definitions include anyone who engages in the business of representing others in the transfer of legal interests in real estate and exclude anyone who does not fit the usual concept of a "real estate agent," such as attorneys, lenders, and other providers of settlement services. Although the licensing acts of the selected sample states hold to this very vague generalization, they do contain a number of semantic and substantive differences. Exhibit II-10 presents many of the specific requirements.

The licensing statutes basically establish that anyone falling within the specified jurisdictional definitions must:

satisfy minimum licensing prerequisites;

obtain the appropriate license; and

conduct all brokerage activities in accordance with specified
rules.

The statutes also establish a state regulatory commission, which is charged with the responsibilities of formulating more specific regulations, handling the licensing procedures, and enforcing the provisions of the act and the rules of the commission.

The licensing requirements vary significantly from state to state but typically involve some approved formal education, successful completion of an examination administered by the regulatory commission, and payment of fees. Some grades of licenses involve experience prerequisites as well. An overview of the requirements in the selected sample states for the past decade suggests the emergence of several trends, such as:

As with state licensing standards for most professions, the licensing requirements established by the real estate commissions vary from state to state. The selected sample sites illustrate the differences quite well. Washington, D.C., for example, has no formal educational prerequisites for a broker's license. Texas, on the other hand, requires 225 classroom hours and California demands a minimum of 18 credit hours of approved college level courses. A summary of some of the licensing prerequisites for the sample sites is set forth in Exhibit II-11.

The rules of conduct contained in the state licensing acts frequently are quite extensive, and detailed. They usually reiterate the common law responsibilities of a broker, and supplement them through particular definition of specific procedures and through expansion into different areas of concern. However, the common law principles establishing the duties of a broker basically provide the foundation for the lists of proscribed activities. The specific regulations describe required procedures for the handling of earnest money2, and place considerable emphasis on attempting to define conflicts of interest, dishonesty, and fraudulent practices. They frequently expand a broker's responsibilities by establishing regulations that also protect home-buyers and the general public. It is important to note that while the states generally hold to these basic guidelines, the actual regulatory systems vary significantly in the definition of the duties of the brokerage industry.

It is of special relevance that some states have contained in their regulations specific provisions that pertain to many of the same problems which RESPA was designed to correct. For example, the Florida Board of Real Estate's Rule 21V-10.13 expressly prohibits "any compensation, fee, kickback, rebate, bonus or other remuneration or valuable consideration, for the placement of...any business transaction which forms a part of, or is incident to" the sale. However, unlike RESPA, the Florida law permits such kickbacks in the event of full disclosure.

Licensing acts tend to provide for a number of different methods of enforcing the established regulations, and consequently provide a number of different remedies as well. Some of these remedies are recoverable in civil proceedings, and some of the sanctions establish criminal liabilities. The regulatory commissions primarily become involved with the purely administrative and disciplinary actions related to the suspension or revocation of the license. Again, the states have addressed these issues with diverse regulatory plans. However, it can be noted that these enforcement provisions

1Cal. Bus. & Prof. Code 10176, 10177 (West); Colo. Rev. Stat. 12-61-112, 12-61-114; D. C. Code Enycl. 45-1408 (West); Fla. Stat. Ann. 475.25 (West); Mass. Gen. Laws Ann. ch. 112, 87AAA (West); Mo. Ann. Stat. 339.100 (Vernon); Tex. Rev. Civ. Stat. Ann. art. 65732 15 (4) (Vernon); Wash. Rev. Code Ann. 18,85.230.

2Florida, for example, has established particularly exacting accounting procedures, even to the point of specifying the number of columns on accounting sheets and the title of each column.

3Careful reading of the statute indicates that this provision does not permit a homeowner to prevent a kickback, since disclosure itself seems to be sufficient to avoid violation. Disobedience of an instruction which prevents the kickback might be proscribed by some general constraints of Florida Statutes 475.25(b), or by the "Duty of Obedience" described in Section 10.07 of the Board of Real Estate Handbook, which is not a rule.

have become substantially more detailed in recent years, not only as a result of concern over the ethics of the marketplace, but also in response to due process and equal protection considerations.

Another provision recently added to some licensing statutes is one for real estate recovery funds. Such funds are established to provide for recovery of damages against brokers who eventually prove to be judgment-proof. Of course, recovery from these funds typically requires that the aggrieved party has already taken the broker to court, obtained a final judgment and attempted to collect from the defendant. Exhibit II-12 shows the sample sites that have established a recovery fund, the upper limit of recovery, and the amount each member of. the brokerage industry is required to contribute in order to finance the fund. An important question suggested by the development of state recovery funds is exactly what conditions have prompted this legislative response.

Similarly, it would be interesting to know whether states that enact stricter regulations have experienced a significant reduction in the types of undesirable behavior that the statutes were designed to combat. reports have implied that all of the current licensing laws now in effect expressly prohibit the complete range of objectionable activities within the brokerage industry, but that regulatory commissions do not, in fact, provide effective enforcement of the laws.

Unauthorized Practice of Law

Just as the brokerage regulators establish their licensing jurisdiction by defining specific brokerage activities, the regulators of the legal profession establish their licensing jurisdiction by defining what constitutes the practice of law. This function has historically been reserved to the judicial branch of the state government, and enforcement is typically carried out by the bar associations. As the brokerage licensing statutes establish the regulatory environment within the brokerage industry, the Unauthorized Practice of Law constraints define some of the buoundaries of the environment:

"The potential legal complications [in a real estate transaction]
have moved some courts to insist that only the legal profession
is capable of adequately servicing the public need...It is clear,
however, that courts are not justified in maintaining that the
lawyer is the only person with the requisite morality, educa-
tion, and intelligence to select or draft an instrument with
legal significance.

lUnauthorized Practice of Law by Real Estate Brokers in New Jersey: A Call for Compromise," Rutgers Camdem Law Journal, Vol. 2. (1970), at p.339, cf. Arkansas Bar Ass'n v. Block, 230 Ark. 430, 323 S.W. 2d 912 cert. denied, 361 U.S. 836 (1959); New Jersey Bar Ass'n v. Northern N.J. Mortgage Associates, 32 N.J. 430, 181 A. 2d 257 (1960), modified, 34 N.J. 301, 169 A. 2d 150 (1961); Hexter Title & Abstract Co. v. Grievance Comm. 142 Tex. 506, 179 S.W. 2d 846 (1944); State Bar v. Arizona Land Title & Trust Co., 90 Ariz. 76, 366 P. 2d 1 (1961), modified, 91 Ariz. 293, 371 P. 2d 1020 (1962).