Laws of Agency prep agent
The real estate commissioner would prohibit which of the following mortgage broker advertisements:
"Call 1-800-FOR- A-LOAN"It is illegal for any advertisement to suggest that a loan can be acquired over the telephone. For example, if a Mortgage Company ran an advertisement that read "Just call us at 1-800-FOR-A-LOAN", the advertisement would be illegal.
Compliance with agency relationship law enacted as a part of the civil code would be required in which of the following transactions:
A broker who negotiates a lease for a period of longer than one year on one half of a duplexIf a Broker negotiated a lease on a duplex, he would have to abide by any applicable Agency Relationship Law.
A real estate licensee has a buyer agency agreement. What is the seller in this situation?
A customer.There's an important distinction between client and customer. Unless there is a specific agreement to the contrary, licensees represent only one side in a transaction. In this case the buyer is the client and the seller is a customer. An agent has fiduciary responsibilities to their client, but not to a customer, so their obligations to each are different.
Which of the following is the best example of the practice known as "puffing":
A licensee exaggerates certain features or benefits of a property;Puffing is when a Licensee may exaggerate the benefits or features of a property. The sometimes exaggerated buildup a salesperson or the seller may give to property. It is recognized in law as an opinion and not necessarily representing the facts
Which of the following activities requires a real estate license in California?
A real estate secretary who hosts open house weekends.As a general rule, what creates the need for a real estate licenses is engaging in any part of the real estate transaction processes for third parties for compensation.
Which of the following would be deemed a RESPA violation?
A title insurance company paying $40 for referring clients.RESPA makes it illegal for a title insurance company to pay a broker $40, or any compensation (often referred to as "kickbacks"), for referring clients to that title company.
For which of the following actions is a broker NOT liable to have his or her license suspended or revoked?
Accepting earnest money from a buyer and depositing it directly into a trust account.Placing earnest money directly into a trust account is not only legal, it is required. This is a special bank account where money is deposited when it is being held for other people involved in a real estate transaction.
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;A Licensee is obligated to present all written offers to a Seller immediately and at the same time. Unless it is a frivolous offer, or if he has been instructed by the Seller that he is not to present certain offers.
The fiduciary obligation to protect a client's confidential information continues:
After the term of the listing agreementMuch like a Doctor or a Lawyer a licensee has a duty to protect a Client's Confidential Information that continues even after a Listing has expired.
A valid contract employs someone to do specific legal tasks which involve representing the interests of the client to a third party. What kind of relationship is created by the contract?
AgencyAgency is a fiduciary relationship between two parties in which one (the agent) is obligated to the other (the principal) . The agent is authorized by the principal to perform certain acts for, and on behalf of, the principal.
Which of the following is not essential to the creation of an agency relationship?
Agreement to pay consideration.An agreement to pay consideration is not essential to create an agency relationship
What is the relationship between a licensed broker and their client?
An agency relationship.The client and broker create an agency relationship. This is a business relationship where a principal (client) gives legal authority to an agent (broker) to act on the principal's behalf when dealing with a third party. An agency relationship is a fiduciary relationship.
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 contractMost Essential Element of an Enforceable Broker-Principal Relationship is the employment contract (the listing contract)
A real estate licensee generally acts:
As a fiduciaryA licensee acts as a fiduciary, a fiduciary is a person in a position of great trust and confidence, as the relationship between principal and broker.
A listing agreement is essentially a/an:
Bilateral Employment ContractA Listing is a Bilateral Employment Contract between Principal and broker whereby the broker is employed by the Principal to find a buyer and accept a deposit.
When a real estate broker misrepresents a property to a buyer while acting as an agent, he may be subject to:
Discipline by the Real Estate Commissioner, Civil law suits and Criminal actionMisrepresentation by a Licensee will subject that Licensee not only to disciplinary action, but potential civil and criminal suits as well.
Agency disclosure is a 3-step process:
Disclose, elect, and confirmAgency disclosure is a 3-step process- Disclose, Elect, and Confirm:Disclose - Provide a copy of the disclosure form to the seller/buyer, explain the possible agency relationships and duties owed.Elect - Choose one of the permitted agency relationships.Confirm - Obtain the seller's and/or buyer's confirmation that they accept the chosen agency relationship.
The representation of opposing principals (buyers and seller) at the same time would be a:
Dual agencyA dual agency is representing both parties in a transaction. In virtually all states it is unethical and illegal for a broker to represent buyer and seller in a real estate transaction WITHOUT written consent of both.
Which phrase best describes a broker's duty to keep a principal fully informed?
Fiduciary obligation.Fiduciary obligation or responsibility means operating from a position of trust and sharing information fully and completely is one of its hallmarks
The usual listing contract authorizes a broker to:
Find a purchaser and accept a deposit with an offer to purchaseThe usual listing contract authorizes a broker to find a purchaser and accept a deposit with an offer to purchase
There is a spectacular house that a salesperson from Firm A has been trying for several weeks to list for sale. The owners have been interviewing salespeople from different firms. They tell Firm A's salesperson that Firm B will charge 2% less commission for selling the house. What should Firm A's salesperson say to the owner to get the listing?
Firm A provides excellent services to market their sellers' properties.Not only is criticizing another firm's compensation policy a bad business practice, it's also potentially illegal under the Sherman Anti-Trust Act.
How is the commissioner selected?
He or she is appointed by the governor.The governor appoints the commissioner, who in turn appoints the ten member Real Estate Advisory Board.
Henry is a licensed broker and Andrew is a client who's selling his home. Henry finds a "ready, willing and able" buyer who makes an offer that Andrew accepts in writing. However, Andrew later has a change of heart, decides to withdraw his home from the market and cancels the sale. Which of the following statements is TRUE regarding Andrew's action?
Henry is entitled to his full commission based on the accepted offerAlthough it is generally true that commissions aren't earned until a transaction closes, technically a broker has fulfilled their primary obligation by finding a ready, willing and able buyer. In this case, Henry has a strong legal argument for having earned his commission.
Betty is a broker with a client who wants to sell his home. In addition, she has a buyer's agency agreement with Peter who wants to purchase that home. Under what circumstances may Betty represent both parties in this transaction?
If both buyer and seller give Betty written permission.Dual agency is perfectly legal in California, and all that is required is that both buyer and seller give their informed, mutual consent. Commission agreements must also be in writing, but are an issue separate and apart from representation.
Claire is a broker with a client who wants to sell his home. In addition, she has a buyer's agency agreement with Peter Benchman who wants to purchase that home. Under what, if any, circumstances, may Claire represent both parties in this transaction?
If both buyer and seller give Claire written permission.Dual agency is perfectly legal in California and all that is required is that both buyer and seller give their informed, mutual consent. Commission agreements must also be in writing, but are an issue separate and apart from representation.
Which one of the following actions, taken in relation to advertising the sale of real property, is considered prima facie evidence by the Real Estate Commissioner in California as being misleading or deceptive advertising?
Implying a specific yield on a note which is different from the interest specified in said note.Misleading Advertising is any advertisement that is deceptive or gives a false impression to consumers. Per California RE 884:10235, "Indicating or otherwise implying any specific yield or return on any note other than the interest rate specified in said note shall be prima facie evidence that such advertisement is misleading or deceptive unless the advertisement sets forth the actual interest rate specified in the note and the discount from the outstanding principal balance at which it is being offered for sale.
Jackson leased his home to Sullivan with a verbal agreement to sell the property to Sullivan. Jackson knows that Sullivan has been making significant improvements to the property in reliance on that verbal agreement. Jackson now declines to sell the property to Sullivan. Which of the following best describes the rights of the parties?
Jackson must sell because the doctrine of estoppel will apply in this caseThe doctrine of estoppel states that a position cannot be taken that contradicts a prior position. In this situation, because Jackson made a verbal agreement to sell the property, Sullivan would likely win a court suit against Jackson based on the doctrine of estoppel. The statute of frauds is only applicable to the actual purchase agreement (not a verbal agreement to sell at some time in the future) and an ostensible agreement is implied through actions, whereas this situation has a prior verbal agreement.
Which of the following would not be legally proper for a licensee to do?
Keep the client's secret that the roof leaksWhen dealing with the public, a broker may not remain silent considering material facts about a property known only to himself
Jane, a real estate salesperson, advertised in the newspaper that anyone who purchased a home through her would receive a free color television. Such action is:
Legal, provided full disclosure is made to all interested parties.It is ok for an agent to advertise that he will give away gifts to buyers as long as he discloses this to all interested parties. An example of a gift would be a Microwave.
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.Misappropriation is the intentional, illegal use of the property or funds of another person for one's own use or other unauthorized purpose. Conversion is the misappropriation of funds, while commingling is the mixing of a broker's personal funds with funds held in escrow.
Two days after entering into a contract for the sale of a home, both the buyer and seller agreed to rescind the contract. The broker representing both the buyer and the seller:
Must return the entire deposit to the buyer.The earnest money deposit belongs to the seller only as long as there is a valid agreement. If there is mutual agreement to rescind (cancel) the contract, the entire deposit must be returned to the buyer.
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.It has not been presented to or accepted by the owner. Remember, contracts aren't valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it's accepted and the transaction closes, the broker will generally be entitled to his or her full commission.
If the owner enters into an Exclusive agency listing and thereafter sells the property through his own efforts:
No commission is payableExclusive Agency Listing is a contract where the Seller agrees to pay the Listing Agent a commission if the property in question sells through the agent. However if the owner sells it themselves the agent gets no commission.
When must a broker's agency relationship with a buyer or seller be determined and all agreements executed?
No later than the time a purchase and sale agreement is prepared.Usually a broker's agency relationship with a buyer or seller is established early on in the process, but it must be determined and all agreements executed no later than the time a purchase and sale agreement is prepared.
While Zach was completing the course work for his real estate license, his neighbor asked him for help selling his house and offered a 5% commission. Zach agreed, found a buyer and the transaction was completed two days after he received his license. However, the neighbor now refuses to pay the agreed-upon commission. Can Zach sue for damages?
No, Zach had to have been licensed at the time of the agreement to win any compensationA person must hold a valid license before he or she undertakes any real estate activity on behalf of a third party for compensation.
Which of the following must be done before placing a "For Sale" sign on a listed property?
Obtain the property owner's consent.A broker may install a "For Sale" sign on the property after obtaining permission from the owner of the property.
What is the definition of "dual agency" in California?
One firm represents both the buyer and the seller equally.Dual agency is legal in California, but requires a written agreement signed by all parties that includes compensation details. Further, licensees must represent the interests both parties in the transaction equally.
When a man's offer was accepted on a property, he was not told about the septic tank installation. As the buyer, his rights would be to:
Rescind the contract;If a buyer is not told that the property has a septic tank, the buyer could rescind the contract
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 damagesA Seller can terminate a Broker before the expiration of the Listing, but he may be liable for damages to the Broker in this instance.
Amanda is a broker who has just been made an officer of her large, multi-office real estate firm. Her increase in pay came with an increase in responsibility and one of her salespeople has recently been the subject of a civil rights investigation. What, if any, potential liability does Amanda face in this matter?
She is subject to DRE discipline.While promotions and increased responsibilities are something most people welcome, brokers must also be mindful of the fact that they are directly responsible for the actions of those working in their offices. Failure to properly supervise exposes a broker not only to disciplinary action, but the possibility of a civil lawsuit.
Legally, what is the nature of agency relationships between brokers and principals?
Specific agency."Specific agency" means that a licensee may act on a principal's behalf only in limited ways for a limited time. For example, an agent can show a potential buyer a client's property, but he cannot make the decision to accept an offer.
Dan is house shopping and contacts a real estate office. He tells the agent, Stephen, that he is interested in the area but is not ready to sign any agreements just yet. Stephen can be helpful and accommodating with many actions, except which one of the following?
Stephen can prequalify Dan for a mortgageStephen cannot obtain confidential information about Dan without first entering into a buyer agency relationship. Thus, Stephen may NOT prequalify Dan for a mortgage.NOTE - This questions says "except which one of the following" which means it's looking for a false answer, and it's false that Stephen can prequalify Dan for a mortgage.
Which of the following would not terminate an agency relationship?
Submission by the agent of two offers at the same timeSubmitting offers doesn't end the relationship. Fulfillment of the agency purpose by the owner's acceptance of one, and ultimately closing on the transaction, would terminate an agency relationship. Revocation by the principal or abandonment by the agent would also terminate an agency relationship, but could result in breach of contract if there's a listing agreement.
Sam, who does not have a real estate license, is the owner and president of an investment firm. He advertises and sells properties for his clients. Since these transactions involve real estate, who will prosecute him for violating the real estate law:
The District Attorney;If Illegal acts occur violating real estate law the District Attorney will prosecute, not the Department of Real Estate itself
Vivian is a seller who has a change of heart after accepting an offer. Which of the following applies to Vivian's broker?
The broker is entitled to collect a commission.Vivian had accepted the offer, thus the broker had earned a commission. However, the broker may not take his commission from the deposit, which must be returned to the buyer.
On June 5, a prospective buyer gave the broker his personal check for $3,000, payable to the seller, along with his offer to buy a property. He asked the broker not to cash it until June 30. Which of the following is correct?
The broker may hold the check, but must tell the seller that a check is being held uncashed before the seller accepts the offerA broker may hold on to a post-dated check or take possession of a promissory note as a deposit on an offer. If this happens, the broker must advise the seller about the deposit when the offer is presented.
What law prescribes the rights and duties between an agent and his clients?
The law of agency.The law of agency is an area of commercial law dealing with a set of contractual, quasi-contractual and non-contractual fiduciary relationships that involve a person, called the agent, that is authorized to act on behalf of another (called the principal) to create legal relations with a third party.
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.Ethical practices is the utilization of honesty, integrity, fairness, and responsibility when working with not only clients, but with associates, customers, and the public in general
Which is an example of ostensible agency?
The principal allows a licensee to act as the listing broker in front of a prospective buyerOstensible agency is similar to implied agency in that the relationship is created by the actions of the parties, rather than by written contract. Ostensible agency occurs when a third party would "reasonably" believe an agency agreement exists between a principal and an agent, even if no such agreement was ever made. Even in those states that recognize ostensible and implied agency relationships as binding, a written agency agreement should be obtained as soon as possible to clarify the understandings of all parties and protect interests.
Broker Carr, with ABC Real Estate Company, listed the property with a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the purchase of the property. What, if any, is the relationship between the buyer's broker, the seller and the listing broker?
There is not a relationship between the parties, broker Carr represents the seller and broker Smith represents the buyerSince each broker represents separate sides in the transaction, no relationship exists.
Broker Frankel with Armon Real Estate Company listed a property for a seller. Broker Yuter, with XYZ Real Estate Company, called Broker Frankel and disclosed that he was a buyer's agent. Broker Yuter wrote a contract with his buyer for the sale of the property. What, if any, is the relationship between the buyer's broker, the seller and the listing broker?
There is not a relationship between the partiesBroker Frankel represents the seller and broker Yuter represents the buyer. Since each broker represents separate sides in the transaction, no relationship exists.
Which of these is a duty of licensees set forth by both the Department of Real Estate and the rules of fiduciary responsibility?
To disclose material information that might affect the price and/or sale of the property, even if the buyer does not ask for it.Confidential information must be respected, but not all information is confidential. Moreover, confidential information sometimes may be disclosed on a "need to know" basis with permission. However, material information such as a faulty foundation or leaky roof must be disclosed even if potential buyers never raise the issue.
Which of these is a duty of licensees under both commission rules and fiduciary responsibility?
To disclose material information that might affect the price and/or sale of the property, even if the buyer does not ask for it.Confidential information must be respected, but not all information qualifies as confidential. Moreover, in certain circumstances, confidential information may be disclosed, with permission, on a "need to know" basis. However, material information such as a faulty foundation or plans calling for a new shopping center to be constructed immediately behind the property must be disclosed even if potential buyers never raise the issue.
The main purpose of "RESPA" (Real Estate Settlement Procedures Act) is to:
To provide consumers with enough information to enable them to shop for settlement services.RESPA applies to 1-4 family residential dwellings and is primarily there to provide consumers with enough information to enable them to shop for settlement services.
Vivian has a buyer's agency agreement with Anne. Vivian is also the listing broker for a property Anne is interested in purchasing. Which of these is the TRUE statement?
Vivian must inform both parties of the respective relationships and obtain their written agreement that she may represent both as a dual agent.Dual agency is a real estate term that means one agent or brokerage represents both the seller and the buyer in the same real estate transaction. A dual agent must walk a narrow path to be neutral toward both parties, and they may not disclose confidential information to either party.As long as licensees fully disclose all relationships they may have in a transaction and obtain appropriate permissions, they may represent either or both parties. In addition, the amount of commission and who pays what portion (100% by either party or some sort of share arrangement), are open to negotiation.
In which of the following ways could an agency relationship not be created?
Voluntary offer by the agent.The mere voluntary offer of an agent is not enough to create an agency relationship.
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 brokerOften listings are for 6 months, sometimes you see 90 day listings. However that is just industry standard, it is not the law, a listing can be whatever is agreed upon between the seller and the broker.
When is a broker relieved of the obligation to present an offer to purchase real property to the principal:
When the offer is patently frivolous or the broker is acting on written instructions of the principal;A licensee must present all written offers immediately, at the same time. He is not obligated to present frivolous offers. He is not obligated to present offers if he is so instructed.
Both a buyer and a seller have agreements with the same real estate agency. Can the buyer make an offer on the seller's property?
Yes, if both the buyer and the seller give their consent to dual agency.Both parties must agree to dual agency. Then the brokerage can represent both seller and buyer.
Stephen, a buyer, wanted to use a promissory note for consideration on the purchase of a property. Can Stephen do this?
Yes. This is acceptable as long as the seller agrees.This is a form of owner financing and is perfectly acceptable, so long as both parties agree to the terms and conditions.
In order to be valid all exclusive listings must include:
a definite date of expiration.Listing agreements must have specific "from-to" dates attached. Moreover, they may not be automatically renewed, but must be renegotiated. (Usually that\'s just a routine extension, but a new agreement, nonetheless.)
Typically a listing broker is considered to be:
a fiduciary (agent) of the seller.A "fiduciary" relationship involves more than just acting on the behalf of a client. It is a set of responsibilities that can be summed up as safeguarding the client's best interests as if they were one's own.
A personal, revocable, non-assignable right to use the property of another is called:
a license.A personal, revocable, non-assignable right to use the property of another is called a license.
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.The broker's commission for the transaction is normally calculated as a percent of the total amount of lease payments. This is negotiable, however and not a hard and fast rule of law.
To the seller, a real estate broker representing the seller usually is
a special agent.In real estate, a special agent is an agent hired to perform a specific duty for a client (also known as a principal). The real estate agent's authority is limited to the specific job for which they are hired.
A prospective buyer could be entitled to damages from a real estate broker if the broker:
acts in excess of the authority given to the broker by the seller.If a Broker acts in excess of the authority given to him/her by the seller, the broker could be liable for damages to the seller as well as to any third party that was affected by those actions.
When agent Andy took a listing, he promised the seller that he would advertise the property in a magazine until it was sold. Andy told the seller he submitted the ad, but the magazine said Andy never contacted them or submitted an advertisement. Andy is most likely guilty of:
actual fraud.A licensee would be guilty of actual fraud if he made a promise to advertise in a magazine and then did not. Actual fraud is an act intended to deceive another, eg, making a false statement, making a promise without intending to perform it.
An agent acquired a listing for a house and orally promised to hold an open house every week until the house was sold, but knew it was unrealistic to hold one every week. The agent held two open houses during the 90 day listing. This is an example of:
actual fraud.Constructive fraud is a breach of duty as by a person in a fiduciary capacity, without an actual fraudulent intent. Actual fraud is an act intended to deceive another; e.g., making a false statement or false promise without intending to perform it.
The buyer's earnest money deposit may be:
all options are correct. a promissory note. anything the seller considers valuable. a check.
The purchase contract between a buyer and seller resulted in a disagreement between them about the refund of the deposit, which the broker had placed into his trust account. Since the broker was unable to resolve this disagreement, he deposited the money with a court, and relinquished any claim to the deposit, thereby forcing the parties to settle the matter without involving the broker. This act is called:
an interpleader action.When a broker gives the deposit to a court because of the conflict between a buyer and a seller, that is called an interpleader.
A licensed real estate broker may legally negotiate the sale of:
any registered mobile home.For a real estate licensee to list and sell a mobile home, it must be registered
Copies of termite reports filed with the Structural Pest Control Board within the preceding two years can be obtained upon request by:
anyone.Copies of termite reports are filed with the Structural Pest Control Board and may be acquired by anyone. Corrective work ordered to repair any damages or infestation are generally the seller's responsibility.
When a licensee signs a contract and becomes the buyer's agent, the licensee will want to inform other parties with a vested interest in the transaction:
as soon as possible.A Licensee must disclose his Agency relationship to all parties as soon as is possible, regardless of whether he is the buyer's agent, the seller's agent, or an agent to both. The order must be disclose, elect and confirm.
When a listing does not authorize the broker to accept a deposit but the broker finds a purchaser and accepts a deposit anyway, the deposit is held by the broker:
as the agent of the purchaser.In holding the deposit, the broker acts as an agent of the purchaser because, until the transaction closes, it is not the sellers money.
When must an agency disclosure statement be given to prospective purchasers/tenants by a real estate licensee?
at the first face-to-face meeting of the licensee and prospective purchasers/tenantsThe agency disclosure statement must be given by the real estate licensee to prospective buyers at the first face-to-face meeting before they are shown any property.
In some cases, a broker's commission can be earned by proving that 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.Producing a "ready, willing and able buyer" is the primary definition of a licensee's role and the basis on which he or she earns a commission. When a licensee can prove that they are the reason for the buyer making an offer on a home, they have "procuring cause".
The amount of a broker's commission usually is:
established by agreement between the broker and the seller or the buyer.Commissions are always negotiated on a case-by-case basis.
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 agencyOpen listings mean that if the owner or any other broker or salesperson produces the buyer, the broker will lose his or her commission. Exclusive Right to Sell gives the broker his or her commission regardless of who actually sells the property, even if it is the owner. Exclusive Agency allows the seller to appoint an exclusive agent, but retain the right to sell the property himself.
Procuring cause would not be required for a broker to receive a commission in a(n):
exclusive right to sell listing.An Exclusive Right to Sell listing is an agreement in which a real estate agent has the sole right to sell a specified property, usually within three months. During this period the seller cannot list the property with any other agent and (unlike in an Exclusive Agency Listing) must pay the agent's commission even if he or she (and not the agent) finds a buyer.
The position of trust assumed by the broker as an agent for the client is described most accurately as a
fiduciary relationship.A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person.
Two brokers decide to list a property together and agree to split the commission 50⁄50. One broker finds the buyer and then refuses to share the commission. In an occurrence like this, an action could be filed:
in a civil court.If a broker agreed to share a commission with another broker and then refused to pay the other broker, the unpaid broker could file an action in a civil court.
Ivonne represents the Sparks who are selling their property. Which of the following actions must Ivonne take when prospective buyers ask to see the property?
inform them in writing that she represents the seller's interestsIvonne must disclose in writing that she represents the seller. The disclosure is necessary so that the buyer understands he or she is not being represented by the seller's agent.
The prime obligation of an agent to the client is:
loyalty.Of all the fiduciary responsibilities an agent has for their principal, the most important is loyalty- putting the client's needs first. A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person.
In addition to the duties of diligence, care, and skill, a real estate agent owes the principal a full disclosure of all facts material to the subject of the agency. Any intentional misstatement by the agent concerning such facts would probably be regarded as:
misrepresentation.Misrepresentation by a licensee will subject that licensee not only to disciplinary action, but potential civil and criminal suits as well. Misrepresentation can be fraudulent, negligent, or innocent. In this case, the only answer that is correct is "misrepresentation", as constructive fraud isn't necessarily intentional and commingling/conversion do not apply.
Wendy hired agent Oscar to find a buyer for her house. After fully understanding the implications and ramifications of the contract, Wendy and Oscar signed an exclusive agency listing contract. Wendy had been talking to her sister about buying the house long before she met agent Oscar and, after Wendy had signed the listing agreement, Wendy's sister bought the house. Oscar is legally entitled to:
no commission.An Exclusive Agency listing is a contract where the seller agrees to pay the listing agent a commission if the property in question sells through the agent. However, if the owner sells it themselves the agent receives no commission.
On Monday, a woman offers to sell her vacant lot to a man for $35,000. On Tuesday, the man counteroffers to buy the lot for $25,500. On Friday, the man withdraws his counteroffer and accepts the woman's original price of $35,000. Under these circumstances:
no valid agreement exists because a counteroffer voids any prior offer.A real estate counteroffer is generated by a home seller after a buyer has submitted an offer to purchase and the offer includes terms that aren't agreeable. Note that when entering into the counter offer stage, the original contract is deemed null and void and the counter offer becomes the new proposed contract.
An actual agency relationship that arises by the actions of the parties rather than by expressed written agreement is called:
ostensible/implied agency.This is an "acts like a duck, walks like a duck, is a duck" interpretation of the law. While ostensible agency is recognized in some states, it is not in others, so written agreements should always be sought.
Broker Bob entered into an oral listing with a seller without subsequent written verification. As to the payment of a commission to Broker Bob, it would be:
permissible, if the seller elects to do so.The seller isn't required to pay Broker Bob a commission because the listing contract wasn't in writing as required by the Statute of Frauds, which makes the agreement legally unenforceable. But the seller can choose to pay the commission, if desired.
Several brokerage firms were accused of violating antitrust laws. Of the following, they were MOST likely accused of:
price-fixing.Antitrust Violations are violations of laws designed to protect trade and commerce from abusive practices such as price-fixing, restraints, price discrimination, and monopolization. The principal federal antitrust laws are the Sherman Anti-Trust Act.
A real estate broker was responsible for a chain of events that resulted in the sale of one of his client's properties. The broker is legally called the
procuring cause.Commission disputes boil down to what is referred to in the industry as "procuring cause." The agent who ultimately caused the buyer to purchase the home and earned the commission is generally the procuring cause agent.
In a typical Exclusive Right To Sell Listing Agreement, there is a clause stating that if the listing period expires and a buyer that was shown the property during the term of the listing becomes the purchaser, the broker is entitled to compensation. If the property is listed by another broker this clause is unenforceable. This clause is known as the:
protection period clause.This practice recognizes that a broker's first function is to "bring buyers and sellers together" and allows for the possibility of a bona fide commission to the broker for bringing in a qualified buyer during the listing period who later becomes the purchaser, after the listing has expired.
If Carol wishes to sell her own house does she need a real estate license?
she does not need a licenseAn owner selling her own property is exempt from real estate licensing requirements
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.Statutes of limitations exist to keep the legal system from getting bogged down in old disputes and allow for evidence and recollections to remain reasonably fresh. Civil limitations typically range from one to six years, though in some cases up to twenty-five years.
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.Licensees have a fiduciary responsibility to act in the best interests of their clients. By disclosing the owner's sense of urgency and suggesting a lower price, the broker was acting as an "advocate" for the opposite side in this transaction. And legally, there may be an implied conflict of interest because such an action creates the perception that the broker may have been looking out for his or her best interests (a quick commission) rather than the client's, which increases the level of malpractice.
Douglas is a broker who has entered into a listing agreement with a seller. Oscar is a broker who has been working with the buyer and learns of the property through the MLS. Who does Oscar represent?
the buyer, as an agentOscar, the second cooperating broker in this case, would represent the buyer as a buyer's agent.
Which of the following does not have to be included in a written listing agreement?
the complete legal description of the property being soldThe legal description is not required, and an adequate description such as the property address is satisfactory.
A licensee arrives to present a purchase offer to an older man who is seriously ill, and finds the man's son and daughter-in-law also present. The son and daughter-in-law urge the man to accept the offer, even though it is much less than the asking price for the property. If the man accepts the offer, the man may later claim that:
the licensee's failure to protect the man from the son and daughter-in-law's influence constituted a violation of the licensee's fiduciary duties.A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. A fiduciary is generally responsible to their principal for loyalty and care, but the plain language description is "an obligation of one party to act in the best interest of another.
To whom must the agency disclosure be given when a broker represents a seller of a property?
the purchaser, at their first face to face meetingThe agency disclosure must be made at the beginning of the first personal meeting with the purchaser so that the buyer is aware of the agency representation options.NOTE - Since they are already representing the seller, the disclosure is presumed to have already been given to them at this point.
An agency relationship 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.Sellers are free to terminate contracts at any time and, more or less, for any good faith reason, such as changing their minds about selling. However, contracts may not be cancelled simply to avoid paying a commission.NOTE - This question states "could be terminated by all EXCEPT" which means it's looking for a false answer, and it's false that an agency relationship can be terminated so the seller can contact a buyer directly and avoid paying commission.
After receiving an earnest money deposit from a buyer, what should the broker do next?
within three business days, deposit the money in an existing special non-interest bearing escrow account, in which all earnest money received from buyers may be held at the same timeThe broker is not required to open separate trust accounts. He may deposit the buyer's funds into an escrow account within three business days after it is received. This account may contain money from other customers and clients.