the licensee can handle, supervisory requirements, mandatory additional education, and regular performance reviews.

Who oversees the conditions of a restricted license?

Typically, the state’s real estate commission or regulatory board oversees the compliance with conditions tied to a restricted license and decides on the potential for reinstatement to full licensure.

Probation

A conditional freedom granted to a real estate licensee who has been found in violation of regulations, where the licensee must follow specific restrictions and conditions for a certain period.

Reinstatement

The process of returning a restricted or suspended real estate license to its full, unrestricted status after fulfilling certain conditions or requirements set by the regulatory body.

Licensing Board

A governmental or quasi-governmental body responsible for issuing and regulating real estate licenses within a specific jurisdiction, including enforcement actions such as imposing restrictions or suspensions.

Disciplinary Action

Measures taken by a real estate licensing authority against a licensee in response to violations, unethical conduct, or other infractions. These actions can range from warnings to fines, suspensions, or restricted licenses.

Online Resources

References

National Association of Realtors. “NAR Code of Ethics.”
ARELLO. “State Real Estate Regulatory Agencies.”
Real Estate Commission Regulations available in state-specific resources such as California DRE, Texas Real Estate Commission guidelines, etc.

Suggested Books for Further Studies

“Real Estate Law, 8th Edition” by Marianne Jennings: A comprehensive guide covering the fundamental principles of real estate law.
“The Real Estate Wholesaling Bible” by Than Merrill: For insights into various real estate practices, including compliance and regulatory considerations.
“Real Estate License Exam Prep” by Kaplan: Aids in preparing for real estate licensure exams, including understanding restrictions and disciplinary measures.

Real Estate Basics: Restricted License Fundamentals Quiz

### What is a restricted license in real estate? - [ ] A license allowing full practice with additional jurisdictions. - [x] A license allowing limited practice under probation due to violations. - [ ] A temporary real estate license for new agents. - [ ] A license void of any oversight or conditions. > **Explanation:** A restricted license in real estate allows for limited practice under probation following a violation of laws or regulations, with specific restrictions set by the real estate commission. ### What typically leads to the issuance of a restricted license? - [x] Violations of state real estate laws or ethical codes. - [ ] Excellent performance reviews. - [ ] Completing advanced real estate courses. - [ ] Multiple successful transactions in a short period. > **Explanation:** The issuance of a restricted license is typically a consequence of violating state real estate laws or ethical codes, serving as a disciplinary measure. ### Who imposes the restrictions on a restricted real estate license? - [ ] The federal government. - [x] The state real estate commission or regulatory board. - [ ] The local county office. - [ ] The real estate brokerage firm. > **Explanation:** Restrictions on a real estate license are imposed by the state real estate commission or regulatory board following a violation of state laws or policies. ### What is the primary goal of imposing a restricted license on a real estate agent? - [ ] To recognize the agent’s accomplishments. - [x] To ensure compliance with regulations and correct misconduct. - [ ] To offer temporary advanced licensing. - [ ] To expand the agent’s area of operation. > **Explanation:** The primary goal of a restricted license is to ensure compliance with regulations and to correct misconduct while allowing limited practice under specified conditions. ### Can someone with a restricted license buy or sell properties independently? - [ ] Yes, they can practice as usual. - [ ] Only in different states. - [x] Only under certain limited conditions as dictated by the commission. - [ ] No, they are prohibited from real estate activities altogether. > **Explanation:** Someone with a restricted license can buy or sell properties only under certain limited conditions set by the real estate commission overseeing their probation. ### After how long can a restricted license potentially be reinstated to a full license? - [ ] Immediately, without any conditions. - [ ] Never, it’s a permanent status. - [x] After fulfilling conditions and obtaining commission approval. - [ ] After one year, automatically. > **Explanation:** A restricted license can potentially be reinstated after fulfilling all imposed conditions and obtaining approval from the respective real estate commission or regulatory body. ### Does a restricted license require additional training or education for the licensee? - [ ] Never required. - [ ] Only for brokers, not agents. - [x] Often, it may include specific training or additional education. - [ ] Only for commercial real estate transactions. > **Explanation:** Often, a restricted license includes conditions that might require specific additional training or education for the licensee to regain full licensing status. ### What is a common supervisory condition under a restricted license? - [ ] Full autonomy with only bi-annual reviews. - [ ] Real estate team leader review. - [x] Close oversight by a designated broker or supervisor. - [ ] Oversight by a federal examiner only. > **Explanation:** A common supervisory condition under a restricted license includes close and regular oversight by a designated supervising broker or supervisor appointed to ensure adherence to the restrictions. ### Why would continuing periodic reviews be important for a restricted license? - [ ] To raise licensing fees. - [x] To monitor compliance and ensure corrective progress. - [ ] To reduce legal avenues for the state board. - [ ] To expand an agent's practice areas. > **Explanation:** Periodic reviews are essential in monitoring compliance with the imposed conditions and ensuring the licensee makes corrective progress toward regaining full license status. ### What role does the licensee play in regaining a full license? - [x] Adhering to all restrictions and completing additional requirements. - [ ] Simply waiting out the probation period. - [ ] Transferring their practice to another state. - [ ] Avoiding industry exams. > **Explanation:** The licensee must adhere to all imposed restrictions and complete any additional requirements such as further education or training to regain a full license.