Who is eligible to receive compensation from the real estate recovery fund?

Compensation from the real estate recovery fund is specifically intended to protect individuals who suffer losses due to the actions of real estate professionals engaging in wrongful conduct as defined by law, typically involving fraud, misrepresentation, or other unethical behavior.

In this context, a seller who pays a commission to a broker under false pretenses is a suitable candidate for compensation. This situation implies that the broker engaged in wrongful practices, such as deceptive practices or failing to provide the services promised, which directly caused financial harm to the seller. The recovery fund exists to reimburse individuals who have experienced monetary losses due to such unethical actions, reinforcing consumer protection in real estate transactions.

The other scenarios presented do not align with the purpose of the recovery fund. A buyer backing out of a contract typically does not stem from unethical behavior by the broker but rather from personal decision-making. Similarly, a tenant in a lease agreement is generally protected under landlord-tenant laws rather than the recovery fund, and brokers facing penalties for non-compliance deal with disciplinary actions rather than seeking compensation through this fund.