Real Estate Broker Unit 3 sections 16-20
Prior to the ACPERA, violations of the Sherman Anti-Trust Act could include prison terms and fines of up to how much per violation?
$350,000
Gladys sells another broker's $300,000 listing for $290,000 at a commission rate of 6%. She has a 60% commission split with her broker. If there is also a 50% brokerage split, what commission will Gladys receive?
$5,220
Due to the potential for broker responsibility for a licensee's actions, what do many brokers require their licensees to carry?
-Automobile liability insurance in high amounts, naming the broker as an insured on the policy -Errors and omissions insurance, covering the broker and licensees for negligent acts
List five licensee responsibilities to the broker.
-Be appropriately licensed -Follow written policies outlined the policy manual -Work to promote and sell the broker's listings -Act in an ethical manner -Assure that fiduciary duties owed to clients are fulfilled
What are the three actions of brokers that the courts have found that violate antitrust laws?
-Charging net commissions -Sharing commissions with brokers who did not provide any service in the sale or listing of a property -Sharing commission with unlicensed companies
What are the three parameters that apply to a violation of an antitrust law?
-Existence of monopoly, contract, conspiracy, or combination of any of these -Creation of a restraint of trade, having a negative impact on someone else's ability to do business -Unreasonable restricting competition and functions against the public interest
List four types of brokerages and briefly explain each.
-Franchise - independently owned company with a licensing arrangement with a franchisor for various benefits in exchange for compensation -Independent - brokerage not affiliated with a franchise -Commercial & residential - deals primarily with limited types of property -Transaction-specialized - specializes in particular types of transactions -Buyer- and seller-oriented - represents only one side of a transaction
List the five responsibilities licensees have in complying with fair housing laws.
-Know fair housing laws and responsibilities for compliance -Act in accordance with the law at all times -Learn to keep clear and accurate records -Attend fair housing training periodically -Know resources to use if misconduct needs to be reported
List five important things to look for when choosing a broker/firm.
-Quality training programs -The broker encourages and supports training. -The broker provides a mentor program and/or office assistance for the licensees. -The firm has a large selection of books, audios, videos, and CDs on hand for licensee use. -The office is dedicated to the licensee's desired specialty area. -The firm employs a number of successful agents. -The agents have a long history with the firm.
What are three exceptions to the TCPA?
-Solicitations can be made in response to a consumer's inquiry. -Tax-exempt non-profit organizations -Solicitations can be made if the consumer has an established business relationship (EBR).
What five topics must be included in every written agreement with an employee or independent contractor?
-Supervision -Duties -Compensation -Duration -Termination
If a person feels like he or she has been discriminated against, how long does that person have to file a complaint?
-With HUD - within one year of the alleged act -In state or federal court - within two years of the alleged act
Which of the following statements is FALSE?
A broker is not responsible for the acts of independent contractors
What is the penalty for violating the CAN-SPAM Act?
A fine up to $11,000 per violation
What did the ACPERA do in regard to the Sherman Antitrust Act?
ACPERA increased the maximum fine for corporations from $10 million to $100 million, increased the fine for individuals from $350,000 to $1 million, and increased the maximum prison sentence from 3 years to 10 years. It also offered financial incentive for informers by de-trebling civil damages for cooperating corporations involved in cartel conduct.
Brokers selling their own property through the brokerage must disclose the brokerage identity is an example of which type of marketing regulation?
Advertising
Alex Jones owns a duplex and lives in one unit. He refuses to rent the other unit to families with children. What would you say about Alex's actions?
Alex is within the guidelines of the Fair Housing Act since he is the owner of a dwelling that has less than four units, one of which is owner-occupied.
What is the purpose of antitrust laws?
Antitrust laws were designed to maintain and preserve business competition.
Identify two duties to clients set forth in the Code.
Avoiding exaggeration, misrepresentation and the concealment of pertinent factsInforming sellers or purchasers of the licensee's interest in a property
What are the three common-law categories that determine the level of control an employer has?
Behavioral Financial Type of relationship
What is blockbusting?
Blockbusting is making a profit by inducing owners to sell by telling them that persons of a protected class are moving into the neighborhood which will have detrimental results.
Why is it important for licensees to understand the Americans with Disabilities Act?
Brokers need to evaluate whether they need to make physical changes to their office space to comply with the law. Licensees should inform their commercial and investor clients of the need to have their leases professionally evaluated and their offices inspected for compliance.
How does FACTA help reduce identity theft?
By allowing individuals to place alerts on their credit histories
Which of the following is not a prohibition under the Clayton Antitrust Act?
Certain labor strikes, picketing, and boycotts
Which is considered to be paramount among the offenses that antitrust laws prohibit and why?
Collusion because it leads to monopoly-like outcomes, including monopoly profits
Jack sells one of his own $225,000 listings for $220,000. The commission is 7%. Jack has an 80% commission split with his broker. What is Jack's share of the commission? What is his broker's share?
Commission = $15,400 ($220,000 x .07) Jack's share = $12,320 ($15,400 x .80) Broker's share = $3,080 ($15,400 - $12.320)
Which of the following is not a penalty for violation of antitrust laws?
Community service
Which of these guidelines is not part of the IRS safe harbor test?
Contractors must have access to workers compensation benefits
The entity that informs government decision makers about the competitive effects of laws or regulations that restrict licensed brokers from offering consumers the option to select specific brokerage services is
Department of Justice.
Which of the following action is an example of discrimination in mortgage lending?
Discriminating when doing a property appraisal
Which of the following must be included in an employment agreement?
Duty Assignment and Compensation
Which of the following is typically NOT a licensee's duty to the brokerage?
Establish compensation agreements with other ancillary service providers.
What does the FACTA allow consumers to do, and what provisions does it contain to reduce identity theft?
FACTA allows consumers to obtain a free credit report once every 12 months from each of the consumer credit reporting companies. FACTA helps reduce identity theft by allowing individuals to place alerts on their credit histories if identity theft is suspected or if the individual is deploying overseas in the military.
Which government entity has the power to enforce compliance with the Sherman Act?
FTC
Agent Betty started with ABC Realty making a 1.5% commission on all listings sold. Within 6 months she will be eligible for a 2% commission. What type of program is Agent Betty on?
Graduated
What is the payment program, when an agent starts out at a lower percentage payment but then graduates to higher percentage rates?
Graduated
Which of these statements about an independent contractor is true?
He or she is paid commission on all sales.
If a licensee joins a company as an independent contractor, which of these will he probably have to pay for on his own?
Health insurance
Describe the exemption that exists for familial status discrimination.
Housing for older persons is exempt if one of the following conditions is exists. The HUD Secretary has determined that it is specifically designed for and occupied by elderly persons under a Federal, State or local government program. It is occupied solely by persons who are 62 or older. It houses at least one person who is 55 or older in at least 80 percent of the occupied units, and adheres to a policy that demonstrates the intent to house persons who are 55 or older.
FACTA contains seven major titles. Which title establishes new limitations on the printing of customers' credit card numbers on receipts?
Identity Theft Prevention and Credit History Restoration
What is the compensation for a licensee who sells one of his or her own listings?
If a licensee lists and sells a property, he or she will receive a share of both the listing and selling side commissions.
What's the penalty for violating the Sherman Antitrust Act?
Individual violators of the Sherman Act can be fined up to $350,000 and sentenced to up to 3 years in federal prison for each offense; corporations can be fined up to $10 million for each offense.
What is significant about the Fair Housing Amendments Act of 1988?
It added handicap and familial status to the list of protected classes.
How did ACPERA affect the Sherman Act?
It offered financial incentives to informers.
Agent Jim wants to send out a e-mail to all the local real estate agents to inform them about an open house he is holding. What must he do to be in compliance with the CAN-SPAM Act?
Jim must give the agents a way to opt out of any future e-mail messages.
Which of the following circumstances would concern you about working for Broker John?
John expects his agents to spend 5 hours a week on unsupervised telephone duty.
What is market allocation? Give an example
Market allocation is the division of markets by location or price. An example would be two companies getting together and deciding that one company would take one part of town, while the other company takes the other part.
Broker Al offers all his agents the ability to sell their own homes without any commission owed the brokerage. In what part of the work agreement might this information be located?
Miscellaneous benefits
What happens every time antitrust suits are heard in court?
New legal precedents are set.
Which training method is conducive for a small brokerage office?
One-on-one training
What kind of training is best for small firms?
One-on-one, on-the-job training
"Everyone charges the same so you might as well list with me" is an example of what?
Price fixing
Which of the following is not one of the liabilities that could be imposed on a company for violation of FACTA?
Prison sentence
List two steps a managing broker should take to ensure compliance with fair housing laws.
Prominently display in all offices the Equal Opportunity Poster that HUD distributes. Provide ongoing training and education to all affiliated licensees by holding seminars and workshops, watching videos and bringing in guest speakers.
What led to the intent to control big business and monopolistic practices through antitrust laws?
Public discontent over limited competition and restrictive price controls in the railway and oil industries
List three activities that are considered discriminatory in real estate.
Refusing to sell, rent or negotiate with any person who is a member of a protected class Telling persons that a property is not for sale or rent when it is Denying membership in any multiple listing service (MLS) or any broker's organization
Under ACPERA, an informant might reduce its damages and avoid liability if it demonstrates what?
Satisfactory cooperation
If a licensee joins a company as an independent contractor, which of these will he probably have to pay for on his own?
Social Security Tax
What ethical standards guide real estate professionals and what are the three sources for the information incorporated into this guide?
The Code of Ethics and Standards of Practice set forth by NAR has used federal and state laws which focus on anti-discrimination laws and fair trade practices, state real estate licensing regulation dealing with agency issues and disclosures, and self-regulation by real estate associations that set standards for professional conduct.
What is the Telephone Consumer Protection Act otherwise known as and what does it address?
The Do-Not-Call List addresses the regulation of unsolicited telemarketing phone calls.
What is a 100 percent commission plan?
The agent pays a monthly fee to the company to cover the costs of things like office space, telephones, office equipment and supervision. In return, the agent receives 100% of the commission from any sales he or she negotiates.
Who is responsible to ensure that all agents in a brokerage are properly licensed?
The broker
How can a broker choose to pay his or her licensees?
The broker can choose to pay the licensee a salary or a percentage share of the commission from the transaction.
What duty is first and foremost in a broker and licensee agreement?
The broker has the duty to supervise his/her licensees.
What are the consequences to the broker if an IRS audit reveals that a contractor is actually an employee?
The broker will be liable for state and federal unemployment insurance premiums, worker's compensation and disability insurance. The broker will also have to withhold federal and state taxes, including Social Security taxes. In addition, the broker could incur stiff tax penalties as a result of the incorrect classification.
Which of the following benchmarks might be used by a licensee when selecting a brokerage?
The firm employs a number of successful agents.
What led to the public's intent to control big business and monopolistic practices?
The limited competition and restrictive price controls by the railway industry and the oil industry.
What is the main difference between an employee and an independent contractor?
The main difference between the two is an issue of control, as established by income tax laws.
What is the penalty for violating the Junk Fax Prevention Act and what is the only defense for doing so?
The penalty for violations is a minimum liability of $500 per page. The only defense is if the sender and the transmission are protected by the EBR exception.
What are the conditions of the IRS safe harbor test?
The person must be a properly licensed real estate agent.Gross income from all output must be based on production and not on hours worked. A written agreement must exist between the independent contractor and the broker stating that the contractor will not be treated as an employee for income tax purposes.
Which of these is not an exemption to fair housing law?
The sale of a single-family home by an owner who owns five residences
What is the only defense if one sends an unsolicited advertisement by fax?
The transmission was protected by the EBR exception.
Why should an independent contractor keep expense records?
These records are particularly important as documentation for the licensee's tax return. Also, depending on the written agreement the licensee has with the broker, he or she may need specific expense records and receipts for reimbursement of some of those expenses.
What types of information might the policy manual contain about discriminatory practices?
They must not inquire about, respond to, or facilitate inquiries about, or make any disclosures which indicate any preference, limitation, or discrimination based on race, color, religion, sex, national origin, ancestry, familial status, or handicap.
What can a broker require of his independent contractors?
They must sign a written agreement
Broker Jed tells buyer Sam that when he signs his purchase agreement he must also purchase a subscription to Jed's monthly newsletter. What would you say about this?
This is a tie-in arrangement which is prohibited by the Sherman Antitrust Act.
What kinds of discussions about commission rates are brokers allowed to have that would not violate the Sherman Act?
To avoid risk of price fixing violations, brokers may only discuss how the commission would be split between the listing broker and the selling broker in a cooperative transaction and may only discuss commission rates with their affiliated licensees or with potential employees during an interview.
Early in the history of big business, why did competing businesses coordinate prices?
To minimize competition and increase profit
What kind of training do new licensees need?
Training in the management systems and philosophy of the brokerage company.
What do the rules of the CAN-SPAM Act exclude?
Transactional or relationship messages that the receiver has agreed to - regular emails between the broker and someone he/she has already made contact with.
What does the Clayton Act allow private individuals to do?
Under the Clayton Act, private individuals are permitted to sue antitrust violators. If the suits are successful, the individuals can recover three times the damages incurred plus court costs and attorneys' fees.
Which of the following must a broker legally provide to an employee?
Unemployment insurance
What types of information might the policy manual contain about open houses?
What are the procedures for licensees holding open houses? What are the rules regarding open house signs and directional signs? What are the safety policies regarding how to keep the licensees safe and how to protect the homeowners' possessions during an open house?
What are three important questions to ask when negotiating a contract?
What are the start-up costs?Who pays the expenses? What is the commission schedule?
What has not been addressed in any amendments to ACPERA?
What constitutes "satisfactory cooperation" in regard to informers and amnesty has never been addressed.
What types of information might the policy manual contain about advertising?
Who writes the ads? Who places ads? Who pays for ads? What media is authorized for use in the brokerage? Is there training on telemarketing solicitation?
Should a policy manual contain a section on referral fees?
Yes because all licensees should be given the same information in writing.
Agent Sue listed and sold the same property. Agent Sue is owed a
a listing and selling commission.
During the investigation period, HUD can attempt to resolve the complaint by getting assurance from the person against whom the complaint was filed that he or she will remedy the alleged violation. This is known as
conciliation
Work agreements must be
dated and signed by the parties
Most licensees are hired as
independent contractors.
Antitrust laws prohibit
market allocation
Business practices and behaviors that violate antitrust laws include
market allocation.
In regard to antitrust laws, some states require licensees to inform clients that commission rates are
negotiable.
Two brokers are discussing how the commission would be split between the listing broker and the selling broker in a cooperative transaction. They are guilty of
nothing
Courts have found that violations of antitrust laws do not occur when brokers
real estate boards directly or indirectly influence commission rates.
Agent Mary sold a listing for another brokerage. Agent Mary is entitled to a
selling side commission.
A restraint of trade is created when
the existence of a monopoly or conspiracy has a negative impact on a company's ability to do business.
The policy and procedures manual should include
the firm's commission policy