Final answer:
If a licensed broker or salesperson's actions lead to a claim being settled from a recovery fund, their license is typically suspended or revoked. Bankruptcy does not protect against these penalties, maintaining industry integrity.
Step-by-step explanation:
Upon payment of any amount from the recovery fund in settlement of a claim in the satisfaction of a judgement against a licensed broker or salesperson, the license of such a broker or salesperson shall be automatically suspended or revoked. A discharge of bankruptcy shall not relieve a person from the penalties and disabilities provided.
This scenario is typical in real estate law where a recovery fund compensates clients for monetary losses due to the illegal action of a licensed real estate professional. When the fund is accessed to settle a claim, the responsible professional faces serious consequences, including the loss of their license. This legal principle ensures that standards in the industry are upheld and provides a form of protection to consumers.