Law of Agency Quiz

If the principal is the seller, then he or she must, under the duty of information, fill out:

A form that discloses any facts about the property that might affect the transaction

The Real Estate License Act allows a licensee to:

Act as an intermediary with written consent

The Real Estate License Act states that a license holder who represents a party in a real estate transaction acts as that party's..................

Agent

Buyer B walks into Agent A's office. Agent A represents Seller C. Buyer B inquires about Seller C's property, and the agent and the buyer engage in a discussion about the property. Which of the following statements is true?

Agent A must give the buyer a written agency disclosure and a statement that explains agency law.

Agent D and Seller C have a listing agreement for Seller C's property. Agent D procures a ready, willing and able buyer, and Seller C accepts the buyer's offer. As the transaction is progressing toward the closing date, however, Agent D discovers that there are liens on the title. Which of the following statements about the commission is true?

Agent D fulfilled the terms of the listing agreement and the seller breached the agreement; therefore, the agent is still owed the commission from the seller.

Which of the following is a possible benefit of the multiple listing service?

Agents benefit because the comprehensive list of properties in a particular area is useful in creating comparative market analyses.

All of the following situations depict a tort EXCEPT:

An agent neglects to disclose to a third party confidential information about the principal.

Under the definition of a broker as set forth in the Texas Real Estate License Act, all of the following statements are true EXCEPT:

An individual who sells his or her own property is automatically considered a broker.

All of the following statements apply to an unlicensed assistant EXCEPT:

An unlicensed assistant can answer questions about the price or condition of a property.

Price fixing, boycotting competitors, and allocating customers or markets are:

Antitrust violations that are common in the real estate industry

Person A was in the process of obtaining a real estate salesperson's license when his mother (Seller) asked for his assistance in selling her home. Person A agreed and did not plan on charging his mother any commission or compensation. However, the house ended up selling for a great deal more than Seller expected, so she decided to send a check for 5% of the purchase price to Person A. Which of the following statements is true?

As an unlicensed individual, Person A cannot accept compensation for performing real estate services.

Seller B signs a listing agreement with Broker A. Broker A often provides services to buyers, but as the seller's agent, she cannot provide any services that conflict with the seller's interests. Which of the following services would Broker A NOT provide to potential buyers?

Assistance with price negotiation

Seller B has agreed in writing to pay Broker D a commission of 6.5% of the listing price of her property. Broker D has fulfilled the terms of the listing agreement and has conducted all brokerage activity. Now, the parties are waiting on the escrow agent to finalize the transaction, and Broker D's real estate license probably will expire before the transaction has closed. Which of the following statements is true?

Because Broker D was licensed when she actually conducted the real estate activity, she is eligible to receive the commission.

Broker A is representing Buyer B and is helping her find a house. The broker finds a suitable property and discovers that six months ago, he represented the seller. Broker A discloses this conflict of interest to his client, and the client doesn't have a problem with the arrangement. Then, Broker A realizes that some of the confidential information that he learned during the previous relationship will be helpful to his client in this transaction. What should Broker A do?

Broker A may not disclose the information.

Which of the following is an example of ratification?

Broker A signs a document on behalf of her principal, and the principal accepts this action after the fact.

Seller A signs a listing agreement that creates an agency relationship with Broker B. Broker B negotiates the sale with Buyer C. Which of the following is true in this situation?

Broker B is the agent, Seller A is the client and Buyer C is the customer.

Buyer E hires Broker F to represent her interests in a transaction with Seller A. Which of the following statements is true?

Broker F is the agent, Buyer E is the principal and Seller A is the third party.

When an agency relationship has been terminated, the agent still owes the principal the duty or duties of:

Confidentiality and accounting

Employer A discriminates against Employee C because Employee C is homosexual. All of the following statements apply to the situation EXCEPT:

Employee C is protected by federal law.

Seller A wants an open listing so that he will be able to sell his property himself without owing a commission to the broker. He also likes the idea of multiple brokers working actively to find a buyer. Broker B is willing that Seller A not pay commission if he finds his own buyer, but Broker B is unwilling to allow other brokers to share the listing. Which type of listing agreement should Broker B try to persuade Seller A to enter into?

Exclusive agency listing

Which type of listing agreement do brokers generally prefer?

Exclusive right-to-sell listings

Buyer H asked Broker J to represent her interests in a transaction, and they signed a buyer representation agreement that authorizes Broker J as Buyer H's agent. By what method was this agency relationship created?

Express agreement

Agency relationships are also considered to be..................

Fiduciary

A real estate agent is expected to be knowledgeable as a real estate professional. As set forth in the Rules of the Texas Real Estate Commission, this duty includes all of the following EXCEPT:

Having expert knowledge of other related industries, including appraisal and law

Broker A must know that, in addition to her own actions, she will be held responsible for the actions of:

Her salespeople

Seller C and Broker D have an oral agreement that Broker D will market the seller's property and the seller will pay the broker 4.5% of the listing price when the property sells. Which of the following statements about this situation is TRUE?

If the seller does not pay the commission, the broker will not be able to sue for the commission.

In Texas, most dual agents function as:

Intermediaries

Under the Real Estate License Act, the term "substantive dialogue" means any meeting or written communication that:

Involves substantive discussion relating to specific real property

Brokers A, B, and C agree to divide the city into thirds, with each broker handling listings in their own third only. This is illegal because:

It restricts open-market competition.

Generally, the seller's agent is also the:

Listing agent

Seller A and Broker B sign a written agreement establishing Broker B's authority to market Seller A's property. This type of agreement is a(n)..................

Listing agreement

The agent's duty of loyalty to his or her principal would include all of the following actions EXCEPT:

Not disclosing negative material facts about the property to a third party

Broker C is representing Seller A in the sale of his house, which has been slow to sell because of a leaky roof. The seller disclosed this defect to the broker, and the broker hires someone to patch it but not fix it. The broker then tells the seller that the problem has been fixed; however, the patch is merely a temporary solution to the problem. When Broker C finds a buyer, she does not mention the problems with the roof. If this buyer purchases the house and then decides to sue over the roof, which individual would be liable?

Only the broker would be liable for failing to disclose this latent defect.

In Texas, a broker could not sue for commission if he or she had only a(n) _______ with the seller.

Oral agreement

If an agent acts outside the scope of his or her duties and the principal authorizes the actions after the fact, this is called:

Ratification

Examples of relationships of general agency probably would include all of the following EXCEPT:

Real estate agent and the seller of the property

The agent owes the following four duties to the third party:

Reasonable care, honest and fair dealing, disclosure of material facts and accounting

Seller E has a listing agreement with Broker F. Broker F commits a tort. Which of the following could NOT happen?

Seller E could be subject to disciplinary action.

The authority of a seller's agent usually includes all of the following actions EXCEPT:

Signing on behalf of the seller

The two documents that provide rules and laws relating to agency relationships for real estate professionals are:

The Real Estate License Act and the Rules of the Texas Real Estate Commission

Seller B and Broker A have an agency relationship. Any of the following actions or events would terminate that agency relationship EXCEPT:

The buyer telling the broker that he will not purchase the property

Licensees can use TREC's Information about Brokerage Services form to fulfill the requirements of disclosure of information about agency law. Licensees are not required to use this form, but they must use the exact same wording EXCEPT:

The licensee may change "buyer" to "tenant" and "seller" to "landlord.

If a client or customer asks a licensee for legal advice:

The licensee should recommend that the party seek the opinion of a lawyer.

The actions of Salesperson A led a potential buyer to assume that the salesperson was acting as her agent, when in fact, the salesperson was the seller's agent. An agency relationship was created between the buyer and the salesperson by implied agency. All of the following statements are true about this situation EXCEPT:

The salesperson must now fully represent the interests of both parties.

All of the following are examples of termination by operation of law EXCEPT:

The seller fires the agent.

Seller R wants to list her property with Broker S. Broker S prefers the exclusive right-to-sell listing. However, Seller R's mother has inquired about the property, and Seller R does not want to owe a commission if her mother purchases the property. What can the broker and the seller do to resolve this situation?

They could add an amendment to the exclusive right-to-sell listing.

Salesperson A assists Buyer B with locating a property. Salesperson A does not disclose that she represents the seller, and the salesperson is very helpful to the buyer. Which of the following statements is true?

This situation could mislead the buyer into thinking that the salesperson represents his interests, not the seller's.

When must a licensee make written disclosure of any relevant agency relationships?

Upon the first substantive dialogue with a party