Real Estate Laws of Agency

A net leasing agreement would require the lessee to pay his share of all of the following EXCEPT

(a leasing ) commission. With a net lease, the lessee (tenant) not only pays the rent for occupancy but also pays maintenance and operating expenses such as taxes, insurance, utilities, maintenance, and repairs.

A prospect for the lease of a commercial property feels the need for adversarial representation and hires a broker to negotiate the lease on his behalf. What is the name of the contract entered into between the prospect and the broker?

A buyer broker agreement. A contract wherein the broker represents a buyer or tenant is called a buyer broker agreement or an exclusive right to represent agreement.

When a salesperson takes a listing which does not authorize the listing broker to accept a deposit from an offeror toward purchase of the property, the broker should advise his salesperson that:

A deposit will be accepted and retained by the broker from the offeror, but only as agent for the offeror; If a broker is not authorized by the seller to accept a deposit, he is the agent of the buyer (offeror) for that one act.

The words "procuring cause" would have an important meaning to which of the following:

A dispute over commission on an exclusive agency listing.

If a broker is an agent of a seller, he owes to the buyer:

A duty of fair and honest dealing

A representative with full authority to bind the principal to all agreements is:

A general agent. A general agent has the power to act for most purposes on behalf of the principal.

A power of attorney can be terminated by the

A power of attorney is a written instrument authorizing a person, the attorney-in-fact, to act as the agent on behalf of another to the extent indicated in the instrument.

Agency is the act of representing someone in the purchase, sale, or lease of a property. Subagency is the act of representing:

A principal who is represented by an agent. A subagency may be authorized by the terms of a listing agreement.

The Statute of Frauds outlines which contracts must be in writing to be enforceable through court action. Which of the following contracts would be enforceable?

A verbal lease for one year or less.

The obligation of protecting any deposits entrusted to an agent is an example of the fiduciary duty of:

Accounting

A listing broker may legally refuse to present a proper offer on the property to the seller when:

Acting on the express instructions from the seller. A licensee is obligated to present all written offers to a seller immediately and at the same time. Unless it is a frivolous offer

When agent Andy took a listing he promised the seller that he would advertise the property in a magazine until it was sold. Andy did not do the advertising that he promised. Andy is guilty of:

Actual fraud.

Which of the following is not essential to the creation of an agency relationship?

Agreement to pay consideration.

As the agent for the seller, a real estate broker negotiated a sale. By agreement, the licensee can be paid his commission in the form of:

All of the choices may be the commission if agreed upon in advance.

If two parties want to create an enforceable broker-principal relationship concerning a right, title or interest in real property, the most essential element to do so would be:

An employment contract. The most essential element of an enforceable broker-principal relationship is the employment contract.

Which of the following statements BEST shows the difference between an exclusive right to sell and either an open or an exclusive agency?

An exclusive right-to-sell guarantees the listing broker a commission if he/she, or any other cooperating broker, procures a ready, willing and able buyer under the seller's terms and conditions; exclusive agency and open listing do not provide the same

When a written agreement spells out the responsibilities of the principal and the agent, the relationship created is called:

An express agency. When the terms of the agency relationship are formalized in writing, it is known as an express agency.

Commissions rate price fixing is a violation of the:

Anti-trust laws. Price fixing is a violation of the Sherman Anti-trust laws.

What is a "client" during a real estate transaction?

Any person who signs an agreement for the sale or purchase of a property with a licensee.

The broker who most qualifies for a commission is the one who:

Communicated the acceptance to the buyer.

"Valuable," "good," " sufficient," and "adequate" are terms most closely associated with:

Consideration: One or more thing(s) of value that is/are exchanged in the contract (not necessarily money)

A broker whose negligence in preparing a sales contract allows the purchaser to void the agreement breaches her duty to her client of:

Due care. "Due care" refers to the licensee's obligation to ensure that all steps in the transaction process are followed with professionalism and accuracy.

If a principal terminates the listing agreement during the listing period, the broker may be able to do any of the following except:

Encourage termination of any contract in process. The agent is prohibited from interfering with any transactions that originated during the relationship.

In order to be entitled to a commission, a broker must show that he/she was the procuring cause of the sale under all of the following types of listings, except:

Exclusive authorization and right to sell. Exclusive Authorization and Right to Sell Listing is a contract where the Owner agrees to sell the property in question through the Listing Broker.

In order to be entitled to a commission, a broker must show that he/she was the procuring cause of the sale under all of the following types of listings, except:

Exclusive authorization and right to sell. The Listing Broker does not need to show that he/she is the procuring cause.

In addition to the duties of diligence, care, and skill, a real estate agent owes the principal a full disclosure of all facts material to the subject of the agency. Any intentional concealment of such facts by the agent would probably be regarded as:

Fraudulent misrepresentation

The relationship of a property manager with the owner is a:

General agency.

If a salesperson acts as an independent contractor, then:

He controls his own working hours.

When the selling agent is a subagent of the listing broker:

His fiduciary duty and primary allegiance are to the seller only. The fiduciary duty of a licensee acting as a subagent of a listing broker is solely to the seller.

Under what circumstances might a broker collect a commission from both buyer and seller?

If both parties give informed consent.

Which of the following statements about the law of agency is CORRECT?

It establishes a fiduciary relationship.

Johnson, a real estate broker, listed a property. Suzie, a salesperson working for broker Sims, received an offer. Donna, a salesperson working for broker Johnson, got the offer accepted. Who earned the commission?

Johnson

Jones lists his house and tells his listing agent, Brown, "I'm listing for $480,000 but I might take less." Brown may properly:

Keep the information to himself.

A listing agent received two offers in the morning and immediately presented the offers to the seller. In the evening the agent received two more offers, both with a lower price. What should the agent do?

Let the seller know of the two new offers immediately.

An agent becomes the agent of the seller when both the seller and the agent sign:

Listing Agreement

An agency relationship may be created by:

Most agency relationships are created by written agreement. An agency relationship can also be created by ratification (consenting to acts of the agent), and estoppel(principal stopped from denying an inconsistent position in the representation).

Which of the following is a requirement for a valid agency relationship?

Mutual consent.

A real estate licensee is usually presumed to be the agent of the:

Party with whom a written contract has been signed.

An agent who represents the buyer exclusively may:

Present offers to the seller and seller's agent.

In an agency relationship, the person identified as the client is usually the:

Principal

If a principal no longer desires the broker to act for him during the period of an exclusive right to sell listing, he may:

Revoke the agency created by the listing contract but may be liable for damages

An agency could be terminated by all EXCEPT:

Sellers are free to terminate contracts at any time and, more or less, for any good faith reason, such as changing their minds about selling. However, contracts may not be cancelled simply to avoid paying a commission.

A broker has been in the business for many years. He currently has 40 exclusive listings in his office. The broker dies and his daughter who is also a broker, takes over for him. What should she do about the current listings?

She must attempt to renegotiate all of the listings.

Once an agency relationship is ended, any confidential information learned by the agent during the relationship is:

Still confidential.

An agency relationship may be created by all of the following EXCEPT:

Subornation. Subornation (suborn) means to bribe or induce someone to unlawfully (or secretly) perform some misdeed or to commit a crime.

The fiduciary duty of full disclosure requires the seller's agent to

Tell the principal anything that would be of use in negotiations.

What happens if the agent has not located a buyer by the end of the listing period?

The agency relationship terminates

A seller has listed her home with a broker for $90,000, and the broker tells a prospective buyer to submit a low offer because the seller is desperate to sell. The buyer offers $85,000 and the seller accepts it. In this situation:

The broker has violated his agency relationship with the seller.

Ethical practices of a real estate licensee most nearly means:

The licensee's honesty and fairness in dealing with the public, clients and associates and customers.

Who is more likely to earn the commission?

The one who communicated the seller's acceptance of the offer to the buyer.

On the last day of a 90-day exclusive listing, broker Jones submits a list of names of people with whom he negotiated to the seller. Broker Jones accidentally left out Adams' name. One week later, the owner sells to Adams. Which of the following is correct?

The owner is not liable for any commission. A safety clause in a listing requires the broker to submit the names of all prospective buyers with whom he/she negotiated prior to the expiration of the listing.

Which is an example of ostensible agency?

The principal showed by actions that the agent's actions were accepted. Ostensible agency is the same as implied agency and means that the relationship is created by the actions of the parties rather than written contract

In a real estate transaction, both the seller's agent and the buyer's agent are legally required to put whose interest first?

Their principal's.

Broker Carr, with ABC Real Estate Company, listed the property with a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property. What, if any, is the relationship between the buyer's broker, the seller and the listing broker?

There is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer.

When serving as a buyer's agent, according to the Civil Code sections dealing with agency, a licensee owes a fiduciary duty:

To the buyer

In which of the following ways could an agency relationship not be created?

Voluntary offer by the agent.. The mere voluntary offer of an agent is not enough to create an agency relationship.

Jones makes a written offer to buy Brown's house for $250,000. Jones confides in Brown's agent, White, that if necessary he would pay $10,000 more, but he doesn't want Brown to know. White should:

Warn Jones that he must pass on to Brown anything useful he knows.

Which of the following represents the minimum time period for an exclusive right to sell listing:

Whatever is agreed upon by the seller and the broker

When is a properly licensed real estate salesperson most likely to get his/her commission?

When escrow closes. The salesperson is most likely to get commission when escrow closes. also, agent earned commission when acceptance of the offer is communicated to the buyer.

When is a broker relieved of the obligation to present an offer to purchase real property to the principal:

When the offer is patently frivolous or the broker is acting on written instructions of the principal

Jones agrees to represent Brown in the sale of a property. The listing contract states that Jones will receive a fee of $25,000 from Brown at closing, regardless of the sales price. Is this a valid form of compensation?

Yes. Compensation can be determined in any number of ways, as long as the seller and broker agree.

Micah agrees to represent Dan in the sale of a property. The listing contract states that Micah will receive a fee of $25,000 from Dan at closing, regardless of the sales price. Is this a valid form of compensation?

Yes. Compensation can be determined in any number of ways, as long as the seller and broker agree.

A real estate licensee has a buyer agency agreement. What is the seller in this situation?

a customer

Typically a listing broker is usually considered to be:

a fiduciary (agent) of the seller

Which of the following listings is illegal in most states and open to fraudulent dealings?

a net listing

When negotiating a lease on behalf of a commercial real property landlord, the broker would usually calculate his commission as:

a percent of the rent due for the entire lease period.

An agency relationship can be created by all of the following, EXCEPT:

agent volunteers

All of the following are essential to the creation of an agency relationship, EXCEPT:

agreement to pay consideration. The payment of consideration need not be involved in an agency relationship.

In some cases, a broker's commission can be earned if he can prove he set in motion a series of events which resulted in the sale of a property. If a broker produces a ready, willing and able buyer he would most likely:

be considered the procuring cause of the sale.

Failure to perform any of the terms or conditions of a contract is called:

breach

Within the agency agreement is a statement that binds the buyer to paying the broker's fee if, within a stated number of days, the buyer purchases a property that was shown to the buyer during the agency period. This clause is called the:

broker protection clause.

The main obligation the principal owes a real estate agent is:

compensation

The maximum commission a broker may charge for the sale of residential property is:

determined by the broker's contract with his principal.

The situation with the most potential for conflict is when a real estate licensee acts as a:

dual agent

A real estate broker should regard himself/herself as a

fiduciary

A real estate agent who is placed in a position of trust, loyalty, and confidence is a(n):

fiduciary.

When acting as agent for seller Jones, real estate broker Smith:

is obligated to render faithful service to Jones.

An attorney-in-fact can best be described as a(n):

legally competent person who has been given the power of attorney by another competent person.

A "safety clause" is found in a:

listing agreement

Nondisclosure of a dual agency by a broker can result in

loss of commission and rescission of contract. The agency may also lose his/her commission and be subjected to disciplinary action by the Bureau of Real Estate.

When an agency relationship ends, which of the following duties does not continue?

loyalty

A person who had leased a property for three years had to move out of state before the lease period had expired. In reading the lease, there was no mention of either subleasing or assignment of the leasehold. The lessee:

may sublease or assign the lease.

In a typical agency relationship between the broker and the client, the broker's commission is determined by:

mutual agreement.

If the owner enters into an exclusive agency listing and thereafter sells the property through his own efforts:

no commission is payable. Under an Exclusive Agency Listing, the seller reserves the right to sell the property himself or herself and not pay anyone a commission.

A listing that does not require a broker to use diligence in obtaining a purchaser is:

not an exclusive listing. An exclusive listing is an agreement in which the seller agrees to appoint only one broker to sell the property. For this reason, it must include a promise by the broker to use diligence in finding a buyer.

Broker Adams represents a buyer in a single-family home transaction. As an incentive, he agreed to rebate part of his commission to the buyer. Broker Adams is required to:

notify the seller of the rebate. Failure to disclose to the seller that the buyer will receive any part of the commission may subject the broker to disciplinary action

Seller "A" lets buyer "B" assume that Broker "C" was his agent. This type of agency relationship is an example of:

ostensible authority. Ostensible authority is that authority which a third person reasonably believes an agent possesses because of the acts or omissions of the principal.

An actual agency relationship that arises by the actions of the parties rather than by expressed written agreement is called:

ostensible/implied agency.

The final decision in establishing the listing price is made by the:

owner

A tenant's five-year lease has expired but they continue to live on the premises and pay their rent monthly. This is considered a(n):

periodic tenancy. the lease continues from period-to-period until one of the parties gives notice of termination.

In a real estate transaction, fiduciary duties are owed to the:

principal

Which of the following would not terminate an agency relationship?

renewal

If you are a subagent of the listing broker, you are working for the:

seller

A real estate commission is usually based on the:

selling price

When selling a business, the rate of commission is determined by:

the agreement between the broker and owner.

In a new counter-offer:

the counteror becomes the counteree. When a counter offer is made, the roles are reversed and the person who made the counter initially (the counteror) becomes the person receiving the new counter (counteree)

Typically when leasing real property, the commission of the leasing agent is based on a percentage of:

total rents collected during the term of the lease.

A 17-year-old unemancipated minor enters into a contract to sell real property. The contract is:

unenforceable

Owner Joe tells broker Stephen that he wants to sell his house as soon as possible and would accept $350,000. Stephen tells buyer Selwyn that Joe has financial troubles and will accept a much lower price, possibly as low as $300,000. Joe, ultimately, accepts an offer from Selwyn for $300,000. Broker Stephen is guilty of:

unethical behavior and a violation of the fiduciary responsibility.

A contract signed under duress is:

voidable