The purpose of the recovery fund is to

• A. Ensure judgments against licensees will be collectible
• B. Subsidize license education
• C. Insure property titles
• D. Fund broker commissions

Answer: (A)

The purpose of the recovery fund is to protect consumers by ensuring there is money available to satisfy valid judgments against licensees who have caused financial harm. If a licensee commits fraud or misappropriates client funds and the licensee cannot fully pay a resulting judgment, a claimant can be compensated from the fund up to statutory limits. The fund is financed by license fees and penalties, not by covering general business costs or guaranteeing every real estate transaction.

It’s not intended to insure titles, subsidize education, or pay broker commissions. Those purposes belong to other systems or programs, whereas the recovery fund specifically serves to make sure wronged clients can recover a portion of their losses when a licensee’s misconduct is proven and a judgment is obtained.