Texas Law of Agency Aceable Practice Tests

Broker Luke agreed to take an Exclusive Agency Agreement with a seller. Two weeks weeks after Broker Luke entered the property into the MLS and started advertising, the seller sold the property. What is TRUE? A) The seller maintained the right to sell and does not need to pay the broker a commission. B) The broker is entitled to half of whatever commission rate was first agreed upon. C) The broker will receive a percentage of any amount paid over the original listing price. D) The broker is still entitled to whatever commission rate was first agreed upon, regardless of who sold the property.

A) The seller maintained the right to sell and does not need to pay the broker a commission.

Asa, a sales agent, knows that her client, Emma, has HIV. To whom should Asa disclose Emma's HIV status? A) No one B) Emma's agent C) The potential buyer of Emma's house, and also Emma's agent D) The potential buyer of Emma's house

A) No one

Broker Misha has performed a brokerage service for Phil with legal accountability. What is TRUE? A) They can only have an agency relationship if they create a written agreement. B) They only have an agency relationship if consent and control are also present. C) Their agency relationship is now void. D) They now have an agency relationship.

B) They only have an agency relationship if consent and control are also present.

Under the duty of agency disclosure, when must a license holder give an individual the written statement of agency law? A) At the open house B) Upon first substantive dialogue C) Before the transaction closes D) Upon initial contact

B) Upon first substantive dialogue

An Austin-based real estate agent commits a license violation, and her license is suspended. Who suspends it? A) Texas REALTORS® B) National Association of REALTORS® C) TREC D) Jill's sponsoring broker

C) TREC

Carla is a listing agent. At an open house, she speaks to a couple who may be interested in purchasing the house. She should: A) After substantive discussion, tell them that she represents the seller B) Only tell them she represents the seller once they are ready to sign the contract C) Upon initial contact, tell them that she represents the seller D) Never tell them she represents the seller

C) Upon initial contact, tell them that she represents the seller

Your friend Lisa calls you up and complains about the service she is getting from her listing agent. "I just can't sell my house!" she wails. She asks if you can start looking around for possible buyers, just as a friendly favor. What should you do? A) Help Lisa, but only on an informal basis. B) Help Lisa - if the other agent isn't doing their job, it's their own fault they've lost their business to you. C) Call the other broker and tell them Lisa's concerns. D) Tell Lisa that you cannot help her while she is under contract with another broker.

D) Tell Lisa that you cannot help her while she is under contract with another broker.

Which kind of agent has the broadest authority? A) Universal agent B) General agent C) Third party agent D) Special agent

A) Universal agent

Who is entitled to know whom the broker is representing? A) Other brokers B) Sales agents C) All parties D) No one

C) All parties

In an intermediary transaction, the consequences to the seller and buyer are all of the following EXCEPT: A) They will not have full disclosure from the broker about anything confidential about the other party. B) They will receive limited fiduciary duties from the broker. C) They will have to take the transaction out of house. D) They will not have complete loyalty from the broker.

C) They will have to take the transaction out of house.

The seller's agent is usually the: A) Intermediary B) Purchasing agent C) Cooperating agent D) Listing agent

D) Listing agent

An intermediary might also be referred to as: A) A broker representing both parties in a transaction B) A subagent representing the interests of two parties in a transaction C) A single acting agent representing both parties in a transaction D) A cooperating agent representing two parties in a transaction

A) A broker representing both parties in a transaction

Mel, a sales agent, represents his broker Belle in his relationships with clients. As such, Mel helps Belle fulfill her fiduciary duties to her clients. Mel is a(n) ________ of Belle. A) General agent B) Specific agent C) Universal agent D) Special agent

A) General agent

Donald, a sales agent, tells a potential buyer that if they purchase the house within the next week, his broker will throw in a 10% discount. Donald knows that it's very doubtful that his broker would do this. Did Donald commit a license violation? A) Yes, Donald made a false promise likely to influence a person to enter into an agreement, which is a license violation. B) No, Donald did nothing wrong, as he was just trying to secure a sale. C) Yes, Donald commingled funds, which is a license violation. D) No, Donald did nothing wrong, because his client should know that only brokers can make promises like that.

A) Yes, Donald made a false promise likely to influence a person to enter into an agreement, which is a license violation.

What is the main difference between compensation for an agent employee and an agent working as an independent contractor? A) Both are paid only by commissions, but the independent contractor generally takes a higher percentage of the split with the broker. B) Employees are paid either a salary or salary plus commission. Independent contractors are paid only by commission. C) Both are paid only by commissions, but the employee generally takes a higher percentage of the split with the broker. D) Employees are paid only by commission. Independent contractors are paid either a salary or salary plus commission.

B) Employees are paid either a salary or salary plus commission. Independent contractors are paid only by commission.

Sarah is a listing agent. When talking to a potential buyer, she can do all of the following EXCEPT: A) Give all required disclosures B) Give advice about price negotiation C) Point out the property's wonderful features D)Help with the loan application

B) Give advice about price negotiation

Which of these lists identifies all of the protected classes according to TREC's Canons of Professional Ethics and Conduct? A) Race, color, religion, sex, age, ancestry, familial status, and disability B) Race, color, religion, sex, national origin, ancestry, familial status, and disability C) Race, color, religion, and sex D) Race, color, religion, sex, national origin, familial status, and disability

B) Race, color, religion, sex, national origin, ancestry, familial status, and disability

Broker Susie has been representing Kwame. Kwame is not too happy with Susie, and decides he wants to end the agency relationship with her. What is this called? A) Rescission B) Revocation C) Expiration D) Renunciation

B) Revocation

With her seller-client, Broker Melanie discusses compensation (commission), permission to list on the MLS, scheduling of house showings, and expected marketing efforts. What document are they going over? A) The buyer-representation agreement B) The listing agreement C) The escrow agreement D) The Seller's Disclosure Notice

B) The listing agreement

All of the following statements are true EXCEPT: A) TAR Buyer's Representation Agreements are similar to TAR Listing Agreements. B) There is no commission agreement in the Buyer Representation Agreement. C) Buyer Representation Agreements need to be signed by the buyers and the agent. D) Buyer Representation Agreements need to be in writing.

B) There is no commission agreement in the Buyer Representation Agreement.

Depending on the business at hand, what kind of employment agreement might exist between a broker and a principal? A) A buyer tenant/representation agreement, a home inspection agreement, or an independent contract agreement B) A property management agreement, a home inspection agreement, or a subagent agreement C) A listing agreement, a buyer/tenant representation agreement, or a property management agreement D) A listing agreement, a buyer/tenant representation agreement, or a property appraisal agreement

C) A listing agreement, a buyer/tenant representation agreement, or a property management agreement

Alexis, a sales agent, is advising her client on how to fill out the Seller's Disclosure Notice. The client does not want to disclose that the house has water damage. What should Alexis do? A) Alexis should allow the client to not disclose this information. B) Alexis should report the client to the Real Estate Commission on Ethics. C) Alexis should urge the client to disclose this information. If the client won't change their mind, however, she should let it go. D) Alexis should remind the client that they must fill out the form honestly. If the client won't change their mind, she should sever the relationship.

D) Alexis should remind the client that they must fill out the form honestly. If the client won't change their mind, she should sever the relationship.

The _______ and ________ are responsible for negotiating the sales price of a house. A) Sales agent; buyer B) Broker; seller C) Lender; buyer D) Buyer; seller

D) Buyer; seller

Completion of the Notice of Intermediary is needed in which of the following examples? A) Mary is representing a seller and has a buyer customer ready to write an offer. B) Sarah has a listing that an agent from another company just brought her an offer on. C) John is representing a buyer who is buying another broker's listing. D) Delores is representing a buyer who is going to make an offer on a property listed by another agent in her office.

D) Delores is representing a buyer who is going to make an offer on a property listed by another agent in her office.

If a supervising broker requires agents to be at the office certain for hours and attend all company meetings, the agents should most likely be classified as: A) Contracted employees B) Subagents C) Independent contractors D) Employees

D) Employees

What happens in a real estate transaction if the seller does not provide the Seller's Disclosure Notice before signing the contract? A) The buyer must ask TREC to intervene, and the seller may be forbidden to list properties in the future. B) The seller suffers a $500 penalty if they don't submit the notice within three days of signing the contract. C) Nothing happens. Provision of the Seller's Disclosure Notice is optional. D) The buyer is allowed to terminate the contract for any reason within seven days after receiving the notice or before closing (whichever is earlier).

D) The buyer is allowed to terminate the contract for any reason within seven days after receiving the notice or before closing (whichever is earlier).

What is the goal of the Sherman Antitrust Act? A) To ensure the fair treatment of all Americans seeking housing B) To prohibit deceit, misrepresentations, and other fraud in the sale of securities C) To protect consumers against inaccurate and unfair credit billing and credit card practices D) To promote fair competition on behalf of American consumers

D) To promote fair competition on behalf of American consumers

Bernard wants to file a claim against his former broker under the DTPA. The alleged violation happened on June 5, 2020 (which is the same day Bernard found out about the alleged violation). He intends to file the claim on April 3, 2022. Can he file a claim? A) No, the DTPA does not apply to broker-client relationships. B) No, Bernard is outside the statute of limitations for filing a claim under the DTPA. C) Yes, there is no statute of limitations for filing a claim under the DTPA. D) Yes, Bernard is within the statute of limitations for filing a claim under the DTPA.

D) Yes, Bernard is within the statute of limitations for filing a claim under the DTPA.

A broker uses the word "broker" in an advertisement. Is this in compliance with current advertising rules? A) No. Ads should not include the word "broker." B) Yes. All ads listed by brokers are required to use the word "broker" in the ad. C) No. While an agent should put the word "agent," a broker should not use the word "broker," as it's assumed. D) Yes. Ads can use the word "broker," but they are not required to.

D) Yes. Ads can use the word "broker," but they are not required to.

Agency can be terminated by: A) All choices are correct. B) A principal firing their agent C) Abandonment by the broker D) Destruction of the property

A) All choices are correct

George's buyer client has decided to make an offer on a property that is listed by George's brokerage firm. George's broker's agency policy says he will become an intermediary representative with an appointment to help the buyer. What further action must George take before proceeding? A) George must ensure he has written authorization from both buyer and seller to enter an intermediary relationship. B) George may not proceed regardless - intermediary representation is illegal in Texas. C) George must ensure he obtains written permission from his buyer client. D) None, George is conforming to his broker's policy.

A) George must ensure he has written authorization from both buyer and seller to enter an intermediary relationship.

Why is the protection period in the Buyer's Representation Agreement important? A) It protects you in the event that you and your client part ways, and then they decide to put in an offer on a home you showed them. B) It permits you to hire a subagent to show the buyer properties. C) It enforces the dual agency clause earlier in the Agreement. D) It allows the client to purchase a home on their own, without giving you commission.

A) It protects you in the event that you and your client part ways, and then they decide to put in an offer on a home you showed them.

The Real Estate License Act has two separate disclosure requirements. What are they? A) License holders must disclose representation of agency upon first contact, and they must provide the IABS Notice upon "substantive" discussion. B) License holders must disclose sales numbers to both clients and customers, and they must provide the Lead Paint Disclosure after occupancy. C) License holders must disclose fiduciary obligation to customers, and they must provide the TRELA Notice after the signing of a contract. D) License holders must disclose any criminal history to any potential buyer or seller, and they must provide details in the Offenders' Registry.

A) License holders must disclose representation of agency upon first contact, and they must provide the IABS Notice upon "substantive" discussion.

Broker Cameron gives his client a notice which informs them of his minimum duties, the types of license holders, and how a license holder can represent a party in a real estate transaction. What is this notice called? A) The Information About Brokerage Services Form B) The Buyer Representation Agreement C) The Intermediary Relationship Notice D) The Listing Agreement

A) The Information About Brokerage Services Form

What is something that does NOT need to be held in confidence by an agent after agency termination? A) The original listing price B) The buyer's financial status C) The history of the property D) The lowest offer the seller considered

A) The original listing price

Sales Agent Aurora has a client selling his home. A potential buyer is not working with a broker. Aurora decides to help the buyer obtain financing. Is this ethical? Why or why not? A) Yes, because the seller getting financing furthers her client's best interests. B) No, because it is unethical for a sales agent to help someone who is not their client. C) Yes, because she is not acting as a mortgage broker for her client, it is not dual agency. D) No, because only a mortgage broker can offer this kind of assistance.

A) Yes, because the seller getting financing furthers her client's best interests.

Frank is handling a lot of foreclosed properties for a bank. He frequently gets bids for having work done to the properties. Since Frank is sending these vendors a lot of business, he asks them to give him a 15% referral fee off the top of their invoices when paid. Is Frank violating any laws? A) Yes, he is in violation of TRELA. B) Yes, he is in violation of RESPA. C) No, Frank has notified his vendors of what he is doing, so it is not illegal. D) Yes, he is in violation of TILA.

A) Yes, he is in violation of TRELA.

Alice, an agent, accidentally told a buyer the seller's motivation for selling. Would this be covered by E&O insurance? Why, or why not? A) Yes. E&O insurance protects agents and brokers in the event of accidental legal violations. B) No. E&O insurance does NOT protect agents and brokers in the event of accidental legal violations. C) No. E&O insurance only protects agents and brokers in the event of intentional wrongdoing. D) Yes. E&O insurance protects agents and brokers in the event of accidental legal violations, as well as intentional wrongdoing.

A) Yes. E&O insurance protects agents and brokers in the event of accidental legal violations.

What is an unconscionable action? A) The principle of "buyer beware" B) An act which takes advantage of a consumer's lack of knowledge, ability, experience, or capacity to a grossly unfair degree and to their detriment C) The principle of "seller beware" D) A judicial movement that tries to limit the amount of recourse and awards that can go to a complainant

B) An act which takes advantage of a consumer's lack of knowledge, ability, experience, or capacity to a grossly unfair degree and to their detriment

All of the following are true of the relationship between buyer and agent EXCEPT: A) Once the buyer agency relationship is created, the buyer and agent enter into a fiduciary relationship in which the agent owes the buyer OLDCAR. B) An agency relationship between buyer and agent is always intentional. C) The relationship is created by agreement between the buyer and agent. It can be expressly stated by the agent and buyer or implied by their actions. D) The best way to create a buyer agency relationship is in writing with a Buyer's Representation Agreement.

B) An agency relationship between buyer and agent is always intentional.

Ali shows a house that Mary is trying to sell on her own. Ali is not Mary's agent, but Mary sees what's happening and does nothing to stop it. Leslie falls for Ali's pitch and buys the house. Eventually, Leslie sues Mary and Ali because the roof is damaged. Does she have a legal claim against Mary? A) No, because of general agency. B) Yes, because of agency by estoppel. C) Yes, because of agency by ratification. D) No, because of specific agency.

B) Yes, because of agency by estoppel.

A real estate brokerage advertises that they will list property for a low commission. Later, the seller finds out that he advertised low commission is contingent upon the seller signing a 12-month listing and agreeing to do all of the showings themselves. Is the brokerage guilty of a violation? A) No, this is just marketing. B) Yes, they are guilty of misrepresentation. C) No, as long as the company notifies the seller of this in writing. D) Yes, only licensed agents can do showings.

B) Yes, they are guilty of misrepresentation.

When a license holder acts as a broker or sales agent, they must uphold all of the following duties to third parties EXCEPT: A) Duty of honesty and fair dealing B) Duty of agency disclosure C) Duty of confidentiality D) Duty of accounting

C) Duty of confidentiality

Ashley is house-hunting and finds a home she likes being sold by the owner. Now that Ashley is interested, neither she nor the owner knows what to do next. Ashley asks her friend Bill, a real estate agent. He advises her and helps her with documents for no fee. What type of relationship has formed? A) Express agency B) Dual agency C) Implied agency D) Limited agency

C) Implied agency

If a license holder pays their own business expenses, including mileage, MLS fees, association and licensing fees, they are probably a(n): A) Contracted employee B) Employee C) Independent contractor D) Associate employee

C) Independent contractor

Nila represents Ed as he sells his house. After the sale, Nila and Ed learn from the buyer that there is mold in one of the bathrooms. The mold was in a hidden spot that was not obvious in prior inspections. Can Nila and Ed be held responsible for this? A) No. The buyer needed to bring up the mold issue before the purchase. B) Yes. The seller is responsible for all defects discovered after purchase. C) No. The seller can only be held responsible for what they know. D) Yes. The seller is responsible for all defects, known or unknown.

C) No. The seller can only be held responsible for what they know.

Sylvia, a salesperson, wants to help a friend find a property and to do it for free. What does she need to do? A) She can proceed without permission from her broker. B) She can proceed without permission from her broker, and also without a written contract. C) She must get permission from her broker before proceeding. D) She can never practice for free, so she needs to charge her friend a fee.

C) She must get permission from her broker before proceeding.

Javier reads a listing agreement that does not have an end date. This listing agreement is: A) Renewable every three months B) Active until the client ends it or the transaction closes C) Standard D) Illegal

D) Illegal

Larry represents Moe in a real estate transaction. They decide they want to work with each other, and formalize that decision. Larry now represents Moe's best interests in all dealings. Describe this interaction. A) Moe is Larry's agent. Larry is principal. They form a mutual agreement. Larry has fiduciary obligations to Moe. B) Moe is Larry's agent. Larry is principal. They form a mutual agreement. Moe has fiduciary obligations to Larry. C) Larry is Moe's agent. Moe is principal. They form a mutual agreement. Moe has fiduciary obligations to Larry. D) Larry is Moe's agent. Moe is principal. They form a mutual agreement. Larry has fiduciary obligations to Moe.

D) Larry is Moe's agent. Moe is principal. They form a mutual agreement. Larry has fiduciary obligations to Moe.

Buyer agency can be created in all of the following ways EXCEPT: A) Agency by ratification B) Actual agency C) Apparent or ostensible agency D) Listing agency

D) Listing agency

Richard has decided to sell his home at 2635 Cason. His agent, Vincent, posted 2635 Cason on the MLS and showed the home to several prospective buyers, including Lily and Lily's agent, Margaret. Eventually, Richard accepted Lily's offer. Vincent is best defined as a: A) Buyer's agent B) Landlord's agent C) Tenant's agent D) Listing agent

D) Listing agent

Buyer Bill buys a home without the broker with whom he is contracted (Broker Matt). Matt decides to pursue payment of commission. Which of the following conditions must be met for Matt to sue for collection of commission? A) Matt must work full-time, not part-time. B) Matt must not be an independent contractor. C) The commission needs to be over 2%. D) Matt must have advised Bill of the need for an abstract or title search along with title insurance.

D) Matt must have advised Bill of the need for an abstract or title search along with title insurance.

An agent is cleaning up his office. He finds contracts from three years ago. He wants to throw them away to make room for new files. Can he? A) No. TREC requires that records such as contracts be kept for a minimum of five years. B) Yes. TREC requires that records such as contracts be kept for a minimum of one year, and it has been three years. C) Yes. TREC requires that records such as contracts be kept for a minimum of two years, and it has been three years. D) No. TREC requires that records such as contracts be kept for a minimum of four years.

D) No. TREC requires that records such as contracts be kept for a minimum of four years.

Agents owe fiduciary duties to their clients. What are those duties? A) Obedience, loyalty, authority, commission, accounting, and repair B) Obligation, loyalty, disclosure, care, accounting, and dual licensure C) Obedience, lawful correlative, disclosure, confidentiality, ability, and reasonable care D) Obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care

D) Obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care

Daisy is looking to sell her home, 5300 Tetler Drive, and has entered into an agency relationship with Broker Josh. Daisy is Broker Josh's: A) Commissioner B) Fiduciary C) Customer D) Principal

D) Principal

It is the duty of the agent to: A) Act on behalf of the financial interests of the customer B) Decide on what is best for the client based on the situation C) Act in the best interests of their broker D) Put a client's interest above that of their own

D) Put a client's interest above that of their own

Who enforces TRELA, including by disciplining salespersons and brokers? A) The Broker-Lawyer Committee B) HUD C) The CFPB D) TREC

D) TREC

Of the below, what is an unlicensed real estate assistant NOT allowed to do? A) Setting appointments to show a listing B) Placing "for sale" signs C) Taking photos to be used in marketing D) Telemarketing and other solicitation work

D) Telemarketing and other solicitation work

In a general agency relationship between a broker and a sales agent, who is responsible for the sales agent's behavior? A) The sales agent B) TREC C) The client D) The broker

D) The broker

Which of the following is NOT true about the brokerage office policy manual for agents? A) They are a response to TREC's requirement that issues such as broker supervision and occupational procedures be put in writing. B) They should discuss things like the timing of disclosure with customers, clients, and other license holders. C) They should discuss things like first contact with customers and clients and presentation of key documents. D) They should be optional reading for members of a brokerage.

D) They should be optional reading for members of a brokerage.