State practice Exam 1
C. 180 (operating a firm) If a firm's principal broker dies or becomes incapacitated, the Board may approve an unlicensed person to conclude the firm's business (limited to 180 days).
After the death or disability of the only broker in a real estate firm, how long does a Board-approved person have to conclude the business? Select one: A. 120 B. 150 C. 180 D. 210
C. Employed by another broker (licensing definitions) Any person who holds a broker's license, but is NOT the principal broker of a firm, is considered to be an associate broker. Therefore, an associate broker must work for another broker.
An associate broker must be: Select one: A. A member of the National Association of Realtors B. A member of the MLS C. Employed by another broker D. Part of a franchise firm
B. Principal broker (operating a firm) The principal broker is responsible for the real estate activities of a firm. This responsibility can also be delegated to the supervising broker of a branch office.
For a corporation licensed to engage in real estate business, which individual is primarily responsible for those real estate activities? Select one: A. President of the corporation B. Principal broker C. Chairman of the board D. Corporate attorney
D. No one (virginia transaction recovery fund) People who regularly deal in real estate transactions are not eligible for payment from the Transaction Recovery Fund. This includes real estate agents, bankers, developers, and contractors.
Harry is a broker. He works out a deal with Larry (a developer), Darrell (a contractor), and Tony (a mortgage banker). The deal states that Harry will sell all of the houses that Darrell built on Larry's land. After that, Tony would handle the mortgages of any buyers through his bank. Harry sells three houses, then runs off with all the funds. Larry, Darrell, and Tony all file claims for payment from the Transaction Recovery Fund. Who is most likely to collect? Select one: A. Larry, the developerterm-15 B. Darrell, the contractor C. Tony, the mortgage banker D. No one
A. She is entitled to a hearing before the Board can take disciplinary action, unless the law provides otherwise (disciplinary procedures and sanctions) Generally, licensees are afforded the right to a hearing before the Real Estate Board takes disciplinary action. However, the law specifies that a license will be automatically suspended or revoked, without benefit of hearing, in several situations. Also, the Board may subpoena any person, licensed or not, if their testimony will have a bearing on the case.
A salesperson is charged with a violation of the License Law. Which of the following statements is true? Select one: A. She is entitled to a hearing before the Board can take disciplinary action, unless the law provides otherwise B. She has the right to present witnesses in her defense, provided those witnesses are licensed real estate professionals C. Her license will be temporarily suspended until the Board can hold a hearing D. Her employing broker will lose his license if the salesperson is found guilty
D. All of the above (licensee's interest) Licensees must make specified disclosures when selling their own property. Disclosure of license status is also required if they have any other interest in a property for sale (for example, if their firm or a family member has an interest in the transaction).
A salesperson is employed by Broker Able, but she works alone to market and sell her own home. She must: Select one: A. Abide by all fair housing laws B. Disclose in all forms of advertising that she is a licensee C. Disclose to all buyers her license status D. All of the above
A. The salesperson is entitled to receive her commission (licensing procedures) The salesperson was properly licensed when a buyer was found in the transaction. Therefore, she would be entitled to the earned commission.
A salesperson took a listing on October 15. The property sells on December 20 and closing takes place on January 15. Unfortunately, the salesperson forgot to renew her license when it expired on December 31. Which of the following statements is true in this situation? Select one: A. The salesperson is entitled to receive her commission B. The salesperson can only be paid if her license is renewed prior to January 31 C. The salesperson cannot be paid D. The salesperson can be paid if she retakes the state licensing exam
A. By having his license returned to the Board and a new license issued to the new broker licensing procedures) When a salesperson transfers from one broker to another, his or her license is returned to the Real Estate Board, who then issues a new license to the new employing broker.
A salesperson wishes to transfer from one broker to another. The salesperson can only do this: Select one: A. By having his license returned to the Board and a new license issued to the new broker B. If he gives his current broker 30 days notice C. If he gives his current broker 30 days notice D. If the Board is notified when his license is renewed
A. Steering (virginia fair housing act) Steering is the act of directing buyers into or away from specific property based on their minority status.
A broker has been approached by a minority buyer, who requests to see properties in a specific section of a city. The broker refuses to show these properties. Instead, the broker indicates that the he would be better off in a location with a greater concentration of his particular minority group. The broker's illegal conduct is known as: Select one: A. Steering B. Blockbusting C. Redlining D. Panic selling
C. When the closing is completed (escrow accounts) The broker may remove his commission from the escrow account after closing or when ALL parties to the transaction agree in writing, not when only the seller states it's okay to do so.
A broker has the buyer's earnest money deposited in an escrow account. The amount of the deposit exceeds the amount of the broker's commission for the sale. The broker can ONLY remove his commission for the sale: Select one: A. When the buyer moves into the property B. When the seller moves out of the property C. When the closing is completed D. Whenever the seller says it's fine to do so
C. The broker and the seller (disciplinary procedures & sanctions) Commission rates are only negotiable between the broker and the seller of the property.
A broker is a member of the local MLS service. Commission rates charged by members of the MLS are established by: Select one: A. The MLS service B. The Virginia Real Estate Board C. The broker and the seller D. The local association of REALTORS
A. Has the owner's permission (advertising) It is improper dealing to place a sign on property without the owner's permission. This doesn't just apply to "For Sale" signs. ANY sign (even a directional sign) requires the owner's permission.
A broker may place a sign on a property when he: Select one: A. Has the owner's permission B. Is ready to advertise the property C. Has a written listing agreement D. Plans to hold an open house
D. Paid or accepted valuable consideration from another broker (operating a firm) The principal broker (and supervising broker, if applicable) should supervise all licensees that work on behalf of the firm. This is important because the broker could be liable if he knew or should have known about illegal conduct and failed to take action. Violating the Fair Housing Act is also specifically prohibited. Therefore, of the listed choices, only accepting or paying "valuable consideration" to another broker is NOT a violation--this is called co-brokerage.
A broker would NOT be in violation of Virginia license law if he: Select one: A. Was aware of the improper dealings performed by his salespersons B. Should have known about the improper dealings performed by his salespersons C. Violated the Fair Housing Act D. Paid or accepted valuable consideration from another broker
A. Put this information into the written offer (escrow accounts) The salesperson should write into the offer that the deposit is a note due at settlement. When the offer is presented to the seller, the seller can then decide whether to accept this as a deposit.
A buyer gives her salesperson a note, payable at settlement, as an earnest money deposit for a home. The salesperson must do which of the following actions? Select one: A. Put this information into the written offer B. Immediately give the note to her broker for deposit in the escrow account C. Immediately call the seller on the telephone D. Tell the buyer to forget it
C.) seller (virginia condominium act) The law requires that certain information be provided to the buyer by the SELLER during the resale of a condo. Agents need to make certain that the seller does everything that is required by law.
A condominium owner re-sells his unit. After settlement, it is discovered that the CCRs were revised during the executory period of the contract. Who was responsible for advising the buyer of the changes? Select one: A. Buyer's attorney B. Buyer should have been aware of the changes C. Seller D. Unit owners' association
D. Hold the funds until ordered by the court to disburse (escrow accounts) The License Law and Regulations advise that if the sale is not consummated, the deposit should be disbursed as agreed upon by the parties (in the sales contract or otherwise). However, there is no agreement in this situation and no indication of the contract terms. Therefore, the only solutions are to let the courts hold the funds until the dispute is settled (interpleader), or to hold the money until a court orders the disposition of the funds.
A contract cannot be consummated due to a disagreement between buyer and seller. The broker still has the earnest money deposit in his escrow account. The seller demands that the deposit be given to him, but the buyer demands that the deposit be returned to her. What can the broker legally do? Select one: A. Immediately return the funds to the buyer B. Immediately give the funds to the seller C. Retain the funds as his commission D. Hold the funds until ordered by the court to disburse
C. The clerk must be licensed as a broker (licensing requirements) Of the choices given, the best answer is that the clerk must be licensed as a broker. He could receive payment if licensed as a salesperson AND employed by the paying broker (since salespersons can only accept compensation from the employing broker). However, we don't have enough information to know if that is true. We DO know that a broker can pay another broker without violating the law.
A motel clerk provides a few leads to a broker in exchange for a percentage of the commission. In this situation, which of the following statements is true? Select one: A. The clerk must be a licensed salesperson B. Neither the broker nor the clerk is in violation of the law C. The clerk must be licensed as a broker D. This is a good sales strategy
D. Files an irrevocable consent to suits and services (licensing procedures) For out-of-state (non-resident) brokers and salespersons, the Board requires applicants to file an irrevocable consent to suits and services (agreement which allows the Board to receive notice of any in-state lawsuit on the licensee's behalf).
A non-resident broker may open an office in Virginia, provided she does which of the following actions? Select one: A. Employs a resident broker to represent her B. Closes her out-of-state office C. The firm must be incorporated in Virginia D. Files an irrevocable consent to suits and services
C. Does not pay the Transaction Recovery Fund assessment (virginia transaction recovery fund) The only instance where your license can be suspended or revoked without a hearing is in relation to the Transaction Recovery Fund. Specifically, a license will be suspended if you fail to pay your assessment, and it will be revoked if you cause payment from the Fund.
A real estate license could be suspended without investigation if the licensee: Select one: A. Engages in acts of brokerage while on inactive status B. Violates the Virginia Real Property Act C. Does not pay the Transaction Recovery Fund assessment D. All of the above
D. None of the above (operating a firm) Only brokers can pay referral fees and split commissions with other brokers/firms. Salespersons are NOT allowed, so this particular salesperson is violating the License Law. In addition, licensees can only be compensated by the principal broker (or broker-owner). As such, a salesperson cannot accept compensation from another salesperson.
A salesperson decides to offer a $500 referral bonus to anyone that finds an acceptable buyer for his listing. The salesperson can pay this referral bonus to: Select one: A. Any other salesperson or cooperating broker, as long as he finds a ready, willing, and able buyer B. The owner, as long as he finds a ready, willing, and able buyer C. An unlicensed friend, as long as he finds a ready, willing, and able buyer D. None of the above
B. This is a violation of the License Law (agency disclosures) Disclosure of license status is required whenever a licensee buys or sells real property in his own name. Also, anytime a third person is a party to a contract, that fact must be disclosed.
If a broker purchases property through a "straw man" and does not disclose that information, which of the following statements is true? Select one: A. This is not a violation of the License Law B. This is a violation of the License Law C. This is permitted if the "straw man" is also a broker D. This is permitted as long as the seller does not find out
A. The claimant must have gone after any assets and property belonging to the debtor (virginia transaction recovery fund) After the claimant has obtained a judgment, he must pursue all legal avenues for reimbursement. This would include a legal attempt to seize and sell all of the respondent's assets. Then, and only then, is the claimant eligible for payment from the Fund.
If a judgment has been awarded to a claimant, what must the claimant do before the Board will authorize payment from the Transaction Recovery Fund? Select one: A. The claimant must have gone after any assets and property belonging to the debtor B. The respondent must assign all commissions and personal property to the claimant or the Board C. The respondent must file bankruptcy and sell all property D. The respondent must submit to interrogatories by claimant
C. The Real Estate Board (virginia transaction recovery fund) You can ONLY file a claim with the Real Estate Board. However, a claimant must first obtain a final judgment against the licensee from a court of competent jurisdiction.
If a person wants to make a claim from the Transaction Recovery Fund, where should this claim be filed? Select one: A. A court of competent jurisdiction B. The Virginia Association of Realtors C. The Real Estate Board D. The principal broker of the respondent
B. The license will be automatically revoked virginia transaction recovery fund) Once a payment is made from the Fund, the person's license is revoked without benefit of a hearing.
If the Board has authorized payment from the Transaction Recovery Fund, what is the effect for the licensee who committed the misconduct? Select one: A. The licensee has 4 years to repay the Fund B. The license will be automatically revoked C. The license will be automatically suspended D. The licensee may continue to sell real estate if a court has adjudicated him as bankrupt
C. Placing rental security deposits in the same account as the property operating funds (escrow accounts) Commingling is the act of mixing or mingling entrusted client or customer funds with personal or business funds (deposit into the same account). Examples of commingling include depositing earnest money in the broker's business operating account, or depositing broker's personal funds in the trust account. Security deposits can be placed in the same account as earnest money deposits, but again, they must not be commingled with operating funds.
In which circumstance would a broker be guilty of commingling funds? Select one: A. Placing rental security deposits in the same escrow account as earnest money deposits B. Placing personal funds in the same account as funds belonging to salespersons and employees C. Placing rental security deposits in the same account as the property operating funds D. Using the same financial institution an escrow account and a personal account
A. Lisa, acting as the owner of the property, is exempt from Virginia Fair Housing Laws (virginia fair housing act) Read the question carefully. The only statement that is not true is that Lisa is exempt. Lisa must still follow the Fair Housing Law (private individual owners are only exempt from the non-racial aspects). Further, Lisa does not meet the private owner exemption since she used discriminatory advertising.
Lisa is a licensed salesperson that is selling her own townhouse. She advertises her townhouse as a FSBO as follows: "Beautiful 3 bedroom townhouse. Excellent assumption. Single females only. Call 123-4567 for details. Owner is licensed." Which of the following statements is not true? Select one: A. Lisa, acting as the owner of the property, is exempt from Virginia Fair Housing Laws B. Lisa has disclosed her license status as required by Board regulations C. Fair housing laws do not apply to marital status D. This ad violates fair housing laws on the basis of sexual discrimination
B. Endorse the check over to Bob (disciplinary procedures) Licensees can only receive compensation from their employing broker. Therefore, Brenda must either return the check to Alex or give it to Bob--she cannot keep it. However, if she gives it to Bob, he could choose to give her a bonus in the same amount as the check received from Alex. Bob (not Brenda) is required to maintain an escrow account. Nevertheless, whether the money is placed in escrow is irrelevant--Brenda cannot receive compensation from someone other than her broker.
Salesperson Brenda is affiliated with Broker Bob, who has a listing with Seller Alex. Salesperson Brenda receives a check from Seller Alex after finding a buyer to purchase the home. If Brenda wants to keep the money and NOT violate VA License Law, she could: Select one: A. Cash the check if she deserves it B. Endorse the check over to Bob C. Put the check in her escrow D. Cash the check, but inform Bob
B. Illegal, because Ellen can only accept money from her broker
Salesperson Ellen shows many different properties to her clients over the course of several weeks. In the end, these clients decide to stay where they are and to quit looking for a home. They give Ellen $500 as compensation for all of her hard work. Ellen deposits the money into her personal checking account. Such action is: Select one: A. Legal, if Ellen maintains a record of the transaction B. Illegal, because Ellen can only accept money from her broker C. Legal, if Ellen performed as agreed D. Illegal, unless properly disclosed
D. Either B or C (disciplinary procedures & sanctions) In general, the Board may take disciplinary action if the licensee admits guilt or after conducting a hearing. If the licensee admits guilt, the Board may not take additional actions beyond the agreed upon punishment. Also note certain actions related to the Transaction Recovery Fund are automatic (no hearing required).
The Board may take disciplinary action against a licensee: Select one: A. If a written complaint contains prima facie evidence that a violation has occurred B. If the licensee admits guilt C. After conducting a hearing D. Either B or C
D. The property is in a dam break inundation zone (virginia property disclosures) Virginia requires sellers to provide a "buyer beware" disclosure to buyers. This form specifically states that a seller makes no representation with respect to whether the property is located in a dam break inundation zone. However, when applicable, a seller should provide additional written disclosure about defective drywall, building violations, and aircraft noise zones.
The Virginia Residential Property Disclosure Act requires disclosure of all of the following property conditions, except: Select one: A. The property has hazardous or defective drywall B. The property has a pending building violation C. The property is in an aircraft noise zone D. The property is in a dam break inundation zone
D. None of the above (signage) There are disclosure requirements for each of these advertising methods. In Virginia, advertising includes all forms of representation, promotion, and solicitation related to licensed real estate activity (for any purpose, in any medium). Therefore, "none of the above" is the best answer choice.
The principal broker of a real estate franchise must make certain disclosures when advertising. In which of the following forms of advertising are these disclosures NOT required? Select one: A. In radio and television advertisements B. On "For Sale" signs places on specific property C. In newspaper ads consisting of more than 28 lines of copy D. None of the above
A. Is required to disclose her license status (agency disclosures) Disclosure of license status is required when a licensee is buying or selling property (even if it's your own property). As a licensee, you must still abide by the Virginia License Law and the regulations of the Board.
When a licensee is selling or leasing personally owned property, she: Select one: A. Is required to disclose her license status B. Does not have to disclose pertinent information about the property C. Must list the property with her employing broker D. Is not subject to Board regulations
B. Placing an earnest money deposit into a separate escrow account (escrow accounts) The earnest money deposit must be placed in an escrow account. This escrow account is separate from other accounts that the broker may have. If the terms of the contract require that the deposit earn interest pending consummation of the deal, the deposit could be placed in an escrow account of its own.
Which of the following would NOT be a violation of Board Regulations? Select one: A. Placing an earnest money deposit into a regular operating account B. Placing an earnest money deposit into a separate escrow account C. Paying for a CRV and a credit report out of the escrow account D. Turning the deposit over to a seller
A. Tell the seller that the prospective buyer is a relative (agency disclosures) You must disclose any interest that you have in in a transaction (for example, a family relationship with the buyer).
A woman tells her brother (a broker) that she would like to buy a piece of property that he has listed. However, she does not want the seller to know of their relationship. The brother should: Select one: A. Tell the seller that the prospective buyer is a relative B. Let another person buy the property and turn the deed over to the sister C. Sell the property without disclosing their relationship D. Find another listing agent to avoid a conflict of interest
May not withhold part of the security deposit to cover the cost of normal wear and tear (virginia landlord-tenant act) The final inspection must be completed within 3 days, and the tenant has the right to be present. However, if a tenant waives this right, the landlord may inspect without him. Security deposits must be returned within 45 days (not 30 days), but landlords are no longer required to collect interest to the benefit of the tenant. The landlord may withhold part (or all) of the security deposit to pay for damages, but that may NOT include normal wear and tear.
According to the Virginia Landlord and Tenant Act, when a lease expires, the landlord: Select one: A. Must return the security deposit within 30 days, plus interest B. Must conduct a final inspection of the property within 5 days after lease expiration C. Cannot conduct a final inspection unless the tenant is present D. May not withhold part of the security deposit to cover the cost of normal wear and tear
C. Explain that she cannot comply because this violates federal law (virginia fair housing act) The broker cannot take a listing under these circumstances. If Sarah takes this listing and obeys the seller's instructions, she would be in violation of Federal Fair Housing Laws. Fiduciary duty only requires that an agent to follow LAWFUL client instructions.
Broker Sarah takes a listing from a seller, who later tells her that the house should not be shown to any minorities. The broker should: Select one: A. Note this on the MLS form B. Make written acknowledgement of the instructions C. Explain that she cannot comply because this violates federal law D. Avoid discussion of the request
A. At least 40 hours per week (licensing definitions) The regulations define "actively engaged" as someone who has an active license AND is engaged in regulated real estate activity for at least 40 hours per week.
By Virginia regulation, a licensee that is "actively engaged" is defined as someone who works: Select one: A. At least 40 hours per week B. At least 30 hours per week C. Less than 20 hours per week D. Any amount of time
B. 7 days (virginia time share act) For an initial purchaser, there is a 7-day right of rescission. Meanwhile, a buyer has a 5-day right of rescission in a time share resale.
The initial purchaser of a time-share estate has a statutory right to rescind a contract to purchase. How long is this rescission period? Select one: A. 5 days B. 7 days C. 10 days D. None of the above
C. Listing broker (general advertising) The name of the seller and the name of the listing salesperson MAY appear in the ad, but the listing broker's name MUST appear in all forms of advertisement (conventional and electronic media).
Which of the following names MUST appear in any advertisement for real estate? Select one: A. Seller B. Listing salesperson C. Listing broker D. Selling salesperson
B. The Real Estate Board could withhold issuance of a new license, forever (virginia transaction recovery fund) The Real Estate Board has the right to refuse issuance of a license to any person who has EVER had his license suspended or revoked. When a claim is paid, the broker's license is automatically revoked by law. The fact that the broker repaid the fund is immaterial.
Which of the following statements is true if a broker has repaid the amounts awarded from the Transaction Recovery Fund? Select one: A. His license is automatically reinstated B. The Real Estate Board could withhold issuance of a new license, forever C. He may apply for a new license within 30 days D. He will be reinstated as a salesperson, NOT as a broker, for a period of 2 years
