Laws of Agency
The main obligation the principal owes a broker is:
Compensation
In the formation of contracts, "valuable," "good," " sufficient," and "adequate" are terms most closely associated with which of the following?
Consideration
A real estate licensee has a buyer agency agreement. What is the relationship of the seller to the licensee in this situation?
Customer
Vivian had listed her property under an exclusive agency agreement with David but, when the agreement expired, she changed to a new agency. Now, David has a buyer who is interested in the property. Which of the following statements is correct?
David cannot disclose any offers received on the property while he was the listing agent
A broker is negligent while preparing a sales contract and allows the purchaser to void the agreement. The broker has breached the duty she owes her client of:
Due care.
In order to be entitled to a commission, a broker must show that he/she was the procuring cause of the sale under all of the following types of listings, except
Exclusive authorization and right to sell
Procuring cause would not be required for a broker to receive a commission in a(n)
Exclusive right to sell listing.
The relationship of a property manager with the owner is a:
General agency.
Which of the following describes a representative with full authority to bind the principal to all agreements in which the representative has been authorized to act?
General agent
Under what circumstances might a broker collect a commission from both buyer and seller?
If both parties give informed consent
Which of the following statements about the law of agency is CORRECT?
It establishes a fiduciary relationship.
Broker Jack listed Jill's home under an exclusive right-to-sell listing and later received an offer from another licensee, Amanda, that met all of the listing terms and conditions. After considering the offer, Jill informed Jack that she no longer wished to sell, and asked to be released from the listing agreement immediately. Which of the following is a TRUE statement about Jack's position in this situation?
Jack may succeed in collecting an earned commission from Jill
Johnson, a real estate broker, listed a property. Suzie, a salesperson working for broker Sims, received an offer. Donna, a salesperson working for broker Johnson, got the offer accepted. Who will the commission be paid to?
Johnson
Which of the following lists the essential elements of an enforceable contract?
Lawful object, competency, mutual consent, consideration
Which of the following would not be a required payment for the lessee under a net lease?
Lease commission
A listing agent received two offers in the morning and immediately presented the offers to the seller. In the evening the agent received two more offers, both with a lower price. What should the agent do
Let the seller know of the two new offers immediately
An agent becomes the agent of the seller when both the seller and the agent sign a(n):
Listing Agreement
When an agency relationship ends, which of the following duties does not continue?
Loyalty.
Arthur, a licensed principal real estate broker, was sued for conversion. This means Arthur allegedly did which of the following?
Misappropriated his client's funds.
Which of the following is a requirement for a valid agency relationship?
Mutual consent
A broker and seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract?
No acceptance has been given
What is the latest time at which a broker must establish their agency relationship with a buyer or seller and execute all such agreements?
No later than the time at which a purchase and sale agreement is prepared
In a real estate transaction, fiduciary duties are owed to the:
Principal.
Which of the following would not terminate an agency relationship?
Renewal
If a principal no longer desires the broker to act for him during the period of an exclusive right to sell listing, he may:
Revoke the agency created by the listing contract but may be liable for damages
If Carol wishes to sell her own house, does she need a real estate license?
She does not need a license
A broker has been in the business for many years. He currently has 40 exclusive listings in his office. The broker dies and his daughter who is also a broker, takes over for him. What should she do about the current listings?
She should attempt to renegotiate all of the listings, if possible
What happens if an agent has not located a buyer by the end of the listing period?
The agency relationship terminates
A seller has listed her home with a broker for $90,000, and the broker tells a prospective buyer to submit a low offer because the seller is desperate to sell. The buyer offers $85,000 and the seller accepts it. In this situation:
The broker has violated his agency relationship with the seller
Douglas, a broker, has entered into a listing agreement with a seller. Oscar is a different broker who has been working with the buyer and learns of the property through the MLS. Who would Oscar represent?
The buyer as an agent
What law prescribes the rights and duties between a property manager and his clients?
The laws of agency
Ethical practices of a real estate licensee most nearly means:
The licensee's honesty and fairness in dealing with the public, clients and associates and customers
Which is an example of ostensible agency?
The principal allows a licensee to act as the listing broker in front of a prospective buyer
In a real estate transaction, both the seller's agent and the buyer's agent are legally required to put whose interest first?
Their principal
Broker Carr, with ABC Real Estate Company, listed a property with a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr and disclosed that he was working with a buyer. Broker Smith wrote a purchase offer with his buyer for the property. What, if any, is the relationship between the buyer's broker and the listing broker?
There is not a relationship between the brokers- Broker Carr represents the seller and Broker Smith represents the buyer.
When serving as a buyer's agent, according to the Civil Code sections dealing with agency, a licensee owes a fiduciary duty
To the buyer
In which of the following ways could an agency relationship not be created?
Voluntary offer by the agent
Jones makes a written offer to buy Oscar's house for $250,000. Jones confides in Oscar's agent, Douglas, that if necessary he would pay $10,000 more, but he doesn't want Oscar to know. Douglas should:
Warn Jones that he must pass on to Oscar anything useful he knows.
Which of the following represents the minimum time period for an exclusive right to sell listing?
Whatever is agreed upon by the seller and the broker
When is a properly licensed real estate salesperson most likely to get paid their commission?
When escrow closes
Broker Williamsburg obtained an exclusive authorization and right to sell listing from the owner of a residence. During the listing period, Williamsburg found a buyer who made an offer that was accepted by the owner. Neither the offer nor the escrow instructions made any mention of Williamsburg being the agent, or of the payment of a commission. Under these circumstances:
Williamsburg is still legally entitled to a commission.
A seller had a listing with ABC firm. The listing expired after 90 days and the seller never renewed the contract. Six months after the listing expired, a new agent started with ABC firm and came across the unsold listing. He wanted to call the seller but noticed the seller's number on the National Do Not Call Registry. Can the agent contact the seller
Yes, because the firm has had a relationship with the seller in the last 18 months
Jones agrees to represent Brown in the sale of a property. The listing contract states that Jones will receive a fee of $25,000 from Brown at closing, regardless of the sales price. Is this a valid form of compensation
Yes. Compensation can be determined in any number of ways, as long as the seller and broker agree
Antitrust laws prohibit all of the following EXCEPT for:
a broker setting a company-wide commission schedule.
A salesperson takes a listing, but the terminology of the listing doesn't authorize the listing broker to accept a deposit from a potential buyer. The broker should advise the salesperson that:
a deposit can be accepted and retained by the broker from the offeror, but only as an agent of the offeror for that one act.
Typically a listing broker is usually considered to be:
a fiduciary (agent) of the seller
When negotiating a lease on behalf of a commercial real property landlord, the broker would usually calculate his commission as:
a percent of the rent due for the entire lease period.
To the seller, a real estate broker representing the seller usually is
a special agent
A listing broker may legally refuse to present a proper offer on the property to the seller when:
acting on the express instructions from the seller.
An agency relationship can be created by all of the following, EXCEPT:
agent volunteers
When selling a business, the rate of commission is determined by the:
agreement between the broker and owner.
All of the following are essential to the creation of an agency relationship, EXCEPT:
agreement to pay consideration
If two parties want to create an enforceable broker-principal relationship concerning a right, title or interest in real property, the most essential element to do so would be:
an employment contract.
When must an agency disclosure statement be given to prospective purchasers/tenants by a real estate licensee?
at the first substantive meeting of the licensee and prospective purchasers/tenants
In some cases, a broker's commission can be earned if he can prove he set in motion a series of events which resulted in the sale of a property. If a broker produces a ready, willing and able buyer he would most likely:
be considered the procuring cause of the sale
To whom does a listing belong
broker
Within the agency agreement is a statement that binds the buyer to payment of the broker's fee if, within a stated number of days, the buyer purchases a property that was shown to the buyer during the agency period. This clause is called the:
broker protection clause
The principal to whom a real estate agent gives advice and counsel is a:
client.
The broker who most qualifies for a commission is the one who
communicated the acceptance to the buyer.
If a principal terminates the listing agreement during the listing period, the broker may be able to do any of the following except:
encourage the termination of any contract in process.
A verbal agreement between two brokers to split a commission is:
enforceable.
Brown leases a residence from Baker on a three-month written lease. When the written lease expires, Brown retains possession of the property without the consent of Baker. Brown now holds a(n):
estate at sufferance.
An agency relationship may be created by:
estoppel, ratification, agreement
What type of a listing agreement allows the owner to appoint an exclusive agent to sell his property, but retains the right to sell the property himself without paying a commission?
exclusive agency
When a written agreement spells out the responsibilities of the principal and the agent, the relationship created is called a(n):
express agency
The word "laches" most nearly pertains to:
failure to do something within a prescribed time.
Commissions rate price fixing is a violation of the:
federal anti-trust laws.
A real estate agent who is placed in a position of trust, loyalty, and confidence is a(n):
fiduciary
A real estate broker should regard himself/herself as a:
fiduciary
The position of trust assumed by the broker as an agent for the client is described most accurately as a
fiduciary relationship.
If a salesperson acts as an independent contractor, then:
he controls his own working hours
An attorney-in-fact can best be described as a(n):
legally competent person who has been given the power of attorney by another competent person.
A "safety clause" is found in a:
listing agreement.
The prime obligation of an agent to their client is:
loyalty.
An agent who exclusively represents the buyer:
may present offers to the seller or to a seller's agent.
If the owner enters into an exclusive agency listing and thereafter sells the property through his own efforts:
no commission is owed.
An actual agency relationship that arises by the actions of the parties rather than by expressed written agreement is called
ostensible agency.
A lease where the rent is based on a percentage of the monthly or annual gross sales of the lessee is called a:
percentage lease
A power of attorney can be terminated by:
revocation of the principal, incapacitation of the party being represented, death of the attorney-in-fact
A real estate sales commission is usually based on the:
selling price
If the buyer defaulted some time ago on a written contract to purchase a seller's real estate, the seller can still sue for damages, if he is not prohibited from doing so by the
statute of limitations
Once an agency relationship is ended, any confidential information learned by the agent during the relationship is:
still confidential
A listing broker agrees verbally to split a commission with a selling broker. The listing broker now refuses to do so. The selling broker should:
sue the listing broker
The fiduciary duty of full disclosure requires the seller's agent to:
tell the seller anything that might be of use in negotiations
In a new counter-offer:
the counter-offeror becomes the counter-offeree.
Typically when leasing real property, the commission of the leasing agent is based on a percentage of:
total rents collected during the term of the lease.
Owner Joe tells his listing broker, Stephen, that he wants to sell his house as soon as possible and would accept $350,000. Stephen tells buyer Selwyn that Joe has financial troubles and will accept a much lower price, possibly as low as $300,000. Joe, ultimately, accepts an offer from Selwyn for $300,000. Broker Stephen is guilty of:
unethical behavior and a violation of the fiduciary responsibility.
A licensed real estate broker is successful in securing a buyer for a property who is ready, willing and able to buy. The offer is accepted and signed by both parties and escrow is opened. During the escrow period, the title company discovers that the seller is married but under 18 years of age and notifies the broker and the escrow holder. Under these circumstances, the contract is:
valid
As the agent for the seller, a real estate broker negotiated a sale. By agreement, the brokerage can be paid his commission in the form of:
valuable personal property, assignment of a note, buyer's personal check
A contract signed under duress is:
voidable
An agency could be terminated by all EXCEPT
when the owner cancels the listing in order to contact the potential buyer and sell to him or her directly.
A net leasing agreement would require the lessee to pay his share of all of the following EXCEPT:
(a leasing) commission
To have a valid contract, which of these is not necessary?
A deed
The words "procuring cause" would have an important meaning to which of the following
A dispute over commission on an exclusive agency listing
Which of the following listings is illegal in most states and open to fraudulent dealings?
A net listing
Agency is the act of representing someone in the purchase, sale, or lease of a property. Subagency is the act of representing
A principal who is represented by an agent
The obligation of protecting any deposits entrusted to an agent is an example of the fiduciary duty of:
Accounting
Which of the following would not terminate an agency relationship?
An agent submitting two offers at the same time
Which of the following statements BEST shows the difference between an exclusive right-to-sell and either an open or an exclusive agency?
An exclusive right-to-sell agreement guarantees a contracted broker commission even if the seller procures a buyer, while the others do not.
What is a "client" during a real estate transaction?
Any person who signs an agreement for the sale or purchase of a property with a licensee.