California Real Estate Practice Exam

No real estate salesperson may be licensed in the employ of a corporation real estate broker licensee, or perform acts for which a real estate license is required on behalf of the corporation if:

1. the salesperson is a director or officer of the corporation

2. the salesperson, singly or together with other real estate salespersons licensed in the employ of the corporation, owns or controls, directly or indirectly, a majority of the outstanding stock of the corporation

3. both a and b

4. none of the above

The correct answer is: the salesperson is a director or officer of the corporation

The correct answer identifies a key regulatory provision in California real estate law regarding the licensure of real estate salespersons in relation to corporate brokers. A real estate salesperson cannot be licensed under a corporation if they are a director or officer of that corporation. This ensures that there is a clear separation of roles within the corporate structure to avoid potential conflicts of interest and to maintain a level of professional integrity. When a person serves as both a director or officer and as a salesperson, it can create scenarios where their decisions as an officer may conflict with their obligations as a salesperson. This regulation is designed to prevent any misuse of power or unfair advantages within the real estate market. By enforcing this rule, the California Department of Real Estate helps to maintain ethical standards within the industry. Including the option that the salesperson owns or controls a majority of the outstanding stock of the corporation adds another layer of conflict that this regulation seeks to address. However, the essential point of the question revolves around the role of the salesperson within the corporation's hierarchy. Thus, the provision highlights the importance of structural integrity in corporate formation and operation in the real estate sector, making it clear that individuals in significant positions within the corporate framework should not simultaneously perform sales activities on behalf of the corporation.