Real Estate Chapter 7

21. The term "double agency" or "dual agency" applies to which of the following situations? 1. The broker has a double escrow or double transaction on one property. 2. The listing broker is cooperating with a selling broker. 3. Two brokers have the same property listed. 4. A broker is acting for both buyer and seller in the same transaction.

A broker is acting for both buyer and seller in the same transaction. (Dual agency can be defined as a situation where one broker or associate represents both parties to a transaction.)

8. In an agency relationship with a principal, the broker must 1. be loyal. 2. obey reasonable instructions and not be negligent. 3. account for all monies and property involved. 4. all of these.

All of these. (the primary responsibilities of an agent to the principal.)

9 The broker must be loyal to the principal in which of the following ways? 1. Profit only by agreed-upon commission and have no interests adverse or opposed to the principal. 2. submit all offers to the principal until the-principal accepts an offer. 3. Both 1 and 2 4. Neither 1 nor 2.

Both 1 and 2 (The agent must have the interest of the principal foremost and must keep the principal fully informed.)

23. Non-disclosure of dual agency can result in 1. loss of license. 2. contract rescission. 3. Both l and 2 4. Neither 1 nor 2

Both l and 2 (Non-disclosure of dual agency can result in 1. loss of license. 2. contract rescission. 3. Both l and 2 4. Neither 1 nor 2)

19. The creation of an agency relationship is usually the result of which of the following? 1. Agency by estoppel. 2. Agency by necessity. 3. Implied agency agreements. 4. Expressed agency agreements.

Expressed agency agreements. (A listing is an expressed agency agreement.)

15. A broker owes certain fiduciary duties to the principal. Which of the following is not included in these duties? 1. Loyalty to the principal. 2. Obedience to the principal's instructions. 3. Maintenance of the principal's property. 4. Accountability for money and property entrusted to the agent.

Maintenance of the principal's property. (Maintaining the principal's property is not one of the fiduciary responsibilities. The others are fiduciary duties.)

14. The fiduciary responsibility requires that the agent must always act in the best interest of the principal. As an example of this, a broker would have to disclose which, if any, of the following to the principal? 1. The prospective buyer is a member of a minority group. 2. The prospective buyer expressed an intent to violate restrictive covenants. 3. The area that the seller is planning to move to has a very large minority population. 4. The prospective buyer has indicated a willingness to pay more than now offering.

The prospective buyer has indicated a willingness to pay more than now offering. (Loyalty to the principal would require disclosure of such information.)

Which of the following best defines the "Law of Agency?" 1. The selling of another's property by an authorized agent. 2. The rules that apply to the responsibilities and obligations of a person who acts for another, 3. The principles that govern the conduct of business. 4. The rules and regulations of OREC.

The rules that apply to the responsibilities and obligations of a person who acts for another, (A vast body of law, both common and statutory, controls the rights and duties of principals and agent. In addition to this general law of agency, which is applicable to all business transactions, state licensing laws also directly affect the agency relationship between real estate licensees, clients and the public.)

11. A broker who acts as agent owes a fiduciary obligation to the seller. To the buyer of the property, the broker owes l. a duty of fairness and honesty. 2. no duty because the sellers pay the commission. 3. only the duty of honestly answering buyer questions. 4. a duty to disclose only those items which the broker feels relate directly to the sale of the property.

a duty of fairness and honesty. (In dealing with a third person, an agent must be fair, honest, and exercise care and diligence because the agent is liable for any material misrepresentations or negligent acts.)

3.A person empowered to act on behalf of another is a(an) l. middleman. 2. agent. 3. principal. 4. third party.

agent (Unlike an employee who merely works for a principal, an agent works in the place of the principal)

4. Under the Law of Agency, licensees can be held liable if they fail to 1. follow the legal instructions of their principals 2. possess and exercise the ability and skill of competent brokers or associates 3. use care in the performance of the agency 4. all of the above.

all of the above (Under common law principles, agents owe their principal personal performance, loyalty, obedience, disclosure of material facts (such as a proposed new school, highway relocation, or a new zoning ordinance that would tend to increase the property value over the agreed on listing price), to take reasonable care not to exceed the authority granted them or to misrepresent material facts to principals or to third parties, to keep proper accounts of all monies, and to place the interest of the principals above those of other persons (customers) involved in the transaction.)

22. Real estate agent may not legally represent all principals in the same transaction if. 1. they have failed to inform all principals that they are the agent for each principal. 2. they have not obtained consent of all to this agency relationship. 3. they are collecting a commission from both principals without the knowledge of the other. 4. any of these conditions exist.

any of these conditions exist. (All of these conditions must exist for an agent to legally represent all principals in the same transaction.)

6. Agents having wide authority to conduct a series of transactions of a continuous nature on behalf of the clients are 1. special agents. 2. general agents. 3. sub-agents. 4. ostensible agents

general agents. (A general agent is authorized to perform any and all acts associated with the continued operation of a particular job or a certain business. The essential feature of a general agency is the continuity of service.)

17. When an agent has no authority but warrants to a third party that he does have authority as an agent, in the event of loss caused by breach of contract, the third party may 1. hold the agent liable. 2. has no recourse. 3. hold the actual agent responsible. 4. none of the above.

hold the agent liable. (A real estate broker is liable to a buyer if the agent acts in excess of the authority given by the seller.)

20.The broker's actual authority to sell a parcel of land is given in the 1. contract of sale. 2. listing contract. 3. broker-associate agreement. 4. Oklahoma Real Estate License Code.

listing contract. (A listing contract is the means by which authority to act as an agent in a real estate transaction is usually given to the real estate broker.)

18. In the usual situation, a broker should l. represents everyone. 2. make personal interest secondary to those of the buyer. 3. make personal interest secondary to those of the seller. 4. place personal interest first.

make personal interest secondary to those of the seller. (As fiduciaries, real estate brokers must handle the sale of properties of principals as though they were selling their own property.)

12. Since employed by the principal, the broker 1. may misrepresent the facts to the purchaser because the broker is not representing the purchaser. 2. may misrepresent the facts to the purchaser if the principal so instructs. 3. may not misrepresent the facts to a purchaser. 4. none of the above.

may not misrepresent the facts to a purchaser. (If real estate broker or associate knowingly misrepresents a material fact concerning the property for the purpose of inducing the prospect to purchase and the prospect purchases, relying on the misrepresentation, the agent is responsible for the tort or fraud or deceit.)

10. A real estate broker acting as an agent of the seller 1. must do as instructed. 2. should do as instructed. 3. should withdraw from the transaction. 4. can ignore instructions.

must do as instructed. (A broker usually represents the seller and must perform the agency contract. As the fiduciary of the principal, the broker has certain duties, obligations, and high standards of good faith and loyalty. The other choices are unacceptable.)

16. A real estate professional expresses all of the following in a fiduciary relationship with the principal except 1. loyalty. 2. patriotism. 3. honesty. 4. professionalism.

patriotism. (Patriotism is not a fiduciary duty between agents and principals.)

7. Associates owe all of the following duties except to 1. obey all legitimate instructions from the broker concerning the transaction. 2. be loyal to the interests of the principal. 3. prepare the deed for the conveyance of title. 4. disclose material defects of the property to the broker and principal

prepare the deed for the conveyance of title. (Preparation of a deed could be considered practicing law.)

2. Persons who authorize others to act for them are 1. employees. 2. principals. 3. authorities. 4. third parties

principals (In a fiduciary relationship, principals are the persons who hire real estate brokers to represent them in the sale of property)

13. A real estate broker, as agent for the owner, should 1. submit only the most advantageous offers to the principal. 2. make an honest profit on the sale in addition to the agreed-upon commission. 3. be an agent for both the buyer and the seller. 4. render faithful service to the principal, handling the sale of the property as if the broker owned it.

render faithful service to the principal, handling the sale of the property as if the broker owned it. (Faithful service is the fiduciary duty of an agent to the principal. All offers must be submitted to the principal, and only the agreed upon commission should be collected. The broker is normally the agent of the seller and cannot serve both buyer and seller without full knowledge and consent of both.)

5. Real estate brokers authorized to conduct a single transaction for their principals are usually classified as 1. general agents. 2. universal agents. 3. special agents. 4. ostensible agents.

special agents (In a standard listing contract, the broker is employed only to find a buyer who is ready, willing and able to make an offer acceptable to the principal. The broker is not authorized to sell the property nor to bind the principal to any contract for the sale of the property.)