REAL ESTATE - Risk Management
6 With respect to an agency relationship, which of the following activities does NOT immediately result in liability?
CORRECT Disclosed dual agency Breach of fiduciary duties Lack of appropriate disclosure of agency relationships Licensee buying a property for his/her own account without disclosure to the seller
9 Which of the following is a disability under the fair housing law? Page 53
HIV/AIDS - Compulsive gambling - Psychoactive substance use disorders resulting from the current use of illegal drugs - Homosexuality and bisexuality
Which of these services does RESPA prohibit a seller from requiring of the buyer? Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company. Generally, RESPA covers loans secured with a mortgage placed on a one-to-four family residential property
A particular title insurance provider A specific escrow agent An appraisal - Auxiliary services (pest control, etc.)
What is the basic definition of a "risk"?
An exposure to the chance of injury or loss. It is identifying problems that can arise in a real estate transaction. The recommendation that legal counsel be obtained when the interest of any party to the transaction requires it. To detect and respond to unauthorized access to the data, both offline and online.
The information gained by an agent representing a seller or buyer must be __________ in order to avoid confidentiality risks.
CORRECT protected
The liquidated damages agreed to in a real estate transaction usually consist only of
CORRECT the earnest money deposit agreed to by the buyer and seller. not more than 2% of the buyer's down payment. the amount of earnest money deposit that is left after the listing broker's expenses are reimbursed by the seller. up to 10% of the transaction price but not less than 2% of the buyer's down payment
What is a good risk anticipation procedure if a client needs assistance on matters that are outside of the licensee's areas of expertise or beyond the scope of their license?
CORRECT: Use a written disclaimer to advise the client to seek a competent professional for advice or services WRONGS - Learn the unknown topics so the client doesn't have to seek a third party for advice - Ignore the client's request for help - Give the client the best advice possible based on the licensee's personal experiences
Kai has Rick's ranch in Shasta County listed for sale. Rick isn't making his mortgage payments and is facing a foreclosure action. Without Rick's consent, Kai tells buyers that Rick is desperate to sell and encourages them to make any offer. Which fiduciary duty did Kai violate?
Care Accounting Confidentiality Disclosure
Which is NOT an illegal per se violation of the Sherman Antitrust Act? In the real estate brokerage business, most civil and criminal litigation has centered around three challenged practices, which if successfully proven, constitute per se violations of the Sherman Antitrust Act. The three challenged areas of practice are price fixing, group boycotts, and tying arrangements.
Redlining ILLIGAL Group boycotts Price fixing Tying arrangements
"The conditioning of the sale or purchase of one product to the sale or purchase of another product" describes which antitrust violation?
Tying arrangement An example of a tying arrangement is the conditioning of the sale or purchase of one product to the sale or purchase of another product.
The fiduciary duty of __________ requires the licensee to maintain complete, accurate, and up-to-date records of trust funds.
accounting
Tom bought a four-plex and is going to live in one of the units with his family. Tom will screen potential tenants for the other three units carefully to try to find the most desirable and safest neighbors for his family. Tom is: Housing that is not covered under the federal fair housing act includes rental housing of four or fewer apartments in which the landlord is living. States and local jurisdictions may pass fair housing law that are more restrictive than the federal law and the more restrictive will prevail.
exempt under federal fair housing law, but must check state fair housing law to see what his legal position is under local state law.
12 Which of the following is NOT an acceptable way to decommission an underground storage tank?
CORRECT Drain the oil from the tank and do nothing else PAGE 84 - Digging up the tank and physically remove it - Drain the oil from the tank and fill it with sand or P-gravel - Drain the oil from the tank and fill it with slurry
7 Which of the following does NOT need to have client status and be represented by a buyer's agent? Page 30
CORRECT Prospects who call to inquire about an advertised property - Relatives - Close business associates - First time buyers who need assistance
11 Which of the following childhood health issues is NOT linked to lead exposure?
CORRECT Rapid growth and development PAGE 73 - Behavioral problems, such as hyperactivity - Motor ability and coordination problems - Learning difficulties
8 Federal fair housing laws do NOT protect which of the following classes?
CORRECT Sexual orientation Page 48 Race Country of national origin Religion
14 Directing a client to seek professional advice or counsel relating to matters outside of the licensee's expertise is a risk management strategy known as:
CORRECT risk shifting. PAGE 4 education. avoidance. risk calculation.
Which of the following is NOT considered the unauthorized practice of law?
Giving tax advice on the implications of the Internal Revenue Code for tax deferred exchanges. Preparing a real estate sale agreement. Explaining legal ramifications on contracts. Interpreting the meaning of the earnest money forfeiture clause in a real estate sale agreement.
13 Which of the following is NOT an example of anti-competitive conduct that would be deemed illegal?
MAYBE Limiting MLS membership using criteria designed to reasonably protect the integrity of the MLS. - Deciding to fix commission fees to match the commissions arranged by other licensees - Requiring an investor to only use their property management brokerage when the investor wants to sell the property - Working together with other brokers to boycott a competing broker's property listings
15 When a licensee lists a property, the obligations and duties the agent assumes are based on
MAYBE contract law. PAGE 10 tort law. the law of negligence. law of damages.
10 In advertising, which of the following is an acceptable phrase?
NOT SURE, MAYBE NO SMOKING "Bachelor pad" "No smoking" "Couples only" "Just like grandma's house"
The classic group boycott is also known as
a concerted refusal to deal. The classic group boycott is also known as a concerted refusal to deal. Such activity is illegal per se.
An individual who violates the Sherman Antitrust Act can receive penalties of: Today, a criminal violation of the Act is a felony punishable by imprisonment for up to ten years and fines not to exceed $1,000,000 for individuals and $100,000,000 for corporations. Damages awarded to plaintiffs in civil actions are automatically tripled.
a prison term of up to 10 years and fines not to exceed $1,000,000.
A noticeable adverse condition about a property that licensees should be able to recognize and alert their clients to is called
a red flag. Although this is an unsettled area of the law, prudence would dictate that licensees should alert their clients to certain obvious conditions that may impact the value of a property. These conditions are often referred to as red flags.
Licensees must disclose __________ that they are aware of. licensees must disclose all material facts of which they are aware.
all material facts
The duty to protect a client's confidential information:
continues after the agency relationship has terminated.
A risk situation that can occur when the same licensee represents two or more principals who are negotiating with each other in the same transaction is called a
dual agency.
If a brokerage will only take a listing if the seller agrees to use the brokerage's partner escrow service, this is called a
tying arrangement. A tying arrangement has been defined by the Supreme Court as the conditioning of the sale or purchase of one product to the sale or purchase of another product.
George is looking for a property manager. Real estate agent Marcus has the necessary experience to manage George's properties and is willing to give George a discount on the property management fee if George agrees to list his rental properties with Marcus' brokerage when George wants to sell. This arrangement is called a:
tying arrangement. Marcus has conditioned a discount for property management services based on the fact that George will have to list his rental properties with Marcus when George wants to sell them. This is called a tying arrangement.
Which one of the following phrases does NOT create a potential antitrust liability? A licensee cannot tell a client that other real estate licensee's won't do something because of agreed-to conditions that are used in the industry. This would be considered a violation of antitrust regulations.
"I promote all of my listings." CREATE a potential antitrust liability "The multiple listing service will not accept less than a 120-day listing." "This is the rate every firm charges." "No one else will cooperate unless you accept the listing on these terms.
Which is NOT a part of proving an intentional misrepresentation?
CORRECT - No corrective action was taken after the deception There was an intent to deceive Actual damages resulted because of the misrepresentation - A misleading statement was made that was relied on by complainant
What is it called when a lender tries to make money at the expense of the customer by offering loan products with significantly worse terms or higher costs than similarly qualified customers?
CORRECT - Predatory lending Actuary lending Subprime lending Profitable lending
An unintentional tort in real estate usually involves _____.
CORRECT - negligence Malfeasance fraud breach of contract
Tort law attempts to right an injured party by awarding monetary damages to
CORRECT - the one who has been wronged. the licensee. the insurance carrier. - the party who was guilty of specific performance.
What should a licensee do to safely dispose of documents that contain personal information? Shred or burn physical documents that contain personal information. Never throw them directly into the trash. This is one of the primary sources for ID theft.
CORRECT Shred or burn the documents - Throw the documents into the trash - Leave them for the next tenant when the licensee moves offices - Donate the documents to a local charity for fundraising purposes
All of the following are part of a reasonable risk shifting strategy, EXCEPT: Open source software will not shift risk and is therefore is not part of a risk shifting plan.
CORRECT Using only open-source software in the office. purchasing Errors and Omissions Insurance. directing the client to seek professional advice relating to matters outside of the licensee's expertise advising the buyer to have a home inspection, even in the case of new construction.
A licensee should attempt to minimize liability exposure by developing __________ for risk management. A licensee should attempt to minimize liability exposure by developing a plan for risk management.
CORRECT a plan a risk-blaming technique an in-office task force a team of lawyers
Damages awarded to place an injured party in the same position as before a contract was entered into are called
CORRECT actual damages. - promissory damages. nominal damages. - punitive damages.
Risk anticipation means to identify or predict problems that can arise in a transaction. Licensees should attempt to establish a strategy to _____ problems instead of dealing with them after they happen.
CORRECT avoid diffuse divert minimize
Usually the best way to control an active complaint is through
CORRECT early communication. documenting all disclosures made. good recordkeeping. a working relationship with a lawyer.
If a real estate agent representing a seller intends to purchase the property directly from the seller, this would put the agent in a conflict of interests regarding the fiduciary duty of _____.
CORRECT loyalty
A licensee who unknowingly gives misleading information and who does not exercise due diligence in getting or giving that information is guilty of
CORRECT negligent misrepresentation.
Dual agency occurs when the same licensee represents two or more principals that are
CORRECT negotiating with each other in the same transaction. both owed a referral fee for business. family members. also real estate agents who work for different real estate brokerages
Willow listed Zander's high-priced vacation property. Because Zander keeps the house vacant most of the year, he told Willow that he doesn't want a For Sale sign on the property. Willow knows it will be several months before any potential buyers visit the property, so she decides to put out her For Sale sign regardless of Zander's instructions. Willow is in violation of her fiduciary duty of:
CORRECT obedience.
The main purpose of RESPA is to
CORRECT protect the public. reduce government spending. reduce government interference with loan products. protect mortgage-related businesses
Punitive damages are awarded as a means of __________.
CORRECT punishment restitution annulment - breach of contract
Recordkeeping is a good example of _____. In order to minimize risk, good recordkeeping and transaction documentation practices are essential. Because the licensee cannot anticipate problems that may arise in the future about past actions, good documentation is always a good first line of defense against liability.
CORRECT risk anticipation risk encapsulation risk control risk shifting
California Civil Code 2079 does NOT require:
CORRECT that the agency disclosure form be provided in business opportunity transactions. - any disclosed agency relationships to be acknowledged by the principals in the purchase and sale agreement. - the listing and selling agents in residential property transactions to provide both the seller and buyer with written and oral disclosures regarding agency relationships and issues. - that all agency relationships be confirmed in the real estate purchase and sale agreement.
Which of the following advertisements violates the fair housing law? Mention of St. Thomas Moore Church gives an indication of religious preference.
CORRECT: Spacious home on 0.52 acre corner lot on dead-end street in a great estate neighborhood. Walk to St. Thomas More Catholic Church. Large open greatroom with cathedral ceiling. Stainless steel appliances. New high efficiency furnace. Newly renovated kitchen.
What was the main reason the Sherman Antitrust Act was passed by Congress in 1890? Congress passed the act because of concerns about putting too much economic power in the hands of a few large businesses.
Concerns about putting too much economic power in the hands of a few large businesses.
Which of these is NOT one of the three primary points of potential liability that comes from doing real estate business over the internet?
Economic uncertainty Advertising rules Disclosure law Privacy protection
Which of the following is not addressed in The Americans with Disabilities Act of 1990 (ADA)?
Employment Commercial facilities Residential housing ADDRESS: Public accommodations
When a licensee ends up being included in a conversation about commission rates with competitors, what is the best defensive action to take?
Explicitly state that you have nothing to do with the conversation and leave. Any licensee who is in the midst of a prohibited commission rates discussion with competitors should take immediate steps to disavow any connections with the discussion. Silence (not disavowing the conversation verbally) may infer that the licensee participated in a price fixing conspiracy!
Several brokerages get together to discuss a problem they all face. There is a new "discount" brokerage in town and it is quickly taking business away from them. The brokerages agree to try to limit the exposure of the discount broker and not show homes listed by the discount broker. Which antitrust action does this situation illustrate?
Group boycotting The classic group boycott is also known as a concerted refusal to deal. Such activity is illegal per se. It is characterized by an agreement or combined action among industry members to drive a competitor from the industry by denying the competitor a source of supply or a source of customers.
Which of these products is LEAST likely to contain VOCs? VOCs are found in carpet, glues and adhesives, pressed-wood products, laminate flooring, cabinet fiberboard, drapery materials, and paint/coating products (such as wood finishes).
Hardwood NOT LEAST Adhesives Wood finish Drapery materials
Which of these is the main way that asbestos enters the body? The majority of asbestos fibers enter the body through inhalation. The fibers less frequently enter the body through ingestion. The fibers cannot be absorbed into the body through the skin.
Inhalation NOT Transmission at birth Osmosis Skin contact
Which of the following statements is true regarding lead-based paint disclosures? Federal law applies to all 50 states. All sellers and licensees should be aware of the provisions of HUD and EPA regulations as they apply to lead-based paint.
Lead-based paint disclosure laws apply to all 50 states.
Regarding group boycotts, what have courts decided? The Fifth Circuit Court of Appeals in Park v. El Paso Board of Realtors affirmed the presence of such an illegal group boycott. The plaintiff licensee offered to list sellers' homes with the MLS for a flat fee. At trial, the plaintiff introduced evidence that competing licensees tried to impose punitive splits on the plaintiff, made disparaging remarks about the plaintiff to potential customers, and refused to show the home that the plaintiff had listed. The jury found for the plaintiff. The conduct of the competing licensees was found to be a boycott of the plaintiff. The appeals court affirmed the trial court's decision. The licensees were found liable per se under the Sherman Act for damages suffered by the plaintiff competitor. The defendants tried to drive the competitor from the market by damaging his reputation and refusing to treat the competitor's listings in the same way as other listings.
Licensees cannot conspire to drive out competitors.
Which of the following statements is false? Illegal price-fixing is not limited to those cases where a specific fee or commission is agreed upon. Rather, the prohibition extends broadly to all agreements that have the effect of raising, depressing, fixing, pegging, or stabilizing the price of real estate services. Furthermore, cases under the act have not required a showing of an express agreement to adhere to an illegal plan.
Licensees must have a written document or have made a verbal statement as evidence to be guilty of price fixing. TRUE Licensees can be guilty of price fixing even without a formal agreement. Price fixing occurs when two or more competing brokers agree to set commissions. A "tacit agreement" is one that is implied or indicated by an act or by silence and is carried on without words or speech.
5 Which of the following would NOT be a defensive record keeping strategy?
MAYBE A telephone log that summarizes all business calls - Keeping records of only closed transactions - An electronic file of all emails -Contemporaneous notes or memoranda in each transaction deal file
2 If a structure was flooded, the sheetrock should be:
MAYBE completely removed and disposed of as hazardous waste. - removed only if it shows evidence of mold on the exterior visual surface. - removed to at least 12 inches above the high watermark. - does not have to be removed if sprayed with a bleach solution.
Mary agrees to sell Jane's house. Jane says she wants to start the price artificially high so she won't lose money when people try to talk her down. Mary feels this is a bad idea but agrees to take the listing. In an effort to try to sell the house quickly, Mary tells a buyer's agent that Jane will accept an offer lower than full list and thereby encourages a low offer. What is Mary doing that was wrong?
Mary is attempting to profit from a net listing Mary is trying to enter into undisclosed dual agency Mary is disclosing confidential information Mary is violating her fiduciary duty of accounting
Which one of the following is NOT one of the major areas where agency law violations occur?
Missed listing agreement appointments Breach of fiduciary duties - Unintentional, undisclosed dual agency - Noncompliance with agency disclosure and documentation requirements
Which statement is true? The seller and licensee must disclose to the potential buyer any knowledge regarding current or past mold and fungi problems. The Seller must make the disclosures in the Seller Disclosure Statement. If the Seller fails to make such disclosures and the agent has knowledge because of his visual inspection of the property, the agent must disclose to the buyer the results of the inspection.
Mold is a material defect that must be disclosed
What is the most common source of problems with potable water in a real estate transaction? If the water supply is from a well, the real estate agent should ask the seller about past well water testing. The agent should also suggest that the seller obtain a current well water test and make it readily available to buyers as a part of the seller's disclosure obligation. Agents working with buyers should recommend a well water analysis reports as a part of the buyer's due diligence obligations. This should especially be the case if the property is located in agricultural or industrial zones or the potential for buried fuel tanks exists.
Private wells NOT Improper water runoff or soil drainage Hydroelectric dams Public water
A licensee is talking with a seller about the possibility of listing his home. During the presentation process, the licensee tells the potential seller that he heard that the neighborhood was rapidly changing and would soon be inundated with people of Asian descent. He further stated that other neighborhoods where this had taken place became a haven for gangs and drive by shootings and decreased the value of all the properties in the area. This scenario is a description of
Redlining. Price fixing. Blockbusting NOT Steering.
Which part of a home built before 1978 would be the least likely to contain lead? Paint, outdoor dirt (due to leaded gasoline deposits), and potable water (due to lead-based solder), are more likely to contain lead than wallboard.
Sheetrock (wallboard) NOT THE LEAST Paint Outside dirt Potable water supply
Which one of the following is an example of a permitted practice? If a real estate agent is showing properties in specific neighborhoods at the request of the buyer, then that client's preference is a nondiscriminatory reason under the Seventh Circuit Court's ruling.
Showing homes in specific neighborhoods to an Asian buyer who has expressed a preference to view homes in neighborhoods with other Asians
Which population group is most at risk with lead exposure?
Small Children Children under the age of six have multiple factors that make them more vulnerable to lead exposure.
Which one of the following is NOT a federal guideline to help licensees avoid risks when advertising real estate for sale or lease?
Source of Income: No income preference may be designated. FED GUIDELINE Race, color, or national origin: No discriminatory limitation/preference may be expressed. Handicap: No exclusions or limitations based on handicap. Familial status: No preference or limitation based upon family size or nature.
Which of the following statements is NOT TRUE regarding federal and state fair housing laws?
States may enact and enforce fair housing laws that are stricter than federal fair housing laws. Unless an exemption applies, no one may discriminate against anyone in the seven protected classes in the sale and rental of housing. States may require enforcement of fair housing laws that are less restrictive than the federal fair housing laws. TRUE The Department of Housing and Urban Development (HUD) has been given the task of administering the federal fair housing laws.
Which one of the following is a red flag that a knowledgeable real estate agent should be able to easily notice that could indicate a potentially serious problem with the property? Water stains are a red flag that could indicate an existing water leak.
Water stains on walls or ceilings NOT REDFLAG Mold in the refrigerator. Unhealthy plants in the flowerbeds. A crack in the driveway pavement.
Which is NOT a valued characteristic of asbestos? Asbestos was highly valued in a wide range of products because of its strength, it will not burn, resists corrosion, is a good insulator, and is chemically resistant.
Water-soluble YES OF ASBESTOS Chemical resistance Strength Resists corrosion
A real estate brokerage should __________ that will help to minimize risk and potential liability exposures. Every brokerage should adopt written policies and procedures that define the company's agency representation policies, competitive practices, fair housing guidelines, personnel policies, communications policies, documentation and record keeping policies, and a statement of the company's overall commitment to the ethical and legal practice of real estate. Once adopted, these policies should become part of each licensee's everyday practice and enforced on a consistent basis.
adopt written policies and procedures keep recordings of all conversations hire a team of lawyers take out a liability insurance policy
A high-risk situation can occur if a licensee is involved in __________ , which is typically illegal in all states.
an undisclosed dual agency
Beni put together a listing presentation for her neighbor, Ernie. Beni has lived in the neighborhood for 20 years and feels strongly that Ernie's house should be listed for $320,000. Rather than rely on only her professional opinion, Beni prepared a detailed CMA of all active, sold, and pending properties in a six-block radius that are comparable to Ernie's house. Through her knowledge and careful preparation of a thorough CMA, Beni has demonstrated the fiduciary duty of
care
The Equal Credit Opportunity Act allows for discrimination in credit transactions based on: The ECOA prohibits discrimination in all credit transactions based on race, color, national origin, religion, sex, marital status, age, receipt of income from public assistance programs or rights under the Consumer Protection Act.
credit worthiness of the applicant. NOT the age and marital status of the applicant. marital status, familial status, and sex of the applicant. marital status and sex of the applicant
A licensee who knowingly fails to disclose a material fact is guilty of:
intentional concealment. offering opinions. - negligent misrepresentation. - the Real Estate Settlement Procedures Act.
In today's consumer-oriented environment, the public expects a real estate licensee to have a basic knowledge of:
potential material matters or conditions that may impact the value of a property. In today's consumer-oriented environment it could reasonably be argued that the public expects one who has a real estate license to also have a basic knowledge of potential material matters or conditions that may impact the value of a property.
If a lender refuses to issue a mortgage loan based on the national origin composition in a specific neighborhood and not because of the loan applicant's qualifications, the lender is guilty of
redlining. Redlining is the prohibited practice of refusing to make mortgage loans or issue insurance policies in specific geographical areas for reasons other than the qualification of the applicant. Redlining is based on racial, ethnic, religious, or national origin composition in a specific neighborhood or geographic area.
1 If a client asks about the condition of a foundation, which would be the best response?
"Because this matter is beyond my expertise, you should discuss the foundation with a qualified engineer." NOT - "It looks like a good foundation to me." - "The seller has lived here for more than 10 years and has not had a problem." - "I have a friend who has just started engineering school and can give you a free opinion."
Which one of the following terms is NOT acceptable to use when advertising a home for sale or rent?
"Los Angeles School District" "Couples preferred" "Private setting" ACCEPT "Senior discount"
What two standards do courts use in determining antitrust practices?
"rule of reason" and "illegal per se" In the 1911 case of United States v. Standard Oil Corporation, the Court created a new standard that is known as the "rule of reason." This standard prohibits those concerted actions that cause an "unreasonable restraint of trade." Nevertheless, the courts have subsequently held that certain conduct is so anti-competitive that it is not to be judged by the rule of reason standard, but is to be deemed illegal per se.
The California agency disclosure form is required to be given in a transaction involving
- manufactured or mobile homes when not attached to land. the sale of a residential two-unit duplex a business opportunity.
A meth lab would be most readily detected by what condition? A person entering a structure that has been used to produce meth will detect an unpleasant chemical/ammonia smell.
An odor like ammonia or cat urine
A criminal penalty for violating RESPA's anti-kickback, referral fees, and unearned fees provisions could cost a licensee
CORRECT fines of up to $10,000 and imprisonment for up to one year.
Torts are generally remedied by which legal procedure?
CORRECT - Civil action Trial for crimes committed Action for specific performance Action for reformation
Negligence is a result of a licensee not measuring up to a reasonable standard of
CORRECT - care. accounting. trust. loyalty
Which one of the following contracts can a licensee assist with? The types of documents that may be completed by a licensee are those that are incidental to the practice of real estate. However, a licensee should not draft or assist in the preparation of a land sale contract, option contract, deed, mortgage, or complicated lease. All of these documents require the services of an attorney.
CORRECT A real estate sale agreement A deed An option contract A mortgage
Which of the following duties does an agent NOT owe to a third party?
CORRECT Confidentiality Honesty Disclosure Care and skill
4 Generally, antitrust laws are enforced through the Antitrust Division of the
CORRECT Department of Justice - Department of Housing and Urban - Development (HUD)National Association of REALTORS® - Equal Employment Opportunity Commission (EEOC)
What type of insurance can be used as a risk-shifting strategy, covering actions undertaken in the course of a professional activity? Traditional liability insurance policies do not cover actions undertaken in the course of a professional activity, such as real estate practice. To cover these risks, errors and omissions insurance is available.
CORRECT Errors and omissions insurance Personal liability insurance Risk retention insurance Malpractice insurance
The main purpose of errors and omissions insurance is to:
CORRECT protect a licensee from claims brought by an unhappy client because of the actions taken by that licensee during the course of representation. compensate a licensee for injuries to a client from an automobile accident in which the client was involved while the licensee was showing the client some properties for sale. protect the owner of the brokerage from adverse claims against the ownership of the business. reimburse the owner of a brokerage for damage to his/her office building that resulted from a wind storm.
Which of these is NOT a risk-shifting method?
Completing a visual inspection of property for sale Directing clients to seek professional advice. Purchasing umbrella liability insurance policies. Purchasing errors and omissions insurance.
When a lender rejects a mortgage application based upon poor credit, what is the lender required to do? Under the Equal Credit Opportunity Act and its fair lending regulations, if the lender denies a loan application because of poor credit, the lender must notify the applicant in writing within 30 days of the completed application and supply the applicant with a statement of specific reasons why the application for credit was denied.
Lenders must provide the rejected applicant with specific reasons for the rejection.
What are liquidated damages?
Liquidated damages are specified in a contract in case of breach of contract Liquidated damages are in addition to those specifically stated in a contract - Liquidated damages are in excess of actual damages Liquidated damages are procured from selling property
3 Which of the following is NOT a fiduciary duty owed by a licensee to a principal?
MAYBE Compliance Care Disclosure Loyalty
Which of these situations is considered discriminatory?
NOT An elderly man requests his agent to find him a home in a neighborhood where families with children are not permitted to buy An agent provides a list of homes in an older, more established neighborhood to a young man that wants to live in an area of historic homes An agent agrees to show a Hispanic couple who request to be shown property in neighborhoods where there are people who speak Spanish A licensee shows an African American couple only homes in predominantly African American populated neighborhoods without being asked to do so
Which is the best advice for avoiding an antitrust lawsuit? Due to the nature of a price fixing case, never discuss fixing commission rates with other licensees or offices.
Never discuss setting fixed commission rates with your competitor offices
Which creates the greatest radon threat? When no ventilation is present to stir and move the air within a structure, radon will settle out of the air to the lowest levels of the structure.
Poor ventilation
A licensee mentions to fellow licensees from other brokerages at lunch one day, "Despite the declining economy, I'm thinking about keeping my rates at 6%." This conversation provides the foundation for an action involving:
Price fixing. An agreement among competing brokers to set commissions is known as price fixing and is illegal. Price-fixing is not limited to those cases where a specific fee or commission is agreed upon. Rather, the prohibition extends broadly to all agreements that have the effect of raising, depressing, fixing, pegging, or stabilizing the price of real estate services. Furthermore, cases under the act have not required a showing of an express agreement to adhere to an illegal plan. Tacit agreement to such a plan will suffice for a violation of the act. A "tacit agreement" is one that is implied or indicated by an act or by silence and is carried on without words or speech.
Redlining is best defined as: Redlining is the prohibited practice of refusing to make mortgage loans or issue insurance policies in specific geographical areas for reasons other than the qualification of the applicant.
Refusing to make mortgage loans or issue insurance policies based upon racial, ethnic, religious, or national-origin composition of a neighborhood.
Which of the following is an example of steering?
Refusing to sell an insurance policy to a homeowner because of the racial composition of a neighborhood. Showing a buyer only the neighborhoods that the buyer indicates they are wanting to live in when the licensee knows them to have very few minorities. Not showing properties to a buyer in certain areas of a city based upon the licensee's assumed perceptions of the buyer's racial preferences. NOT STEERING Encouraging a seller to sell because a particular minority group is moving into the neighborhood.
What is the first antitrust law that forms the foundation for antitrust actions against the real estate industry?
Sherman Antitrust Act The basis for antitrust actions against the real estate industry is primarily based upon Section 1 of the Sherman Act which provides, "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among several states, or with foreign nations, is declared to be illegal."
Which situation is legal?
Showing homes only in neighborhoods with a large Russian population when asked to do so by a Russian client. NOT LEGAL Refusing a mortgage loan to a single woman because they statistically earn less than men. Refusing to allow the installation of a wheelchair ramp on a rental property for a disabled tenant. Charging additional rent to persons who are not US citizens.
What is the main problem with former meth labs?
Toxic waste Toxic waste is a byproduct of the meth cooking process. All of this waste poses long-term hazards because they can persist in the soil and groundwater for years. Clean up costs are high because solvent-laced soil usually must be incinerated.
A licensee is allowed to fill in the blanks of a preprinted, standardized form A real estate licensee may fill in the blanks of a purchase and sale agreement, a promissory note for earnest money, rental agreements, and most lease agreements. The licensee, however, is to fill in the blanks at the direction of a party to the transaction, such as the seller, buyer, landlord, or tenant.
at the direction of a principal to the transaction such as the seller or buyer. when required to do so by federal real estate law. after the closing of escrow. when the buyer or seller missed filling in some of the blanks.
A licensee should have basic knowledge to be able to alert a buyer to potential environmental hazards on a property, but a licensee: Licensees are not required to identify all sources or potential sources of environmental hazards. However, a licensee should have basic knowledge to be able to alert a buyer to potential hazards on a property.
is not required to identify all sources or potential sources of environmental hazards.
To avoid potential risks concerning discrimination, a licensee
may not volunteer information regarding the racial, religious, or ethnic composition of any neighborhood.
Beni, while showing a property listing to her buyer, George, overheard the seller telling a neighbor that she was going to reduce the price of her house by $10,000. Beni immediately told George about overhearing the conversation. This is an example of the fiduciary duty of
obedience. disclosure. care. loyalty.
