Texas Real Estate STANDARDS OF CONDUCT.

Which of the following advertisements, placed by a licensee, might be misleading?

"Beach Front Properties. Ask for Amil." An advertisement placed by a licensee must clearly identify the licensee as a real estate licensee or the advertisement must include an additional designation, such as "agent" or "broker" or a trade association name that serves clearly to identify the advertiser as a real estate agent.

In any real estate sales transaction that a broker negotiates, the broker would be well advised to do all of the following EXCEPT A)provide the buyer the broker's personal opinion of the condition of the seller's title to the property. B)make sure that the closing statement is accurate and that a copy of it is delivered to both the buyer and the seller. C)make sure that the written purchase and sales agreement includes all of the terms of the parties' agreement. D)keep copies of all documents involved in the transaction in the broker's files for five years after the year in which the transaction was closed.

A)provide the buyer the broker's personal opinion of the condition of the seller's title to the property. Offering an opinion of title is a legal opinion and would constitute the Unauthorized Practice of Law.

Salesperson Joanna Hastings paid the local telephone company to list her name in the directory under the real estate heading as "Joanna Hastings, Real Estate Salesperson, Residential Property Is My Specialty." Based on this information, Joanna must also include A)the name of her sponsoring broker. B)the expiration date of her license. C)her license number. D)her street address.

All advertising must identify the sponsoring broker's name or the name of the brokerage.

The Texas Real Estate License Act requires that the A)broker discloses everything that the seller tells the broker. B)broker discloses negative material facts about the property that might affect the sale even though the buyer does not ask for it. C)seller discloses all facts that might impact negotiations of the transaction. D)broker keeps all information that the seller has provided confidential.

B)broker discloses negative material facts about the property that might affect the sale even though the buyer does not ask for it. Licensees must disclose material facts to a potential buyer concerning significant defects, including latent structural defects, even if the buyer does not inquire. Failure to disclose would constitute misrepresentation by omission.

Upon obtaining a listing, a broker or a licensed salesperson is obligated to A)set up a listing file and issue it a number to be in compliance with the Texas Real Estate License Act and Commission Rules. B)give the owner signing the listing a legible, signed, true, and correct copy of the listing upon the owner's request. C)cooperate with every real estate office wishing to participate in the marketing of the listed property. D)place advertisements in the local newspapers.

B)give the owner signing the listing a legible, signed, true, and correct copy of the listing upon the owner's request. Upon the owner's request, the license holder is obligated to give the owner signing the listing a legible, signed, true, and correct copy.

In regards to rebates, all of the following are true EXCEPT A)title insurance companies are prohibited from paying rebates to real estate licensees. B)accepting an undisclosed rebate or profit on an expenditure for a principal demonstrates lack of ability to perform with honesty, trustworthiness, and integrity. C)it is illegal for a broker to rebate a portion of the commission to a principal to a transaction. D)if a real estate licensee accepts a rebate or direct profit on an expenditure made for a principal, it must be disclosed to the party they represent.

C)it is illegal for a broker to rebate a portion of the commission to a principal to a transaction. Under certain circumstances, it is legal for a broker to rebate a portion of the commission to the principal if the payment is strictly a rebate and is not made for a real estate service, such as a referral. The rebate may be in any form such as cash, gift certificates, appliances, frequent flyer certificates, et cetera.

A broker or salesperson who fails to give the statutory title notice to the buyer at or before closing A)must forfeit the entire commission on the subject transaction but in so doing is absolved of any other liability. B)is required to show cause as to why such disclosure was not made. C)may have the license suspended or revoked and cannot collect a commission on the subject sale. D)will have the license suspended without reinstatement for two years.

C)may have the license suspended or revoked and cannot collect a commission on the subject sale. Failure to advise a buyer in writing before the closing of a real estate transaction that the buyer should obtain title assurance is grounds for suspension or revocation of a license; specifically, the agent must advise the buyer to have the abstract covering the real estate that is the subject of the contract examined by an attorney chosen by the buyer or be provided with or obtain a title insurance policy.

A seller told a broker that she wanted to net $50,000 when she sold her house. The broker accepted the listing and did not specify a maximum amount for the broker's commission in the listing agreement. The broker sold the house for $160,000. The broker gave $50,000 to the seller and kept the rest. All of the following are true EXCEPT A)the broker took unfair advantage of the client and failed to put the client's interest above his own. B)the broker should have given the seller his true opinion of the market value of her house. C)the broker's commission exceeds statutory and NAR guidelines. D)as the seller's agent, the broker had a duty to sell the house for the best possible price for his client while limiting the broker to only a specified maximum commission.

C)the broker's commission exceeds statutory and NAR guidelines. Texas statutes and NAR do not set guidelines for commissions. While net listings are legal in Texas, this example illustrates the conflict of interest that a net listing provokes. The broker was not working in the best interest of the client and failed to limit himself to a specified maximum commission as required by law.

In Texas, real estate brokers or salespersons A)must disclose to a buyer's agent that their client will accept a price less than the asking price. B)cannot disclose the terms of sale for the purpose of facilitating a listing. C)may disclose that they hold a Texas broker or salesperson license when selling their own property. D)must disclose a known latent defect to prospective buyers.

D)must disclose a known latent defect to prospective buyers. A latent defect is one that is known to the seller, but not to the buyer, and that is not discoverable by ordinary inspection. As an agent of the seller, a broker is likewise responsible for disclosing known latent defects

According to the Texas Real Estate License Act, which of the following must appear in a written listing agreement in Texas?

a definite termination date not subject to prior notice. A license may be suspended or revoked if a broker fails to specify a definite termination date not subject to prior notice in any contract (other than property management) in which the licensee agrees to perform services for the client.

In Texas, all of the following actions would be grounds for revoking a salesperson's license EXCEPT

agreeing to accept a listing on behalf of the broker for less than the broker's normal commission rate. Commission rates are always negotiable between the seller and the broker.

If a broker tells a lender that the sales price on a property is something above its actual sales price in order to help the buyer obtain a larger loan, the

broker faces loss of license and a fine. Brokers are not to be parties to a dual contract for the purpose of obtaining a larger loan. Doing so may subject the license holder to charges of fraud.

A broker or salesperson may perform all of these actions in preparation for a closing EXCEPT

conduct any title searches that might be required. Conducting a title search for another person in connection with the license holder's brokerage activity with that person may lead to charges of practicing law without a license if the licensee advises the person regarding the validity or legal sufficiency of an instrument or the validity of title to real property.

An exclusive right-to-sell listing agreement requires a

definite termination date not subject to prior notice. TRELA requires every representation agreement, except property management agreements, to include a definite termination date that is not subject to prior notice by either party. Failure to do so may not make the agreement unenforceable, but may subject the licensee to loss of license.

In Texas, a broker's license may be suspended or revoked for all of these actions EXCEPT A)depositing trust funds into the broker's escrow account. B)employing an unlicensed person to perform acts of a broker. C)helping another person cheat on the licensing examination. D)displaying a For Sale sign on a property without the owner's written consent.

depositing trust funds into the broker's escrow account. Depositing trust funds into the broker's escrow or trust account is proper conduct.

The Commission has the power to revoke a salesperson's license if the licensee

deposits a buyer's earnest money into the salesperson's own bank account. Depositing a buyer's down payment into the salesperson's own bank account would be commingling of personal and client funds, a prohibited practice.

All of the following are grounds for the Texas Real Estate Commission to revoke a license EXCEPT

failing to disclose a death on a property listed for sale, if the death occurred due to a cause that is unrelated to the property condition. Licensees have no duty to disclose that a death occurred on a property by natural causes, suicide, or accident unrelated to the condition of the property.

The Texas Real Estate Commission may suspend or revoke a real estate license for all of the following causes EXCEPT

failing to specify a definite termination date in a lease. The requirement of the Texas Real Estate License Act regarding termination dates in contracts does not apply to lease agreements. The license, however, may be suspended or revoked for accepting an undisclosed commission; offering property for sale by means of a lottery; or placing a sale or lease sign on property without the written consent of the owner.

If a real estate broker maintains a trust account, how many years must that broker retain records of all deposits and withdrawals from the account?

four. A licensee maintaining a trust account must retain a documentary record of each deposit or withdrawal from the account for a period of four years.

The License Act requires that every listing

has a definite termination date. All listings must specify a definite period during which the broker is to be employed and must have a definite termination date. Texas statute prohibits the use of automatic extensions of time in listing agreements.

Which Canon of Professional Ethics requires that the broker or salesperson employ prudence and caution in the discharge of her duties to avoid misrepresentation?

integrity. The Canons of Professional Ethics and Conduct define integrity to include "...employment of prudence and caution so as to avoid misrepresentation...by acts of commission or omission."

Net listings are

is permitted in Texas but discouraged. Net listings are legal but discouraged because of a potential conflict of interest. Net listings are permitted by TREC only when the principal (1) requires a net listing and (2) where the principal appears to be familiar with current market values. Additionally, when negotiating any listing, net or otherwise, or even offering to purchase the property on the licensee's own account as a result of a contact made while acting as a real estate agent, a "licensee is obligated to advise a property owner as to the licensee's opinion of market value of a property."

A real estate salesperson decides to sell his own property without using a broker. In offering his property for sale, the salesperson

must disclose, in writing, his status as a real estate license holder prior to entering into the purchase agreement. Salespersons must disclose licensure status when offering their own property for sale. The disclosure must be in writing prior to entering into any contract of a sales or rental agreement.

A salesperson has developed a website to attract buyers and sellers. What, if anything, must the salesperson include?

name of the sponsoring broker/company. Each page of the salesperson's website must include the name of the sponsoring broker/company.

In Texas, real estate commissions are

negotiable between the client and the broker. Commissions are always negotiable between the principal and the agent. The commissions are not determined by law, the Real Estate Commission, or a group of local brokers. Any attempt to set commission rates among competitors in the real estate industry would be considered an antitrust violation. A broker does not commit an antitrust violation by requiring all the broker's own licensees to charge a specific rate or amount so long as the broker does not conspire or agree with competing brokers to do the same. All listings and buyer/tenant representation agreements in the firm belong to the broker. Therefore, the broker is only prescribing a commission amount for all the broker's own agreements.

Regarding listing agreements in Texas, which of the following might result in the suspension or revocation of an individual's real estate license?

no definite termination date. Listings must have a definite termination date not subject to prior notice.

An agent who wishes to place a For Sale sign on a listed property must first

obtain the written consent of the owner of the property.

To place a For Sale sign on a listed property, a broker must first

obtain the written consent of the owner of the property.

All of the following are violations of the Texas Real Estate Licensing Act EXCEPT A)failing to disclose to a potential purchaser any latent structural defects known to the license holder. B)receiving a commission without the knowledge and consent of the license holder's client. C)encouraging a seller to reject an offer because the of the prospective buyer's religion. D)placing a For Sale sign in front of a house after receiving written permission to post the sign.

placing a For Sale sign in front of a house after receiving written permission to post the sign. A broker must always have written consent to erect a For Sale or lease sign on a property.

A broker signs a listing agreement with a seller. The agreement contains the following clause: "If the property has not been sold after three months from the date of this signing, this agreement will automatically continue for additional three-month periods thereafter until the property is sold." Based on these facts, the agreement

provides grounds for loss of the broker's license. Listings must contain a definite termination date not subject to prior notice or the licensee could face TREC disciplinary action.

A real estate license may be suspended or revoked for

publishing an advertisement that may create a misleading impression. The commission may suspend or revoke a license if the license holder publishes or causes to be published an advertisement, including an advertisement by newspaper, radio, television, the internet, or display, that misleads or is likely to deceive the public, tends to create a misleading impression, or fails to identify the person causing the advertisement to be published as a licensed broker or agent.

All trust funds received by a broker on behalf of the principals must be deposited in the broker's escrow or trust account or with an escrow agent named in the contract by the close of business on the

second working day, or as agreed upon in writing by the parties to the contract. TREC rules require that other people's money, such as earnest money and security deposits, if held by the broker as escrow agent or trustee for the funds, must be deposited by the close of business the second working day the license holder receives the money as escrow agent in a real estate transaction after the agreement becomes a binding contract. That is unless another time has been agreed to by the parties in writing. Note: The TREC promulgated contract forms are worded such that neither broker is required by the contract to ever even see the earnest money check. The TREC promulgated contract forms state that "upon execution of this contract by all parties, Buyer shall deposit...." This contractual provision places the burden for deposit of the earnest money on the buyer and does not allow for a "close of business the second working day" provision. Under the terms of the buyer's offer, if using a TREC promulgated form, the seller's broker appears to have no contractual right to require that the earnest money or earnest money check be submitted with the buyer's offer. Requiring photocopies of the buyer's earnest money check to show to the seller is likely a meaningless and unnecessary gesture.

A broker has developed a website advertising the broker's office. What, if anything, does the broker need to include?

status as a broker on each page of the site. Each page of the website must indicate her status as a broker or agent.