Agency-- Real Estate

Which act could NOT lead to the suspension or revocation of a real estate license? 1. Failure to make clear, to all parties of a transaction, for which party the licensee is acting 2. Deliberately withholding information from a buyer-client that the seller has AIDS 3. Collecting a referral fee from a carpet installer without the seller-client's consent 4. Guaranteeing future profit on the sale of a property

2. Deliberately withholding information from a buyer-client that the seller has AIDS

Even though a broker is an agent for one party, she is obligated to treat both parties

Fairly

Universial agency

Gives a very broad scope of power to the agent

With all proper disclosures having been made, intermediary status will occur if the buyer-client chooses to

Make an offer on his broker's listing

A sales agent, acting as the agent for the buyer, takes his buyer client to see several homes currently on the market. While driving through one neighborhood, he finds a For Sale By Owner (FSBO) sign in the ward of one property that his buyer client wants to preview. The sales agent knocks on the door, introduces himself, asks if he can preview the seller's home, but does not give the "Information About Brokerage Services" form to the owner/seller.

This is a violation of Texas law because the law requires that the sales agent give the Information About Brokerage Services form to prospective buyers, tenants, sellers, and landlords at the first substantive dialogue with a party to the transaction, about specific property, except in limited circumstances

An "unconscionable action" in the DTPA is a vague term that allows the courts to

Use their discretion in deciding cases where persons have been tricked or swindled

An agency responsibility that requires the agent to protect the client and place the client's interests above that of the agent is known as

A fiduciary duty

The TRELA mandates that all agency agreements must include a(n)

Definite termination date

A broker or salesperson owes customers

Honesty, fairness, and disclosure of material facts about the property

Due to the unique nature of the fiduciary duty of obedience, a licensee has an obligation to follow an unlawful instruction of a client under which circumstance?

Never

A tenant is looking for additional warehousing space for his auto parts store. He hires a broker to find an appropriate space within the tenant's size and financial constraints, and to help the tenant negotiate the best long-term lease possible. The agency relationship between the broker and the buyer is one of

Special agency

The general agency relationship created by the written agreement between a broker and a salesperson establishes that

The salesperson owes fiduciary duties to the broker

Which of the following is NOT a primary ingredient in the creation of an agency relationship? 1. Compensation promised by the client 2. Delegation of authority by the client 3. Reliance on the agent by the client 4. Control of the agent by the client

1. Compensation promised by the client

A licensee holds a real estate broker license but does not wish to run her own office. She may elect to contractually obligate and subordinate herself administratively to another broker to whom she is accountable. The contractually obligated broker is generally called a

Broker associate

If a real estate licensee violates the rules of the Texas Real Estate Commission, she has violated a/an

Administrative law

One who has accepted a delegation of authority to act for and on behalf of another is a(n)

Agent

The fiduciary relationship that arises when 1 person (a principal) manifests assent to another person (an agent) that the agent manifests or otherwise consents so to act is called

An agency relationship

During a listing presentation to a seller, a sales agent is

Acting as an agent to her broker and must act in the best interests of the broker during the negotiations of the listing agreement, but owes no agency duties to the seller at this time.

Brokers are responsible for their salespersons

Authorized acts

The initial meeting with a prospective buyer or seller in a brokerage office that practices nonexclusive single agency is BEST described as the

Broker counsels the buyer or the seller

The parties to a buyer representation agreement are the

Broker's agent and the buyer-client

A third party you work with but do not represent in a transaction would be referred to as a

Customer

The duties of honesty, fairness, and disclosure of material facts bout the property are owed to the

Customer

To act as an intermediary, a broker must have written consent from

Each party being represented in the transaction

An agency created by the parties' actions is known as

Implied agency

An agency relationship would NOT be terminated by

Marriage of the principal

Unless the consumer proves that the conduct was committed knowingly or intentionally, DTPA provides that the consumer may NOT collect for

Mental anguish

One reason for an agent's obligation to exercise integrity in discharging his responsibilities is to avoid

Misrepresentation

Delegation of authority by a client and acceptance of that authority by the agent

Must be in writing to create an agency relationship

It may be MOST reasonably inferred that fiduciary duties demand that a real estate broker, acting as an agent for the buyer in a real estate transaction, place

No personal interest above that of the buyer

Intermediary brokerage services are

Not confined to residential transactions

Agents appointed to each of the parties by an intermediary broker may give

Only publicly recorded facts to the clients

In the case of multiple offers being received by the broker, the listing broker must

Present all offers at the same time

In the case of a second offer being received by the listing broker while the seller is awaiting a response to a counteroffer he has made to another buyer, the listing broker should

Present the second offer immediately but instruct the seller to be careful of accepting without first withdrawing the counteroffer to the first buyer

Punitive damages are

Punishing damages

A real estate broker, acting as an agent for another in a transaction, has a primary duty to

Represent the interests of the agent's principal

The underlying principle found in almost all codes of ethics established by professional organization or corporations is

The golden rule

TRELA prohibits a licensee from

Using her expertise to the disadvantage of a person with whom the licensee deals

An illegal boycott has occurred when two or more business entities conspire to

Withhold their patronage to reduce competition

Under Texas Deceptive Trade Practices Act, an innocent misrepresentation

is also actionable

Which statement by the listing broker to the buyer might lead a court to imply an agency relationship existed with the buyer?

"Let's test the seller with a low offer and then go up if we have to"

Which is NOT an essential element of a cause of action for fraud? 1. Mistake 2. Intent 3. Damage 4. Reliance

1. Mistake

The nonexclusive single-agency broker would have an office policy allowing representation of each of these consumers in a transaction EXCEPT 1. The buyer or the seller 2. Both the seller and the buyer 3. The tenant or the landlord 4. The vendor or the vendee

2. Both the seller and the buyer

A one-time showing agreement allows terms of the agreement to apply to

A specific buyer only

A real estate agent owes what level of obligation to a client?

Highest fiduciary obligation

What action of the broker is MOST likely to result in the creation of an agency relationship with the buyer?

Negotiating on the buyer's behalf

Fiduciary duties demand that an agent be

Scrupulous and meticulous in performing the agent's functions.

The Information About Brokerage Services form informs consumers

That they have a right to choose the type of representation they wish to receive, if any

The Texas Supreme Court has ruled that for an "as is" agreement in a contract to be effective against the purchaser, it must pass several tests, which include

The "as is" agreement must stand up to all of these tests to be effective against the purchaser

A broker from ABC Realty represents a buyer who wishes to negotiate on a property listed by XYZ Realty in a different real estate firm. During this transaction, which broker(s) may act as an intermediary

There is no need for an intermediary in this transaction

Unless a defendant is found to have acted knowingly and/or intentionally, the damages under DTPA are limited to

Economic damages

A listing agreement does not authorize a listing broker to

Execute a document in the name of the seller concerning the property

Price-fixing, boycotting, and allocating customers or markets are activities MOST relating to real estate brokerage violations of

Federal antitrust laws

What is a fiduciary relationship?

A contractual relationship between a principal and an agent that requires valuable consideration to be paid

When may a broker in Texas take a et listing?

When a seller requires it and is familiar with market values

Crucial elements of preserving independent contractor status versus employee status would include all these policies EXCEPT 1. The sales associate adhering to broker-required working hours 2. The sales associate performing under the terms of a written contract between the sponsoring broker and the sales associate 3. The sales associate paying her own income taxes and social security 4. The sponsoring broker controlling what, but not how, services are to be performed by the sales associate

1. The sales associate adhering to broker-required working hours

TREC Rules

Do not require licensees to be members of trade associations

The initial disclosure of an agency relationship may be

Oral or written

The rules of TREC are found in the

Texas Administrative Code

A broker has an office policy of nonexclusive single agency and is representing a seller in the sale of his property. A buyer comes into the office and asks for representation during negotiations for the purchase of the listed property. Given the broker's office policy, which option would be available to the broker at this point? 1. Agree to represent the buyer and proceed with negotiations as a intermediary 2. Explain the office policy to the buyer and insist that he must be treated as a customer on this in-house negotiation; if the buyer insists on his need for representation, refer the buyer to another broker for representation 3. Explain to the buyer that representation is not available to him under any circumstances in this transaction 4. Revoke the listing with the seller and agree to represent the buyer

2. Explain the office policy to the buyer and insist that he must be treated as a customer on this in-house negotiation; if the buyer insists on his need for representation, refer the buyer to another broker for representation

A broker at a listing appointment, before signing the listing contract, decides she would like to purchase property for her own use. In this case the broker must advise the seller of all the following EXCEPT 1. The the offered price may not reflect market value 2. That the agent is acting as a principal 3. That the agent can act as an intermediary for the seller 4. To have an independent fee appraisal of the property

2. That the agent is acting as a principal

Actions that help reduce the risk associated with acting as a broker in a real estate transaction include all of the following EXCEPT 1. Recommending the use of other experts 2. Warranting the condition of the property 3. Using written disclosures whenever possible 4. Maintaining a written policies and procedures manual

2. Warranting the condition of the property

During a listing presentation, the prospective seller asked the salesperson if his company's listing fee was standard in the area. Which of the following is the salesperson's BEST answer? 1. "Yes, most firms charge the same" 2. "Firms that charge less are not reputable and give very poor service" 3. "Our firm bases its fees on the services we provide" 4. "We charge the minimum allowable listing fee in this area"

3. "Our firm bases its fees on the services we provide"

A broker has an office agency policy of exclusive seller agency. Which BEST describes the broker's policy? The company policy is of 1. Representing sellers and buyers 2. Representing buyers or sellers, but not in the same transaction 3. Representing sellers as a listing broker 4. Representing sellers as a subagent, but not as a listing agent

3. Representing sellers as a listing broker

A buyer signs an exclusive-right-to-buy agreement with a broker to be her buyer's agent and which promises a 2% commission from either the buyer or a seller if the buyer purchases a property during the period of the contract. While driving home from work, the buyer stops to preview a FSBO property. The seller indicates that they will not pay any brokerage fees. If the buyer purchases the FSBO property, which is a TRUE statement? 1. The broker has not earned her commission because the buyer found her own property 2. The FSBO seller must pay the buyer's commission because it is guaranteed in buyer agency contract 3. The broker earned her commission, and the buyer is contractually bound to pay if the FSBO seller refuses 4. Neither the FSBO seller or buyer are contractually bound to pay the broker

3. The broker earned her commission, and the buyer is contractually bound to pay if the FSBO seller refuses

In the DTPA, the key to the success of a licensee's defense that the licensee relied on information from another source depends on the licensee proving 1. The the licensee did not know, and could not have known, the information was false or inaccurate 2. That the licensee gave written notice to the consumer prior to closing that the licensee was relying on the written information 3. That the licensee received the information in writing 4. All of these

4. All of these

A broker secures a listing to represent a seller in the sale of her home. The listing guarantees the broker payment of an agreed upon commission no matter who sells the property, with one exception. If the seller sells the property herself, the broker will not receive any compensation. This type of listing is referred to as

An exclusive agency listing agreement

If a licensee is found guilty of violating the DTPA, the remedies available to the court include

Entering a financial judgement for damages against the licensee

What kind of listing agreement would obligate the seller to pay a commission to the listing broker, no matter which broker produces the buyer, but would allow the seller to pay no commission if the seller finds a buyer without any broker's participation?

Exclusive agency

The type of listing that places listing brokers in a position of competing with their own clients to find a buyer is

Exclusive-agency listing

The type of listing contract that guarantees the listing broker will be paid a commission if anyone, including the seller, finds a buyer for the property, is the

Exclusive-right-to-sell listing

A new broker has received her broker's license and plans to open her own office. What would the broker have if both parties are customers?

Facilitator

The language of TRELA regarding a broker's representation of more than one party to a transaction allows for the multiple representation to commence and continue orally as long as the agreement is placed in writing before closing

False, nothing allows an intermediary relationship to be maintained by oral agreement

A broker who is not a REALTOR wishes to use written contracts to establish her agency agreements with buyer-clients. The broker should

Have a Texas attorney prepare a contract form

When presenting an offer to a listing agent on behalf of a buyer, the buyer's agent must NOT

Indicate that the buyer is willing to pay more than the offer being made

A buyer is interested in finding a single-family residential property. One of the buyer's many requirements is that the local elementary school be a feeder school into the John Jay Middle School. A salesperson shows the buyer several properties meeting her various financial and size requirements. The buyer ultimately purchased a property but later found that the elementary school did not feed into John Jay Middle School. The salesperson does not have children and was not aware that the listing broker did not correct the MLS when the school boundaries changed in the fall. The salesperson

Misrepresented by omission

In an intermediary transaction, the broker may appoint

One or more licensed associates to communicate with and carry out instruction of the parties

A seller listed her home with a local brokerage firm. The seller tells the broker that a recent death on the property was due to natural causes, when in fact her nephew died because he was electrocuted by faulty wiring. Who is potentially liable for a civil suit under the DTPA if the broker does not disclose the death to a potential buyer?

Only the seller

A licensee who represents a principal in a proposed real estate transaction must disclose that representation

Orally or in writing, whenever first coming into contract with the other party to the transaction

A broker is required by TRELA to offer certain minimum services to her seller-client. Minimum service does NOT include

Telling other brokers to negotiate directly with the client

A listing broker need NOT disclose

That a registered sex offender resides next door

The Texas Real Estate Commission is responsible for

The administration of TRELA

The broker's legal and ethical obligation under a listing contract is to negotiate

The best possible transaction for the client

The parties to the buyer representation agreement are

The broker and the buyer

A sales associate stops by one of her vacant listings to ensure that the gardener had mowed the lawn. While there, a prospective buyer drives up, mentions that he is represented by another company in town but still would like to view the property. Before showing the listing to the prospective buyer, TRELA would require the listing sale associate to

Verbally disclose that she represents the seller

Which of these would NOT be categorized as a physical material fact? 1. Missing roof shingles 2. Termite damage 3. Missing deed in the public record 4. All are physical material facts

3. Missing deed in the public record

A broker with an office policy of nonexclusive single agency is similar to a broker offering intermediary services in all of these examples EXCEPT 1. Both may represent sellers 2. Both may represent buyers 3. Both may represent buyers or sellers 4. Both may represent buyers and sellers in the same transaction

4. Both may represent buyers and sellers in the same transaction

A listing agent would be required to disclose to a potential buyer all of the following EXCEPT 1. Fire damage 2. Termite damage 3. Use of the premises for the manufacture of methamphetamines 4. The sellers are getting a divorce

4. The sellers are getting a divorce

Regarding the status of an intermediary, TREC generally interprets the relationship between the broker and both clients to be one of

Agency

A broker already representing both a buyer and a seller now seeks intermediary status. At what stage of a real estate transaction should the broker disclose the potential intermediary status?

Before entering into an agency relationship with each potential client

A sales agent, acting on behalf of her broker, procures an exclusive right to sell listing agreement from a seller. The type of agency relationship that exists between the broker and sales agent is______ and the type of agency relationship that exists between the broker and seller is ______?

Between broker and sales agent is a general agency, and between broker and seller is a special agency

A broker has 15 sales agents in her firm. Sales agent #1 procures an exclusive right to sell listing agreement from a seller. The agency relationship of the parties is

Broker is agent of seller; seller is principal/client of broker; sales agent #1 is agent to broker and by way of broker is agent for seller; the other 14 sales agents are agents for broker, and by way of broker, are also agents for seller

An unlicensed individual assisted her neighbor in the sale of her home. The unlicensed individual did not receive any compensation for marketing the neighbors property; fielding all phone calls from prospective buyers; showing the neighbor's property; assisting the neighbor in reviewing offers; or any other activity she performed until the property was sold. The unlicensed individual

is NOT in violation of TRELA because she did not receive any form of compensation from her neighbor for any of the activities performed

Broker A, representing the seller, receives an inspection report from Broker B, the buyers broker. The report reveals that the heat exchanger is defective. Which of the following is true? 1. Once Broker A received the report from Broker B, the seller has "imputed notice" of the existence of the reported defect 2. Until the seller actually receives a phone call from his broker notifying him of the existence of the report, or receives a faxed copy of the report, the seller has no notice of the existence of the report or the noted defect 3. The moment that the inspector gave the report to the buyer, the sellers agent has received imputed notice of the report and the defect 4. "Imputed notice" does not apply in Texas

1. Once Broker A received the report from Broker B, the seller has "imputed notice" of the existence of the reported defect

The DTPA is a state law that is intended to be liberally constructed and applied to promote its underlying purposes, which are to protect Texas consumers against all of the following EXCEPT 1. Personal injury 2. False, misleading, and deceptive business practices 3. Unconscionable actions 4. Breaches of warranty

1. Personal injury

Which offer must a listing broker submit to the seller? 1. Offer submitted through a cooperating broker at $100 less than an in-house offer 2. All of these 3. Offer for a price below the amount that the seller said was unacceptable 4. Offer from a buyer who recently filed for bankruptcy

2. All of these

A seller signed an exclusive right to sell listing agreement with a broker. The listing agreement gives no authority to the broker to attempt to represent both the seller and prospective buyer through becoming an intermediary. Which of the following is correct? 1. Since the broker is representing the seller only, the only duty the broker has to the buyer is that of fiduciary. 2. An advantage to the seller of signing an exclusive right to sell listing agreement, without permission for an intermediary transaction, is that the broker owes fiduciary duties to the seller only, negotiates solely for the best interests of the seller, and treats all other 3rd parties in an "arms-length" relationship 3. In exclusive representation of the seller, the broker still owes the duty of "confidentiality" to both the seller and the buyer. He must keep the private information of each party private and cannot share such information with the other party either before, during, or after the transaction is concluded 4. An advantage to the broker, acting under an exclusive right to sell listing agreement that gives no authority to act as an intermediary, is that he must remain neutral, and cannot give opinions or advice to either the seller or buyer or the sales agent of the seller or buyer.

2. An advantage to the seller of signing an exclusive right to sell listing agreement without permission for an intermediary transaction, is that the broker owes fiduciary duties to the seller only, negotiates solely for the best interests of the seller, and treats all other 3rd parties in an "arms-length" relationship.

A broker representing the owner of a commercial office building in the negotiations of a lease with an unrepresented prospective tenant may do all of the following EXCEPT 1. Show the property to the potential tenant and explain the terms of the lease agreement 2. Negotiate the terms and conditions on behalf of the owner/landlord 3. Share with the potential tenant that the monthly lease amount is currently 20% over market rates in the area for comparable properties 4. Negotiate the lease on behalf of the owner/landlord

3. Share with the potential tenant that the monthly lease amount is currently 20% over market rates in the area for comparable properties

Broker A secured a signed exclusive right to sell listing agreement with the seller. During the time Broker A was acting as an agent for the seller, the seller revealed that he and his wife were getting a divorce and would like to set different times to sign all of the documents at the Title Company. A buyer purchased the property and successfully closed on the property 6 weeks later. Which of the following fiduciary duties "survive the closing"? 1. The duties of obedience, loyalty, and confidentiality 2. The duty of reasonable care and due diligence 3. The duty of confidentiality 4. The duties of obedience, loyalty, disclosure and confidentiality

3. The duty of confidentiality

A broker and the broker's sales agents, acting as an agent for the seller, have an obligation to disclose all of the following to a buyer EXCEPT 1. Which party the broker/sales agent is acting for in the real estate transaction 2. The fact that the seller's property was built prior to 1978 and could contain lead based paint 3. The seller's home was tested for termites and the inspectors report shows slight damage to the southwest corner of the pier and beam foundation 4. An appraisal, requested an paid for by the seller, shows the sellers home to be worth $350,000.00 even though the sellers asking price for the home is $390,000.00

4. An appraisal, requested and paid for by the seller, shows the sellers home to be worth $350,000.00 even though the sellers asking price for the home is $390,000.00

All of the following are ways a broker can protect herself from possible lawsuits, complaints to TREC from buyers and/or sellers, and manage the potential risks that accompany being an agent for a party in a real estate transaction, EXCEPT 1. Clearly and accurately disclose the brokers agency relationship with 1 or more of the parties to the transaction, and the ramification of that relationship as they pertain to the brokers buyer or seller client 2. Never undertake to provide specialized professional services concerning a type of property or service that is outside the brokers field of competence, but suggest that the parties to the real estate transaction may want to engage that assistance of one who is competent on such types of property or service 3. Present a written Information About Brokerage Services form at the time of the license holders first substantive communication with a party relating to a proposed transaction regarding a specific real property 4. Assist the seller in filling out the Sellers Disclosure of Property Condition to ensure all defects to the property are noted on the form and that the seller reveals any items that are not functioning properly, to avoid any future legal action from a purchaser of the sellers property

4. Assist the seller in filling out the Seller's Disclosure of Property Condition to ensure all defects to the property are noted on the form and that the seller reveals any items that are not functioning properly, to avoid any future legal action from a purchaser of the sellers property

A seller listed her home with XYZ Brokerage. A buyer went to ABC Realty and the broker agreed to help her find a home. The buyer's broker found the XYZ listing in the MLS and showed it to the buyer who wrote an offer. The MLS offered compensation to both buyer's agents and subagents. Which is a TRUE statement? 1. The ABC broker does not represent the buyer 2. The XYZ broker must be an intermediary 3. The ABC broker must be the subagent of the seller 4. The ABC broker must be the agent of the buyer

4. The ABC broker must be the agent of the buyer

Broker A, when showing property to a Hispanic couple, discriminates against the couple based upon race. Which of the following does NOT address the issue of racial discrimination? 1. The Real Estate License Act (TRELA) 2. The Rules of the Real Estate Commission 3. The Code of Ethics 4. The Texas Statute of Frauds

4. The Texas Statute of Frauds

A real estate broker hired by the buyer to locate a property must obey all of the following EXCEPT 1. The instructions of the buyer 2. The agency law 3. State licensing law 4. The instructions of the seller

4. The instructions of the seller

A broker is previewing a For-Sale-by-Owner (FSBO) property to determine if it meets the requirements of her buyer-client. While touring the property with the FSBO, which statement would cause the broker to be in breach of fiduciary duty to the buyer? 1. "My buyer would like to have a fenced yard for her dogs" 2. "My buyer will need you to agree to seller financing because she has a low credit score" 3. "Your asking price is slightly above the market for this area" 4. "I notice there are no walk-in closets"

2. "My buyer will need you to agree to seller financing because she has a low credit score"

Which of the following types of contracts must have a specific termination date? 1. Buyer representation agreements and listing contracts 2. Buyer representation agreements, listing agreements, and property management agreements 3. Independent contractor agreements between brokers and their associates 4. All these service contracts must have definite termination dates

1. Buyer representation agreements and listing contracts

In an intermediary transaction, which of these statements is FALSE? 1. The broker may disclose confidential information 2. The broker is an agent of the buyer 3. The broker is an agent of the seller 4. The broker must remain impartial

1. The broker may disclose confidential information

Which of the following factual comments to the seller by the seller's appointed licensee would be permitted even without the written permission of the buyer in a fully authorized intermediary relationship with appointments? 1. "The buyer would be willing to pay more than the list price if you agree to pay some of their closing costs" 2. "The buyer is truly motivated to close this deal because their lease expires on their apartment in 30 days" 3. "Offering to pay some of a buyers closing costs often encourages them to make offers closer to the asking price" 4. "This buyer must go with an FHA-insured loan because they cannot qualify for a conventional loan"

3. "Offering to pay some of a buyers closing costs often encourages them to make offers closer to the asking price"

A broker advised his seller-client, who is selling his principal residence, to provide a completed Seller Disclosure Notice as required by the Texas Property Code. He should also advise the seller, that if a buyer does not receive the disclosure prior to signing a sales contract, the

Contract will be voidable by the buyer for any reason at any time prior to closing if the buyer does not receive the notice

A seller states that he will list the property with an associate of Eagle Realty, only if the associate does not reveal to prospective buyers that the swimming pool has a crack that the owner painted over with concrete to hide. The associate should

Decline the listing on behalf of Eagle Realty and refuse to work with the seller

Errors and omissions insurance generally covers a broker and her associates for

Errors and mistakes made in common listing and selling activities

A seller signed a listing agreement with Broker A, giving Broker A the authority to represent her in the sale of her home. In the listing agreement the seller promised to pay Broker A his compensation no matter who successfully sold her property at the price, terms and conditions that she agreed upon. This type of listing agreement is called

Exclusive right to sell listing agreement

A property manager broker manages a large 60-unit apartment complex for the owner, who has instructed the manager to limit the leases to 120 days. In regard to providing the statutory information about brokerage services to prospective tenants, the property manager is

Exempt, because the leases are all for under the one-year statutory limit

Both the buyer and seller gave written authorization for the broker to act as an intermediary but without appointments should the situation arise. The buyer expresses interest in seeing the sellers property. In regards to the intermediary transaction that now might arise, TRELA would require

No further notification to the parties from the broker, although it would be prudent to do so

A salesperson has been focusing on property management while sponsored by another broker over the last 7 years. The salesperson has just received his brokers license and immediately opens his own brokerage office. Numerous licensees with whom he worked in the past approach him for sponsorship, indicating a desire to do residential and commercial sales. The new broker has little experience in either area. Although the new broker is anxious to get started, he is particularly concerned about his limited experience in residential and commercial sales. The new broker

Should not agree to sponsor anyone until he has developed a written office policies and procedures manual

A buyer approaches a broker regarding purchasing a new home in the area. The broker presents the Information About Brokerage Services (IABS) form and circles "BUYER" at the bottom of the form. If the buyer signs the form, there is proof that

The buyer has been given notification in writing of various brokerage services available in Texas as required by law

What are federal antitrust laws intended to prevent?

The unreasonable restraint of trade

An example of a psychological stigma that might have an impact on the market value of a property would be

Child molestation occurring on the property

A buyer called the listing company of a property he wanted to purchase. The sales agent who listed the property showed the buyer the property and answered all of the prospective buyers questions. The sales agent made clear to the prospective buyer that the agent represented the seller. The buyer later filled out a sales contract himself, and took his offer to the listing agent, asking the agent to present his offer to the seller. In this scenario, the buyer is considered to be

A customer of the listing broker

A seller hires a broker to assist him in the sale of his home. The seller reveals to the broker that his father died from a fall from a second story balcony that collapsed. The broker should treat this as

A death related to the condition of the property that should be disclosed

The Texas Real Estate License Act is

A licensing statute

Subagency is

Created by the mutual consent of the parties involved, and may be created expressly by agreement or implicitly by words, conduct or custom, and both the broker with the original agency agreement, and the subagent broker, owe the principal (whether buyer or seller) all of the fiduciary duties.

A person who receives limited brokerage services without establishing an agency relationship, and a party to a real estate transaction who receives information, services, or benefits but has no contractual relationship with the broker, is called a/an

Customer

An agent would NOT owe fiduciary duties to a

Customer

A sellers agent is permitted by law to

Present an offer from the agent's parents with full disclosure of the relationship

In the case of multiple offers being received, the listing broker should

Present them as soon as possible in each case

Broker A has an exclusive right to sell listing agreement with a seller and is not functioning as an intermediary. The seller reveals to the broker that he must close on the sale of his home within the next 30 days. He asks the broker to "market the home, including pricing, for a quick sale" and gives his broker permission to reveal the 30 day urgency. Broker B brings a buyer client to see Broker A's listed property. Broker A tells Broker B that although the home is listed for $200,000, the seller must close the sale of his home within the next 30 days and to "make his best offer" as quickly as possible. Broker A

Has specific instruction from the seller to "market the home, including pricing, for a quick sale" and therefore is not in violation of his fiduciary duties to the seller

With respect to listing in most MLS systems, any commission to be paid to the "other" broker by a listing broker is determined by agreement between the

Seller and the listing broker

"No real estate license holder shall inquire about, respond to, or facilitate inquires about, or make a disclosure of any owner, previous or current occupant, potential purchaser, lessor, or potential lessee or real property which indicates or is intended to indicate any preference, limitation, or discrimination based on the following: 1) race; 2) color; 3) religion; 4)sex; 5) national origin; 6) ancestry; 7) familial status; 8) disability." This statement is a part of 22TAC 531 Cannons of Professional Ethics and Conduct which is found in the

TREC Rules

An individual received her sales agent license, without securing a sponsoring broker, and left her new license on file with TREC, until she found a broker who would sponsor her. 6 months after she was licensed, she found a broker who invited her to join his brokerage. The sales agent signed an independent contractor agreement with the broker, who then filed a form with TREC accepting responsibility for the licensee, and asked TREC to send her sales agent license to his office. The license arrived at the brokers office 10 days later. When is the newly licensed sales agent able to represent a buyer or seller in a real estate transaction?

Under TRELA, the sales agent must have a broker sponsoring him or her, and have received her license evidencing the authority to act as a sales agent before the sales agent may act for another person for a fee in a real estate transaction

Sales agent for Broker A is successful in obtaining an exclusive right to sell listing agreement from seller. Sales agent for Broker B brings his buyer client to see the listed property of seller. During the buyer's preview of the property, the buyers agent asks the sellers agent the following question: "do you really think this property is worth the listed price?" The sellers agent replies: "To be honest with you, the list price is far above the current market value for homes in this area, but if your buyer will just make an offer on the property, the seller will probably take it, because he must sell as quickly as possible." The listing agent...

Violated his fiduciary duty to his client by revealing confidential information, both about the pricing of the property and the sellers need to sell quickly

On September 1, 2005, a new section was added to TRELA. Common law dual agency

Was made legally impossible under TRELA. Brokers no longer have the choice to represent buyers and sellers as "dual agents" in real estate transactions

One of the primary requirements to establish an independent contractor status as defined by IRS regulations is a

Written contract with a statement that the salesperson will not be treated as an employee for federal tax purposes

An agent owes fiduciary duties to

sponsoring broker, client, principal,

The seller signs a listing agreement authorizing a broker to represent him with 3rd parties in the sale of his home. This type of agreement is characterized as

A written express agency agreement

A buyer is seeking exclusive representation from a real estate broker in the purchase of a home. Which of the following statements is true? 1. The broker is required to give the Information About Brokerage Services (IABS) form to the prospective buyer at the time of the first substantive dialogue with the party, about a specific property, even if the contact is my email 2. The broker is required to give the Information About Broker Services (IABS) form to the prospective buyer at the first face to face meeting at an open house 3. The broker is only required to give the Information About Broker Services (IABS) form to a prospective buyer at the first face to face meeting at an open house 4. The Information About Broker Services (IABS) form is required to be given to both the buyer and the seller, after the listing and buyer representation agreements are signed, but prior to the signing of the sales contract between the parties to the transaction

1. The broker is required to give the Information About Broker Services (IABS) form to the prospective buyer at the time of the first substantive dialogue with the party, about a specific property, even if the contact is by email

A broker secured a buyer representation agreement with an unlicensed buyer. In the buyer representation agreement, the buyer wrote into paragraph 17. Special Provisions: "Broker agrees to pay Buyer at time of closing $1,000.00 from Buyer's commission". Under TRELA, which of the following is true? 1. In Texas, the broker is NOT allowed to pay the $1,000 to the buyer, because licensees are not permitted to share commissions with unlicensed buyer principals 2. In Texas, the broker is not prohibited by TRELA or TREC from sharing any amount of his commission with an unlicensed buyer/principal 3. In Texas, a broker is allowed to pay a buyer principal compensation, as long as the compensation is not more that $50.00 4. None of these

2. In Texas, the broker is not prohibited by TRELA or TREC from sharing any amount of his commission with an unlicensed buyer/principal

To ensure that his sale agents and associate brokers are not considered employees by the IRS, the broker may do all of the following EXCEPT 1. Require the sales agent sign an independent contractor agreement that includes the following statement (or one similar to it): "Associate is an independent contractor and is not brokers employee. Broker will not withhold any amounts for taxes from the fees paid to associate under this agreement, unless ordered to do so by a court of law or the IIRS> Broker will not pay any amounts for FICA, unemployment compensation, or worker's compensation for associate" 2. Require each sales agent and associate broker to comply with a weekly schedule, created by the broker, outlining the following: what time he or she must arrive at the office, and what time they may leave; the number of days he or she has "up-front desk duty" per week; how many day per month he or she will attend training sessions; how many "cold calls" he or she must make weekly; and the required weekly quota of listing agreements and buyer representation agreements for each sales agent and broker associate 3. Require the sales agent and broker associate to sign the "Statement of Understanding" that states: "On or about the first day of _____ of each calendar year this agreement is in effect, associate will execute and deliver to broker a statement of understanding, a copy of which is attached to this independent contractor agreement." 4. Require the sales agent and broker associate to sign a statement that states: "This agreement does not create a partnership between the parties. Except as provided by this agreement, neither party is liable to the other party for any expense or obligation incurred by the other party"

2. Require each sales agent and associate broker to comply with a weekly schedule, created by the broker, outlining the following: what time he or she must arrive at the office, and what time they may leave; the number of days he or she has "up-front desk duty" per week; how many days per month he or she will attend training sessions; how many "cold calls" he or she must make weekly; and the required weekly quota of listing agreements and buyer representation agreements for each sales agent and broker associate

If a real estate broker or sales agent violates TRELA, the Texas Real Estate Commission (TREC) may do all of the following EXCEPT 1. Suspend the brokers license 2. Revoke the brokers membership in the National Association of REALTORS 3. Revoke the brokers license 4. Require the broker to attend additional education courses related to the violation of TRELA

2. Revoke the brokers membership in the National Association of REALTORS

Which statement is TRUE when a broker is representing the parties in an intermediary transaction? 1. Neither the broker nor the appointed associates may give the parties advice and opinions 2. The appointed associates of the broker may give the parties advice and opinions 3. The seller's appointed associates must tell the seller if the buyer said she would pay more that than the offered price 4. The buyer's appointed associates must tell the buyer if the seller said he would accept less than the offered price

2. The appointed associates of the broker may give the parties advice and opinions

A licensed broker represented a seller in a real estate transaction and charged the seller a 6% commission on the sales price of the home. After the successful conclusion of the sale, the seller refused to pay her listing broker the agreed commission. In order for the broker to sue for her commission, TRELA requires all of the following EXCEPT 1. The broker must prove that they were duly licensed at the time the brokerage services began 2. The broker must prove that they are "members in good standing" of the national, state and local association of REALTORS 3. The agreement for compensation be in writing and signed b the party against whom the action is brought or by a person authorized by that party to sign the document 4. At or before the time of signing the contract to purchase, the buyer was advised in writing to have an abstract of title examined by an attorney, or to secure a policy of title insurance

2. The broker must prove they are "members in good standing" of the national, state and local association of REALTORS

A salesperson sold a property to an unrepresented buyer in a cooperative sale. Which statement is TRUE? 1. The salesperson is a subagent of the sellers broker 2. The salesperson represents her broker, who is a subagent of the sellers broker 3. This is a cooperative sale and no subagency exists 4. The salesperson would only be a subagent if she sold one of her brokers listings

2. The salesperson represents her broker, who is a subagent of the seller's broker

In order to create an agency relationship in a real estate transaction, which of the following is true? To create an agency relationship, 1. The principal and potential agent must sign a written agreement stating that one party, the principal, requests that the other party, the agent, act on his or her behalf with third parties in a real estate transaction, and the other party agrees to so act 2. A written promise from the principal to pay compensation, must be signed by the party charged to pay the compensation, and agreed to and signed by the potential agent 3. There must be express "mutual consent", either oral or written, between the parties to establish an agency relationship. However, the consent may be deemed by the court to be implied if not expressed 4. A written listing agreement or buyer representation agreement must be signed by the seller or the buyer, and accepted and signed by the agent

3. There must be express "mutual consent", either oral or written, between the parties to establish an agency relationship. However, the consent may be deemed by the court to be implied if not expressed

Regarding listing and buyer representation contracts in Texas and the ability of a broker to sue for his compensation, which of the following statements is NOT correct? 1. TRELA does not require that listing contacts or buyer representation contracts be in writing 2. TRELA states a person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document 3. An oral listing contract is legal in Texas but cannot be used to bring an action for collection of the licensee's commission 4. Both oral listing contracts and written listing contracts are always enforceable by the courts in Texas

4. Both oral listing contracts and written listing contracts are always enforceable by the courts in Texas

A listing broker would be obligated to follow all of the following instructions from a seller EXCEPT 1. Show the property only on Fridays 2. Conceal the suicide on the premises 3. Set showing appointments with tenant during the period of the listing 4. Conceal the cracked foundation

4. Conceal the cracked foundation

The real estate broker, acting as an agent for a buyer or seller in a real estate transaction under an exclusive right to sell listing agreement with the seller or a buyer representation agreement with a buyer, owes all of the following fiduciary duties to the principal EXCEPT 1. Obedience and loyalty 2. Duty of full disclosure and duty to account for all monies or documents, etc. 3. Confidentiality and reasonable care and due dilligence 4. Duty to accomplish the sale of the seller/client's property, or duty to find an acceptable property for the buyer/client

4. Duty to accomplish the sale of the seller/client's property, or duty to find an acceptable property for the buyer/client

A broker was told by his seller client that there has been a recent fire in the kitchen. The seller indicated that he has hired his uncle who owned a construction business, to repair the damage and install new wiring. Based upon this information, the broker made the decision that there was no need to reveal to any prospective buyer, the fact that there had been a fire in the building kitchen since the damage had already been repaired. The property was purchased by a buyer, and 4 weeks after closing, another fire took place in the kitchen due to faulty wiring which caused $25,000 worth of damage. In a suit filed under the DTPA, each consumer who prevails may obtain all of the following EXCEPT 1. Economic damages, attorney fees, and court costs, as well as an additional sum of money for mental anguish if the conduct has been committed knowingly or intentionally 2. If the act is committed intentionally, the consumer may receive no more than 3 times the amount for economic damages and 3 times the amount for mental anguish damages 3. If a court finds that a defendant had knowingly acted, the court is limited to an award of a total of not more than 3 times the consumers economic damages. However, if the total of triple the economic damages plus damages for mental anguish 4. If a broker or sales agent is found in violation of the DTPA, the court may award economic damages, attorney fees, and court costs. However, the DTPA does not award any amount of money for mental anguish

4. If a broker or sales agent is found in violation of the DTPA, the court may award economic damages, attorney fees, and court costs. However, the DTPA does not award any amount of money for mental anguish

Which of the following os NOT a recognized way for an agency relationship to be terminated? 1. Lapse of the time specified in the agreement 2. Completion of the purpose for which the agency relationship was created 3. Mutual rescission 4. Marriage of the principal

4. Marriage of the principal

Which of the following is NOT one of the benefits of buyer agency to the buyer? 1. Having a tailored buyer representation agreement specific to the needs of a buyer client 2. A strong negotiating position and strategy for the buyer, when the agent is exclusively representing the buyer 3. No conflicts of interest when representing the buyer exclusively as opposed to the broker functioning as an intermediary with "limited agency" duties 4. No requirement for confidentiality for the buyer when the broker is acting exclusively as the agent for the buyer

4. No requirement for confidentiality for the buyer when the broker is acting exclusively as the agent for the buyer

Although much real estate law is governed by individual states, federal legislation plays an important role in real estate practice and addresses overriding national concerns that apply in any state. Which of the following is NOT a federal law that addresses national concerns that apply to any state? 1. The Sherman Antitrust Act 2. Truth in Lending Act and Regulation Z 3. Fair Housing Act of 1968 4. Occupation Code, Title 7, Section 1101

4. Occupation Code, Title 7, Section 1101

Prior to a buyer representation agreement being signed, the sales agent working with a potential buyer client is required to do all of the following EXCEPT 1. Give, and explain to the prospective buyer the Information About Broker Services form to the prospective buyer client 2. Disclose to the buyer her agency relationship with her broker 3. Negotiate the terms and conditions of the buyer representation agreement on behalf of her broker who is in an "arms-length" relationship with the potential buyer prior to the signing of the agreement 4. Represent the buyers position and interests in the negotiation of the buyer representation agreement "against" the interest of the other party to the buyer representation agreement

4. Represent the buyer's position and interests in the negotiation of the buyer representation agreement "against" the interest of the other party to the buyer representation agreement

A broker who sponsors salespersons or is a designated broker for a business entity must maintain, on a current basis, written policies and procedures to ensure that the broker is in compliance with TREC mandated broker responsibilities. All of the following responsibilities are mandated EXCEPT 1. That each sponsored salesperson is advised of the scope of the salesperson's authorized activities subject to the act and is competent to conduct such activities 2. That each sponsored salesperson maintains his license in active status at all times while he is engaging in activities subject to the act 3. That any and all compensation paid to a sponsored salesperson for acts or services subject to the Act is paid by, through or with the written consent of the sponsoring broker 4. That all listing and buyer representation agreements shall be reported to the Texas Real Estate Commission on a monthly basis, and an annual report listing the entire brokers real estate activities (by month) will be submitted to TREC no later than December 31 of each year

4. That all listings and buyer representation agreements shall be reported to the Texas Real Estate Commission on a monthly basis, and an annual report listing the entire broker's real estate activities (by month) will be submitted to TREC no later than December 31 of each year

A sales agent received a call at her brokerage office from a homeowner. The owner is contemplating selling his home and was given a recommendation from a friend to call the sales agent, based upon the excellent work the sales agent had done in selling the friends home. The sales agent made an appointment to list the sellers home. During the process of listing the sellers home, the sales agent discussed the conditions under which she will take the listing, the commission percentage charged charged by her broker, and answered the sellers questions. Prior to the signing of the listing, which of the following is true? 1. The sales agent is in an "arm around" relationship with the seller and owes all of the fiduciary duties of an agent to her seller client/principal 2. The sales agent is acting as an agent on behalf of both the agents broker and the seller, and owes both her broker and the seller all of the fiduciary duties of an agent to a client/principal 3. The sales agent is solely acting in her own behalf to procure the listing but once the listing is procured, she is acting on behalf of her broker and herself 4. The sales agent, prior to the signing of the listing agreement by the seller, is acting on behalf of her broker principal as a fiduciary; however, during the presentation to become a fiduciary to the seller, the sales agent must take care not to disadvantage the seller in future negotiations with a prospective purchaser

4. The sales agent, prior to the signing of the listing agreement by the seller, is acting on behalf of her broker principal as a fiduciary; however, during the presentation to become a fiduciary to the seller, the sales agent must take care not to disadvantage the seller in future negotiations with a prospective purchaser

While the Texas Real Estate License Act (TRELA) is a statute, TREC rules

Are administrative regulation created by the real estate commission to further the purpose of, and clarify, TRELA, and that have the effect of law relative to licensee conduct for TREC enforcement purposes

A seller would generally NOT be liable for the acts and representations of the

Buyer's agent

A sales agent representing his seller client meets with an unrepresented prospective buyer to show the seller's property. The sales agent knows that the roof needs repairs. The sales agent, knowing that he has a duty to get the best possible price for the home on behalf of his seller client, does not tell the prospective buyer about the needed repairs

Even though the sales agent has the fiduciary duty of obedience to his seller client, the agent will be held liable to "third parties" for misrepresentations and a failure to disclose certain material defects in the property that may affect the buyer's offer

A real estate broker, when engaging in a real estate transaction on her own behalf (ex: representing herself, not another person)

Is obligated to inform any person with whom she deals that she is licensed, and shall not use her expertise to the disadvantage of a person with whom she deals

A owner of several apartment complexes hires a broker to manage her properties. The broker approves all tenants, makes decisions regarding repairs, pays all expenses for the owner, signs all rental agreements, and hires/fires all apartment employees. The relationship between the owner and the property manager is one of

General agency

A sales agent is sponsored by a licensed broker. The type of agency relationship created between the sales agent and the broker is generally a

General agency

A broker allows her sales associates to list their own homes through the brokerage without charging the usual listing compensation paid by the seller to the listing broker. The broker does, however, charge for the compensation to be paid to the cooperating broker. This type of agency is

Gratuitous agency

If a broker secures a buyer representation agreement with a buyer, the broker...

Is the exclusive representative of the buyer in any specific transaction, unless the buyer representation agreement authorizes the broker to become and "intermediary", which allows the broker to continue to act in the transaction as the intermediary in the brokers company's listings as well as act as only the buyers agent in other brokers' listings

Under section 5.008 of the Texas Property Code, the statute requires a written sellers disclosure notice for most single-family residential resale properties. Which of the following is true?

If the statutory written seller's disclosure notice is not delivered by the seller to the purchaser on or before the effective date of an executory contract binding the purchaser to purchase the property, the purchaser may terminate the contract for any reason within 7 days after receiving the notice

An agency relationship with a buyer may be created by

Implication, an express written agreement, or an express oral agreement

A sales agent, (through her broker) represents the seller in the sale of the sellers homes through an exclusive right to sell listing agreement. After 8 months of being advertised in the MLS, an unrepresented prospective buyer calls the sales agent to set an appointment to see the property. During the showing of the property, the prospective buyer is concerned that the asking price is really too high, and the sales agent responds to the buyers concern by saying: "Don't worry; I'll get you the best deal I possibly can. The seller is eager to sell." The sales agent...

Just placed her broker in an "undisclosed dual agency" position because she told the buyer she would get the buyer the best deal she possibly could, even though the sales agent, through her broker, is already the exclusive agent for the seller

Broker A has a small brokerage, with only 1 sales agent. The sales agent has procured an exclusive right to sell listing agreement with a seller. The agreement authorizes the intermediary relationship with the possibility of appointments. The sales agent has also procured a buyer representation with a prospective buyer, authorizing the intermediary relationship, with the possibility of appointments. The buyer informs her sales agent that she would like to see Broker A's listing. Broker A chooses to act as an intermediary, and appoints his sales agent to communicate with and obey the instruction of the buyer, and appoints himself (Broker A) to communicate with and obey the instruction of the seller. Broker A

Is NOT allowed, under TRELA, to appoint himself to either the buyer or the seller, so appointments may NOT be made by Broker A. Broker A will act "as" the intermediary and his sales agent will act "like" the intermediary. Neither Broker A nor his sales agent may give opinions and advice to the buyer or seller

If a broker chooses to act as an intermediary between the buyer and seller in a real estate transaction, under TRELA the intermediary broker may

Make appointments; one sales agent to communicate with and carry out the instruction of the buyer client, and one sales agent to communicate with and carry out the instructions of the seller client. Each properly appointed licensee may give advice and opinions to the party to whom he or she is appointed

TRELA holds brokers responsible to

Members of the public, TREC, and their clients

Mutual agreement to terminate a written agency agreement

Must be in writing

Real Estate sales agents

Must be sponsored by a licensed real estate broker and must have received his or her license prior to acting as, or representing that, he is a real estate sales agent, even if he has received notification of having passed the sales agent exam successfully. Real estate sales agents derive their authority to act on behalf of a buyer or seller client of the broker, through the broker, and do not have a contractual relationship with either a buyer or seller through the listing agreement

In the typical residential transaction involving an MLS-listed property and 2 brokers, where subagency has been offered and accepted, which agent owes primary allegiance to the buyer?

None

Unless there is an agreement to the contrary, the duties of a broker acting as principal to her licensed agents include

Performance, compensation, indemnification and reimbursement

A sales agent, acting on behalf of his broker, procures a signed written listing agreement with a seller that includes permission to act as an intermediary, and states the source of any expected compensation to the broker. On the same day, the sales agent procures a signed written buyer representation agreement with a buyer that includes permission to act as an intermediary, and states the source of any expected compensation to the broker. The buyer asks to see the seller's property and subsequently makes an offer on that property. In this scenario..

The broker has met the requirements of TRELA to act as an intermediary by having the signed agreement of both buyer and seller giving him permission to act as an intermediary and by stating the source of any expected compensation to the broker in the agreements. Both permissions given were in conspicuous bold print

Once a broker has agreed to represent a buyer through the TAR Residential Buyer/Tenant Representation Agreement, the broker promises to: "(a) use brokers best efforts to assist the client in acquiring property in the market area; (b) assist client in negotiating the acquisition of property in the market area; and (c) comply with other provisions of the agreement..." If the broker does not find a property that suits the buyers needs prior to the expiration of the representation agreement, the buyer

The broker is not obligated to find a suitable property within the time of the buyer representation agreement, he is only obligated to use his best efforts to do so

A seller will be on a business trip for 3 weeks and requests that his sales agent contact a roofer while he is gone, to make repairs to the roof of his home. The seller gives his sales agent specific instructions about the repairs and asks his sales agent to pass those instructions along to the roofer. The relationships of the parties in this scenario are

The sales agent is agent to the seller/principal; the roofer is the "3rd party" vender; the seller is customer to the roofer/vendor; the agent has no relationship to the roofer except to carry out the instructions of his seller client and remain at arms-length to the roofer.

A sales agent, acting as an agent for a buyer, assisted the buyer in writing an offer using a contract form designed by the seller's attorney. The attorney's sales contract form did not have any disclosure information specific to the right of the buyer to have an abstract covering the real estate examined by an attorney chosen by the buyer, or his right to be provided or to obtain a title insurance policy. The sales agent did not give that information in writing to his buyer client prior to or at the time of the signing of the offer.

The sales agent is in violation of TRELA and could have his license suspended or revoked and jeopardize any earned commission

A cooperating broker acting as a subagent tells a buyer that the seller is filing for divorce and for bankruptcy. This disclosure would be improper unless

The seller authorized the release of this information

A misrepresentation can be made by acts of

Commission or omission