Quiz Answers for Topic 1: Agency
Lead based paint was banned in _____ because of the danger of lead poisoning from peeling or flaking paint that small children may put in their mouths.
1978 If a house was built before 1978 the agent should provide prospective buyers with the lead based paint pamphlet.
The fiduciary duty that says a broker must be faithful to his principal and work for no other interested party without the principal's knowledge or permission is:
Loyalty The broker must put his client's interest above all others. The duty of loyalty is the most difficult to perform in a dual agency relationship, therefore the broker cannot enter into dual agency without the consent of both parties.
Which of the following MUST be disclosed?
Material facts and defects that are known to exist in the property Dual agency The agent has an ownership interest in the property Material defects, agency relationships, and agency coupled with an interest must all be disclosed.
In what year was lead based paint banned?
1978 Lead Based Paint was used before 1978 and is often found in older houses. It was banned in 1978 because of the danger of lead poisoning from peeling or flaking paint that small children may put in their mouths. Lead from paint or other sources can result in damage to the brain, nervous system, kidneys and blood.
In what year did HUD issue a regulation requiring disclosure of the presence of any known lead based paint hazard to potential buyers or renters?
1996 In 1996 the EPA and the Department of Housing and Urban Development (HUD) issued the final regulation on lead based paint. The regulation requires the disclosure of the presence of any known lead-based paint hazard to potential buyers or renters. There is no requirement in the federal law for testing for the presence of lead-based paint. Paint inspections are possible that identify the lead content of every different painted surface in a building.
The method by which an environmental hazard is reduced is called:
Abatement Abatement means to lessen. It does not mean removal or completely eradicating the problem.
If more than one offer is received by the agent, how should they be presented to the seller?
All at the same time and as soon as possible All offers should be presented as soon as they are received, in no particular order.
____________ is a naturally occurring material that was once widely used in building materials because it is fire-resistant and has some insulating properties.
Asbestos In the past asbestos was used for many things including roof shingles, siding and insulation.
The common law doctrine of _________ means "let the buyer beware" and was the rule in the past.
Caveat emptor
The broker representing the buyer (selling broker) is known as:
Co-operating broker In a co-operative transaction the selling broker is known as the cooperating broker.
Which of the following can NOT be disclosed?
Confidential information about the client unless he gives permission Confidential information can only be disclosed to others if: the client permits the disclosure by word or conduct, the disclosure is required by law or would reveal serious defect, the information becomes public from a source other than the licensee.
The person who is not being represented by a licensee but for whom the licensee is performing ministerial acts is known as the:
Customer The person being represented in a transaction is known as the client or principal. The person not being represented is the customer.
A person authorized by the broker to act as the agent of a specific principal is known as the:
Designated agent Under designated agency, the broker appoints one agent to be the designated agent for the principal or client so that other agents in the form can represent a different client in the same transaction without becoming a dual agent.
In a Buyer Agency agreement, the commission is paid by:
Either Buyer or Seller Buyer agency means that the agent is representing the buyer - it does not necessarily stipulate how the commission or fee is paid.
As a/an ____________, the salesperson may work on a commission basis or a salaried basis.
Employee
It is often safer to use ____________ rather than remove asbestos.
Encapsulation Encapsulation means covering the asbestos so that the fibers cannot escape into the air. This can be done by sprays or other sealant or taping.
Persons who are exempt from licensing requirements such as owners or administrators can still collect a commission.
False
The duties owed to the customer, the person you do not represent, by the agent are:
Honesty and truthfulness The fiduciary duties are owed to the client or principal. The customer is only owed honesty, truthfulness and fairness.
As an ____________ the salesperson enjoys a larger amount of freedom. Normally he works on commission and establishes his own working schedule and manner of doing business.
Independent contractor Independent contractors are not considered employees and therefore can set their own work hours and must pay their own taxes.
A federal law which establishes a statewide registry containing information on sex offenders is:
Megan's Law Megan's Law was passed after a child named Megan was abducted and killed by a sex offender. The statewide database provides information on where known sex offenders live.
_____________occurs when the agent accidentally fails to perform some act, such as delivering a counteroffer.
Negligent omission Negligent misrepresentation occurs when the agent should have known that a statement about a material fact was false. Ignorance is no excuse. Negligent omission occurs when the agent accidentally fails to perform some act, such as delivering a counteroffer.
Any form of collusion among brokers or real estate boards in the fixing of commission rates is illegal and is called:
Price fixing Setting fixed prices or commissions between brokers is a violation of the antitrust laws.
Exaggerating a property's benefits such as views or landscaping is called:
Puffing Puffing is exaggeration such as "This is the most beautiful house in town!" Puffing is not illegal but is unethical.
A colorless and odorless radioactive gas that is produced by the natural decay of other radioactive substances is:
Radon
A naturally occurring colorless and odorless gas that is found in soil is called:
Radon Radon is a colorless and odorless radioactive gas that is produced by the natural decay of other radioactive substances. Radon can occur anywhere, but some areas are known to have unusually high amounts. When trapped in buildings in high concentration, it can cause serious health problems. It is often found in the soil and can enter buildings through the basement or flooring and become trapped in the building if there is poor ventilation.
Which of the following is/are examples of ministerial acts?
Responding to phone inquiries about a property Setting an appointment to view property Showing a property to a customer on behalf of the owner Ministerial acts do not involve agency and are those that are informative in nature.
In what areas might asbestos be found?
Siding Roofing Insulation Asbestos is a naturally occurring material that was once widely used in building materials because it is fire-resistant and has some insulating properties. It was a component of thousands of building materials found that were used in construction of residential structures. Because it is also relatively inexpensive, asbestos insulation, siding and roofing were very popular for residences and public buildings such as schools.
When an agent represents only one of the parties to a transaction this is known as:
Single agency When an agent is representing both parties to a transaction it is called dual agency. When only one person is being represented it is single agency.
Which of the following does NOT have to be disclosed?
The former occupant of the house had AIDS. NOT REQUIRED TO DISCLOSE: Psychologically impacted property such as a murder or suicide on the property, or property is thought to be haunted, there was a burglary on the property. These MAY be disclosed but you need written permission if you represent the seller or are a dual agent
Compensation does not determine agency.
True
Encapsulation of asbestos is often safer than removal.
True
In 1996 the EPA and the Department of Housing and Urban Development (HUD) issued the final regulation on lead based paint. The regulation requires the disclosure of the presence of any known lead-based paint hazard to potential buyers or renters.
True
The lead based paint disclosure addendum allows for buyers to waive a lead based paint inspection.
True
To qualify as an independent contractor in the eyes of the Internal Revenue Service the agent must be licensed, must have a written agreement with the broker specifying that the licensee is an independent contractor, and at least 90% of his income must be based on sales commissions.
True
When may confidential information be disclosed?
When the client gives permission When it becomes public knowledge from another source When it is required by law such as a material defect in the property Agents may not disclose confidential information concerning his client unless the client gives permission or the information becomes public knowledge from another source. However, the agent is required to disclose any material defects regardless of whether the seller agrees.
When has an agent earned a commission?
When the seller accepts a ready, willing, and able buyer The agent his hired to find a ready, willing and able buyer. If he has done this then he has performed his duty to the contract.
When has an agent earned a commission?
When the seller accepts a ready, willing, and able buyer The agent his hired to find a ready, willing and able buyer. If he has done this then he has performed his duty to the contract.
Which of the following is not considered a material fact or defect requiring disclosure?
an occupant of the house died of AIDS Psychologically impacted properties are those where the property is stigmatized because of a murder, haunting, suicide, etc. These things do not need to be disclose because they are not physical or material defects.
When the commission is shared between the listing broker and the selling broker, this is known as:
broker coopertion Often one broker will list a property and another broker will find a buyer for the property. This is known as broker cooperation.
The party who hires the agent/licensee is known as the:
client or principal The person being represented in a transaction is known as the client or principal. The person not being represented is the customer.
There are three basic types of buyer agency agreements. In which type is the agent guaranteed a commission regardless of who sells the property?
exclusive buyer agency With open buyer agency any broker who finds a property for the buyer will be compensated. In exclusive agency buyer agency, the buyer may find the property himself and not owe a commission to the broker.
Which of the following is NOT grounds for termination of an agency relationship?
failure on the part of the agent to show the property enough times The reasons for terminating agency include death or incapacity of either party, destruction or condemnation of the property, expiration of the terms of the agency, mutual agreement, renunciation by the agent or revocation by the principle, bankrupcy of the principle, or fulfillment of the purpose for which the agency was created. However, remember that the duty of confidentiality is not extinguished upon termination of the agency relationship!
Which of the following is NOT grounds for termination of an agency relationship?
failure on the part of the agent to show the property enough times The reasons for terminating agency include death or incapacity of either party, destruction or condemnation of the property, expiration of the terms of the agency, mutual agreement, renunciation by the agent or revocation by the principle, bankruptcy of the principle, or fulfillment of the purpose for which the agency was created. However, remember that the duty of confidentiality is not extinguished upon termination of the agency relationship!
The intentional misrepresentation of a material fact is:
fraud Giving false information about a property, whether intentionally or unintentionally is misrepresentation. If damages result from any type of misrepresentation, the agent may be held liable. Fraud is the intentional misrepresentation of a material fact. Fraud includes making false statements and withholding pertinent information. Negligent misrepresentation occurs when the agent should have known that a statement about a material fact was false.
To qualify as an independent contractor in the eyes of the Internal Revenue Service you must:
have a written agreement with the broker saying he is an independent contractor. earn at least 90% of his income from commissions. be a licensed real estate agent. The salesperson may be either an employee of the broker or independent contractor. The employment agreement between the broker and salesperson should specify whether the salesperson is an employee or an independent contractor. To qualify as an independent contractor in the eyes of the Internal Revenue Service the agent must be licensed, must have a written agreement with the broker specifying that the licensee is an independent contractor, and at least 90% of his income must be based on sales commissions.
If an agent is working as an independent contractor for the broker:
he agent is responsible for paying his own Social Security and income taxes. As an independent contractor, the agent is working for himself and is not an employee of the broker. He must pay his own social security and income taxes.
The agent owes which of the fiduciary duties to the customer?
honesty and truthfulness While the agent owes a number of fiduciary duties to the client, the only duties owed to the customer are honesty and truthfulness.
A hidden structural defect that would not be discovered by ordinary inspection is called a:
latent defect The word "latent" means hidden or dormant.
When an agent should have known that a statement about a material fact was false, this is called:
negligent misrepresentation Giving false information about a property, whether intentionally or unintentionally is misrepresentation. If damages result from any type of misrepresentation, the agent may be held liable. Fraud is the intentional misrepresentation of a material fact. Fraud includes making false statements and withholding pertinent information. Negligent misrepresentation occurs when the agent should have known that a statement about a material fact was false. Ignorance is no excuse.
When an agent should have known that a statement about a material fact was false, this is called:
negligent misrepresentation Negligent misrepresentation occurs when the agent should have known that a statement about a material fact was false. Ignorance is no excuse.
The agent whose actions are the primary reason for a sale taking place is said to be the:
procuring cause When several brokers become involved in a sale, there is sometimes a question as to which of them has found the buyer, that is, which has been the procuring cause in the sale. In a real estate transaction, the procuring cause is considered to be the person whose actions are the primary reason for a sale taking place.
