Law of Agency Final Exam Review

. In a net listing: A. The seller states the amount he wishes to net from the sale and the broker is allowed to keep anything above that amount. B. The tenant pays a set amount of rent each month and a lump sum at the end of the lease. C. The broker fee is set by TREC. D. A broker is not needed, a salesperson owns the listing.

A. The seller states the amount he wishes to net from the sale and the broker is If the property sells for more than the seller wishes to net, the broker earns a commission. If the property sells for less than the seller wishes to net the broker receives no commission.

An agent who may perform any acts or transactions the principal may perform is a: A. Universal agent B. Special agent C. Seller agent D. General agent

A. Universal agent An example of special agency is the relationship between the broker and the seller. It could be created with a listing agreement.

Confidential information is confidential forever or: A. Until the principal gives the agent written permission to release the information B. Until the end of the fifth year after the seller closes on the property C. Until the principal gives the agent verbal permission to release the information D. Information is never confidential.

A. Until the principal gives the agent written permission to release the information Permission to disclose the confidential information about a principal must be in writing and signed by the principal.

All parties to the transaction must be treated honestly and fairly, but a fiduciary relationship is owed to the: A. Customer B. Client C. Everyone D. No one

B. Client A fiduciary relationship is a relationship of trust. The broker must always put the client's interest above the broker's interest.

CMA is an acronym for: A. Common Market Amendment B. Comparative Market Analysis C. Co-owned Material Act D. Complete Market Analysis

B. Comparative Market Analysis A CMA is used by an agent to help a client or customer know the value of a property. It is not an appraisal.

In subagency, the buyer is a: A. Client B. Customer C. Intermediary D. Seller

B. Customer In subagency, the seller must be a client of one company and the buyer must be a customer of another company

The owner should not tell a buyer's agent anything the owner would not want the buyer to know because a buyer's agent must: A. Always be loyal to the seller. B. Disclose to the buyer any material information known to the agent. C. Never disclose to the buyer any material information known to the agent. D. Promise the owner he will never tell the buyer and then tell the buyer.

B. Disclose to the buyer any material information known to the agent. The buyer's agent owes a fiduciary duty to the buyer (not the seller) and therefore must disclose all information to the buyer.

. In a subagent relationship, the seller's broker and the buyer's broker are always: A. From the same company B. From two different companies C. The same broker D. Have the same sponsored salespeople

B. From two different companies In subagency, the broker is not represented and remains a buyer customer.

A "ready, willing, and able" buyer has been found for the property. At that point, the listing broker: A. Has canceled the listing B. Has earned his commission C. Will be paid on the day the buyer is found D. Will only receive part of the commission on the day the buyer is found

B. Has earned his commission This information is in Paragraph 5-B of the TAR residential listing agreement.

When the unrepresented buyer is led to believe that he is being represented, it is: A. Dual agency B. Implied agency C. Subagency D. Open agency

B. Implied agency Implied agency is created by acts or words of the principal and agent.

Bob is helping his client negotiate a lower price for the house the client has made an offer on. What is this an example of? A. Obedience B. Loyalty C. Disclosure D. Confidentiality

B. Loyalty Loyalty means putting the client's interest above the agent's interest.

TREC states that a broker must maintain a written ____________ for the company. A. Listing agreement authored by the broker B. Policies and procedures manual C. Property management agreement D. Deed

B. Policies and procedures manual The policy and procedures manual could contain information about advertising, business procedures, commission and fee structure, ethics, fair housing, etc.

A company working with both sellers and buyers, but not in the same transaction, would be called a: A. Dual agency company B. Single agency company C. Buyer company D. Seller company

B. Single agency company A single agency company would never be an intermediary.

. In 1993, the legislature created: A. Buyers agency B. Statutory dual agency C. Intermediary D. Subagency

B. Statutory dual agency In 1993, statutory dual agency became a part of TRELA. It was removed from TRELA in 1996 and intermediary was put into TRELA.

If the salesperson who took the listing on the property moves his license to another company, the listing: A. Goes with the salesperson to the new company B. Stays with the broker who sponsored the salesperson when the listing was taken C. Is transferred to the new broker D. Ends

B. Stays with the broker who sponsored the salesperson when the listing was taken All listings are taken in the name of the broker and are the property of the broker.

Requirements concerning display of license, relationship between the broker and his salespeople, and changing location of the real estate office are found in the: A. Listing Agreement B. Texas Real Estate Licensing Act C. Sales Contract D. Buyer's Representation Agreement

B. Texas Real Estate Licensing Act All of these requirements are found in the TRELA.

Protection Period means: A. The house will be protected by hazard insurance. B. That time starting the day after the listing and continuing for ____ days C. The home will have a clear title. D. The property cannot be sold for ___ days after the contract is finished.

B. That time starting the day after the listing and continuing for ____ days The protection period is set by the broker with the agreement of the seller.

Paragraph 11 of the TAR Residential Real Estate Listing Agreement Exclusive Right to Sell states: A. The broker may sign documents for the seller. B. The broker is not given permission to sign documents in the name of the seller. C. The broker may sign documents for the buyer. D. The broker may not disclose the sales price to other brokers.

B. The broker is not given permission to sign documents in the name of the seller. The broker may not accept an offer on the property for the seller. The seller must consider the offers on the property and decide which offers, if any, the seller wants to accept.

The salesperson can only collect a commission from: A. The seller B. The sponsoring broker C. The buyer D. Another salesperson

B. The sponsoring broker A broker cannot pay a commission to someone they do not sponsor. They may only pay their sponsored salespersons and other brokers.

When the listing broker shows the listing to someone and implies that the broker is representing that person, it is: A. Intentional dual representation B. Unintended dual representation C. Universal agency D. Special representation

B. Unintended dual representation Intermediary is intentional dual representation. The agent is aware of the agency relationship and has disclosed the relationship to all parties.

Paragraph 9 of the Residential Real Estate Listing Agreement Exclusive Right to Sell gives the seller information about: A. The sales price B. Access to the property C. Intermediary D. Confidential information

C. Intermediary The seller can agree or not agree to intermediary in the listing agreement

In 1993, TRELA established a new real estate course. It was: A. Law of Contracts B. Promulgated Contract Forms C. Law of Agency D. Principles Two

C. Law of Agency A real estate student is required to complete a Law of Agency course in order to receive a salesperson's license.

The broker must put the client's interest above the broker's interest. This is: A. Obedience B. Accounting C. Loyalty D. Disclosure

C. Loyalty . Loyalty is one of the fiduciary duties owned to the client. The duties include obedience, accounting, and disclosure.

A form that is used to make an offer on a single-family home is a(n): A. Unimproved Property Contract B. Farm and Ranch Contract C. One to Four Family Residential (Resale) Contract D. Residential Condominium Contract

C. One to Four Family Residential (Resale) Contract The One to Four Family Residential (Resale) Contract is a TREC form written by the Broker-Lawyer Committee. It is used for the resale of a residential property.

Something that affects the property or the health of the residents of the property is called a(n): A. Psychological stigma B. Exception C. Physical stigma D. None of the above

C. Physical stigma A psychological stigma does not affect the physical condition of the property, but it can affect the value of the property.

An example of a general agent is a: A. Buyer agent B. Seller agent C. Property manager D. Subagent

C. Property manager Buyer agency and seller agency are both examples of special agency. The property management agreement and the independent contractor agreement are examples of general agency.

__________ is the chance of something going wrong and the danger that injury, damage, or loss will occur. A. Material fact B. Real estate C. Risk D. Office manual

C. Risk Brokers can minimize risk by making sure all disclosures are in writing.

The listing broker may cooperate with the buyer's broker or a subagent. Often the commission for all brokers in the transaction is paid by the: A. Subagent B. Buyer C. Seller D. Attorney

C. Seller The amount of the commission to be paid by the seller for the sale of the property is set in the listing agreement.

If the seller disclosure notice is not delivered by the effective date, the buyer has the right to cancel the contract within _________ days after receiving the notice. A. Ten B. Six C. Seven D. Four

C. Seven If the buyer does not have the seller's disclosure form before he signs a contract to buy, the seller must deliver the form to the buyer after the contract is signed. The buyer has 7 days to cancel the contract after he receives the disclosure form.

The Civil Rights Act of 1969 was amended to 1974 to include: A. Handicap B. Race C. Sex D. Familial status

C. Sex The protected classes under Fair Housing Laws include race, color, religion, national origin, sex, disability, or familial status.

The broker working with a buyer customer and representing the seller through the seller's broker is a: A. Buyer B. Seller C. Subagent D. Intermediary

C. Subagent For subagency to exist there must be two sponsoring brokers. One of the brokers has a seller client and the other broker must have a buyer customer.

The listing broker agrees to pay the other broker in the: A. TRELA B. IREM agreement C. TREC sales contract D. IABS

C. TREC sales contract The listing agreement states the amount to be paid to the seller's broker and the seller's broker states the amount to be paid to the buyer's broker in the sales contract.

What is required for the agent to sue for a commission in a court of law? A. No agreement is required. B. An agent is not allowed to sue the principal. C. The agent is allowed to sue if he has a written agreement with the principal. D. The agent is allowed to sue if he has a written or verbal agreement with the principal.

C. The agent is allowed to sue if he has a written agreement with the principal. In order for the broker to collect a commission, the broker must be licensed and employed. The listing agreement and buyer's representation agreement are employment agreements.

All listing agreements and the buyer's agreements are taken in the name of the sponsoring broker. When the salesperson who took these agreements leaves the broker's sponsorship: A. The agreements come to an end, and the client must find another broker. B. The agreements are transferred to the new sponsoring broker. C. The agreements were taken in the name of the broker and remain with the broker. D. The salesperson takes the agreements to the new broker.

C. The agreements were taken in the name of the broker and remain with the broker. All employment agreements are taken in the name of the broker and become the property of the broker

The broker is the agent of the client. The salesperson is the agent of: A. The buyer B. The seller C. The broker D. Both the seller and buyer

C. The broker The broker is employed by the client and the salesperson is employed by the broker. Agency is always created at the broker level.

The listing agent must give Information About Brokerage Services when the agent meets with: A. The agent working with the buyer B. The agent acting as a subagent C. The buyer customer D. The buyer client of another agent

C. The buyer customer The agent must give Information About Brokerage Services at the first substantive dialogue about real estate.

When the seller asks the salesperson to fill out the Seller's Disclosure Notice: A. The salesperson should fill out the form for the seller. B. The salesperson should have the form filled out by the sponsoring broker. C. The salesperson should not fill out the form for the seller because it is the sole responsibility of the seller to fill out the Notice. D. The salesperson should ask another salesperson to fill out the Notice.

C. The salesperson should not fill out the form for the seller because it is the sole The agent may not fill out the form for the seller. The seller must do this for themselves.

6. Who is responsible for the acts of a salesperson? A. Seller B. Buyer C. The sponsoring broker D. All of the above

C. The sponsoring broker The sponsoring broker is liable to the real estate commission, the public, and the broker's clients for the acts of his sponsored salespersons.

A seller's broker may not tell confidential information to a buyer unless the seller has given him permission to do so. How must this information be communicated? A. This information should be oral. B. This information should be given on the phone. C. This information should be in writing. D. The broker may not tell anything to the buyer

C. This information should be in writing. A broker may not disclose confidential information about the client unless the client has given them permission in writing to do so.

To give false or misleading representation because of lack of knowledge is: A. Puffing B. Fraud C. Unintentional misrepresentation D. Antitrust

C. Unintentional misrepresentation Puffing is exaggerating, that is making something sound better than it is. Fraud is a statement made with the intention to deceive.

A listing broker is considered to have earned the commission: A. When the sales contract is signed by the seller, the buyer, and the broker B. At closing and funding C. When the broker procures a ready, willing, and able buyer D. When the listing agreement expires

C. When the broker procures a ready, willing, and able buyer The commission is earned when the broker procures a ready, willing, and able buyer, but the commission will not be paid until closing and funding.

The broker has signed an Exclusive Agency agreement with the seller. This means that the listing broker: A. Is guaranteed a commission if the property sells B. Will not receive a commission if the buyer is represented by another broker C. Will not be paid a commission if the seller sells the property himself D. Will not be paid a commission if one of the broker's sponsored salespeople finds the buyer

C. Will not be paid a commission if the seller sells the property himself The TAR Exclusive Right-to-Sell Listing Agreement with the TAR Exclusive Agency Addendum attached is often used to create this type of listing.

How many companies are required in a subagency relationship? A. 13 B. 9 C. 4 D. 2

D. 2 For subagency to exist there must be two sponsoring brokers (companies) and one of those brokers must have a buyer customer.

An offer made by a buyer who would like to buy the property if the first contract does not close is: A. Not allowed B. Against Texas Real Estate Commission rules C. Only good for 1 day D. A backup offer

D. A backup offer A backup offer is created by attaching an "Addendum for Back-up Contract" to a sales contract.

The buyer's agent will view the transaction from the buyer's point of view and will counsel the buyer on: A. Financing the property B. Contingencies C. Negotiating strategy D. All of the above

D. All of the above

A broker with a buyer's representation agreement in place is more likely to show all properties that meet the needs of the buyer. The properties could include: A. For Sale by Owner B. Foreclosures C. Property not yet on the market D. All of the above

D. All of the above A broker with a buyer's representation agreement will try to show all properties that fit the needs of the buyer. The broker represents the buyer as a client and will try to show the best properties to the buyer.

The TRELA does not require disclosure if a death occurred on a property: A. By natural causes B. By suicide C. In an accident unrelated to the condition of the property D. All of the above

D. All of the above A murder on the property and an accidental death resulting from an accident related to a condition of the property must be disclosed.

The benefit of being a buyer's agent is greater client loyalty. In the future, the buyer will: A. Ask the agent to find other properties for the client to buy B. Ask the agent to list a property for sell C. Refer other people to the agent D. All of the above

D. All of the above Buyers often buy more than one property in their lifetime and use the same broker over and over again. Buyers become sellers and list their properties with this same broker.

The Information About Brokerage Services form gives information about the broker: A. Representing the owner or the buyer B. Acting as a subagent C. Acting as an intermediary D. All of the above

D. All of the above IABS gives information about all types of agency relationships.

Licensees are permitted to use contracts if the contracts are: A. Promulgated by TREC B. Prepared by the property owner C. Written by an attorney and required by a principal D. All of the above

D. All of the above The Broker-Lawyer Committee writes the forms that are then promulgated by the Texas Real Estate Commission.

The amount of the commission is set in the: A. Listing agreement B. Property management agreement C. Buyer's agreement D. All of the above

D. All of the above The amount of the commission is negotiable between the broker and the client. The amount to be paid is named in one of these three agreements.

The clients' duties include: A. Compensation and cooperation B. Indemnification C. Information D. All of the above

D. All of the above The client must give correct information to the broker. The client must compensate the broker for his services.

The fiduciary duties owed to the client include: A. Obedience, loyalty B. Confidentiality, accounting C. Reasonable care, disclosure D. All of the above

D. All of the above The fiduciary duties can be remembered by using OLD CAR - obedience, loyalty, disclosure, then confidentiality, accounting, and reasonable care.

A broker must be licensed by TREC and employed in order to receive a commission. He is employed by: A. Listing agreement B. Buyer agreement C. Property management agreement D. All of the above

D. All of the above The listing agreement, buyer agreement, and the property management agreement are all employment agreements. They employ the broker.

The agency relationship will terminate if: A. The broker or the client dies. B. The agreement has been completed. C. The agency agreement expires. D. All of the above

D. All of the above The relationship will also terminate if the broker and the client mutually agree to cancel the agency relationship.

A client who has signed a Buyer Representation Agreement understands that: A. The properties he is shown will be shown to other clients as well. B. The agent will help other buyer clients negotiate for the properties. C. The agent will help other buyer clients acquire the properties. D. All of the above

D. All of the above This is in Paragraph 9 Competing Clients (of the TAR Buyers Representation Agreement)

The One to Four Residential Contract (Resale) is the form used to make an offer on a property. It becomes the contract when: A. A lawsuit affects the property. B. The buyer has signed the form. C. The offer is made to the seller. D. All parties have signed.

D. All parties have signed. The offer must be signed by the buyer and seller. At this point the offer becomes a contract.

A 2005 amendment to the TRELA states that a broker who agrees to represent both a buyer and a seller in the same transactions must agree to act as: A. A buyer's agent only B. A seller's agent only C. A subagent D. An intermediary

D. An intermediary Before 2005, dual agency was still allowed. Since 2005, if a broker represents both a seller and buyer or a landlord and tenant in the same transaction, the broker must become an intermediary.

Information about Brokerage Services must be given to potential buyers, sellers, tenants, and landlords: A. At the time of first meeting B. After the listing is taken C. At the closing D. At the first substantive dialogue about a property

D. At the first substantive dialogue about a property Information About Brokerage Services gives information concerning the ways a broker can represent a person. It gives information about buyer's agency, seller's agency, intermediary, and subagency.

All salesperson's licenses must: A. Be kept in the salesperson's office B. Be displayed on the wall of the sales office C. Be inactive with TREC D. Be kept in the sponsoring broker's custody and control

D. Be kept in the sponsoring broker's custody and control The sponsoring broker must receive the salesperson's license before the salesperson may practice real estate.

A broker may make or not make appointments. If appointments are made the broker must: A. Appoint a salesperson to the seller B. Appoint a salesperson to the buyer C. Appoint himself to the seller D. Both A and B

D. Both A and B The broker may or may not make appointments. The broker can never appoint themselves to one side and appoint a salesperson to the other side.

The broker representing the owner is referred to as the: A. Seller's broker B. Listing broker C. Buyer's broker D. Both A and B

D. Both A and B The broker representing the buyer is called the buyer's broker, the other broker, and the cooperating broker.

TRELA states a broker may act as an intermediary between parties to a real estate transaction if: A. The broker obtains written consent from each party for the broker to act as an intermediary in the transaction. B. The written consent of the parties states the source of the expected compensation to the broker. C. Neither A or B D. Both A and B

D. Both A and B The written consent is usually given in the listing agreement signed by the seller and the buyer's representation agreement signed by the buyer.

Special agency is created when a broker signs: A. A listing agreement with a seller B. A buyer representation agreement with a buyer C. A property management agreement with an owner D. Both A and B create special agency.

D. Both A and B create special agency. Buyer agency and seller agency are both examples of special agency. The property management agreement and the independent contractor agreement are examples of general agency.

In most companies, the salespeople are: A. Employees B. Employers C. Unlicensed D. Independent contractors

D. Independent contractors An independent contractor salesperson sets his own hours and receives no benefits from the broker. The salesperson must pay all of his own income taxes and his Social Security taxes.

. A personal assistant: A. Must be licensed by TREC B. May give advice and opinions about real estate C. Is never used D. Is not required to be licensed by TREC

D. Is not required to be licensed by TREC A personal assistant who is not licensed may not do anything that requires a real estate license.

A defect that is known to the seller and hidden from the buyer is a: A. Material defect B. Zoning defect C. Intermediary defect D. Latent defect

D. Latent defect A seller is required to disclose any known defects and must not hide them from the buyer.

"The whole system or set of rules made by the government of a town, state, or country" is the definition of: A. Real Estate B. Morality C. Ethics D. Law

D. Law Ethics is rules of behavior based on ideas about what is good and bad. Morality is based on what you think is right and good.

A real estate broker is required to become a member of which organization? A. National Association of REALTORS® B. Texas Association of REALTORS® C. Austin Board of REALTORS® D. None of the above

D. None of the above An agent is not required to join any trade organization. NAR, TAR, and ABOR are all trade organizations.

The practice of several brokers agreeing to all charge the same amount of commission is called: A. Allocation of clients B. Good business C. Boycotting D. Price-fixing

D. Price-fixing Price-fixing, boycotting, and allocation of clients are all against antitrust laws. The Sherman Antitrust Act was passed in 1890 and is the oldest of the antitrust laws.

To praise extravagantly is the definition of: A. Material fact B. Fraud C. Unintentional misrepresentation D. Puffing

D. Puffing Puffing is especially used by agents in advertising property

Salesperson Bob is holding $3000 that belongs to his client. He has placed this money in his personal bank account. Which choice best describes Salesperson Bob's action? A. Bob is allowed by TRELA to do this because the amount is under $5000. B. Bob is allowed to do this because his broker said it would be OK. C. The money is only going to be in the account for a short time. D. Salesperson Bob is commingling the funds.

D. Salesperson Bob is commingling the funds. When an agent mixes the client or customer's money with their personal money or with their company's money it is called commingling.

Commissions are paid to the salespeople and the broker associates by the: A. Other salespersons B. Other brokers C. Clients and customers D. Sponsoring broker

D. Sponsoring broker A broker may pay other brokers and his sponsored agents. A salesperson may not pay anyone.

Broker Bob is meeting with Kim for the first time and hopes to list her home. Which choice best describes the conversation between Broker Bob and Kim? A. The conversation is a substantive dialogue and Bob must give Information about Brokerage Services. B. The conversation is a substantive dialogue, but Information about Brokerage Services is not required. C. Information about Brokerage Services will only be given if Bob gets the listing. D. Information About Brokerage Services is only used for buyers.

A. The conversation is a substantive dialogue and Bob must give Information about Information About Brokerage Services is used for buyers, tenants, sellers, and owners.

In an open listing: A. The only listing broker who receives a commission is the broker who produces a buyer that closes on the property. B. All listing brokers share the commission but the listing broker who produces a buyer receives a larger share. C. The commission is always a flat fee. D. The commission is always 6%

A. The only listing broker who receives a commission is the broker who produces a buyer that closes on the property. In an open listing, the brokers do not cooperate with each other. The broker who brings the buyer is the only broker to be paid by the seller.

The ________ amendments to the fair housing laws protect families with children. Anyone under the age of ________ is considered to be a child. A. 1988 ----- 18 B. 1988 ----- 21 C. 1974 ----- 18 D. 1974 ----- 21

A. 1988 ----- 18 The Civil Rights Act of 1968 was amended in 1988 to include handicap and familial status. Handicap includes persons infected with AIDS or the HIV virus.

The broker has taken a listing on a house. The seller knows the house he is listing has a cracked slab. He has hidden this fact and doesn't intend to tell the buyer. This is: A. A latent defect B. Subagency C. Honesty D. FHF & Flood Insurance

A. A latent defect If the broker knows about the latent defect and the seller refuses to disclose or allow the broker to disclose, the broker must refuse to take the listing.

For a broker representing a buyer client to be assured of a commission, the broker must have: A. A written exclusive agreement with the buyer B. An oral agreement with the buyer C. A listing on the property D. Two sponsored salespeople

A. A written exclusive agreement with the buyer An oral agreement is not enforceable in a court of law. To be able to enforce the agreement in court, the agreement must be in writing.

Equitable title is the buyer's right to: A. Acquire legal title at closing B. Pay property tax C. Borrow money D. Not pay closing cost

A. Acquire legal title at closing Under a contract for deed the buyer has equitable title and the seller has legal title.

When the buyer is represented as a client, a fiduciary duty is owed to the: A. Buyer B. Seller C. Agent D. Buyer and seller

A. Buyer The broker always owes a fiduciary duty to the client.

The broker has a fiduciary relationship with the: A. Client B. Customer C. Third party D. No one

A. Client An agent owes a fiduciary duty to their client and honesty to their customer. They must treat everyone fairly.

Brokers often act as an intermediary and are involved in extensive negotiations between an owner and a tenant in: A. Commercial leasing B. Apartment locating C. Selling homes D. Listing homes

A. Commercial leasing The agent should disclose the agency relationship to both the owner and the tenant.

A guide to help the licensees learn to make ethical decisions: A. Could be developed by the company B. Could be written by the Texas Real Estate License Act C. Could be written by Austin Board of REALTORS® D. Is not needed

A. Could be developed by the company This information is often included in the Policy and Procedures manual.

Representing that goods are new if they are not, representing that something is of a particular brand if it is not, or advertising goods with intent not to sell them as advertised is a violation of: A. DTPA B. Americans with Disabilities Act C. Sherman Anti-Trust Act D. Title VII of the Civil Rights Act

A. DTPA DTPA stands for Texas Deceptive Trade Practice Act. It protects the consumer

Honesty and ________ are owed to the customer and all ________ and latent defects must be disclosed to the buyer customer. A. Disclosure ----- material facts B. Personal property ----- tenants C. Sellers ----- buyers D. All of the above

A. Disclosure ----- material facts The seller's broker must disclose material facts to the buyer, but the seller's broker does not give the buyer advice and opinions.

If the Sellers Disclosure Notice is not delivered by the ___________ in the contract, the buyer has the right to cancel the contract within seven days after receiving the notice. A. Effective date B. Closing date C. Option date D. Earnest money date

A. Effective date The buyer may cancel the contract for any reason after he receives the contract.

The Code of Ethics requires the buyer's agent to disclose to the seller's agent that they represent the buyer at the: A. First contact B. First face-to-face meeting C. First substantive dialogue D. First formal meeting

A. First contact Brokers must always disclose to each other who they represent in the transaction. This must be done at the first contact between the two brokers.

Most lawsuits involve issues of who did or did not represent whom. The number of lawsuits is: A. Increasing B. Decreasing C. Stabilizing over the last several years D. Broker lawsuits are not allowed.

A. Increasing The correct answer is A. A broker is more likely to be sued because he failed to make it clear to all parties who he represented as a client.

9. When the broker is aware of the agency relationship and has disclosed the relationship to all parties to the transaction, it is: A. Intentional dual representation B. Unintended dual representation C. Universal agency D. Special representation

A. Intentional dual representation A. Implied agency can result in unintended dual representation. When a listing agent shows his own listings to an unrepresented buyer, the agent should make sure the buyer understands whom the agent represents.

Something that a buyer would need to know before they make a decision to buy is: A. Material fact B. Open listing C. Statute of Frauds D. TAR

A. Material fact An example of a material fact would be that there is going to be a zoning change for the property the buyer is considering buying

If the salesperson is an independent contractor, the broker must comply with the wage and hour laws and withhold_________ from the salesperson's compensation. A. Nothing B. Income tax C. Social Security D. Both B and C The correct answer is A. An

A. Nothing An independent contractor is responsible for paying their own income tax and Social Security.

A stigma that has no physical effect on the property is a: A. Psychological stigma B. Physical stigma C. Residential stigma D. None of the above

A. Psychological stigma A physical stigma would affect the actual property. Contamination on the property would be a physical stigma.

When the salesperson leaves the sponsorship of the broker, the buyer's agreement: A. Remains with the broker B. Is cancelled C. Is always given to the salesperson D. Doubles in length

A. Remains with the broker All listing agreements and all buyer representation agreements are taken in the name of the broker and become the property of the broker.

. Information on annexation, inspections, MLS, and residential service contracts are given to the buyer in the: A. Texas Association of REALTORS® General Information and Notice B. Texas Real Estate Commission Listing Agreement C. Texas Real Estate Commission's Buyer's Representation Agreement D. Austin Board of REALTORS® Sales Contract

A. Texas Association of REALTORS® General Information and Notice The TAR General Information and Notice is an information form for the agent to give to the buyer.

Under "Broker Information" on the last page of the TREC sales contract, the listing broker agrees to pay the other broker a part of the total sales price when: A. The Listing Broker's fee is received. B. The contract closes. C. The Buyer's Broker sends a demand letter to the Seller's Broker. D. The offer becomes a contract.

A. The Listing Broker's fee is received. The broker representing the buyer in the transaction is called the "Other Broker" in the contract.

The listing agreement most used in Texas is: A. The TAR Residential Real Estate Listing Agreement Exclusive Right to Sell B. A listing agreement written by the seller C. A listing agreement written by the agent D. The Residential Real Estate Listing Agreement Net Listing

A. The TAR Residential Real Estate Listing Agreement Exclusive Right to Sell TREC does not make any employment agreements. Brokers often use agreements written by the Texas Association of REALTORS®

We study agency because: A. The Texas Real Estate Commission requires people wishing to be licensed take an Agency class. B. Only brokers study agency. C. Only attorneys should study agency. D. The client is required to take a class in agency

A. The Texas Real Estate Commission requires people wishing to be licensed take an Effective September 1, 1993, amendments to the Texas Real Estate Licensing Act were made. At that time, a new core real estate course, Law of Agency, was established. The course became mandatory for new salesman applicants beginning September 1, 1994.

. In 1949, The Texas Real Estate Commission was created by: A. The Texas Real Estate License Act B. Broker-Lawyer Committee C. Federal Housing Administration D. TAR

A. The Texas Real Estate License Act

The commercial leasing agent who represents the building owner should make sure the potential tenant understands who the agent represents. What is the relationship? A. The owner is the client and the tenant is the customer. B. The tenant is the client and the owner is the customer. C. The owner and the tenant are both clients. D. The tenant and the owner are both customers.

A. The owner is the client and the tenant is the customer. The leasing agent works for the owner and represents the owner. The owner is the agent's client.

The term "market area" is found in the: A. Listing agreement B. Buyer agreement C. Condo agreement D. Home agreement

B. Buyer agreement The "market area" is the area in Texas in which the broker has agreed to represent the buyer.

Effective January 1, 1996, TRELA removed statutory dual agency from the act and added: A. Seller agency B. Buyer agency C. Intermediary D. Subagency

C. Intermediary Intermediary did not become mandatory until 2005

The qualifying real estate course, Law of Agency, was established by an amendment to the TRELA in: A. 1948 B. 1993 C. 1987 D. 1968

B. 1993 Prior to 1993, there was NO Law of Agency core real estate course. The course became mandatory for new salesperson applicants beginning September 1, 1994.

All licensees are required to renew their licenses every _____ years. A. 3 B. 2 C. 4 D. 5

B. 2 Continuing education is 18 hours of education. 8 hours of that must be in Legal Update 1 and 2.

The broker compensation is in Paragraph _____ of the Residential Real Estate Listing Agreement Exclusive Right to Sell. A. 1 B. 5 C. 10 D. 2

B. 5 Paragraph 1 is Parties, Paragraph 2 is Property, and Paragraph 10 is Confidential Information.

The fact that there is going to be a zoning change, or a street being widened would be an example of: A. A stigmatized property B. A material fact C. A latent fact D. Accounting

B. A material fact A material fact is something the buyer would need to know before they make a decision to buy the property

A FSBO is more likely to be shown if the agent has a written buyer's representation agreement with the buyer. A FSBO is: A. A property that the listing broker has not put into MLS B. A property that is for sale by the owner C. A property that has a contract pending D. A property listed by another broker

B. A property that is for sale by the owner A FSBO property is not listed with a broker and the seller has not agreed to pay a commission to a buyer's agent.

Jones v. Alfred H. Mayer Company occurred in: A. 1948 B. 1958 C. 1968 D. 1978

C. 1968 C. Jones v. Alfred H. Mayer Company is a 1968 lawsuit concerning fair housing laws.

There is no difference in residential and commercial transactions regarding: A. Sales contracts B. The set rate of commissions C. Agency disclosure requirements D. The number of transactions

C. Agency disclosure requirements All agency laws apply to all types of transactions

A listing broker is not required to: A. Maintain a fixed office address B. Use Information About Brokerage Services C. Allow subagency D. Have a license issued by TREC

C. Allow subagency A listing broker may allow or not allow subagency. He will make a decision for his company to pay either buyers' brokers, subagents, or both.

The Fair Housing Act is a federal act in the U.S. intended to protect the buyer and renter from discrimination by the _________. A. Seller B. Landlord C. Both A and B D. Neither A or B

C. Both A and B The Fair Housing Act protects the buyer and renter from discrimination on the seller's (or landlord's) part.

What advice would an agent give to a seller? A. Advice about market conditions and financing options B. Advice about preparing the property for sale and negotiating contracts C. Both A and B D. None of the above

C. Both A and B The agent is representing the seller as a client and owes advice and opinions to the seller.

. In the Buyer's Representation Agreement, the buyer agrees to pay a commission to the buyer's broker if the broker cannot collect the commission from the: A. Seller B. Landlord C. Both A and B D. None of the above

C. Both A and B The broker will first try to collect a commission from the seller or landlord. If the broker cannot collect from them, the broker will look to the buyer or tenant for the commission.

The seller should be aware of which situation? A. The seller may pay the buyer's broker. B. The buyer's broker represents the buyer. C. Both A and B D. None of the above

C. Both A and B The buyer's broker is often paid by the seller but represents the buyer

Examples of employment agreements are: A. Listing agreements B. Buyer's representation agreements C. Both A and B D. Neither A or B

C. Both A and B The property management agreement is also an employment agreement. The agreements are between the broker and their clients.

4. When the broker represents the buyer as a client, it is: A. Seller's Agency B. Subagency C. Buyer's Agency D. The broker is not allowed to represent a buyer

C. Buyer's Agency The broker owes a fiduciary duty to the buyer not the seller.

The TAR Residential Buyer/Tenant Representation Agreement states that the broker will seek payment of commission first from the seller, landlord, or their agents. If such persons refuse or fail to pay, the broker will be paid by the: A. Buyer customer B. Tenant customer C. Client D. None of the above

C. Client The broker will be paid by the client if the broker cannot collect a commission from the seller, landlord, or their agents

After the agency relationship has been established, the broker is the agent of the __________, and the sponsored salesperson is the agent of the __________. A. Buyer ----- tenant B. Broker ----- client C. Client ----- broker D. None of the above

C. Client ----- broker The agency relationship with the client is always created at the broker level.

A person not represented by a broker, but to whom the broker owes honesty is a: A. Client B. Agent C. Customer D. Buyer client

C. Customer An agent owes a fiduciary duty to a client and honesty to a customer. The agent must treat everyone fairly.

When a broker is working with a buyer customer, the broker can: A. Give advice B. Tell the buyer the amount to offer for the property C. Deliver the offer to the seller's broker D. Give opinions

C. Deliver the offer to the seller's broker A broker working with a buyer customer is not allowed to give the buyer customer advice or opinions about the property

Intermediary is not limited to residential transactions. Other transactions that it could be applied to are: A. All listing agreements B. All buyer representation agreements C. Farm and ranch and commercial and industrial leasing transactions when the same broker represents both parties D. All loans

C. Farm and ranch and commercial and industrial leasing transactions when the same Intermediary is used any time a broker represents both parties in a transaction