Chapter 4 - Agency Law

You are the listing agent for Ivan Beeker, who has recently discovered there is a lien on his property that must be resolved prior to listing the property for sale. You refer Ivan to a property attorney and municipal authorities who can help him clear the lien quickly. Which of the following best describes this scenario?

As a real estate licensee, you are not required to offer advice outside your area of expertise, such as legal advice.

Bailey is a real estate salesperson working with Lenore, who wants to buy a home, and who has signed a buyer's agreement with Bailey's office. Bailey shows Lenore a house which her office has the exclusive listing on, but it will expire in less than a week. Lenore says it's not exactly what she's looking for, but maybe she should just put an offer on it. Bailey saw a new listing on MLS that morning that sounds like it is exactly what Lenore was looking for. Which is true:

Bailey should tell Lenore about the new listing.

If a broker represents both the seller and buyer, they operate as a ................agent.

Dual

An agency relationship in which the agent acts concurrently for both of the principals in a transaction is known as a/an...?

Dual agency

A real estate salesperson operates as a ...........agent.

Special

Dougie owns a 16-unit rental building and goes into a real estate brokerage that has been recommended to him. He speaks to the broker, Tara, and explains what services he would like from the brokerage. He wants someone who will choose new tenants, set the rental rates based on market value and relevant laws, and sign all the leases on his behalf, as well as hiring anyone needed to conduct maintenance and repairs. Basically, Dougie is moving to Florida, and he doesn't want to have to worry about the rental property anymore. Which response of Tara's makes the most sense:

Tara will happily provide that service as her office offers property management. In that capacity, she will be a general agent to Dougie for that property, she will bill him a set fee for this service every month.

Which is true of a single agent?

When they represent a principal, they do not represent any other principals who have competing interests.

Ideally, which is the best kind of agency relationship to enter into?

express agency

Remy Pascal is a broker representing seller Carl Smith. Remy decides that the property is a great candidate for a quick flip and makes an offer on the home. Immediately after purchasing the home, Remy resells it for a profit. In this case, Remy has not acted appropriately to safeguard Carl's interest above his own. Which fiduciary duty has Remy violated?

loyalty

Which term below goes with the following definition? The seller or buyer of real property who benefits from a fiduciary relationship with a real estate agent or broker.

principal

In a strong rental market, agents are charging the renters for their fees. Justin rents a $2,200 apartment and charges 10% of the annual rent as his fee. What commission has he earned on this rental?

$2,640 (Dollars)

Lionel is a real estate broker who signs a listing agreement with Rachel to sell her house. The listing agreement contains the marketing plan, the listing price, the listing expiration, and the commission as well as other pertinent information. Before showing any prospective buyers the house, he always gives the customer a consumer notice that states that he represents the seller of the house as the principal, and does not represent the customers. Which two things are true about Lionel's agency relationship with Rachel?

He is a special agent and a single agent.

Tom is acting as an agent for property owner Bill in a building that has rent restrictions. Tom has been knowingly charging rents that are above the maximum that is legally allowed. Which statement is true about Bill's liability?

All of the answer choices provided are correct.

What are ways in which an agency relationship can be terminated?

All of the answer choices provided are correct. -Completion of the transaction -Mutual agreement of the parties -Expiration of the listing contract

Which of the following best describes an agency relationship?

An agent represents the principal to a third party.

What is a special agent when referring to the real estate industry?

An agent who is granted limited authority on behalf of the principal. Almost all real estate agents are acting as special agents.

Bailey is a real estate salesperson working with Lenore who wants to buy a home, and who has signed a buyer's agreement with Bailey's office. Bailey shows Lenore a house which her office has the exclusive listing on, but it will expire in less than a week. Lenore says it's not exactly what she's looking for, but maybe she should just put an offer on it. Bailey saw a new listing on MLS that morning that sounds like it is exactly what Lenore was looking for. Which is true?

Bailey should tell Lenore about the new listing.

An exclusive ............ is expected to prepare themselves through education and to competently stand up for the buyer at all times. Please fill in the blank with the best answer based on the definition given.

Buyer's Agent

Chris is a real estate salesperson who has been working with Jake to help him sell his home. Which statement is true:

Chris should make sure that the broker he works for establishes a clear agency agreement with Jake

You are required to protect your principal's secrets, unless it is unlawful to do so. If you know anything that can compromise your client's bargaining position, you have to keep it to yourself and not share it with the other party to the transaction. This describes which duty to your client?

Confidentiality

Which term is NOT an example of how an agency relationship can be created in real estate?

Double agency

What role refers to the responsibility you have to act as an agent, or champion, for your client?

Fiduciary

Which is an example of implied agency?

Franz has been so helpful for Frank and Pat in finding the house of their dreams. He's shown them houses that are on the MLS listed with other agencies as well as listings he has in his office. When Frank and Pat talk about how stressful the search is, Franz says "don't worry, I've got your back." Frank and Pat believe Franz is working for them, but they've never discussed it directly.

A property manager operates as a ..............agent.

General

Which statement is true about universal agents?

Having power of attorney is one type of universal agent.

Which is true about an agency relationship?

It can be created in writing, verbally or by implication.

Which is true about commissions on sales...?

It is always negotiable.

Which statement is true about dual agency?

It must always be disclosed to the competing principals.

Which of the following is an example of a universal agent?

Power of attorney

An agent who works for only the buyer or the seller is referred to as a/an...?

Single agent

An agent with limited authority to act on behalf of the principal, such as created by a listing contract, is known as a/an...?

Special agent

A person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent's principal is known as a/an?

Sub-agent

Sydney's brother Lawrence is a real estate salesperson in a prestigious brokerage that is a member of several active MLS services. Sydney wants to sell her condo, and she wants to negotiate a listing agreement with her brother that will allow him to make 100% of the commission. Which statement is true?

Sydney should negotiate a listing agreement with Lawrence's sponsoring broker. It's very unlikely she'll be able to get 100% for Lawrence, but she may be able to negotiate a listing agreement that gives Lawrence a significant split of any commission as a subagent.

Which statement most accurately describes the role of a subagent?

The agent authorizes the subagent to represent the interests of the principal.

Which is true about agency relationships?

The agent owes the most loyalty to the principal.

What is a principal?

The person whom the agent represents.

Who acts as the principal to the listing broker?

The seller

Which statement is true of the third party in a real estate agency relationship?

The third party is called the customer.

Why are implied agency relationships so bad for real estate brokers?

They risk losing out on commission

The agent who has complete authority over any activity of the principal is known as a/an...?

Universal agent

One who acts for and with authority from another, called the principal, is known as a/an...?

agent

The employer of an agent is referred to as the...?

principal