1.1 Arkansas Real Estate Commission (AREC)
Key Takeaways
- AREC regulates Arkansas real estate licensees under the Arkansas Real Estate License Law (Ark. Code Ann. Title 17, Chapter 42).
- The Commission has five members appointed by the Governor to three-year terms: three from the real estate profession and two public members (one consumer representative, one age-60+ elderly representative) per Ark. Code Ann. 17-42-201.
- AREC issues licenses, approves schools and courses, audits trust accounts, investigates complaints, holds disciplinary hearings, and administers the Real Estate Recovery Fund.
- AREC can deny, suspend, or revoke licenses, impose fines up to $1,000 per violation, and issue citation penalties for specific lapses.
- The exam is delivered by Pearson VUE; the salesperson exam has 110 scored questions (80 national + 30 state).
The Arkansas Real Estate Commission (AREC) is the state agency that licenses, regulates, and disciplines real estate brokers and salespersons under the Arkansas Real Estate License Law, codified at Ark. Code Ann. Title 17, Chapter 42. AREC sits within the Arkansas Department of Labor and Licensing.
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AREC Structure and Membership
Under Ark. Code Ann. § 17-42-201, the Commission consists of five members appointed by the Governor to three-year terms. The makeup balances industry expertise with public/consumer voice:
| Member Type | Number | Requirement |
|---|---|---|
| Real estate professionals | 3 | Licensed broker/salesperson (typically 5+ years licensed) |
| Consumer representative | 1 | Public member, not in the industry |
| Elderly representative | 1 | Public member representing persons age 60+ |
Common Trap: Many older study aids say AREC has "seven members, five brokers and two public." That is wrong. The correct answer is five members — three industry, two public (one consumer, one elderly). Expect this on the state portion.
Day-to-day operations are run by an Executive Director and staff, including an investigative section. The Commission itself sets policy, adopts regulations, and decides contested disciplinary cases at formal hearings.
Powers and Duties of AREC
AREC's authority is broad and exam-relevant. The Commission may:
| Function | What It Means |
|---|---|
| License | Process applications, set requirements, issue/renew/deny salesperson and broker licenses |
| Educate | Approve pre-license and post-license schools, courses, and instructors; set CE topics |
| Examine | Contract with Pearson VUE to develop and deliver the licensing exam |
| Investigate | Receive complaints and open investigations on its own initiative |
| Audit | Inspect broker trust accounts and transaction records, with or without notice |
| Discipline | Reprimand, fine, suspend, revoke; impose probation or required education |
| Administer the fund | Operate the Real Estate Recovery Fund and order payments to harmed consumers |
The License Law and AREC Regulations
Two layers of authority govern practice. The Real Estate License Law (the statute, enacted by the legislature) sets the framework: who must be licensed, exemptions, prohibited conduct, discipline, and the Recovery Fund. The AREC Regulations (rules the Commission adopts to implement the statute) fill in operational detail — application procedures, advertising standards, agency disclosure procedures, and the trust-account rules in Regulation 10. On the exam, a "violation of Commission regulations" is an independent ground for discipline, separate from violating the statute itself.
Exam Tip: When a question pairs a duty with an enforcement consequence, remember the chain: License Law sets the rule -> AREC regulation details it -> violating either can lead to discipline under § 17-42-308.
License Categories AREC Issues
Arkansas distinguishes several license levels, and the state portion expects you to know who can do what:
| License | Role |
|---|---|
| Salesperson | Works only under a sponsoring principal broker; cannot hold a trust account |
| Associate broker | Holds a broker license but works under a principal broker |
| Executive broker | A broker authorized to perform broker functions under a principal broker |
| Principal broker | The supervising broker responsible for the firm, its affiliates, and the trust account |
Exam Tip: Only a principal broker holds and is responsible for the firm's trust account. Salespersons and associate brokers operate under a principal broker's supervision.
A firm itself may be licensed (the brokerage entity), with a designated principal broker responsible for it. When you see a question about who is ultimately accountable for an office's conduct, trust funds, or supervision, the answer is the principal broker of the firm.
Who Must Be Licensed
The License Law (Ark. Code Ann. § 17-42-103) requires a license for anyone who, for compensation and on behalf of another, performs real estate acts such as listing, selling, buying, leasing, negotiating, or offering to do so. The key triggers are acting for another and expecting compensation.
Common Exemptions
| Exempt Party | Reason |
|---|---|
| An owner dealing with their own property | Not acting for another |
| A licensed attorney performing legal duties | Acting as counsel, not a broker |
| A person acting under a court order (executor, trustee, receiver) | Statutory authority |
| Salaried employees of a property owner for certain leasing tasks | Limited statutory exemption |
Exam Tip: The exemptions revolve around either not acting for another (owners) or separate legal authority (attorneys, court-appointed fiduciaries). A salesperson is never exempt from supervision: a salesperson's license is valid only while affiliated with and supervised by a principal broker.
How AREC Enforces the Law
AREC enforcement typically begins with a complaint (from a consumer, another licensee, or staff observation) or a routine trust-account audit. The investigative section gathers documents and statements; if a violation appears, the matter proceeds to a formal hearing before the Commission, where the licensee has due-process rights. Sanctions range from a reprimand to revocation, plus fines up to $1,000 per violation and possible restitution. We cover the full disciplinary process and the Recovery Fund later in this guide.
How many members serve on the Arkansas Real Estate Commission, and how are they composed?
Which body sets the operational detail (such as trust-account and agency-disclosure procedures) that implements the Real Estate License Law?
A homeowner sells their own house without a broker. Do they need a real estate license?