AREC exam 2022

Louis gave a $45,000 down payment to his agent Tim, a managing broker, who cashed the check and promptly left the country. Louis has just won his claim against Tim. His total amount lost, owing to bank fees and lawyer expenses, is $55,000. How much will he receive from Alabama's Recovery Fund, assuming he files two complaints?

$50,000 (max amount awarded is 25k per claim)

After passing the real estate exam, applicants must send their application for licensure to the commission within _____ days.

90 days

Which of the following is an example of conversion?

A broker uses client trust funds without the client's permission.

Which of the following is a disciplinary action that the commission may NOT take against a licensee?

A jail sentence of up to 18 months

If your license is suspended, it's only temporary. If your license is revoked, it is permanently removed and requires ______.

A new license application after the penalty period

What must you have to apply as a real estate salesperson in Alabama

A sponsoring broker

Which of the following is true about disciplinary actions in Alabama?

A suspended license can be reinstated once the licensee has completed certain actions.

Which of the following is true about license renewal notifications?

AREC mails renewal forms to licensees starting around July 15 of even-numbered years.

In which of these matters is AREC most likely to get involved?

Adam has been engaging in real estate activities, but his license lapsed five years ago.

Which body comprises appointed members who oversee license law in Alabama?

Alabama Real Estate Commission

What information about a property is the licensee required to disclose to potential buyers?

Any material, adverse information that the licensee has actual knowledge of concerning the physical condition of the property

Which of the following people would NOT get their questions answered by AREC?

Brock is setting up a new brokerage in Huntsville. He asks himself, "I wonder what's the best way to split commission with my employees?"

It's Friday afternoon, and Lori can't make it to the bank in time to deposit an earnest money check in the brokerage's escrow account, so she uses her mobile app to deposit it into her personal checking account for safekeeping. What violation did Lori just commit?

Commingling

Milt has had a temporary real estate license since April. Which of the following must he do to convert it to an original license?

Complete his post-licensing requirements by October.

Which of the following is a step that Pauline must take to change her license status from inactive to active?

Complete the 15 hours of CE that are required for the current licensing period.

Which of these terms describes a situation in which a broker uses client trust funds without the client's permission?

Conversion

One of the following licensee's actions would constitute commingling. Which is it?

Cynthia deposited her client's earnest money check into the firm's operating account.

Ned represents Sofia in the sale of her townhome. Luciana represents Sofia's buyer, Arturo. What is Luciana's responsibility to Sofia?

Disclose that the buyer will not have the funds for the down payment unless he sells his current home.

Norma, a real estate licensee, is working with the buyers in a transaction. She suspects mortgage fraud. What should she do?

Discuss the situation with her broker.

Woodrow helps his neighbor sell his home by assisting with negotiations. He receives no compensation for his assistance. Based on this transaction, Woodrow _____

Doesn't need a real estate license

A buyer client is preparing an offer on a property. He wants to make sure his offer stands out above all others and is accepted, so he discusses waiving the inspection contingency. What should the agent do?

Encourage the buyer to get an inspection, and if he still wants to waive it, put it in writing that you advised against waiving the inspection and have him sign.

Which of these tasks must a licensee perform for buyer clients?

Ensure that the buyer receives copies of all signed paperwork.

George wants to co-broker a home purchase in Alabama. His state allows this arrangement. Which of the following is a requirement he must meet?

Enter into a written agreement with an Alabama broker.

Isabelle decided to take her career in a different direction and didn't renew her license when her renewal deadline came around. What is her license status?

Expired

Bethenney is Jason's agent. Jason made an offer on a property and wrote an earnest money check, which he gave to Bethenney. What should Bethenney do with the check?

Follow brokerage procedure for handling monies entrusted to agents by clients.

Should the broker end up in litigation, any trust funds not safely tucked away in a trust account could be ______.

Frozen

Jimbo doesn't yet have a real estate license. Which activity is he legally allowed to perform without one?

Give advice to a friend who is negotiating the purchase of a house.

Gerome is an Alabama salesperson applying for his broker license. He's moving across the state, and his broker license will be issued to a new brokerage. Which of the following is a true statement?

He can't perform real estate activities until the new qualifying broker receives his broker license.

Damian, a salesperson, is interested in being a qualifying broker. Which of the following conditions does he NOT have to meet to make this change?

He has to have been an associate broker for at least three years.

Sue believes she's about to get into an undisclosed dual agency position. What should she do?

Inform all parties to the transaction

Landon wants to transfer his license from his current managing broker, Daria, to a new managing broker, Roy. Landon has had his real estate license for 10 months. Which of the following is true about his situation?

Landon must inform Daria of his decision to transfer to a new managing broker.

To which of the following situations does the law of contracts apply?

Max's client doesn't like a particular clause in the agency agreement document that they're about to sign, so Max crossed it out.

Danny is 19 years old. He has a GED and has been working in real estate for the last 18 months. He's completed 60 hours of approved broker pre-licensing coursework online. Is he ready to take his broker's licensing exam?

No, he must have worked in real estate for at least 24 months.

How must qualifying broker Rudy ensure that his affiliated licensees understand the types of agency relationships allowed at their brokerage?

Provide a copy of the brokerage's agency disclosure office policy and explain it to his licensees at least once a year.

Daisy holds a real estate license in Mississippi and looking to obtain a reciprocal license in Alabama. Which requirement must she meet?

Provide her licensing history to the commission within 120 days before her reciprocal license is issued.

Which area of real estate law covers the requirements of a licensee when performing real estate activities within the state, including continuing education requirements, supervisory requirements, and prohibited conduct?

Real estate license law

Lisa wants to transfer her license to another brokerage, where she would be managed by Richard. Currently, her managing broker is Diane. Which of the following is NOT part of the license transfer process?

Richard must get Diane's permission in writing.

What responsibility does the seller's agent have to the seller?

Seek a sale at the best price at terms that are acceptable to the seller.

Before the commission can convene a hearing, which of the following must it do?

Serve the accused licensee with a copy of the formal complaint

Nan is licensed in Mississippi. Her client has found the perfect property to buy—in Alabama. She wants to co-broker this purchase, and her state allows it. Which of the following statements is true?

She must enter into a written co-brokerage agreement.

Brynn, a licensee from another state, wants to obtain a reciprocal license in Alabama. Which of the following statements is true?

She must provide her licensing history to the commission within 120 days before the commission issues the license.

Beverly is a new licensee. She's at a listing appointment and notices some stains on the ceiling and cracks in the basement walls. What should she do related to these items?

She should ask the sellers about these issues and ensure that they are disclosed to buyers.

Mavis is a buyer's agent working with Blaine, an unrepresented seller. Mavis's buyer, Cintra, makes an offer on Blaine's property. Mavis assists Blaine with the paperwork. What's Mavis's relationship to the parties?

She's an agent to Cintra, and the seller is her customer.

Dennis, a broker, has been accused of colluding with an appraiser to get kickbacks on fraudulent appraisals. He'll be appearing soon before AREC for their decision. Which of the following can AREC NOT impose as a penalty?

Six months' jail time

Which of the following is true about subagency in Alabama?

Subagents owe their client the same duties that the agent owes that client.

Which of the following statements about post-licensing education requirements is true for real estate licensees in Alabama?

Temporary active licensees must complete 30 hours of PLE within their first six months to receive an original license.

After an investigation and hearing, Jeremy was found guilty of violating license law. Against which entity would he submit an appeal?

The Alabama Real Estate Commission

Which of the following is a true statement regarding trust accounts?

The broker is a fiduciary/trustee of the funds, but doesn't own them.

The commission is investigating the actions and records of Alabama licensee Thomasina. Which of the following is true?

The commission can investigate Thomasina without a written complaint.

Which of the following events does NOT happen after a licensee files a notice of appeal and an appeal bond?

The commission files a formal written apology with the court if its judgment is not upheld.

Which of the following statements about Alabama company real estate licenses is true?

The qualifying broker for each location must apply for the license.

In a seller agency relationship, to which party does the licensee owe undivided loyalty?

The seller

Licensee Randy has a written listing agreement with Brent, a seller. The buyer is Tim. Who is Randy's client?

The seller (Brent)

In a buyer agency relationship, what relationship does the seller have to the licensee?

The seller is the licensee's customer.

David is a qualifying broker for Merit Real Estate. He's also agreed to serve as qualifying broker for First Choice Realty, which is an affiliate company that operates out of the same office. Both companies have agreed in writing, but what else needs to happen in order for this arrangement to be legal in Alabama?

The written consent must be filed with the commission.

Which of the following is true about Alabama Real Estate Commission hearings?

They are usually held in Montgomery County.

For how long must an Alabama licensee retain transaction file records after the date of the transaction?

Three years

Which of the following duties does an Alabama licensee have with regard to offers made on a property the licensee has listed?

To accept delivery of offers and present them to the seller

Alabama broker Mandy has presented the Real Estate Brokerage Services Disclosure form to consumer Kyla and asked Kyla to sign it. What's the purpose of Kyla's signature on this form?

To acknowledge that Mandy's presented her with this form

Which of these is a broker's responsibility under RECAD?

To provide all licensees with a copy of the agency disclosure office policy

What's an agent's responsibility related to home inspections?

To recommend a buyer have a professional inspection performed

Michael's had quite a day. He forgot to get his client's signature on a contract, so he had to hunt her down and have her sign it. Then, he chatted with Sue, who wants him to represent her. He told her to come see him when her current agency agreement expires. Next, he realized he needed to pay some fees to the commission, so he put a check in the mail, crossing his fingers that there would be enough money in his checking account. Which of these actions, if any, could violate license law?

Writing a possibly bad check to the commission

Each qualifying broker must explain the agency disclosure office policy, which specifies the types of agency relationships allowed, to licensees at least once every ______.

Year

Carl is an Alabama salesperson applying for his broker license. Can he continue to perform real estate activities while he waits for his broker license to be issued?

Yes, if the broker license will be issued to the same company as the salesperson license.

What does it mean to affiliate with a broker?

You will work as the agent of a broker who is responsible for your actions and required to supervise you.

Which of the following actions might be considered a red flag signaling mortgage fraud?

Your buyer requests a specific appraiser.

Lee is wondering if he really needs to complete his CE requirements during this licensing cycle. Which of these questions should you ask him to help him determine if he has to or not?

"Have you held a reciprocal license for less than a year?"

LuAnn is selling some property, and she wants broker Richard to represent her. He explains that she needs to sign a brokerage agreement, and she asks, "What does it mean when I sign this?" What's the best answer Richard can give?

"It means that you understand and accept the conditions of our agency relationship."

Suki, a licensee, is selling a house for the Swensen family. She's just gotten it on the market when Clark, a potential buyer, says that the roof looks new, and asks her when it was installed. Suki isn't sure. What should she say?

"You know, let me look that up, and I'll get right back to you."

Robin, a member of the AREC board, notices that the amount of the Alabama Recovery Fund is $425,000. What happens next?

AREC will order each licensee in the state to pay a $30 assessment to replenish the fund.

Depositing trust funds into a trust account provides protection for those funds should the broker or licensee be faced with ______.

Accidents, death, or litigation

The commission is holding a hearing for licensee Dana. Which of the following is she NOT allowed to do?

Ask a commission member to testify on her behalf

When must an agent disclose an agency relationship to an unrepresented transaction party?

At first substantive contact

What information does the commission use to determine an applicant's suitability for licensure?

Background check

Candi, an Alabama licensee, knows that her seller client's new roof leaks. When speaking about this roof, she only tells potential buyers, "This roof is just a few years old!" What license law violation, if any, has Candi committed?

Behaving in an untrustworthy or dishonest manner

Which of the following actions performed by these licensed salespersons is a common real estate violation?

Benjamin places a lock box in an inconspicuous location on the sellers' property without their permission.

License candidates must request a ____________ prior to applying for an Alabama real estate license.

Criminal record check with fingerprinting

Which one of the following actions would be considered a real estate violation?

Hailey ran out of copies of the brokerage engagement form, so she drafted a copy on a blank sheet of paper.

Alabama licensee Terrence can conduct a lottery to persuade people to do business with him under which, of any, of the following circumstances?

He can't conduct a lottery under any of these circumstances. Holding these types of lotteries is illegal in Alabama.

Temporary active Alabama licensee Ken is studying for his post-licensing course. What happens if Ken fails to complete the post-licensing course requirements within the allotted timeframe?

His license will be placed on inactive status.

Jasmine hasn't completed her CE requirements, and it's August 28 of an even-numbered year. Which of these options can she do?

If she can't finish her CE by the end of August, she can finish it by the end of September and pay a late renewal fee.

Huntsville licensee Caden gave his buyer client a cash rebate as part of a recent real estate transaction. Which of the following statements about the cash rebate is true?

It's illegal for licensees to give cash rebates as part of a real estate transaction.

Should a client incur financial hardship because of the misuse of trust funds, the broker could be held ______.

Liable

Sally's a first-time homebuyer. She's a little nervous about finding a good real estate licensee to help her—she's read about a lot of scams out there. Which of the following provides protection for consumers like Sally?

License laws

Broker Al presents consumer Cathy with the Real Estate Brokerage Services Disclosure form. After they discuss it, he requests that she sign it to acknowledge its receipt. She refuses. What should Al do?

Make a note on the form that she refused to sign it.

Broker Joseph tells his client that a property is zoned as residential even though he knows it's zoned as commercial. This violation is an example of ______.

Making a substantial and willful misrepresentation

Of the following, which one could be considered a real estate violation? -Before showing a buyer customer his listing, Mitchell explained that he represents the sellers. -Henry provided customers with a copy of their signed broker engagement agreement. -Isabelle keeps all signed broker engagement agreements in a safe but accessible location in the broker's office. -Mandy didn't disclose to potential buyers that she was showing her own listing, or that she represents the sellers.

Mandy didn't disclose to potential buyers that she was showing her own listing, or that she represents the sellers.

Lucinda is 25 and licensed in Alabama. She has been actively engaged in real estate for the past three years and has taken 60 hours of broker pre-licensing coursework. She used to be licensed in Florida, but her license there was revoked four years ago. She also has five unpaid parking tickets. Assuming she passes her licensing exam, is she qualified to be a broker?

Maybe, if the commission approves her application.

If you, as an Alabama licensee, make a statement in an ad that you should have known was false, what are you guilty of?

Misrepresentation

In Alabama, appeal notices are typically filed in the circuit court of which county?

Montgomery

Licensee Raina is happy that her seller client's home is under contract, and closing's just a few days away. That is, until she discovers a material defect on the property that hasn't been disclosed to the buyer. What should she do?

Notify her client of the defect and disclose it in writing to the buyer.

Patty is writing an online ad for several condos she's selling. "More than 3,000 square feet!" she writes. She's pretty sure that this is the average size of the condos. She included her brokerage firm and her license status on the advertisement, as well. How did Patty do?

Patty could be held responsible for misrepresentation if her estimate is incorrect.

Which of the following would disqualify an applicant from receiving an Alabama broker license?

Pleading guilty to or being convicted of a felony

The Alabama commission is holding a hearing to investigate a complaint against Lucy. What actions is Lucy allowed to take at the hearing?

Produce evidence and cross-examine witnesses.

Closing day is finally here! As an Alabama qualifying broker, how much time does Amanda have to disburse all funds held in trust for the transaction?

Seven days

Which area of real estate law covers how an agency relationship is created and the duties of an agent to the principal?

The law of agency

Xavier deposited a $3,000 earnest money check into his personal account for safekeeping while he was on vacation. The balance in his account when he left on vacation was $4,200, and when he returned, it was $2,800. He withdrew enough funds from his savings account to cover the earnest money check and delivered the funds to the escrow agent. Which statement best represents Xavier's issue?

Xavier is guilty of commingling and conversion.

Licensee Bert's seller client asks him not to tell prospective buyers that he's selling his house because he's lost his job and can't continue to afford the mortgage payments. Should Bert obey him?

Yes, because this is a lawful instruction, and this information should be kept confidential.

Licensee Stephanie tells Betty and George, her buyer clients: "Since you want to get $300,000 for your house, let's list it at that price for three months. If it sells, I'll keep anything above that amount as my commission. How does that sound?" Has Stephanie violated license law?

Yes, because this is a net listing, which is illegal in Alabama.

In addition to serving as the listing agent for several clients, your own house is also on the market. You receive a call from another licensee who wants to show her buyer client your house. What must you immediately disclose to the buyer's agent and buyer?

You own the property.