How should licensees respond when faced with illegal activities or information from clients?

• A. Participate in the activity
• B. Do not participate; decline involvement, advise clients appropriately, and refer to legal counsel or authorities as required
• C. Ignore the issue
• D. Report to the listing agent only

Answer: (B)

When confronted with illegal activities or information from clients, a licensee must not become involved in the wrongdoing. The right approach is to decline participation, clearly explain the legal consequences and options to the client, and guide them toward lawful action. If the situation triggers reporting requirements under applicable laws, the licensee should escalate to the appropriate authorities or seek legal counsel to determine the proper steps.

This stance protects you from liability, upholds professional integrity, and aligns with ethical duties to act lawfully and in the public interest. It also balances client confidentiality with the obligation not to facilitate illegal acts. Reporting only to the listing agent or ignoring the issue would not meet these duties, and actively participating would be inappropriate and illegal.