Texas 30-Hour Law of Agency

Which of the following statements about appointments in an intermediary brokerage relationship is true?

An intermediary broker must have at least two different licensees to make appointments.

You might tell a new client, "This means that I, as the agent, have to keep certain private information you tell me, or that I find out otherwise in our relationship, to myself," when describing your duty of ______ to the client.

Confidentiality

Cindy is a new sales agent working for City Realty. She has a buyer representation agreement with Craig and she helps him make an offer on a listing with Countryside Realty. When the sale closes, the seller pays the commission for the listing agent and for Cindy. Who is Cindy's client?

Craig

What can a licensee do to mitigate the risk of a consumer complaint about a violation of the intermediary brokerage rules?

Explain the intermediary brokerage option while providing the Information About Brokerage Services form at the first substantive dialogue about a property, and other proper written consents from both parties before acting as an intermediary.

Can a broker acting as an intermediary offer advice and opinions to the buyer or the seller?

No, the broker must remain fair and impartial.

Is it a good idea for a licensee to buy a property listed by their employing broker?

No, the licensee may put their own interests before those of the client.

Trevor lived for the adrenaline rush. One day, riding his skateboard down the stairs inside his house, he zagged when he should have zigged and collided with a wall. The wall survived. Trevor wasn't so lucky. The listing broker tells you the story of Trevor's death. Are you required to disclose this to your seller client?

No. The house didn't cause Trevor's death.

What should a seller remember when speaking to the buyer's agent?

Not to tell the buyer agent anything the seller wouldn't want the buyer to know

A client has asked her agent for a 24-hour notice on showings. The agent knows this will have a negative impact on the number of showings. Which duty is in conflict with reasonable skill and care?

Obedience

Manuel is a licensee meeting with Daniella, a potential buyer client. Which of the following should he avoid doing until there is an agency agreement in place?

Performing agency-related activities

Which of the following actions is against the NAR Code of Ethics?

Preparing a written agreement that falsely states a purchase price

What type of ownership interest needs to be disclosed in writing to all parties?

Property held directly or indirectly by the licensee, the licensee's immediate family member, the licensee's firm, or a member of the licensee's firm

Erica describes the condo she's listed as being "the best unit in the building." What's this an example of?

Puffery

Rhonda is an unrepresented buyer who's purchasing Tony's townhome. Gary represents Tony in the sale of his property. What's Rhonda's relationship to Gary?

A customer

What can a broker acting as an intermediary do that a dual agent (when dual agency was legal) could not do?

Appoint licensees, who may offer advice and opinions to the clients

After agency terminates, which of the following fiduciary duties survives?

Confidentiality

Which of the following duties are still owed after a listing agreement expires?

Confidentiality

Betty is explaining a sales contract to her buyer client. What must Betty be careful to avoid?

Giving legal advice

Broker Paulo has asked his sales agents to practice using scripted dialogue and engage in role-playing related to agency relationships. Why might he do this?

He wants to make them more comfortable and effective discussing agency-related issues.

The main difference between puffery and misrepresentation is that _______.

Misrepresentation falsely represents material facts that a reasonable person would rely upon

In Texas buyer representation agreements, from whom will the broker first seek to obtain payment of the commission?

Seller, landlord, or their agents

Which of the following actions would be a violation of the Texas Deceptive Trade Practices ‒ Consumer Protection Act?

Shari misrepresents the facts about the reasons for a price decrease.

In which of the following listing agreement terminations is there LEAST likely to be a penalty for terminating the agreement?

The client and agent mutually agree to terminate the listing.

Alex's client doesn't want prospective buyers to track dirt and mud throughout her clean home. She asks Alex to place a box of booties by the front door with a sign asking visitors to wear the booties while viewing the home. Alex does as his client instructs—no questions asked. What fiduciary duty is this an example of?

The duty of obedience

Phoebe is careful to never act outside of her scope of expertise. She's a real estate professional and proud of it, so when asked for advice about legal matters, inspection results, flaws in construction, or shoddy building materials, she always refers them to a professional in that field. Which duty is Phoebe demonstrating?

The duty of reasonable skill and care

Agents must provide the IABS form at the time of first substantive dialogue. What constitutes "first substantive dialogue"?

The first face-to-face meeting, email, call, or text in which a specific property is discussed

In order to utilize the written notice defense, a licensee must provide the consumer a written statement that they have relied on information from a third party. Which of the following is also true?

The information received from the third party must be in writing.

What is the primary way an agency agreement is created with a seller?

The listing agreement

Which of the following is a legitimate reason to terminate a buyer agency agreement?

The term of the agreement has expired.

Why are net listings illegal in some states?

There's potential for a conflict of interest.

Jamie, a seller, deliberately hid the evidence of a termite infestation from potential buyers. Annette, his listing broker, agreed to not disclose the presence of termites in the home, even though she had seen them for herself. Jamie also paid Fred, a friend and home inspector to leave it out of his report. According to the Fraud in Real Estate and Stock Transactions Act, who is liable?

jamie, Annette, and Fred

As a seller's agent, which of the following would you be prohibited from answering?

Is this a family neighborhood?

Which statement about the fiduciary duty of confidentiality is true?

It doesn't extend to material facts relating to the property.

Why are proper implementation and presentation of agency important?

It helps protect brokers by clarifying and documenting agency roles and responsibilities.

If a licensee has fiduciary duties to obey all lawful instructions from a client and also to exercise reasonable skill and care, which answer describes a situation in which there is a conflict between the two fiduciary duties?

Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.

Lamar has signed an exclusive buyer agency agreement with Terrell, a real estate licensee. Under their agreement, Terrell is entitled to a 4% commission for his services. The house Terrell has found for Lamar is perfect, but the seller will only pay part of Terrell's commission. What does this mean?

Lamar must pay the balance of Terrell's commission.

Layla, a licensee, has had a few casual meetings with a potential client, Marcus. Marcus has told Layla the type of home and locations he's interested in. Layla has mentioned a few homes that she thinks Marcus might be interested in. Although Layla hasn't said that she will continue to look for homes for Marcus, Marcus believes she'll do just that. Which of these statements about this situation is correct?

Layla's actions may have created an implied agency agreement with Marcus.

Broker Kyle has insisted that his affiliated licensees only work with buyers if they have signed, written buyer representation agreements with those buyers. Written buyer representation agreements ensure that ______.

All of the commissions earned by the licensees are protected because the buyer agency relationships have been formalized

Texas broker Tex Wilson is trying to explain a buyer representation agreement to his newest licensee, Joe. Which of these explanations best describes this agreement?

"A buyer representation agreement forms an agency relationship between the buyer and the broker."

Which of the following is an example of puffery?

"This condo has the best view this side of the river!"

Which of the following is an example of the duty of disclosure?

Informing parties to the transaction of material facts related to the transaction

According to Article 7 of the NAR Code of Ethics, which of these statements is most accurate when accepting compensation from parties to a transaction?

A licensee shall not accept compensation from more than one party to a transaction without the full knowledge and consent of all parties.

A buyer representation agreement is similar to which document used when representing a seller?

A listing agreement

Marie's brokerage relationship with the Clarks has terminated. She has some paperwork she needs to send to them. When she provides this paperwork to them, what is this an example of?

Accounting

John, a personal assistant, advised Shelly, who is a client of John's supervisor, Bill, about a negotiation strategy. John is ______.

Acting legally, provided he has a real estate license

Sean had been showing homes to potential clients, Amy and Chris Williams, for weeks before the couple finally agreed to sign a buyer agency agreement with him and acknowledge him as their agent. What type of agency is this considered?

Agency by ratification

What happens if a house for sale is destroyed by a flood before the representation agreement expires?

Agency terminates by operation of law.

A(An) ________ is "someone who acts on behalf of someone else."

Agent

What's the term for someone who's been given the authority to act on behalf of someone else?

Agent

Scripted dialogue can be a useful tool to assist licensees with becoming more comfortable discussing exclusive buyer agency with potential clients. Two important points which should be discussed are the benefits to the potential client of an exclusive buyer relationship, and how ________________ will be handled.

Agent compensation

What term describes a broker with written consent to act on behalf of both the owner and the buyer in a transaction?

Intermediary

Licensee Rudolph agrees to work as a buyer agent for Blitzen. Blitzen, who considers herself a bit of a law aficionado, notices the buyer representation agreement has an automatic extension clause. Knowing this, what can you deduce?

Automatic renewals in agency agreements are prohibited by law.

A pre-closing checklist can help ensure that ____________________ has/have completed all of the required tasks prior to the closing date.

Both the seller and agent

In Texas, "someone who has agency representation with the real estate sales agent or broker" is the definition of a ________.

Client

In Texas, a ________ is "someone who has agency representation with the real estate sales agent or broker."

Client

Which of these is NOT one of the ways in which an agency relationship may be terminated without penalty for either the agent or the principal?

Delaney signed a buyer's representation agreement with Martha. After Delaney made an offer on a house, she changed her mind and terminated the agency agreement.

A real estate licensee is acting as what type of agent when assigned by the broker to represent one party in an in-house transaction?

Designated

Fidelity, integrity, competency, consumer information, and _________________ are the Canons of Professional Ethics and Conduct.

Discriminatory practices

Natalie is a single mother of twins and receives government assistance to help make ends meet. She's been living with her mother for the last few years but really wants to buy her own home to gain some independence. She's got a little in savings and has good credit, but when a lender turns her away because she receives public assistance she worries that she'll never be able to get a loan. What act prevents automatic discriminatory practices by lenders and protects individuals like Natalie?

Equal Credit Opportunity Act

Generally, a brokerage firm must have a policies and procedures manual in place before the insurance company will issue it a(n) ______ policy.

Errors and omissions insurance

Which term is defined as a broker who is employed to negotiate a transaction between the parties of a transaction, and for that purpose, may act as a limited agent of those parties?

Intermediary

The Morgans are about to close on their home. They're meeting with the lender to complete all the necessary paperwork. They've requested that none of their demographic information be shared with anyone. Which act would they need to be made aware of?

Home Mortgage Disclosure Act

Manuel is a licensee meeting with Daniella, a potential buyer client. Which of the following duties does he owe Daniella?

Honesty and fairness

Sam has had bad luck with his rental property. The first tenant never paid the rent and Sam had to evict them. The second tenant was discovered to have been operating a meth lab in the home. Which of the following is true?

If Sam resells the home, he is required to disclose this information.

Brady is a supervising broker and a real estate professional has violated real estate law. Under what circumstances could Brady be held liable?

If the licensee were under Brady's license

Agency is established by mutual consent, so by which of the following may it be successfully terminated?

Mutual agreement

Eliza is an unlicensed assistant for the In It to Win It Team at Best Nest Realty. Tom is an associate broker on the team. Which of these activities must be performed by Tom and not Eliza?

Negotiating a commission with a client

Which of the following statements about being able to sue for unpaid but owed compensation for real estate services rendered is true?

Only a licensed real estate broker or sales agent may sue to collect commissions.

Jeremy's seller clients have completed closing and moved out of their house, and are just waiting for Jeremy to send them a copy of the final transaction documents. Which fiduciary duties does Jeremy still owe them?

Only confidentiality and accounting

Incapacity or death, bankruptcy, or destruction of property are examples of circumstances where agency terminates by ______.

Operation of law

When the client or the agent dies, agency terminates by ______.

Operation of law

Henry is Monica's listing agent. As Monica's agent, Henry has a duty to account for and properly handle her funds and ______.

Paperwork

What type of worker, defined under tax law as an independent contractor and not an employee, includes direct sellers and licensed real estate agents?

Statutory non-employee

Andrew just signed a listing agreement with Jordan of XYZ Realty. Andrew gave Jordan permission to work with another broker (from ABC Realty), who will earn a share of Jordan's compensation for finding a buyer. The buyer in this situation is not seeking representation. What relationship does ABC Realty have with Andrew?

Sub-agency

Which of the following options is something that you would only do for a buyer client and not a buyer customer?

Suggest an earnest money amount based on the practices in your area.

Texas licensees must obey the laws, rules, and regulations which govern the practice of real estate in Texas. What entity enforces these rules and regulations?

TREC

Your latest buyer client, Cal, says that his neighbor's house is for sale. Although he's not actually interested in purchasing the house (he wants a larger home in a different area), he tells you, "I heard the guy who owned that house has AIDS. Is that true?" What should you do?

Tell him that federal fair housing laws forbid you from answering his question.

Agency may be legally terminated in which of the following ways?

The principal broker becomes incapacitated.

Which of the following details may you share with the buyer if you're the seller's agent?

The roof leaks when it rains.

Before closing, who must make requested repairs, meet all of the terms of the sales agreement, and request the affidavit of title?

The seller

Who does the agent assisting the buyer in a transaction represent if there's no buyer agency agreement?

The seller

Without a buyer agency agreement in place, which party does the agent who's assisting the buyer represent?

The seller

Which of these is an example of a material fact?

The seller would not have accepted an offer had he or she known the fact.

According to the TAR Buyer Representation Agreement, when is the broker's fee earned and payable?

When the sale closes or when the buyer breaches the sales contract or the buyer representation agreement

Which of the following factors helps the IRS determine whether a licensee is classified as an employee or an independent contractor?

Whether the licensee receives benefits from the brokerage firm

What is specified in the Broker's Compensation provision of the listing agreement?

Who pays the broker's fee and how it is to be calculated

Ted is a seller working with a broker acting as an intermediary. Ted is hoping for a quick sale, because he has made an offer another property. Ted has written instructions to the intermediary not to share this information. Should Ted expect the intermediary to keep this information confidential?

Yes, because an intermediary may not disclose confidential information.

You represented Chloe a few years ago when she sold her home. Now she is a party to a transaction, and you are not representing her because she is a buyer who is making an offer on one of your listings. Do you owe Chloe the duty of confidentiality?

Yes, the duty of confidentiality survives the termination of your brokerage agreement.

Which of the following qualities is it most important that you demonstrate to a buyer through your buyer presentation?

Your service mindset

The __________________ establishes an agency relationship with the seller.

Listing agreement

Jose forgot to measure the home's interior to verify the square footage. After the buyer moved in, she found that he had made an error, and that her home was 200 square feet smaller than she had been told. What violation has Jose committed?

Misrepresentation

You represent Andrew, a buyer, and Martha, a seller, as an intermediary. Andrew tells you something that would give Martha a distinct advantage if she knew. Do you tell Martha?

No, because you can't share confidential information from one client with another.

Which of the following actions should be taken when holding an open house?

Schedule the open house soon after the property hits the market.

With seller agency, whose responsibility is it to market the property?

Seller agent

Maddison is a supervising broker who has a new licensee, Shawn. If Shawn commits a serious error as a licensee, whose license is at risk?

Shawn's and Maddison's

Elisa agreed to list Simone's house for sale. After the listing contract was signed, Simone lost her job, and her father, George, offered to help Simone by paying Elisa's listing commission. The buyer's agent, Carl, also reduced his commission. Who is Elisa's client?

Simone

Which of the following is the definition of a client in Texas?

Someone who has agency representation with the real estate sales agent or broker.

Mark is a sales agent on his way to meet a potential buyer for the first time. What written statement should he give to the potential buyer?

The Information About Brokerage Services form

Rex has a reputation in the community for being a bit odd. He listed his ranch for sale and insisted on the low price he's placed on it, though his agent told him it's underpriced. Rex's distant family hears of the potential sale, and they go through the courts to present evidence that Rex isn't legally competent to manage his business affairs; the judge agrees. What's the status of the listing agreement?

The listing agreement is terminated by force of law.

Trina's property is listed with Avalon Homes. The market is a little slow, and Trina's listing is a high-end home, where sales are even slower. She's had several showings, but no offers. The term of the listing agreement is nearly over. What happens when the termination date is reached?

The listing expires and is automatically terminated.