RE174 Ch 3 Duties & Responsibilities of Licensees
Which of the following is True regarding an undisclosed referral fee?
*A case could be made that this fee is a secret profit *This fee may be interpreted as an illegal kickback *Brokers can protect themselves by making full disclosure of any referral fee A case could be made that an undisclosed referral fee is a secret profit being made by the presumed gratuitous agent of the buyer. if the courts agreed to this supposition, the buyer would be entitled to the secret profit paid to the agent. brokers could protect themselves by making full disclosure of any financial arrangements they have that result in a referral fee.
All of the following are TRUE statements about subagents,
*A subbroker appointed without the owner's authority would be the agent of the listing broker *A cooperating broker can sue the owner for the commission *to appoint subagents, a listing broker must have the specific approval of the owner the owner is liable for the actions of the sub-broker To work with subagents, the broker must have the specific approval of the principal. If the listing authorizes sub-brokers - subagents - an agency is created between the seller and the sub-broker. the seller isl iable to third persons for the subbroker's actions, and the subbroker has a fiduciary responsibility to the owner.
Which of the following is correct when a licensee is also the buyer?
*the agent should inform the buyers and sellers that he or she is dealing as a principal and not in an agency capacity. *Full disclosure could extend beyond revealing that the agent is the purchaser and may include the motives or intentions of the agent. *If the agent intends to do work on the property to make the property more valuable, the agent should disclose these intentions.
Disclosure requirements require all of the following
*the broker inform a buyer about problems with the property *The seller disclose construction work performed without a building permit *The broker warn the seller as to the effect of a subordination clause in the offer.
The Cartwright Act - Bus & Professions Code 16720
California's antitrust act that prohibits agreements restraining trade. A federal violation is likely to also violate the state law, which provides for penalties for individuals up to $250,000 and imprisonment up to three years.
CalBRE no longer exists it is now called
DRE - my two cents not the instructor's
Which of the following landmark cases determined that the agent must not only disclose material facts known about the property, but must also disclose facts that should be known.
Easton v. Strassburger
A blank is a right to operate under a common name and marketing plan.
Franchise
Blank is intentional deceit to induce a party to act to his detriment.
Fraud. courts might award punitive as well as compensatory damages for fraud.
Is the Real Estate Transfer Disclosure Statement required for business and income property?
No, the TDS is not required for business and income property
Misrepresentation is the intentional or unintentional misstatement or concealment of a material fact. T or F
T, misrepresentation is the intentional or unintentional misstatement or concealment of a material fact. misrepresentation could result in civil damages as well as other contractual remedies.
The delivery of a Transfer Disclosure Statement - TDS - is a nonwaivable condition precedent to the buyer's duty of performance. The buyer not requesting a TDS cannot be construed as a waiver. The court noted that after delivery of the TDS, the buyer has 3 days to rescind the sale. True or False
True, a TDS must be given to a buyer and they have 3 Days to rescind the sale
IF a seller-required disclosure is received by the buyer after execution of a purchase agreement, the buyer has three days after delivery in person, five days after mail delivery, to terminate the offer or agreement. T or F
True, buyer has 3 days after seller-required disclosure delivery by person, and 5 days after mail delivery, to rescind an executed purchase agreement
While sellers have a duty of disclosure, buyers have no corresponding duty to disclose material facts that they are aware of, such as why they are buying. True or False
True, buyers have no duty to disclose material facts
The duty of a seller to disclose relevant facts concerning the property for sale can be found in California statutes, case law, and real estate law. T or F
True, seller duties to disclose relevant facts is found in Calif statutes, case law and real estate law.
The purpose of the real estate law is to ensure that real estate brokers and salespeople will be honest, truthful and of good reputation
True, the purpose of RE Law is to ensure honesty in agents
Ethics precede the law. True or False
True. What apparently was legal, but unethical at the time of an action, might later be determined to have been illegal by our courts. Licensees who use the law alone as a standard of conduct could find themselves facing great liability.
The Sherman Antitrust Act makes it illegal for businesses to conspire to control prices or competition through price-fixing, market allocation agreements, group boycotting, or tie-in agreements. Yes or no.
Yes Sherman Antitrust act makes it illegal for price fixing, market allocation agreements, group boycotting, or tie-in agreements.
Section 1102 of the Civil Code requires that a seller of one to four residential units provide a written disclosure of known property defects to a purchaser. Yes or No
Yes, Section 1102 of the Civil Code requires a seller of 1 - 4 residential units to provide a written disclosure of known property defects to a purchaser, aka TDS
An agent's duty to a buyer must reveal anything detrimental about the property and conduct a reasonably competent and diligent inspection of residential property to disclose to prospective purchasers all facts materially affecting the value of the property. The seller of one to four residential units also has a duty to disclose known defects to a buyer. All True?
Yes, all true.
Both the seller and the broker must execute the Real Estate Transfer Disclosure Statement. Yes or No
Yes, both seller and broker must sign the Real Estate Transfer Disclosure
Respondeat Superior refers to
a principal's liability for torts of agent
Puffing
a statement of opinion that a consumer would not rely on and does not involve material fact. This is the best house on the street.
A transfer disclosure statement does not include
agent's determinate of value
subordination clause
allow later loans to take priority over seller financing and endanger the seller's security in the property
A person engaged to perform a duty but is not under the direct control of the principal is considered
an independent contractor. an independent contract is one who is engaged to perform a duty but is not under the direct control of the principal. An independent contractor is reimbursed for results and is not subject to control and direction regarding how those results are achieved.
a remedy for net listing abuse is
if the licensee makes an extraordinary profit from a net listing, the owner may claim that the agent, in helping to set the list price, was acting in a self-serving manner and therefore breached his or her duties of financial trust. A net listing could very well be an invitation to a lawsuit. The ethical conflict of net listings, Possible low fees and expensive lawsuits make net listings unattractive.
Ethics generally determine if an action is
just. Laws are enacted to set what was considered at the time to be the minimum standards of acceptable human behavior. Ethics go far beyond the law and determine not if an action is legal, but whether it is right or just.
Caveat Emptor
let the buyer beware. this is no longer the law of California. The agent now has duties to know about property offered for sale.
An agent's personal interests are opposed to principal's interest when there is a
net listing
A buyer must disclose to a seller
nothing
AS-is applies only to
obvious defects and offers no protection to agents and/or owners from hidden defects that they knew of, but failed to disclose.
The Sherman Antitrust Act was enacted to prevent businesses from conspiring to control blank and/or blank
prices and/or competition - also known as price fixing.
An agent's primary responsibility is to the blank, ordinarily the owner of property listed for sale or lease.
principal
"Respondeat Superior"
principal's liability for torts of Agent
What type of real state sales can be 'as is'
probate, tax and foreclosure sales
A fraudulent activity where a purchaser takes possession with little if any down payment, but promising the seller to be "cashed out" in a short period of time is called
rent-skimming. This fraudulent activity is called rent skimming, where a purchaser takes possession with little if any down payment, but promising the seller to be "cashed out" in a short period of time.
Broker Jones listed a residential property for seller Smith. Broker Jones then has an undisclosed relative buy the listed property and then resell it to a buyer whose earlier offer was never presented to seller Smith. This is an example of
secret profit. The agent cannot make a secret profit. The agent works for the principal and is entitled only to the compensation agreed on.
A net listing can be an invitation to a lawsuit because
serious conflict of interest problems can arise. In setting net price, the agent's best interest is contrary to the principal's best interest. If the agent makes too much profit, the principal may claim breach of financial trust. Agent's commission is all money received for a property over a net amount set in the listing. agent's best interest is served over the principal's.
The seller or his agent must also complete a Natural Hazards Disclosure Statement that indicates if the property is in
special flood hazard area earthquake fault zone very high fire hazard severity zone
A transfer disclosure statement should include
systems not in operating condition known environmental hazards agent's visual inspection
Option Listings
the broker takes a listing combined with an option to purchase. broker becomes agent and principal, a dual role. profit must be revealed per bus & prof code and obtains the principal's written consent to the amount of profit., withholding of approval could prevent the exercise of the option. The broker is not obligated to buy if a buyer isn't found.
The IRS will consider a real estate salesperson to be an independent contractor based on 3 criteria one of which is
the sales person possess a real estate license
death on the premises from any cause need not be disclosed to a buyer after
three years
Sherman Antitrust Act of 1890
to prevent businesses from conspiring to control prices and/or competition. Penalties for violations include fines, damages, court costs, and up to three years' imprisonment. The act is enforced by the Federal Trade Commission. www.ftc.gov
What are some of the Sherman Antitrust violations
1. Price fixing. It would be illegal for a group of brokers to agree on minimum commissions that they would charge. 2. Market Allocation. Agreements of firms to divide a marketplace geographically or by type of service would be a violation because it would tend to reduce or eliminate competition. 3. Group Boycotting. Firms may not agree to refuse to do business with a firm or an individual. As an example, it would be a violation of the act for two or more firms to agree not to allow another firm to show their listings. 4. Tie-in agreements. Agreements that require a business to buy additional goods or services in order to get the goods or services desired would be illegal. An example of a tie-in agreement would be the requirement that the buyer agree to keep the property insured through a firm controlled by the broker as a condition of submitting the buyer's offer.
Net listing
Illegal listing; broker keeps everything above a certain figure. a low listing that sells for more which the agent receives the difference, net listing.
The law that concerns the registration of sex offenders and making information regarding sex offenders available tot he public is called
Megan's Law
The largest association of brokers is the National Association of REALTORS - NAR true or false
True NAR www.realtor.org the state organization of NAR is the California Association of REALTORS - CAR www.car.org
A sales agent of the seller who is not the listing agent would be
a subagent
A referral fee or finder's fee to a non-licensee is legal for
an introduction. Although finder's fees payments by real estate licensees are not allowed in some states, a California real estate licensee can pay a referral or finder's fee to a non-licensee for an introduction.
Realtist
denotes a member of the National Association of Real Estate Brokers www.nareb.com
The California Bureau of Real Estate Regards a salesperson to be an blank of the broker.
employee
Franchisees
ordinarily are independent contractors, and the franchisor is not liable for the wrongful acts of the franchisee.
principal
owner of property listed for sale or lease, or the buyer.