A temporary shift away from a full-time real estate career does not mean abandoning professional credentials. Placing a real estate license “on hold,” formally known as inactive status, is a common solution for agents needing a pause without sacrificing their hard-earned qualification. This process allows a licensee to maintain their status with the state licensing body, preserving their ability to return to practice when they are ready.
Understanding Inactive License Status
Inactive license status means the license is current and valid but cannot be used to conduct any real estate business or earn a commission. This status is a formal recognition by the state licensing board that the licensee has temporarily stepped away from transactional work. Common reasons for choosing this path include a temporary career change, health issues, or extended family leave.
Economic downturns or a desire for a lower-stress professional period also frequently prompt agents to switch to inactive status. By moving to this status, an agent avoids the high costs and time commitments associated with active brokerage affiliation, such as board dues and Multiple Listing Service (MLS) fees. The specific definition and rules governing inactive status are determined individually by each state licensing board.
The Formal Process of Moving to Inactive Status
The transition from active to inactive status must be handled officially through the state licensing body. The initial step for a sales agent is notifying their current sponsoring broker of the intent to cease practice. The broker is typically required to sign a termination form or complete a digital process to formally release the agent from their sponsorship.
In many states, the broker terminating sponsorship automatically places the license into inactive status, as a sales agent must be sponsored to be active. The licensee then needs to file the required form with the state licensing body, often through an online portal or license management system. This filing may require paying a small administrative fee to process the status change.
Failing to complete this official process can result in disciplinary action if the licensee merely stops working while their license remains technically active under a brokerage. Ensuring the status is officially recorded as inactive with the state is necessary to avoid potential fines or other disciplinary actions.
Ongoing Requirements for Maintaining an Inactive License
Even when a license is inactive, the licensee still faces continuing obligations to keep the credential current and in good standing. The license must still be renewed on a timely schedule, often every two years, to prevent it from expiring entirely. Agents are usually required to pay the standard state renewal fees to keep the license valid.
Continuing Education (CE) requirements vary significantly by state for inactive licensees. The most common approach allows agents to defer CE while inactive, but they must complete all “catch-up” hours before they can reactivate the license. Failure to maintain these ongoing requirements will result in the license expiring or lapsing, which forces the agent to restart the more costly and time-consuming process of original licensing.
Restrictions and Limitations of Inactive Status
Inactive status enforces clear legal boundaries on what an agent can and cannot do. A licensee is strictly prohibited from engaging in any activity that requires an active license, such as showing property, negotiating contracts, or soliciting clients. They are also unable to earn or receive any real estate commissions or referral fees for activities conducted while in this status.
Many state regulations impose a limit on how long a license can remain inactive before the agent must take additional steps to renew or reactivate. If the license has been inactive for an extended period, such as five to ten years, the agent may be required to retake the state licensing exam. This ensures that agents returning to practice possess current knowledge of real estate law and practices.
Steps to Reactivate Your Real Estate License
Returning to active practice requires a multi-step process to formally move the license back to active status. The first step involves securing a new or returning sponsoring broker, as a sales agent must be affiliated with a brokerage to conduct business. The prospective sponsoring broker must submit an application or form to the state licensing body to formally assume sponsorship of the agent.
The agent must also complete any outstanding “catch-up” Continuing Education hours deferred during the inactive period. After securing sponsorship and completing necessary education, the agent must file specific reactivation paperwork with the state. This includes paying a reactivation fee. If the license has been inactive for five or more consecutive years, the state may require the agent to pass a reactivation examination to demonstrate current competency.
Alternatives to Placing Your License On Hold
Agents considering a break have alternatives to placing their license on formal inactive status. One common option is transferring the license to a low-cost referral brokerage or holding company. This arrangement allows the agent to maintain their license with an active brokerage, which is necessary to earn referral income, without the obligations of full-time practice.
Holding companies typically charge minimal fees and allow the agent to refer clients to active agents in exchange for a portion of the resulting commission. Allowing the license to expire is generally the most expensive and time-consuming option if the agent intends to return to practice. An expired license often necessitates repeating the original licensing process if the lapse period exceeds the state’s grace period.