Disciplinary actions can include censure, probation, suspension, or revocation of a license.
Before you read
Test yourself first: 5 questions
Question 1 of 5
Which of the following is most likely to be grounds for discipline by the Indiana Real Estate Commission?
Answer: B. Commingling client trust funds with personal or operating money is a serious violation and a common basis for disciplinary action. The other choices describe proper, lawful conduct.
Question 2 of 5
Which of the following actions by an Indiana licensee would MOST likely be grounds for disciplinary action by the Real Estate Commission?
Answer: C. Paying compensation or referral fees for licensed real estate activity to an unlicensed person is prohibited and is grounds for discipline. Presenting all offers, disclosing material defects, and segregating trust funds in escrow are all required, proper practices, not violations.
Question 3 of 5
An Indiana broker uses earnest money held in escrow to temporarily cover the firm's payroll, intending to replace it before closing. This act is BEST described as:
Answer: B. Using client trust funds for the broker's own purposes is conversion, the misappropriation of money belonging to another. It is a serious violation regardless of intent to repay and is grounds for license discipline by the Commission.
Question 4 of 5
Mixing a broker's own money with clients' escrow funds in the same account is best described in Indiana as:
Answer: B. Holding personal or business funds together with client trust funds is commingling, a violation of Indiana's trust-account requirements that can subject a licensee to discipline.
Question 5 of 5
Disciplinary actions against an Indiana real estate broker, such as suspension or revocation, are imposed by:
Answer: B. Authority to discipline licensees, including suspension or revocation, rests with the Indiana Real Estate Commission, administered through the Professional Licensing Agency, not with private trade or MLS boards.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- The Indiana Real Estate Commission investigates complaints and disciplines licensees for violations.
- Disciplinary actions can include censure, probation, suspension, or revocation of a license.
- The Commission may impose civil penalties (fines) and require remedial education.
- Grounds include fraud, misrepresentation, dishonest dealing, and violating license law or Commission rules.
- Commingling or conversion of client/escrow trust funds is a serious disciplinary violation.
- Indiana maintains a real estate Recovery Fund to reimburse consumers harmed by licensee wrongdoing.
- Recovery Fund payments follow a court judgment against a licensee and are subject to statutory caps.
- A licensee paid from the Recovery Fund typically has the license suspended until the fund is repaid.
Indiana License Discipline, Penalties & Recovery Fund Quick Sheet: FAQs
Is Indiana License Discipline, Penalties & Recovery Fund Quick Sheet on the real estate exam?
Yes. State License Law is a scored domain on the Indiana real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Indiana test this differently?
Indiana applies its own license law on top of the national portion. This page covers the Indiana rules specifically, which is what the state section of your exam tests.
