California Real Estate Practice Exam

An auctioneer who sells a business on which a Notice of Sale was properly recorded and published:

1. Is personally liable for any losses to seller's creditors

2. Must have a "Business Opportunity" license

3. Must have a "Securities Dealer" license

4. Only needs a Real Estate Broker's license

The correct answer is: Is personally liable for any losses to seller's creditors

In this scenario, the correct answer highlights the auctioneer's personal liability for losses to the seller's creditors. This situation arises from the nature of the auctioneer’s role in selling the business. When an auctioneer takes on the responsibility of selling a business, they are facilitating a process that can significantly impact the seller's financial obligations, including debts owed to creditors. If the auctioneer fails to act in the seller's best interest, or if their actions lead to a reduced sale price or failure to sell altogether, they could be held personally liable for those losses. This aligns with general principles of agency and fiduciary duty in real estate transactions, where the agent must protect the principal's interests. The other options provided do not address the specific responsibilities and liabilities that arise within this context of an auction. While having the appropriate licenses is essential for operating in real estate and business transactions, the nature of the liability discussed in the question is about the auctioneer's risk when they are actively involved in the selling process under existing financial burdens of the seller, rather than simply licensing requirements.