Real Estate Brokerage, Alabama Real Estate License Law Violations

A

Belinda is a licensee whose client asked her to draft an addendum containing complicated terms that even Belinda doesn't fully understand. Belinda should ______. A. Avoid unauthorized practice of law B. Hire an attorney C. Refuse to work with this client D. Use legalese

C

Which of the following is NOT a listing agreement violation in Alabama? A. Failing to include a firm expiration date. B. Neglecting to provide the principal with a copy of the listing agreement. B. Neglecting to stage the house effectively for open houses. C. The seller specifies a price, and the licensee gets any amount over that price.

D

Which of the following is NOT considered a license law violation? A. Accepting commission or valuables from someone other than the qualifying broker B. Committing fraud, misrepresentation, and deceit C. Failing to disclose a property's material defects D. Listing a family member's home, with proper disclosure

D

Which of the following is a useful tool in determining the most ethical course of action? A. Do whatever is easiest. B. Do whatever works best for you. C. Flip a coin. D. Follow the Golden Rule.

B

Which of the following statements about independent contractors and employees is true? A. Employees set their own hours, pay their own expenses, and are compensated according to their results and not time spent. B. Independent contractors and employees are taxed differently. C. Independent contractors must file W-2s with the IRS. D. Most brokers are employees, not independent contractors.

B

Abigail doesn't want the lenders to know that she's the buyer in a real estate transaction, so she's using her aunt's name and credit information to obtain the loan. Which type of mortgage fraud scheme is this an example of? A. Equity skimming B. False identity C. Property flipping D. Wire transfer fraud

D

Which of these is an example of antitrust violations common to real estate? A. Fraud, concealment, and misrepresentation B. Profiteering, racketeering, and domineering C. Puffery, hyperbole, and exaggeration D. Tie-in arrangements, market allocation agreements, and group boycotting

C

Which of these terms describes a situation in which a broker uses client trust funds without the client's permission? A. A reverse trust B. Commingling C. Conversion D. Transferrable interest

C

Dean was very motivated to sell his house and was excited when he got an offer. When he realized the buyer couldn't qualify for the purchase price, he decided to accept a second mortgage without mentioning it to his lender and reduce the sales price accordingly. Which type of mortgage fraud scheme is this an example of? A. Inflated appraisal B. Property flipping C. Silent second D. Straw buyers

D

Harriet, an out-of-state licensee, is friends with Tonya, a licensee with Perfectly at Home. Harriet referred one of her buyer friends to Tonya, so Tonya plans to pay Harriet a referral fee. Which statement about this fee is true? A. It's illegal for Tonya to pay an out-of-state licensee a referral fee. B. Referral fees have no disclosure requirements. C. Tonya must pay the fee directly to Harriet since Harriet is an out-of-state licensee. D. Tonya must pay the referral fee through her brokerage firm to Harriet's brokerage firm.

B

Licensees may be disciplined for violating Alabama compensation laws. Which of the following are possible penalties for doing so? A. Fines, license suspension, jail time B. Fines, license suspension, license revocation C. Fines, probation, jail time D. Probation, jail time, license revocation

A

Marcy is found guilty of price fixing. This means she must have ______. A. Agreed with a competitor to charge a specific amount B. Charged a fixed commission price her broker asked her to use C. Charged a separate co-op fee for different brokerages D. Deviated from the standard commission rate

A

Margaret is meeting with James and Cindy, potential buyers of a property listed by one of Margaret's colleagues. They're in Margaret's office preparing their offer when James says, "The only thing that bothers me are those black spots on the bathroom ceiling. Do you think that could be the bad kind of mold? It's not dangerous, is it?" What should Margaret do? A. Refer James and Cindy to a qualified mold professional. B. Tell them that she will personally clean it up. C. Tell them they could probably clean it up with a little bleach. D. Tell them to not worry about it.

D

Of these, which one could be seen as a common real estate violation? A. Before showing a buyer customer his listing, Mitchell explained to the buyers that he represents the sellers. B. Henry provided customers with a copy of their signed broker engagement agreement. C. Isabelle keeps all signed broker engagement agreements in a safe but accessible location in the broker's office. D. Mandy didn't disclose to potential buyers that she was showing her own listing, or that she represents the sellers.

A

Candi, an Alabama licensee, knows that her seller client's new roof leaks. When speaking about this roof, she only tells potential buyers, "This roof is just a few years old!" What license law violation, if any, has Candi committed? A. Behaving in an untrustworthy or dishonest manner B. Making false promises C. None. She's keeping client information confidential. D. Not putting her client's interests first

A

Which of these statements most accurately represents existing federal antitrust legislation? A. The Clayton Act supports the Sherman Antitrust Act's purpose of prohibiting monopolies by prohibiting mergers or acquisitions that would create a monopoly. B. The Federal Trade Commission Act established the Sherman and Clayton acts to prevent collusive activities that limit competition. C. The Federal Trade Commission Act prevents one large firm from acquiring another similar firm that would result in a restraint of trade. D. The Sherman Antitrust Act was passed to supplement the Clayton Act in an effort to prevent mergers that create monopolies.

B

Which one of Gerry's statements to a client crosses the line into unauthorized practice of law? A. "I'd encourage you to have an expert look at the exceptions on your title insurance commitment." B. "Most couples take ownership of property as joint tenants, so that's what I'd advise." C. "The contingency clauses in your contract give you options to terminate the contract if, for example, your financing falls through." D. "We can add the brokerage firm's standard language into the 'additional provisions' section to cover what you're suggesting."

A

Which statement describes a code of ethics? A. Guidelines for conduct B. Laws that licensees must abide by C. Rules used by law enforcement officers D. Something licensees don't need to worry about unless they join the NAR

B

Whose responsibility is it to supervise licensees and review transactional paperwork and advertising? A. Peers B. The broker C. The licensee D. The National Association of Realtors®

C

Why might a brokerage firm choose to create its own set of ethical guidelines? A. To eliminate ethical guidelines altogether B. To impose looser guidelines than a national or state code C. To impose stricter guidelines than a national or state code D. To meet local business law requirements

B

Roger is an unlicensed assistant in Dave's office. He performs tasks for several of the firm's licensees. Katherine is a licensed assistant, and she performs tasks for three of the firm's independent contractor licensees. The firm's broker, Michaela, has her own licensed assistant. Which of these statements best represents Michaela's liability for the acts of all these assistants? A. Michaela is only responsible only for her own personal assistant. B. Michaela is responsible for all licensees and employees associated with the firm. C. Michaela is responsible only for the licensed assistants. D. Michaela is ultimately responsible for her assistant and for Roger (the unlicensed assistant).

A

Select the statement that best describes how brokers handle income and Social Security taxes for independent contractors. A. Brokers don't withhold income or Social Security taxes for independent contractors. B. Brokers withhold income and Social Security taxes for independent contractors. C. Independent contractors don't pay income tax or Social Security tax. D. The IRS doesn't tax independent contractors.

D

Shakira is attending an association meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that charges a flat $500 to list properties, then lets the sellers fend for themselves. Shakira should leave the discussion because ______. A. She needs to get to work developing this model for herself B. The group seems bent on creating a tie-in arrangement C. This conversation seems to be turning into a discussion of market allocation D. This conversation sounds like it could move into antitrust territory

D

Stan wants to drum up business, so he decides to hold a lottery-style contest, offering prizes to anyone who does business with him in November and a big prize to the lottery winner. Which of the following is true? A. He can't do this until he registers with the state lottery commission. B. He must first obtain his broker's approval. C. He must keep cash prizes to less than $50. D. This is illegal. Stan needs to make a new plan.

C

Which of the following statements about enforcing a firm's code of ethics is true? A. A firm's code of ethics shouldn't have to be enforced. B. Enforcement of the firm's code of ethics should be predicated on the honor system. If a member of the firm violates the code, that person should admit it. C. There should be consequences for violating the firm's code of ethics, and these consequences should be communicated and documented. D. There should be one consequence for violating the firm's code of ethics: immediate dismissal.

B

Which of the following statements about licensee compensation in Alabama is true? A. Licensees may only receive compensation for real estate services from consumers. B. Licensees may only receive compensation for real estate services through their qualifying broker. C. Licensees may only receive compensation for real estate services through the listing agent's broker. D. Licensees may receive compensation for real estate services through their broker, through the listing agent's broker, or from consumers.

C

Which of these is a document-related task that's required of licensees? A. Provide a copy of all transaction-related documents to all relevant parties up to five years after the transaction. B. Send copies of all transaction-related documents to the commission once every two years. C. Surrender a document to its rightful owner after the licensee has possessed it. D. Turn over all transaction-related documents to any other brokerage that requests them.

C

Which of these is an example of a real estate violation? A. Alex tells his new seller clients that he typically uses a six-month term for all of his listings. B. Bill negotiated a listing agreement ending date so that his agreement would end after a home would typically sell in the current market. C. Bonnie included an automatic renewal clause in her listing agreement if the Smiths' home didn't sell by the end of the original listing agreement. D. Courtney discusses using a three-month period for her new listing with the Jones family.

B

Which of these is the best example of a procedure? A. Accounting may not issue commission checks until agents submit a completed transaction file. B. Complete transaction files by ensuring that all documents are properly signed and then uploading them to the firm's file management application. C. Licensees must enter new listings into the MLS within 48 hours. D. The managing broker must verify that all advertising and marketing materials meet advertising requirements.

D

An agent is trying to drum up business for a friend's mortgage company. She offers to charge a lower commission rate to clients who use her friend's mortgage company for their financing. What's this an example of? A. Group boycotting B. Market allocation C. Price fixing D. Tie-in arrangement

B

Annabelle's previous transactions have all been median-priced, detached single-family residential homes in the main part of the city or its suburbs. In which of these situations would Annabelle be practicing within her area of competence? A. Listing a multi-million-dollar residence in the city's exclusive lakeshore estates B. Listing a property in the main part of the city that she'll market as a fixer-upper C. Working with a buyer client to purchase a condo D. Working with an investor who intends to purchase a rental property

B

For how long must an Alabama licensee retain transaction file records after the date of the transaction? A. Five years B. Three years C. Two years D. Up to 10 years

D

Maya violated Alabama real estate license law. Which disciplinary action is NOT a possible penalty? A. Her license may be subject to suspension. B. Her license will be revoked and she'll be unable to practice real estate in the future. C. Her license will be suspended during which time she cannot practice real estate. D. She will not be able to take continuing education classes.

D

Telling a client, "I can only work with you if you agree not to use ABC Title Company," is what type of antitrust violation? A. Group boycotting B. Market allocation C. Price fixing D. Tie-in arrangement

B

When a brokerage implements a code of ethics, who should be familiar with it? A. Administrative assistants B. Everyone at the brokerage C. Licensees D. Management

C

Which of the following tasks would require a real estate license? A. Assemble closing documents B. Calculate a commission check C. Host an open house D. Place a for sale sign in a front yard

B

A new real estate professional is getting to know licensees at his new firm, Tremont Homes. One licensee tells him there's an unwritten agreement with a neighboring firm that Tremont serves the mid-town area, and everyone who has prospective clients in that area refer their leads to Tremont. What's thisan example of? A. Group boycotting B. Market allocation C. Price fixing D. Tie-in arrangements

C

According to Alabama law, what should Alabama real estate licensees do when they receive an earnest money check? A. Deposit into the brokerage operating account. B. Deposit it into their own personal account. C. Handle the check in a timely fashion. D. Make sure it's safely locked in a drawer.

C

According to the U.S. Department of Justice, which type of antitrust violation is an agreement between competitors to eliminate discounts to all customers or certain types of customers? A. Group boycotting B. Market allocation C. Price fixing D. Tie-in arrangement

C

Alison was the listing agent on Sheldon's property. Brenda put in an offer on the property contingent upon a home inspection, which found that the gas furnace needed to be replaced, as it was producing carbon monoxide above the acceptable level. Brenda decided not to purchase the property. Alison told Sheldon that the furnace condition must be disclosed to future prospective buyers. Sheldon disagreed and told Alison to lie about the condition. However, Alison stated she couldn't do this, and the contract was terminated. A short time later, Alison noticed that Sheldon's property was back on the market. Curious, Alison contacted the new listing agent to find out if a new furnace was installed. It wasn't, and now Sheldon is upset that Alison is inquiring about the condition of the property and broke confidentiality. What do you think? A. Sheldon's property condition is confidential. Alison owes Sheldon the duty of confidentiality even beyond their agency relationship. She didn't live up to this duty. B. It was unethical for Alison to contact the new listing agent. C. While it's true that Alison's duty of confidentiality to Sheldon lives on forever, a property's material defects aren't considered "confidential information." Alison behaved ethically.

A

Bethany has several clients who've used Jerrica, a local mortgage broker, for their mortgage loans. Jerrica recently had an opportunity to return the favor, and she referred a buyer client to Bethany. Through her broker, Bethany sent Jerrica a $200 gift card as a referral fee. Which of these statements best represents this transaction? A. Because Jerrica holds a mortgage broker's license, Bethany can pay her a referral fee. B. Because she paid the referral fee through her broker, Bethany didn't violate any laws. C. Bethany and her broker violated federal (and perhaps state) laws prohibiting referral fees to certain third-party vendors. D. Bethany should have sent the referral fee directly to Jerrica to avoid violating RESPA.

C

Carla is a licensee helping her seller client, Suzan, who asks Carla to include some false information about the house in her marketing material, saying that it's Carla's duty to obey her wishes. What's the right thing for Carla to do? A. Avoid confrontation and follow her client's request, even though she doesn't think it's right. B. Follow her client's request, since that's where Carla's commission will come from. C. Refuse her client's request, since it's her ethical duty to behave honestly. D. Tell her client that she's a bad person for making such a suggestion.

B

Douglas is the buyer's agent for a transaction in which May (from a different brokerage) listed her seller client George's property. From whom will Douglas receive his compensation? A. From George B. From his own broker C. From May's broker D. It depends

C

In Alabama, a _________________ is grounds for a real estate license suspension. A. Background check B. Broker affiliation C. Criminal conviction D. Loss of a sale

C

In addition to serving as the listing agent for several clients, your own house is also on the market. You receive a call from another licensee who wants to show her buyer client your house. What must you immediately disclose to the buyer's agent and buyer? A. The house may have been an orphanage 80 years ago. B. You'd sell for far lower than the current asking price. C. You own the property. D. Your housemate had swine flu last month.

D

Jeanine has an exclusive right-to-sell agreement with her listing agent, Tera. Which of these statements about Tera's compensation is true? A. A protection clause in any listing agreement guarantees that Tera will be compensated if she or another listing agent sells the property. B. A protection clause in the exclusive right-to-sell agreement guarantees that Tera will be compensated no matter who sells the property. C. The exclusive right-to-sell agreement guarantees procuring cause, which means that no matter what Tera does, there will never be any question about who initiated the uninterrupted chain of events the led to the sale. D. The exclusive right-to-sell agreement means that, under contractual obligation, the broker will be paid no matter who brings the buyer to the transaction.

A

Jennifer, an experienced salesperson, hires an unlicensed assistant, Suzanne. Jennifer's on vacation, and in her absence, Suzanne discussed some contract terms with one of Jennifer's clients. Who's responsible for Suzanne's behavior? A. Both Jennifer and her broker are responsible for supervising Suzanne, and both could be disciplined. B. Jennifer is, because she hired Suzanne. C. Jennifer's broker is, because the broker has ultimate responsibility for all brokerage staff. D. Suzanne is, because she knew she was performing tasks that required a license.

D

Jim is meeting with a client at a listing. Outside the basement window, there are wood shavings. The client asks Jim if they mean there are termites in the home. What would be an appropriate response? A. Investigate further before offering an opinion. B. Offer his opinion that it usually doesn't mean there are termites present. C. Reassure the client that there is no termite infestation. D. Refer the client to a qualified pest professional.

A

Lawrence is the listing agent for Todd's property. Todd is moving out of state for a new job, so the house will be vacant for some time, depending on how long it takes to sell. Todd is pretty adamant about not having a sign in his yard, especially after he moves. Lawrence follows Todd's wishes, but a month after Todd moved, there hasn't been any movement on the property. Lawrence places a sign in the yard, hoping it will drum up some interest. Is this okay? A. No, Lawrence shouldn't place a sign on Todd's property without Todd's written permission. B. No, Todd's neighbors might tattle. C. Yes, as the listing agent, Lawrence has the right to place a sign on the properties he has listed. D. Yes, since Todd has moved, Lawrence can make decisions related to the property.

C

Licensee Clint operates as an independent contractor associated with Red Hat Properties and its broker, Margaret. Which of these statements is true about Margaret's supervisory responsibility and liability for Clint's actions? A. Clint can elect whether or not to be subject to Margaret's supervision. B. Margaret can't be held responsible for Clint's actions since he's an independent contractor. C. Margaret is responsible for and can be disciplined based on Clint's actions. D. Margaret must supervise Clint but isn't responsible for his actions.

B

Ned doesn't want the lenders to have his personal information, so he's applying for a home loan under an assumed name. Which type of mortgage fraud scheme is this an example of? A. Equity skimming B. False identity C. Property flipping D Silent second

D

One of the steps of integrating a code of ethics into an organization is to commit the code of ethics to writing. However, to be effective, the wording must be ______. A. Brief B. Didactic C. In electronic form D. Specific

B

Overall, how do company checklists assist with agent supervision and help to mitigate risk? A. Checklists ensure that tasks are completed in a timely manner. B. Checklists help ensure that agents and staff don't miss steps in a process. C. Checklists provide a method for brokers to track agent training. D. Completed checklists in transaction files prove that agents completed all tasks.

C

Regarding licensee compensation, which of the following statements is true? A. Consumers may directly compensate a licensee if the licensee's broker gives written permission. B. Licensees may be compensated for performing real estate services through any broker. C. Licensees may only receive compensation for real estate services through their broker. D. Only consumers may compensate licensees for real estate services.

B

Ricky is working for Matt, a buyer client, who is interested in a property at which the listing agent offers compensation to cooperating agents. The listing agent has offered Ricky or any cooperating agent additional compensation if the transaction closes within 40 days. Is this ethical? A. No, it's never ethical for a licensee to accept compensation from more than one party. B. Yes, but only if all of the involved parties have full knowledge and provide consent. C. Yes, but only if the Matt has full knowledge of the compensation arrangement and provides consent. D. Yes, licensees can receive compensation from multiple parties in the transaction.

A

Which of the following is a benefit of legal counsel as a preventive measure? A. They can review policies, procedures, practices, documents, etc., and identify risk areas. B. They can usually handle all risk issues in an annual meeting. C. They're inexpensive consultants. D. You don't have to meet with them regularly.

D

Which of the following is price fixing? A. A brokerage requires all licensees to offer a fair cooperative brokerage fee. B. Three brokerages agree to purchase office supplies together to obtain a bulk discount. C. Twelve brokerages discuss compensation of associated independent contractor licensees. D. Two brokerages determine a standard commission rate.

C

Which of the following is true about tie-in arrangements? A. They involve market allocation. B. They involve price fixing. C. They're an antitrust violation. D. They're a type of mortgage fraud.

D

The two real estate firms in one small town, Vineyard Realty and Homestead Homes, agree to charge the same commission rate to avoid the possibility of clients selecting a firm based simply on price. What specific federal legislation prohibits this? A. The Clayton Act of 1914 B. The Federal Trade Commission Act of 1914 C. The Restraint of Trade Act of 1894 D. The Sherman Antitrust Act of 1890

C

Two competing firms are found guilty of illegal market allocation. Which of the following scenarios must be true? A. The two firms are located in different parts of the state. B. The two firms are owned by the same umbrella company. C. The two firms have agreed not to compete in one another's markets. D. The two firms have agreed to set commission rates and/or co-op fees at a specific amount.

B

What do laws use as their guiding principles? A. Community morals B. Generally accepted ethics C. Laws from other jurisdictions D. Personal morals

A

What is a licensee's responsibility related to the paperwork in a real estate transaction? A. Make sure all parties have copies of the paperwork and that it's retained for the statutory period. B. Make three copies of all documents. C. Secure paperwork in the broker's vehicle. D. Shred documents once the transaction is complete.

B

What is the relationship between a policies and procedures manual and the broker's obligation to supervise agents? A. Brokers who can prove that all agents have access to the PPM won't be cited for failure to adequately supervise agents. B. Brokers who enforce policies and procedures outlined in an effective PPM have proof of efforts to properly train and supervise agents. C. The PPM may be used in place of face-to-face orientation training for new licensees. D. The PPM outlines the broker's responsibility to supervise and provides detailed proof of scheduled one-on-one meetings and group training sessions.

C

What penalty might a licensee or broker face for failure to submit documents the Alabama Real Estate Commission has requested? A. Civil penalties B. Court costs C. Disciplinary action D. Legal damages

B

What type of agreement would guarantee payment of commission regardless of who actually sells the property? A. Exclusive agency agreement B. Exclusive right-to-sell agreement C. Net listing D. Open listing

A

What's true about the Golden Rule? A. It's a good guideline for all personal and professional ethical situations. B. It's as helpful as flipping a coin. C. It's not applicable to business situations. D. It's only applicable to people who are religious.

D

When accepting compensation, which of the following statements is most accurate, according to the NAR Code of Ethics? A. A licensee shall not accept compensation directly from more than one party to a transaction. B. A licensee shall not accept compensation from anyone. C. A licensee shall not accept compensation from more than one party to a transaction without consent from the client. D. A licensee shall not accept compensation from more than one party to a transaction without the consent of all parties.

B

When must an agent disclose an agency relationship to an unrepresented transaction party? A. At closing B. At first substantive contact C. Relationships don't need to be disclosed D. When asked about the relationship

D

Which of the following actions is representative of an agent's due diligence and ethical behavior? A. A buyer client wants to waive an inspection. The agent follows the request without question. B. An agent deposits a buyer client's earnest money check into her personal bank account. C. An agent notices a discrepancy between what the homeowner says and what the property shows, so he ignores it. D. An agent notices a discrepancy between what the homeowner says and what the property shows, so he investigates.

C

Which of the following actions poses the greatest risk for your brokerage? A. Developing a thorough policies and procedures manual B. Developing company checklists for all licensees to follow C. Not penalizing staff who don't follow policies or procedures D. Requiring all staff to carry E&O insurance

A

You're a real estate broker supervising 24 licensees. What's the most effective way for you to protect your firm from lawsuits? A. Develop, implement, and train firm members on policies and procedures. B. Make timely use of your attorney. C. Obtain errors and omissions insurance. D. Train your sales staff on effective negotiation skills.