Many brokers search for ways to step back without losing their hard-earned license. You may see two terms used for this: “real estate license on hold” and “inactive license.” They sound alike, but they are not the same thing. This guide explains both in plain English so you can choose the option that fits your plans.
Quick answer
- License on hold usually means you place your license with a referral or license-holding brokerage. You stay affiliated with a broker but you do not practice. You can earn referral fees where allowed.
- Inactive license means your license is not affiliated with any broker and the state shows you as inactive. You cannot practice and, in many states, you cannot earn referral fees until you reactivate.
Your state’s exact rules control each status, but this framework helps you see the practical trade-offs.
What “license on hold” means in practice
“On hold” is an industry phrase, not a legal status in most states. In day-to-day use, it means the agent moves their license to a holding company or a referral-only brokerage. You do not join the MLS. You do not take listings or write offers. You may refer clients to active agents and receive a referral commission through your holding broker when the deal closes, where permitted.
Common traits when your license is on hold:
- Broker affiliation: Yes—your license sits with a holding or referral brokerage.
- Referrals: Usually allowed and paid through your broker.
- MLS/lockbox: No access, since you are not practicing.
- E&O insurance: Often covered at the brokerage level; confirm terms.
- Continuing education (CE): Varies by state. Many agents keep CE current to avoid a scramble later. Illinois requires CE to remain current for your license to remain valid regardless of whether you are practicing or not.
- Reactivation: Usually simple—transfer to a full-service broker and meet any CE/fees required.
Who this fits: Agents who want to pause showings and paperwork but keep a foothold in the business and earn referral income, such as new parents, students, part-timers, or professionals shifting roles.
What “inactive license” means
An inactive license is a formal regulatory status. You are not affiliated with a broker. The state’s database shows you as inactive. You cannot practice real estate. You typically cannot collect referral fees while inactive because you are not operating under a broker.
Common traits when your license is inactive:
- Broker affiliation: No.
- Referrals: Usually no, because payments flow through brokers to licensed agents.
- CE requirements: Some states pause CE while inactive; others do not. You may face extra CE or a reactivation course later.
- Renewal fees: Still due in many states to keep the license record alive.
- Reactivation: You must affiliate with a broker and meet any CE, testing, or fee requirements set by the state.
Who this fits: Agents stepping fully away for a longer period, or those unsure if they will return soon and prefer to minimize ongoing brokerage costs.
Side-by-side comparison
| Feature | License on hold (referral/holding brokerage) | Inactive license (no broker) |
|---|---|---|
| Legal term of art | Usually informal industry term | Formal regulator status |
| Broker affiliation | Yes | No |
| Can practice (list, show, write offers)? | No | No |
| Can earn referral fees? | Often yes, paid through broker (where permitted) | Generally no |
| MLS/lockbox | No | No |
| CE expectations | Keep current to avoid gaps (varies) | May pause, but reactivation CE often required |
| Typical costs | Holding-company fee; low overhead | State renewal fees; no broker fees |
| Reactivation path | Transfer to full-service broker + CE/fees | Affiliate with broker + CE/fees; sometimes extra steps |
Always check your state commission’s rules and your brokerage agreement before you decide.
How to choose the right option
Ask yourself three simple questions:
- Do I want the option to earn referral income?
If yes, a license on hold with a referral-only brokerage is usually the better path. - How long will I be out of production?
For a short break (months to a couple of years), on hold keeps you engaged and makes reactivation simple. For a long break with no plans to refer, inactive may be fine. - How much admin do I want later?
On hold tends to mean smoother reactivation. Inactive can require catch-up CE or a reactivation course, which can delay your return.
Common mistakes to avoid
- Confusing “on hold” with inactive. On hold keeps you tied to a broker; inactive does not.
- Letting CE lapse without a plan. Even if your state pauses CE while inactive, you may face larger CE loads when you return.
- Accepting a referral fee directly. Referral fees typically must be paid broker-to-broker. Do not accept payment outside your brokerage.
- Staying in the MLS while “on hold.” If you plan not to practice, drop MLS membership to avoid needless fees and compliance issues.
- Waiting until the last minute to reactivate. Reactivation may take days or weeks depending on CE verification, background checks, or state processing.
Steps to put your real estate license on hold (referral route)
- Confirm state rules. Check the real estate commission website for terms on referral activity and CE.
- Choose a license-holding brokerage. Compare fees, payout policies, and support.
- Transfer your license. File the broker change with the state and complete any forms the holding company needs.
- Update your marketing. Remove MLS logos and active-agent claims. Keep your sphere informed that you can connect them with a vetted agent.
- Track CE and renewal dates. Put simple reminders in your calendar.
- Set a reactivation plan. Note the steps to move back to a full-service broker if your timeline changes.
Steps to place your license on inactive status
- Review your current broker agreement. Follow any notice rules to avoid penalties.
- File the inactive request with your state regulator and pay any required fees.
- Record CE status and deadlines. Note what will be required to reactivate.
- Store your records. Keep transaction files and trust-account records per state retention rules if you recently closed deals.
- Recheck before returning. When you are ready, confirm CE, background checks, and any reactivation fees, then affiliate with a broker.
FAQs
Can I hold my real estate license and still get paid referral fees?
If your license is on hold with a referral or license-holding brokerage, often yes, paid through your broker. If your license is inactive, usually no. Check your state rules.
Is “real estate license on hold” an official status?
Not in most states. It is an industry way to describe placing your license with a holding company while you stop practicing.
Which option is easiest to undo?
Both can be simple, but on hold often means faster reactivation because you remained under a brokerage and kept routine requirements current.
Bottom line
Use license on hold if you want a clean pause from production and the ability to earn referrals through a broker. Choose inactive if you need to step away for longer and want to keep only the state’s license record alive. In both cases, plan your CE, renewal dates, and reactivation steps now. It will save time when you are ready to return.