FL REAL ESTATE CHAPTER 4

21. In many brokerage relationship situations, the broker gives permission for the sales associate to work directly with a principal. Which of the following is true in this situation? (a) The broker gives up the fiduciary relationship with the principal. (b) The broker has a fiduciary relationship with the sales associate, but not with the principal. (c) The sales associate is no longer under the supervision or direction of the broker. (d) The sales associate has a fiduciary relationship with both the broker and the principal.

Your answer: D A sales associate or broker associate is registered with the broker as his or her agent and is never an agent of the broker's principal. However, when employed by and licensed under a broker, a sales associate or broker associate acts as the broker's agent in performing services of real estate. Since the broker has a fiduciary duty to the principal, any licensee acting on behalf of that broker also has a fiduciary duty to the principal. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent

3. As an agent, a broker is employed by and acts on behalf of whom? (a) A buyer (b) A seller (c) A customer (d) A principal

Your answer: D In a single agency relationship, the employer becomes the principal, who authorizes the broker as agent to perform certain services on his or her behalf. The party whom the broker does not represent as an agent, and with whom the broker attempts to be successful in achieving the purpose of his or her employment by the principal, is the broker's customer. Reference: Authorized Real Estate Brokerage Relationships, Single Agent

9. Mary, an Ohio broker, accompanied a customer to Florida and met with broker Stan in his office in Miami. While Stan showed the customer property and obtained a binding contract for the purchase of a condominium, Mary took some time off and went to the beach. When Mary returned to Stan's office, she discovered that Stan had written a contract and demanded a share of the commission. Which statement is correct? (a) Stan may share the commission with Mary. (b) Mary violated the real estate license law by accompanying the customer to Florida. (c) If Stan pays Mary a share of the commission, Stan will be in violation of the license law. (d) If Stan pays Mary a share of the commission, both Stan and Mary will be in violation of the license law.

Your answer: A A Florida broker may pay a referral fee to, or share a commission with, a broker licensed or registered by another state or foreign country. The out-of-state or foreign broker may accompany the customer to Florida, but may not participate in the transaction in any manner. However, if the out-of-state or foreign broker comes into Florida and provides real estate services in the transaction, no referral fee or commission can be paid. Reference: Chapter 4, Broker's Right to Compensation, Referral Fees

23. Sal, a properly licensed Arizona broker, forms a relationship with Betty, a properly licensed Florida broker. Sal agrees to refer potential buyers to Betty, and in return, Betty agrees to pay Sal 25% of her commission as a referral fee. Jorge, a competitor of Betty's, discovers the relationship and files a complaint with DBPR. What will an investigation of the complaint most likely determine? (a) The Florida real estate license law was not violated. (b) Broker Betty violated F.S. 475 by paying the commission to Sal. (c) Since Sal accepted the commission, both brokers violated F.S. 475. (d) Sal violated Florida's real estate license law by asking Betty to pay a referral fee.

Your answer: A A Florida broker may pay a referral fee to, or share a commission with, a broker licensed or registered by another state or foreign country. The out-of-state or foreign broker may accompany the customer to Florida, but may not participate in the transaction in any manner. If the out-of-state or foreign broker comes into Florida and provides real estate services in the transaction, no referral fee or commission can be paid. In this example, the Florida-licensed broker, Betty, performed the real estate services. Sal, the out-of-state broker, only referred potential buyers to Betty. He did not perform any real estate services. Betty can pay Sal a referral fee. Reference: Chapter 4, Broker's Right to Compensation, Referral Fees

5. Broker Joan just received an oral offer to purchase a listed property. No earnest money accompanied the oral offer. Which of the following statements is correct? (a) Joan must present the offer. (b) Joan should not present the offer since no earnest money deposit was received. (c) Joan must advise the customer that an earnest money deposit is required to make an offer valid. (d) Joan should reject the offer on behalf of the seller.

Your answer: A A broker has a duty to transmit any and all offers to the employer including oral offers or offers made without a binder deposit. Failure to present an offer may be considered as concealment or a breach of trust and could result in disciplinary action against the broker. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Presenting Offers

22. In regards to agency relationships, which statement is most correct? (a) A special agent is only authorized to perform a single act on behalf of the principal. (b) A dual agency is the preferred relationship in Florida. (c) A sales associate is a general agent of the broker's principals. (d) A fiduciary relationship cannot be created without the payment of compensation.

Your answer: A A special agent is authorized under agency law by the employer to perform a single act. The employment contract between the employer and agent establishes the limit of authority granted. Example: A broker employed under a single agency listing for the sale of a property has been authorized to locate a purchaser on behalf of the owner. This is a single act. The broker becomes a special agent of the owner, who is the broker's principal. Reference: Chapter 4, Agency Law, Special Agent

8. Broker Tom sold a property which was listed with broker Alice. Tom was unable to attend the closing, so Alice collected the entire commission. Alice refused to pay Tom his share of the commission. What could Alice be charged with? (a) Failure to account (b) Collecting an overage (c) Commingling (d) Fraud

Your answer: A Brokers involved in a transaction may agree to split or divide a commission if permission of all parties to the transaction has been obtained. If one of the brokers collects the entire commission and refuses to share with the other broker as agreed, the broker can be charged with failure to account, which is a form of fraud. Reference: Chapter 4, Broker's Right to Compensation, Commission Disputes between Competing Brokers

1. Who owes fiduciary duties in a single agency relationship? (a) The broker only (b) The principal only (c) Both parties (d) Neither party

Your answer: A The single agency relationship is the only one that establishes a fiduciary relationship, which legally allows the seller or buyer as principal to place trust and confidence in the broker as his or her agent. An agent has fiduciary duties to the principal imposed by law; these duties are not a matter of contract or compensation. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent

30. Which brokerage relationship status includes a full fiduciary relationship? (a) Single Agency (b) Transaction Broker (c) Dual Agency (d) Nonrepresentation (no brokerage relationship)

Your answer: A The single agency relationship is the only one that establishes a fiduciary relationship. The fiduciary relationship legally allows the seller or buyer as principal to place trust and confidence in the broker as his or her agent. An agent has fiduciary duties to his or her principal imposed by law; these duties are not a matter of contract or compensation. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent

26. A real estate licensee who is working with a seller receives a call from another broker stating that, "I am representing a buyer as the buyer's broker. I'm standing in front of one of your listed properties with my buyer." What can the licensee infer from this conversation? (a) The licensee is required to collect the No Brokerage Relationship Disclosure prior to giving any information to the broker. (b) The agent who is calling is in a single agency relationship. (c) The buyer's broker must first contact the listing broker for permission to enter into this relationship. (d) Unless the licensee is a single agent for the seller, the licensee should stay away from this transaction.

Your answer: B A single agent is a broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction. Since the caller is representing the buyer as the buyer's broker, there is an implied employer/employee (buyer/broker) relationship. The word "principal" does not have to be explicitly used to create a single agency relationship. Reference: Chapter 4, Brokerage Real Estate Relationship Disclosure Act, Definitions, Single Agent

7. An agent failed to advise a principal regarding the value of the owner's property prior to accepting a listing. Which fiduciary duty did the agent breach? (a) Loyalty (b) Disclosure (c) Accounting (d) Obedience

Your answer: B All licensees, in any type of brokerage relationship, including nonrepresentation, have the responsibility to disclose all known facts that affect the value of residential property and are not readily observable to the buyer. In a single agent relationship, an agent also has the fiduciary duty of full disclosure and is required to report any fact or rumor to the principal that may affect his or her decision. The principal may rely upon all material statements made by the agent. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent

10. What is an agent required to do in an agency relationship? (a) Obtain the highest price possible. (b) Attempt to obtain the most favorable price and terms on behalf of the principal. (c) Obtain the lowest price possible. (d) Negotiate the transaction to receive the highest possible commission.

Your answer: B As an agent of the principal, the agent has a duty to obtain the most favorable price and terms on behalf of the principal. If representing a seller, the agent must attempt to obtain the highest price possible; if representing a buyer, the agent must attempt to obtain the lowest price possible. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent

16. A broker has appointed two sales associates to act as agents in a nonresidential transaction, one for the seller and one for the buyer. Which statement is correct? (a) This is an illegal dual agency. (b) The sales associates are referred to as designated sales associates. (c) Buyer and seller must have combined assets of $1 million. (d) The FREC will revoke the licenses of the broker and both sales associates.

Your answer: B In nonresidential sales transactions, if both the seller and the buyer have assets of $1 million or more, and both request single agent representation, the broker may, at the request of the parties, designate sales associates to act as single agents for the different customers in the same transaction. One or more sales associates, each titled "designated sales associate," may be designated to act as agents for the seller, and one or more may be designated to act as agents of the buyer. Although this is technically a dual agency that would otherwise be illegal, this provision has been incorporated into the law. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Designated Sales Associate

31. Anxious to close a deal, a sales associate agreed to kick back part of her commission to the buyer. Which of the following best describes this situation? (a) This is a violation of F.S. 475 and the licensee would be subject to discipline. (b) This arrangement is acceptable provided all parties are notified and agree. (c) This is a violation of F.S. 455. (d) Provided the kickback does not exceed 10% of the total commission due, it would be a legal arrangement.

Your answer: B The Federal Real Estate Settlement Procedures Act (RESPA) prohibits a broker from receiving a fee, kickback, or rebate in a real estate transaction unless certain criteria are met. The broker must perform a service entitling him or her to any such fee, have the appropriate license to perform the service if one is required, and advise all parties to the transaction of payment of the fee. Reference: Chapter 4, Broker's Right to Compensation, Kickbacks

2. All of the following activities are exempt from the requirement to provide disclosures under the Brokerage Relationship Disclosure Act, EXCEPT: (a) Sales staff at a new development center (b) Showing property to a party that is not being represented (c) A bona fide open house or model home showing that does not involve eliciting confidential information, the execution of a contractual offer or an agreement for representation, or negotiations concerning price terms, or conditions of a potential sale (d) Responding to general factual questions from a potential buyer or seller concerning properties that have been advertised for sale

Your answer: B Written disclosure is required in single agency and nonrepresentation (No Brokerage Relationship). Reference: Chapter 4, Brokerage Relationship Disclosure Act, Disclosure Requirements; Disclosure Exemptions

24. Which of the following best describes the practice of dual agency in Florida? (a) Dual agency is legal, provided it is disclosed to both parties. (b) Dual agency is another name for Transaction Brokerage. (c) Dual agency is a violation of Florida Statute 475. (d) Florida law creates a presumption of dual agency unless another relationship is formed.

Your answer: C A broker may represent a seller or a buyer, or a landlord or a tenant. Any attempt to represent both parties to a transaction would create an illegal dual agency. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent

4. In which of the following situations does a general agency relationship exist? (a) When a broker is employed to market a property (b) When a sales associate is working with a customer (c) Whan a sales associate is employed by a broker (d) When a broker is employed by a buyer

Your answer: C A general agent has the principal's authority under agency law to act for him or her on a continuing basis, but with authority limited to a specific trade or business. A sales associate is a general agent of the broker and automatically becomes a subagent of all the broker's principals. Reference: Chapter 4, Agency Law, General Agent

20. Which of the following statements is correct regarding a broker's authority to act on behalf of the principal? (a) A broker can refuse offers on behalf of the principal. (b) A broker can buy the listed property without consent of the principal. (c) A broker must follow all legal instructions of the principal or withdraw. (d) A broker must ignore the instructions of a principal when the instructions are not in the best interests of the principal.

Your answer: C An agent must obey all legal instructions of the principal. If an agent cannot comply with the legal instructions of the principal, the agent must withdraw from the relationship. If a principal gives an illegal instruction, the agent should advise the principal that he or she is unwilling to proceed. The agent must withdraw from the transaction if the principal persists. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent, Obedience

27. A home was listed and sold within 24 hours. The buyer felt that the broker did not earn the full commission called for in the contract and requested that the broker rebate $3,000 at closing. The broker agreed. Which of the following statements is correct? (a) This is a violation of F.S. 475 and the broker would be subject to disciplinary action by the FREC. (b) This is a violation of F.S. 120. (c) This is legal, provided that all parties are informed and agree. (d) This is acceptable, as long as the rebate does not exceed 10% of the purchase price.

Your answer: C RESPA prohibits a broker from giving or accepting a fee, kickback or anything of value in exchange for the referral of real estate settlement (closing) services in connection with federally related mortgage loans. The exception is if a broker performs a service that entitles him or her to any such fee, has the appropriate license to perform the service (if one is required), and discloses and receives consent from all interested parties regarding the fee payment. Reference: Chapter 4, Broker's Right to Compensation, Kickbacks

28. A seller with nonrepresentation (no brokerage relationship) informed an agent that he is selling his home due to a divorce, and for that reason would take $20,000 below market value. The agent told a potential buyer "If I were you, I would offer $20,000 less than the asking price. The seller is in the middle of a nasty divorce, and you'll likely get a good deal." Which of the following statements is correct? (a) The agent should not have disclosed this information due to limited confidentiality, and disciplinary action may be taken by the FREC. (b) The agent has an implied loyalty to the seller to obtain offers as close to market value as possible. (c) The agent may disclose the above information in a No Brokerage Relationship. (d) The agent was in compliance by telling the buyer to offer less, but violated the law by telling the buyer about the divorce.

Your answer: C The duties a real estate licensee owes to a customer with whom the licensee has no brokerage relationship (nonrepresentation) are as follows: (1) Dealing honestly and fairly; (2) Disclosing all known facts materially affecting the value of the residential property which are not readily observable to the buyer; and (3) Accounting for all funds entrusted to the licensee. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships

19. According to the Brokerage Relationship Disclosure Act, which is the only brokerage relationship form that must be signed or initialed? (a) Single Agency Disclosure (b) Transaction Broker Disclosure (c) Consent to Transition to Transaction Broker (d) Important Information Disclosure

Your answer: C With the Content to Transition to Transaction Broker Notice, the transition disclosure either must be in writing to the principal as a separate and distinct document or included as part of other documents such as a listing agreement or other agreement for representation. If the principal refuses to initial or sign the form consenting to the broker's transition, the broker must continue to act as a single agent. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Consent to Transition to Transaction Broker

25. A prospective purchaser made a written offer to purchase a home listed by broker Ben. Before Ben presented the offer to the seller, a second prospective purchaser made a verbal offer of $180,000, but did not put the offer in writing, and did not provide any earnest money. Which statement correctly describes Ben's situation? (a) Ben is not required to submit the oral offer. (b) Ben must only present the written offer since the law requires him to present offers in the order they are received. (c) Ben should not present the oral offer because oral offers not accompanied by an earnest money deposit are worthless. (d) Ben is required to present both offers to the seller.

Your answer: D A broker has a duty to transmit any and all offers to the employer including oral offers or offers made without a binder deposit. Failure to present an offer may be considered as concealment or a breach of trust and could result in disciplinary action against the broker. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Presenting Offers

13. When can both parties in a transaction pay a broker a commission? (a) When the broker has performed (b) When both parties are aware of the dual commission (c) When both parties are being represented by the broker (d) When both parties agree to the dual commission

Your answer: D A broker may collect a commission from both parties in a transaction provided both parties know of and agree to the dual commission. Reference: Chapter 4, Broker's Right to Compensation, Payment of Commission

29. Regarding single agency, which of the following statements is most correct? (a) The licensee would be a designated agent, which is acceptable in residential transactions. (b) A licensee may represent the buyer and seller as a single agent in the same transaction. (c) A licensee may represent both parties in the same transaction, but must be careful what is said to each party. (d) A licensee is prohibited from representing the buyer and seller as a single agent in the same transaction.

Your answer: D A broker may represent a seller or a buyer, or a landlord or a tenant. Any attempt to represent both parties in a transaction would create an illegal dual agency. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent

18. Fairness and honesty are required of all licensees in which brokerage relationship? (a) Single agency only (b) Transaction brokerage only (c) Nonrepresentation only (d) Any real estate transaction

Your answer: D A licensee a duty to act with fairness and honesty in any real estate transaction, under any type of brokerage relationship, including nonrepresentation. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships

12. Each of the following is contained in the definition of a residential transaction, EXCEPT: (a) Unimproved property intended for four units or fewer (b) Agricultural properties of ten acres or less (c) Leases with options to purchase all or a portion of improved property of four or fewer residential units (d) Dispositions of business interests involving property of five or more residential units

Your answer: D A residential transaction is defined as: (1) the sale of any improved residential property of four units or fewer; (2) the sale of unimproved property intended for four units or fewer; (3) the sale of agricultural properties of 10 acres or less; (4) leases with options to purchase all or a portion of improved property of four or fewer residential units; or (5) dispositions of business interests involving property of four or fewer residential units. Reference: Chapter 4, Brokerage Relationship Disclosure Act, Definitions, Residential Sales

6. Which of the following statements best describes a transaction broker? (a) A transaction broker is an agent of both parties. (b) A transaction broker has fiduciary duties to the seller. (c) A transaction broker has fiduciary duties to the buyer. (d) A transaction broker provides limited representation to both parties.

Your answer: D A transaction broker is a broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent. Reference: Chapter 4, Brokerage Relationship Disclosure Act, Definitions, Transaction Broker

11. When can an agent disclose confidential or harmful information about a principal? (a) At any time (b) During the fiduciary relationship period only (c) After the transaction is completed and the fiduciary relationship is over (d) Never

Your answer: D An agent is required to keep harmful information received from the principal confidential. Any such information the broker learns about the principal may not be disclosed, even after the relationship ends. Confidential information obtained by an agent must remain so for the life of the agent. Reference: Chapter 4, Authorized Real Estate Brokerage Relationships, Single Agent, Confidentiality

14. All of the following provide control of agency relationships in real estate, EXCEPT: (a) F.S. 475 (b) Common law (c) The Brokerage Relationship Disclosure Act (d) The Department of Financial Services

Your answer: D Common law is unwritten law that has developed from court decisions that tend to reflect the attitudes of the community. Agency law derives from common law. As such, agent conduct must be acceptable and conform to standards acceptable to society or be subject to potentially severe consequences. F.S. 455 and 475 are written statutes enacted by the state legislature. Statutes authorize the creation and operation of administrative agencies to administer and enforce certain laws. F.S. 455 created the DBPR and F.S. 475 created the DRE as agencies empowered by the statutes. Representatives of the DBPR, the FREC, and the Florida Association of REALTORS worked together to formulate the Brokerage Relationship Disclosure Act. Reference: Chapter 4, Types of Laws and their Purposes

15. Which of the following statements best describes policy and procedure manuals? (a) Policy and procedure manuals are maintained by all real estate offices. (b) Policy and procedure manuals are required by law. (c) Policy and procedure manuals are a major cause of arguments. (d) Policy and procedure manuals are useful in maintaining good relations within a brokerage office.

Your answer: D Each brokerage firm should have a policy and procedures manual providing guidance for sales associates and broker associates. Not all offices have such a manual. Although not required by law, it is an effective tool in maintaining good relations within an office and may prevent unnecessary disagreements. Reference: Chapter 4, Policy and Procedures Manual

17. Each of the following relationships is adversarial, EXCEPT: (a) Arm's length (b) Buyer beware (c) Caveat emptor (d) Fiduciary

Your answer: D When parties are dealing "at arm's length," they are acting in their own best interest in an adversarial relationship, which is the opposite of a fiduciary relationship. The terms "caveat emptor" and "buyer beware" are synonymous with an arm's length relationship. Buyers and sellers typically operate at arm's length; the seller wants a price that is as high as possible and the buyer wants a price that is as low as possible. Reference: Chapter 4, Arm's Length Relationship