Managing a real estate license requires adherence to state regulatory guidelines, and placing a license on inactive status is a common administrative step for professionals taking a temporary leave. Real estate licensing is governed entirely at the state level, meaning the specific forms, fees, timelines, and requirements vary significantly by jurisdiction. This article provides a general framework for understanding the inactive status process, but readers must consult their state’s real estate commission website for the exact procedures applicable to their license.
Defining Inactive Status
Inactive status allows a license holder to retain professional credentials without the obligations of an actively practicing agent. This status is designed for agents who wish to pause their real estate career temporarily, keeping the door open for an easy return. Choosing this option avoids the need to maintain certain financial and educational requirements associated with active practice.
These avoided requirements typically include the cost of a sponsoring broker’s fees and the necessity of carrying Errors and Omissions (E&O) insurance coverage. The distinction of an inactive license is the prohibition against engaging in any activity that requires an active license for compensation. The license remains current, but the authority to conduct real estate transactions is suspended until the status is formally changed.
Official Steps to Place Your License on Inactive Status
The initial step involves formal disassociation from your current brokerage. Sales agents must notify their sponsoring broker of their intent to leave. In many states, the broker is required to submit an official license termination notice to the state regulatory body, often within a short period, such as 10 days of the disassociation. The agent must ensure all legal ties to the brokerage are severed before the license can be moved.
Following the termination, the license holder must formally submit an application or form to the state real estate commission to request the change of status. This document is often called a “Change of Status” or “Transfer/Inactivate” form, and many states allow online submission through an e-licensing portal. In some jurisdictions, the agent may need to return their original paper license certificate to the commission along with a signed termination notice.
The process requires the payment of an administrative fee to cover the cost of processing the status change, which varies by state. For example, some states require a fee of around $10 to $50 for this transaction. Completing these procedures ensures the license is officially recorded as inactive, preventing it from automatically becoming involuntarily inactive or expired.
Requirements for Maintaining Inactive Status
Maintaining a license in inactive status requires ongoing administrative tasks to prevent it from lapsing or expiring. The most consistent requirement across jurisdictions is the obligation to continue paying renewal fees according to the state’s established schedule. Even without actively using the license, the professional must pay the renewal fee to keep the credential current.
Continuing Education (CE) requirements for an inactive license vary significantly by state. Some states waive the CE requirement while the license is inactive, allowing the license holder to defer coursework until reactivation. Other states require a specific amount of CE to be completed during the inactive period, or they mandate a “catch-up” of accrued CE hours before reactivation is permitted.
For example, a license holder may be exempt from biennial CE requirements while inactive in some states, but others might require 14 hours of CE for renewal, regardless of status. The license holder must also ensure their contact information, including mailing and email address, remains current with the state commission. Failing to renew the license or pay the required fees typically results in the license becoming expired, which requires a more complex reinstatement process than simple reactivation.
Practical Limitations of Inactive Status
Placing a real estate license on inactive status imposes strict legal boundaries on the holder’s professional activities. The primary prohibition is that the inactive license holder cannot engage in any activity that requires an active license for compensation. This means they are barred from performing core real estate functions such as listing a property, showing homes, negotiating contracts, or preparing closing documents.
Furthermore, an individual with an inactive license is prohibited from receiving referral fees or commissions for any real estate activity. This restriction applies even if the referral leads to a successful transaction for an active agent. The license holder is also restricted from advertising themselves as an active professional or using their license to influence or participate in transactions.
Violating these limitations can lead to disciplinary action from the state real estate commission, including fines, suspension, or forfeiture of the license. The inactive status is a complete pause on all transactional activities; the license holder is only maintaining the credential, not the authority to practice.
How to Return to Active Status
Returning an inactive license to active status generally reverses the steps taken to go inactive, often with additional requirements to ensure the agent is prepared to practice. A foundational step is securing a sponsoring broker who agrees to hold the license, as a sales agent cannot be active without this affiliation.
Once a sponsoring broker is secured, the agent must submit a formal reactivation application and pay any associated fees, such as a transfer fee and a reactivation fee. The license holder must also meet any outstanding Continuing Education (CE) requirements that accrued during the inactive period. Depending on the state and the length of the inactive period, this may involve completing a substantial number of CE hours before the commission approves the change.
Finally, the agent must provide proof of Errors and Omissions (E&O) insurance coverage, which is a mandatory requirement for active professionals in most states. The E&O policy must be current and meet the state’s minimum coverage requirements. Only after all requirements are met, forms submitted, and the new broker affiliation registered can the state commission change the license status back to active, authorizing the individual to resume brokerage activities.