Chapter 23 Application Questions

What are some of the risk areas in the listing and selling process?

A listing agent is responsible for verifying the accuracy of statements made in the listing agreement concerning the property, the owner, and the owner's representations. Failure to verify can lead to liability if the statements prove to be inaccurate or false. In performing a CMA and assisting the seller to choose a listing price, the agent is in danger of misrepresenting him- or herself as an appraiser and of recommending a price that is unrealistically high or low. Inaccuracy in estimating closing costs and misrepresentation in advertising are also danger zones. Finally, exceeding the authority granted by the listing agreement and offering advice that goes beyond the agent's expertise can be construed as violations of contract as well as of the fiduciary standard of care.

The lead - based paint disclosure requirement...?

Applies to residential properties built before 1978.

Transaction records required to be maintained typically include...?

Closing Statements

What kind of coverage is provided by general liability insurance?

Coverage for a property owner's risks incurred when the public enters the insured premises.

Which of the following actions can a real estate licensee perform without risking the commission of an unauthorized practice of law?

Fill in blanks on a lawyer-prepared contract form.

Why is education considered a fundamental risk management procedure in brokerage firms?

If brokers, salespeople, agents, and employees are fully conversant with the requirements of the law, they are less likely to make mistakes that can harm the public and have serious repercussions for the firm. Likewise, knowledge of best practices and proper procedures contributes to providing services that receive praise, rather than blame, from consumers and clients. Education is the best means of heading off mistakes of all kinds.

A licensee who knowingly conveys false information about a property is committing...?

Intentional misrepresentation.

A good way of reducing the risk that brokers and sales affiliates will commit errors or inadvertent law violations is to...?

Maintain a comprehensive and up-to-date procedures manual.

One of the major risk areas in advertising a listed property is that an advertisement will...?

Make a substancial misrepresentation.

In assisting a party to prepare a purchase contract, it is essential for a licensee to...?

Make sure the information in the contract is accurate and that all agreed terms are included.

Creating a false impression that the licensee is a certified appraiser is a danger in...?

Performing a comparative market analysis.

If licensees working for competing firms are overheard discussing commission rates, they are at risk for being charged with...?

Price fixing.

Discuss the nature of professional liability and the kinds of actions that are covered by a standard Errors and Omissions Insurance policy.

Professional liability primarily concern failure to perform fiduciary duties, provide an acceptable standard of care, or perform the terms of a contract. Examples of actions that create professional liability for real estate practitioners might include violating client confidentiality, allowing a purchase transaction to fail through neglect of the contracting process, and failing to present an offer in a timely manner. E&O policies cover negligent acts but not criminal ones, and specifically exclude fraud, mishandling of moneys, antitrust and fair housing violations, and other violations of the law.

To minimize the risk of violating fair housing laws, a licensee should...?

Refuse to use terms that refer to or describe any of the classes of persons protected by the laws.

Failure to maintain client confidentiality is a risk associated primarily with...?

The agency relationship.

The risk of committing an unauthorized practice of law can be practically reduced by...?

Using standard forms and contracts prepared by attorneys.

Standard E & O policies exclude coverage of damages resulting from...?

Violations of Law