Moseley real estate

When a seller makes a counteroffer, which of the following statements is NOT true? Select one: A. it is a partial acceptance of the original offer B. the seller has obligated herself C. the original offeror becomes the offeree in the counteroffer D. it is a rejection of an earlier offer

A: There is no such thing as a partial acceptance--you either accept the offer or make a counteroffer. The seller has, in fact, obligated herself by making a counteroffer, although she is free to withdraw prior to acceptance. This is why offers should not be taken lightly! The correct answer is: it is a partial acceptance of the original offer

All of the following are true of buyer broker agreements except: a. buyer broker agreements cannot be assigned b. buyer broker agreement terms may be disclosed to customers c. buyer broker agreements may be created orally d. the salesperson is not a party to the agreement

B The client in the buyer broker agreement is the buyer. The buyer broker representative's customer is the seller. You may not disclose the agreement to the customer (party you are not representing)

The State decides to widen a highway. It will be necessary to use six feet of private property on each side. The State's power to take this property is derived from: A: the police power B: zoning power C: condemnation proceedings D: none of the above

D: none of the above When the State takes property for the good of the public, it does so through the POWER of Eminent Domain. This is separate from the police power. Like all government powers, eminent domain is derived from the Constitution. The PROCESS through which the state takes property from one who refuses to give it up is a condemnation proceeding

Buyer-broker agreements could be: A: oral B:executory C: unassignable D: all of the above

D; all the above

Jan accepts Jenny's offer to purchase. Jenny's salesperson delivers the downpayment to Jan's salesperson. Jan's salesperson delivers the funds to her broker, who places the money into escrow. Jan's broker owes a fiduciary duty to: Select one: A. Jan B. Jenny C. Jan and Jenny D. None of the above

C: Escrow agents owe fiduciary duty to both the buyer and seller.

Broker Sam lists a house and sells it 2 months into the listing period. After closing, Sam tries to collect his commission, but the seller refuses and correctly asserts that he is not legally obligated to pay. What type of listing did Sam have? A: exclusive agency listing B:open listing C:net listing D: exclusive right-to-sell listing

C: net listing With a net listing (which is illegal in most states), the seller specifies the NET amount that he must receive and the broker gets anything over and above that amount.

An owner has been using a parcel of land for heavy industry since 1973. Subsequently, the property is zoned commercial, excluding industrial purposes. The owner's continued industrial use of the property is a(n): violation of the existing zoning . A: violation of the existing zoning B: deviation from the master plan .C: example of a zoning variance D: Illegal non-conforming use

A: violation of the existing zoning

The zoning commission has proposed a change that would dramatically impact the subject property in a broker's listing agreement. This information: Select one: A. Should be withheld from any prospective buyer B. Must be promptly disclosed to all parties C. Could, at the discretion of the owner, be disclosed to prospective buyers D. Must be promptly disclosed to all parties, but only if the change is approved

B. Must be promptly disclosed to all parties Disclosing this information is required because it is "material." The broker must disclose this material information to the seller and any prospective buyer.

The zoning commission has proposed a change that would dramatically impact the subject property in a broker's listing agreement. This information: Select one: A. Should be withheld from any prospective buyer B. Must be promptly disclosed to all parties C. Could, at the discretion of the owner, be disclosed to prospective buyers D. Must be promptly disclosed to all parties, but only if the change is approved

B Disclosing this information is required because it is "material." The broker must disclose this material information to the seller and any prospective buyer.

When must a licensee disclose agency relationships? Select one: A. When a prospective buyer asks for information about a particular property B. As soon as a prospective buyer enters the broker's office C. Any time prior to preparing an offer to purchase D. When the licensee has substantive discussions about specific property

D: (agency duties) In general, state laws require that agency be disclosed when the licensee has substantive discussions about a specific property. The correct answer is: When the licensee has substantive discussions about specific property

Salesperson Sam works for Broker Betty. Betty enters into a listing agreement with Cheryl the Seller. Which term best describes these relationships? Select one: A. Subagency B. General agency C. Special agency D. All of the above

D: Betty is an agent for Cheryl and they most likely have a special agency relationship (the typical brokerage relationship). If Sam is affiliated with Betty's firm, then he is most likely employed as a general agent. Sam could also be a subagent of Cheryl, although the facts are not clear (we don't know if Betty has assigned Sam to this particular transaction). However, given this possibility, the best answer is all of the above.

A 19 year old inherits property from his grandfather, then immediately contracts to sell it. Can he later refuse to sell the property? Select one: A. yes, because contracts with minors are void B. yes, because contracts with minors are voidable C. yes, because the contract is unenforceable D. no, the contract is valid and binding on all parties

D: no, the contract is valid and binding on all parties

Jon is an agent for Betty the Buyer. This relationship could exist by virtue of: Select one: A. An oral agreement B. Judicial action C. Validation D. All of the above

D: Agency may be created by express agreement, which may be oral or written. Agency may also be created by estoppel (requires judicial action) and ratification (sanction or validation of the broker's conduct).

Which of the following is classified as personal property? Select one: A. apartment lease B. business reputation C. tool shed attached to the brick foundation D. both A and B

D: Both A and B

A person who enters into a brokerage relationship with a licensee is: Select one: A. A client B. A customer C. A claimant D. Actively engaged

A

It would NOT be considered commingling of funds if: Select one: A. The broker holds an earnest money check, as requested by the offeror, until acceptance by the offeree B. The broker holds an earnest money check, as requested by the offeror, after acceptance by the offeree C. The broker holds earnest money in his personal account until the offer is accepted or rejected D. The broker holds earnest money in his brokerage operating account because the deal is going to be all cash

A

The legal relationship between broker and seller is generally: Select one: A. Special agency B. General agency C. Universal agency D. None of the above

A

If a seller learns, after he has entered into a valid contract with a buyer, that his broker was representing the buyer, the seller has a right to: a. cancel the contract, without obligation to either buyer or broker b. cancel the contract, but only with written permission from the buyer c. cancel the contract, but with liability to the broker for any expense d. the contract is valid and must be executed as agreed

A Representing both buyer and seller, without prior knowledge and approval is a breach of the listing agreement. The seller may cancel the contract without obligation or could accept the contract but refuse to pay the broker because the broker's actions would amount to misrepresentation

A broker lists a property. A buyer submits a written offer and the seller accepts it. On the date scheduled for closing, the seller refuses to sign any of the papers. The broker is entitled to: Select one: A. A full commission because he fully performed B. One-half of the agreed upon commission C. Out of pocket expenses, but only if the client is in breach D. Nothing until the papers are ratified

A The broker fulfilled the agency agreement as soon as he found a ready, willing, and able buyer to purchase the property on terms acceptable to the seller. Both parties agreed to the terms in the offer. Thus, the seller is liable for the full commission.

The vendee is: a. the buyer or one who offers to buy b. the seller or one who offers to sell c. one who lend or offers to lend money d. one who borrows or offers to borrow money

A vendee is one who buys or offers to buy real estate (buyer). The vendor is the one who offers to sell or sells real estate.

Mr. & Mrs. Jones sold their home to a church, but retained the right to occupy the property as long as they lived. The interest of the church is that of a: Select one: A. remainder estate B. life estate C. reversion estate D. trustee

A: Remainder Estate

When a seller makes a counteroffer, which of the following statements is NOT true? A: it is a partial acceptance of the original offer B: the seller has obligated herself C:the original offeror becomes the offeree in the counteroffer D: it is a rejection of an earlier offer

A: it is a partial acceptance of the original offer There is no such thing as a partial acceptance—you either accept the offer or make a counteroffer. The seller has in fact obligated herself by making a counteroffer, although she is free to withdraw it prior to acceptance.

Seller Pruitt signed an exclusive right-to-sell listing with Broker Cook. The listing includes a 7% commission and a clause which states that this agreement is in effect until the house is sold. Is this legal? Select one: A. No, because the commission was over 6% B. No, because the term is potentially indefinite C. Yes, if it is a multiple listing D. Yes, assuming all other elements are satisfied

B

What should a salesperson do with the earnest money deposit she receives from a buyer? A. Deposit it in her escrow account B. Give it to her broker C. Attach the check to the contract and file it D. Give it to the seller

B

Which of the following statements is true about an open listing? Select one: A. The commission is split between all brokers that have an open listing for the property B. The seller only pays the broker who produces a ready, willing, and able buyer C. No more than two brokers may attempt to sell the property D. If the owner sells the property, she owes a commission to the broker that took the listing first

B

Two brothers own separate real estate companies, but agree to divide their received commissions equally. Broker A pays for three-fourths of the advertising costs and finds the buyer. Broker B pays for one-fourth of the advertising costs. If the total commission on the sale is $4,500, how much does Broker B receive? Select one: A. $1,125 B. $2,250 C. $4,500 D. None of the above

B Do not be fooled into making this question more complicated than it is.

Under a contract for sale, the seller is most likely to be the: a. offeror b. vendor c. grantee d. vendee

B The vendee is known is the buyer and the vendor is the seller

A land description that reads "T4S, R3E" is most likely based on the: Select one: A. monument method B. government survey method C. metes and bounds method D. recorded Plat method Feedback

B: Government Survey Method

A listing agreement will automatically terminate: A: if the selling agent changes brokers B: On the date specified in the listing agreement C: if the owner abandons the property D:all of the above

B: On the date specified in the listing agreement The only true statement is that a listing agreement will terminate on the date specified in the agreement. There are other reasons why a listing would terminate, but they are not offered as answers.

A real estate salesperson may legally accept extra commission on a difficult sale from: Select one: A. An appreciative seller B. A thankful buyer C. Her broker D. The mortgage lender

C

A seller contacted three brokers to suggest the list price for his property. Broker A said $78,000, Broker B said $79,000, and Broker C said $91,000. The seller listed with Broker C and the house ended up selling for $76,000. In this situation, Broker C might be guilty of violating which fiduciary duty? Select one: A. Loyalty B. Reasonable care C. Disclosure D. None of the above

C

Casper is selling his house and wants the broadest possible exposure. Therefore, he gives an exclusive right-to-sell listing to Bert, an exclusive agency listing to Gail, and an open listing to Mark. Mark sells the property. Assuming that all of these listings are valid, which of the following statements is true? Select one: A. Mark must split his commission with Bert and Gail B. Casper owes 2 commissions, one to Mark and one to be split between Bert and Gail C. Casper owes 3 commissions D. Only Mark earned a commission

C

A buyer-broker agreement may arise by all of the following means, except: Select one: A. Express agreement B. Ostensible agreement C. Custom D. None of the above are valid

C An agency relationship with a buyer may be created by all of the methods identified, except by custom. While custom can be used to establish a relationship, it is generally a means to establish an agency relationship with the seller, not the buyer

Which of the following will provide instruction for the distribution and proration of escrow and impound funds? a. a deed b. a mortgage c. the sales contract d. the listing

C The settlement agent will examine various documents to ascertain how to distribute funds. Of the choices, the sales contract will come closest to containing all pertinent information about disbursements

A purchaser receives equitable title to real estate: A: by closing on the property B:by signing a valid sales contract on the property C: by accepting the deed to the property D: by receiving an estoppel certificate from the seller

C : by signing a valid sales contract on the property Equitable title is conveyed to the buyer when the seller signs the offer to purchase, thereby creating a sales contract. After closing and accepting the deed, the buyer receives legal title

A sales agent obtains an exclusive right-to-sell listing. What is the sales agent's relationship with the broker and the seller? Select one: A. Agent of both the seller and broker B. Agent of the seller and sub-agent of the broker C. Agent of the broker and sub-agent of the seller D. Employee of the broker and agent to the seller

C: sales agent is an agent to his or her employing broker. Agency also exists between the seller and the broker. The salesperson is an agent of an agent (broker) and is therefore a sub-agent of the seller.

For tax purposes, which of the following deductions is a homeowner allowed if he only uses his residence as a home? Select one: A. Depreciation B. Principal payments C. Interest payments D. Cost of improvements

C: Interest payments

A listing agreement must contain all of the following pieces of information EXCEPT: Select one: A. The signature of the owner of the property B. The percentage of commission or fee C. An expiration date D. The proceeds due to the seller from the sale

D

A listing agreement will automatically terminate: Select one: A. If the selling agent changes brokers B. On the date specified in the listing agreement C. If the owner abandons the property D. All of the above

D

If a broker has an exclusive right-to-sell listing, which of the following statements is INCORRECT? Select one: A. There must be a definite termination date in the listing B. All money given to the broker must be accounted for C. The broker may cancel the listing if he chooses D. The broker is legally obligated to sell the property

D: The broker is NOT obligated to sell the property. He is only obligated to make a reasonable effort to sell the property.

A new residential development requires that all single-family houses have brick fronts. This requirement is most likely an example of: local building codes . A: Local Building codes B: municipal regulations C: a covenant D: zoning ordinance

a covenant A covenant (promise to keep) is a form of a deed restriction. This type of restriction would be imposed by a developer, not a local government through zoning powers. The restriction described is most likely an aesthetic consideration.

All of the following situations are examples of down zoning except: a. from single family dwellings to multi-unit apartments b. from agricultural use to single family dwellings c. from single family dwellings to a conservation area d. both a and b

d. both a and b . Correct answer. Down zoning occurs when the zoning regulations are changed from a higher, more active use, to a lower less active use.

A salesperson receives an earnest money deposit check on Monday while working with Broker Allen. On Friday, the salesperson goes to work for Broker Bob. If the salesperson still has the earnest money deposit check on Friday, what should be done with it? Select one: A. It should be immediately given to Broker Allen B. It should be immediately given to Broker Bob C. It should be immediately given to the seller D. It should be immediately given to the buyer

A

A salesperson takes a 90 day exclusive right-to-sell listing on April 1st, but moves out of the area on May 15th. His license placed on inactive status on June 1st. This listing would: Select one: A. Remain in effect B. Terminate on May 15th C. Revert to an open listing D. Terminate on June 1st

A

If a buyer defaults on a valid sales contract, the seller may have which of the following performance remedies? Select one: A. specific performance B. monetary damages C. liquidated damages D. both A and B

A: Specific Performance

If a broker employs a property manager, the relationship is likely to be: Select one: A. Specific agency B. General agency C. Managerial D. Universal agency

B A property manager is a textbook example of general agency (i.e., a person empowered to do a number of things for the principal).

Susan has a listing agreement with Tom to sell his house and an adjoining lot. Susan sells Tom's house to Pete. Before closing, Susan also negotiates a valid option contract with Pete for Tom's adjoining lot, which is listed at $150,000. When will Susan earn her commission on the adjoining lot? Select one: A. When the sale on the home closes B. When the option period expires C. Upon Tom's acceptance of Pete's offer of the option D. None of the above

D: Susan earns a commission if she produces a ready, willing, and able buyer to the agreed upon terms. Since Pete may choose not to exercise his option on the adjoining property, he does not meet that definition of a ready, willing, and able buyer. Therefore, Tom is not obligated to pay a commission for the adjacent lot at this point. If the option period expires and he still hasn't exercised the option, then Susan will not receive a commission for the lot. The sale of the home is additional information that has nothing to do with the option contract for the adjoining lot.

A person engaged to act in place of another by contractual agreement is: Select one: A. A principal B. An agent C. An attorney-in-fact D. Either B or C

D: (law, definition, & nature of agency relationships) The question could describe the precursor to either an agency relationship or a power of attorney. The correct answer is: Either B or C

Mrs. Franklin is buying property from Mr. Akin. In order to get to the property, it is necessary to cross property owned by Mr. Travis. In the past, Mr. Travis has granted permission to Mr. Akin for this purpose. Mrs. Franklin wants to protect this privilege. What would best serve Mrs. Franklin's interests? a. an easement in gross b. a license c. an appurtenant easement d. either a or c

:C Mrs. Franklin should ask for an easement from Mr. Travis. The easement could be an appurtenant easement or an easement in gross. Both would give Mrs. Franklin the RIGHT to cross the property. However, an appurtenant easement would transfer to other property owners and survive the death of either owner. easement in gross would not serve Mrs. Franklin as well as an easement appurtenant because the easement in gross would not survive the death of Mr. Travis

A special agency empowers the agent to perform: Select one: A. A specific act B. Any act required C. Any legal act D. Related acts

A

An owner is listing his rental property with a broker. Based on past experience, the owner thinks that females cause less damage. He therefore tells the broker that he only wants to rent to females. What should the broker do? A. Advise the owner that this restriction is illegal B. Follow the owner's instruction in order to protect the client's interest C. Accepting the listing and give preferential treatment to female applicants D. Follow the owner's instruction because of the fiduciary relationship

A

A purchaser receives equitable title to real estate: a. specific performance b. monetary damages c. liquidated damages d. both a and b

A: Specific performance, monetary damages, and liquidated damages are all potential remedies for breach of a sales contract. However, the question asks you to identify "performance" remedies.

Henry enters into an exclusive right-to-sell listing agreement with Bob the Broker. The parties agree upon a 6% commission. Bob presents an offer to Henry, which he accepts. At closing, Henry discovers that the customary commission is 3%. Feeling as if he was taken advantage of, Henry refuses to pay Bob any more than a 3% commission. Is the listing still effective? Select one: A. Yes, because Henry breached the agreement B. No, because Bob produced a ready, willing, and able buyer C. Yes, unless a 6% commission is excessive D. No, because Bob violated a fiduciary duty

B law, definition, & nature of agency relationships) Make sure you read the question carefully! This question does not ask whether Bob will get his commission; it asks whether the listing is still in effect. Agency relationships terminate upon completion of the employment objective. In this case, the employment objective is to produce a ready, willing, and able buyer. According to the facts, Broker Bob satisfied his end of the bargain.

Salesperson Kelly takes a 90 day exclusive listing to sell Murphy's home. Three weeks later, Kelly moves out of the area and puts her license on inactive status. Which of the following statements is true about the listing? Select one: A. The exclusive listing becomes an open listing B. The listing remains effective C. The listing is voidable by Murphy D. The listing is automatically terminated

B: This listing is a contract between the seller (Murphy) and his broker, NOT between the seller and salesperson (Kelly). Therefore, the listing remains in force.

Liquidated damages from breach of a sales contract are usually available to the: Select one: A. buyer, in the event of the seller's default B. seller, in the event of the buyer's default C. broker, in the event of the buyer's default D. either the buyer or seller where the other defaults

B: Liquidated damages are pre-negotiated damages that are due if a party breaches a contract. In real estate sales contracts, it is common for the buyer to offer an earnest money deposit with with his offer on the property. If accepted, the buyer's earnest money is deposited into an escrow account, which will serve as liquidated damages if the buyer defaults or a downpayment on the property if the sale closes. Generally, if the seller defaults and the buyer chooses to rescind the contract, the buyer is entitled to have his earnest money returned (but not as "liquidated damages"). The correct answer is: seller, in the event of the buyer's default

Two salespersons have been assigned as designated agents in a real estate transaction. The seller requests that her agent, Anne, not mention the mold issue in the bathroom since she wants to sell her house quickly. At an office meeting, Anne tells her broker that the seller might accept a lower price because of the issue. In this situation: A. The broker may tell the buyer that the seller wants to sell her house quickly B. The broker may tell the buyer that the seller is willing to accept a lower offer C. The broker may tell the buyer about the mold problem in the bathroom D. The broker may not tell any information that was mentioned in confidence to the buyer

C

When a seller makes a counteroffer, which of the following statements is NOT true? A: it is a partial acceptance of the original offer B:the seller has obligated herself C:the original offeror becomes the offeree in the D: counteroffer it is a rejection of an earlier offer

C

Mr. Gregory is selling his house and puts a "FOR SALE BY OWNER" sign in the yard. Salesperson Gary calls, identifies himself, and asks for the key to show the property. Mr. Gregory agrees. What would best describe the relationship between Mr. Gregory and Gary? Select one: A. Mr. Gregory is Gary's principal B. Gary is Mr. Gregory's agent C. Gary's broker is the agent of Mr. Gregory for a reasonable time D. No agency relationship exists

C An agency agreement between Gary's BROKER (agent) and Mr. Gregory (principal) exists by implication. Gary did identify himself and the seller agreed to let him show the property. In absence of a specified period of time, the agency would continue for a "reasonable" time.

What is the agency relationship between cooperating brokers (listing broker and selling broker) who are members of the MLS? Select one: A. Co-brokers B. The cooperating broker could be a sub-agent to the seller C. The listing broker is principal, and the selling broker is the agent of the listing broker D. None of the above

C: Notice that the question asks for the agency relationship between the listing broker and the selling broker. It does NOT ask for the relationship of the selling broker to the seller. In this situation, note that the listing broker is the principal and the cooperating broker (selling broker) is the agent of the listing broker.

A broker shows one of her listings to a prospective buyer. The broker knows that the listed property borders a toxic waste dump, as identified by the EPA. The broker should: Select one: A. Keep the information confidential because disclosure would violate a fiduciary duty B. Keep the information confidential because the event occurred off-site C. Disclose the information because it is material D. Disclose the information, but only if asked

C: This is a controversial issue, and therefore a difficult question. Traditionally, things outside the boundaries of a property aren't considered as "material information" that would require disclosure. However, the risks posed by toxic dumps are likely to physically impact the neighboring properties (odor, nuisance, migration of toxins, contamination of ground water, etc.), as well as the health of persons in close proximity. An increasing number of courts have ruled that a broker's failure to disclose the presence of a known (and close) toxic waste dump is a concealment of a material fact (therefore, a fraudulent act). As such, the best answer is that the broker should disclose the presence of the toxic waste dump because the information is material.

To be legally binding on all parties, a contract for sale must include: a. the signature of the spouse, if the seller is married b. an ernest money deposit c. a method to calculate the licensee's commission d. legally competent parties

D Of the listed choices, only competent parties are required for a binding sales contract. Attorneys usually require a spouses signature if the seller is married, but that is not necessary element. Neither is an ernest money deposit although it is frequently included as a condition

A listing may be revoked by: Select one: A. The seller B. The selling broker C. The salesperson that obtained the listing D. The death of the salesperson

A

Sam Slick lists his home with Clueless Kelly, a broker. Two weeks later, Kelly learns that Sam has a reputation for dishonesty and a bad record with other brokers. Three weeks later, Kelly learns that Sam is speaking to other brokers behind her back. Kelly confronts Sam and terminates the listing. Which party breached the listing agreement? A. Sam, because he was speaking with other brokers B. Kelly, because she unilaterally terminated the agreement C. Sam, because he terminated the agreement D. None of the above

B" Sam has done nothing wrong by merely "speaking with" other brokers. While Kelly may think Sam is in breach, there is no evidence that this is true. If you terminate a contract unilaterally without evidence of an actual breach, you risk being the breaching party.

Ralph is an independent broker. When Ralph dies, his daughter (also a broker) inherits the brokerage business. If she intends to operate the firm and keep her father's listings, it is necessary that she: Select one: A. File legal notice of her intent to assume responsibility for the brokerage business B. Advise the probate court of her intent to assume responsibility for the listing agreements C. Renegotiate Ralph's current listings D. Nothing is required because she is a licensed broker

C: All listings in Ralph's name terminate upon his death because a listing is a personal service contract. The fact that his daughter inherits the firm is irrelevant; she must still renegotiate the listings in her own name. While some state licensing laws allow a non-broker to conclude the affairs of a deceased broker (under specified conditions), the listings must still be renegotiated.

If a person has contracted for the opportunity to purchase property at a specified price, within a specified time, the person has: A. a right of first refusal . B. an option . C. a sales contract . D. both A and B

B. an option A person who contracts for the opportunity to buy property within a specific period of time has an option contract. A right of first refusal is a contractual agreement for the right to purchase.

Which of the following items is NOT required in an open listing? Select one: A. Signature of the principal B. Definite termination date C. Agreed upon commission or fee D. Description of the property

B: An open listing does not require a definite termination date--it will remain in effect for a "reasonable period" of time. However, the other elements are required.

The listing broker discovers that a property's value has been adversely affected by proposed construction of a new power plant. She must: Select one: A. Inform the seller B. Inform the buyer C. Inform the lender D. Both A and B

D The broker must inform the parties of this material fact. The correct answer is: Both A and B

Seller Chaney rejects three offers, all of which were $2,500 below the list price. Broker Rudy receives a fourth offer which is also $2,500 below the list price. What should Rudy do? A. Reject the offer in accordance with his duty of due diligence B. As Chaney's agent, inform the prospective buyers that the offer is rejected C. Give Chaney another offer that she is sure to reject D. Either B or C

C

A listing will automatically terminate: Select one: A. If the listing broker goes bankrupt B. On the date specified in the listing agreement C. If the seller dies prior to receiving an offer from a ready, willing, and able buyer D. All of the above

D

A person engaged to act in place of another by contractual agreement is: A. A principal B. An agent C. An attorney-in-fact D. Either B or C

D

A seller agrees to split all commission between the brokerage firm and his unlicensed brother. This agreement is: Select one: A. Permissible, as long as the brother had contractual competency B. Permissible, so long as the seller agrees C. Impermissible, unless the brother is licensed D. Impermissible, unless approved by the local board of Realtors

D

Dan and Daisy enter into a buyer-broker agreement. Dan believes that Daisy is in breach. May Dan terminate the contract? Select one: A. Yes, but Dan waives his right to specific performance B. No, unless there is a mutual agreement between Dan and Daisy C. Yes, but Dan risks causing a breach himself D. No, so long as Daisy is willing and able to perform

C Dan has no right to specific performance because this is a personal service contract. One may terminate a contract with or without mutual consent (regardless of whether the other party is willing and able to perform). However, any time you terminate a contract, you risk a breach. If Daisy wasn't actually in breach, Dan's termination would be a breach of the contract.

An owner entered into a valid listing agreement. During the agreement period, the seller sells the property himself. The seller is not legally required to pay a commission to any broker. What type of listing agreement did the seller have? Select one: A. An open listing B. An exclusive agency C. An exclusive right-to-sell listing D. Either A or B

D

Randy buys a house, using a VA loan to finance the purchase. The listing broker and selling broker split the commission at a 75/25 ratio. If the Department of Veteran's Affairs learns about the arrangement between the brokers, what will they do? Select one: A. Suspend the licenses of both brokers B. Revoke the licenses of both brokers C. Force both to refund the commission D. Nothing

D

What is the highest commission rate that a real estate broker may charge for marketing a farm property? Select one: A. 10% B. 15% C. 25% D. None of the above

D

Which of the following situations is an example of dual agency? Select one: A. A broker's undisclosed representation of both buyer and seller B. Two salespersons represent a different buyer and seller in the same transaction C. A salesperson represents both buyer and seller D. Both A and C

D

hich of the following items is the listing agent NOT required to disclose? Select one: A. To the seller: that the potential buyer is having financial problems B. To the seller: that the state plans to build a new highway near the property C. To the buyer: that they property is subject to seasonal flooding D. To the buyer: that the seller is going through a divorce

D

Which of the following actions would create an agency relationship? Select one: A. A broker accepts the listing to sell a friend's home and agrees to a reduced commission B. An individual gives written authority for a broker to buy, sell, or exchange his real property for a one year period C. A duplex owner signs a listing agreement which authorizes a broker to market the property for one year D. All of the above

D Each of these creates an agent/client relationship, where the broker is the agent and the other party is the client.

What would NOT terminate an agency agreement by operation of the parties? Select one: A. Mutual consent B. Renunciation C. Revocation D. Expiration of time

D law, definition, & nature of agency relationships) Expiration of time terminates an agency agreement by operation of law, not by action of the parties. The correct answer is: Expiration of time

When a seller makes a counteroffer, which of the following statements is NOT true? Select one: A. it is a partial acceptance of the original offer B. the seller has obligated herself C. the original offeror becomes the offeree in the counteroffer D. it is a rejection of an earlier offer

A There is no such thing as a partial acceptance--you either accept the offer or make a counteroffer. The seller has, in fact, obligated herself by making a counteroffer, although she is free to withdraw prior to acceptance. This is why offers should not be taken lightly! The correct answer is: it is a partial acceptance of the original offer

Jill lists her property with Broker Joe. After much hard work, it looks as if the property will finally sell. However, Broker Joe files for bankruptcy before the property actually does sell. Jill becomes nervous and seeks to terminate the listing agreement. May Jill terminate the agreement without breaching the contract? Select one: A. No, only Joe may terminate the contract without a breach B. Yes, because she is legally justified C. No, unless Joe is in breach of the terms D. Yes, provided that Joe cannot perform

B: If a party to a listing agreement files for bankruptcy, the other person may terminate the agreement without a breach. The listing agreement may also be terminated in the bankruptcy process by operation of law. Note that while a bankruptcy court may extinguish Joe's debt, it will not rescind his liability.

Cheryl and Chris enter into a buyer-broker agreement. They specify that the agreement will last for a two week period. At the end of two weeks, Chris informs Cheryl that the agreement is no longer binding. Chris is: Select one: A. Correct, so long as the agreement was written B. Incorrect, because the agreement is valid for a reasonable amount of time C. Correct, regardless of whether Chris informed Cheryl D. Incorrect, unless Cheryl agrees

C

Wally Wells, a licensed salesperson, listed Parcel A under an open listing agreement and Parcel B under an exclusive right-to-sell listing agreement. Both listings expired. Three days later, the two owners exchanged properties. Wally will receive: Select one: A. One commission for the exclusive right-to-sell agreement B. Two commissions because Wally was the procuring cause C. No commission so long as Wally was not the procuring cause D. A split commission

C Wally gets no commission because the listings expired. If the stem of the question had indicated that Wally was involved in the transaction between the two parties during his listing period, then he may have had a cause of action to collect from one or both parties.

Jon and Jacob are parties to a valid agency agreement. One day, Jon wakes up and decides that he no longer cares for Jacob's personality. Can Jon terminate the contract? Select one: A. Yes, if Jon is the client B. No, because Jon has an unacceptable reason C. Yes, regardless of whether Jon is the client D. No, because Jon must perform

C For a personal service contract, courts will not enslave someone by ordering specific performance. Jon may or may not be in breach by this action (there is insufficient data to determine that fact). Nevertheless, either party can terminate the agency contract at any time and for any reason. If this termination does result in a breach, Jon may be liable to Jacob for damages.

A listing agreement can be terminated by all of the following circumstances, EXCEPT: Select one: A. Mutual consent B. Revocation by the principal C. Death of the salesperson D. Performance of the requested act

C: The agency agreement is between the principal and the BROKER, not the salesperson. If the broker finds a buyer and the house sells, the requested act has been performed and the agency relationship ends. However, if either party to the contract dies (the broker or the seller), the contract would terminate by operation of law. Remember that the salesperson is not a party to the contract.

Brokers may only assist buyers if: Select one: A. There is a written agreement B. There is a formal representation C. There is an agency relationship D. There is consent

D: Brokers may assist buyers with or without a written agreement, formal representation, or an agency relationship. However, there must be some sort of consent (implicit or explicit).

In order for a dual agency to be legal, it must be: Select one: A. Disclosed orally prior to negotiations B. Disclosed in writing and agreed upon prior to negotiations C. Disclosed in writing after negotiations D. None of the above

A law, definition, & nature of agency relationships) In states that permit dual agency, it must be disclosed and agreed upon in writing by all parties prior to negotiations. The correct answer is: Disclosed in writing and agreed upon prior to negotiations

Broker John and Buyer Jenny enter into an exclusive buyer agreement. However, Jenny finds a suitable property on her own. After Jenny purchases the property, John demands his commission. Must Jenny pay John a commission? Select one: A. Yes, because John took steps to find a suitable property for Jenny B. Yes, so long as Jenny purchased property similar to the one described in the agreement C. No, because Jenny found the property on her own D. No, because John failed to find a property before Jenn

B: The exclusive buyer agreement obligates the buyer to compensate the agent if the buyer purchases property similar to that which was described in the contract. Under an exclusive buyer agreement, the agent is compensated regardless of whether the buyer discovers the property on her own or through another agent. This is the counterpart to the exclusive right-to-sell listing. We do not know whether John took sufficient steps to find property for Jenny, but it is irrelevant that Jenny found the property on her own if the property is similar to the one described in the agreement.

Vernon presents an offer to a seller, with a provision that it must be accepted within 72 hours. Under which of the following circumstances would the offer terminate? Select one: A. Vernon dies before the seller accepts the offer B. the seller resubmits the offer, with a minor change to the settlement date C. the seller proposes to wait a week before acceptance D. all of the above would terminate the offe

D. all of the above would terminate the offer If Vernon dies before the seller accepts the offer, there is no contract. Re-submitting the offer with a different settlement date, and proposing to wait a week before acceptance, are both counteroffers. Counteroffers are new offers that terminate the original offer. The correct answer is: all of the above would terminate the offer

An owner lists a home with a broker for $72,000. Two days later, the broker brings in an offer for $70,000. At this time, which of the following statements is true? Select one: A. The broker had found a buyer and has earned his commission B. A ready and willing buyer has been found and a commission is due C. A ready and willing buyer has been found, but no commission is due D. None of the above

D: In order to earn a commission, the broker must find a ready, willing, and able buyer ON THE TERMS OF THE SELLER. The offer was lower than the listed price; therefore, the offer was NOT on the terms of the seller. While the buyer appears to be ready and willing, there is no evidence that the buyer is financially able. Therefore, no commission is due and the best choice is four.

Harry hires David to be his buyer-broker. However, a few days later, Harry spots a property for sale while driving home from work. He falls in love with the property and makes the purchase without David's assistance. Two days later, David demands a commission. Is Harry required to pay a commission to David? Select one: A. Yes, because the agreement was in force when Harry bought the property B. Yes, so long as there is an exclusive agency buyer agreement C. No, because David was the procuring cause in the sale D. No, so long as the agreement was not an exclusive buyer agreement

D: Knowing that the agreement was in force is not specific enough to answer the question. If the agreement was an exclusive agency buyer agreement, Harry would not be obligated to pay. However, if it was an exclusive buyer agreement, Harry would be obligated to pay even though David was not the procuring cause. Therefore, Harry is not obligated pay David so long as the agreement was not an exclusive buyer agreement.

A seller lists her house with a broker for $189,500. The seller tells the broker that if necessary, she will accept $185,000. What may the broker do when showing the property to prospective buyers? Select one: A. Say that the seller will accept a few thousand less B. Suggest that the buyer should make an offer for $185,500 C. Advise the buyer that the seller is flexible D. Disclose what the seller will accept, with the seller's permission

D: To do any of the suggested actions violates the agency relationship, unless the broker was told to disclose only what the seller will accept. If the seller agrees, the broker could disclose the seller's willingness to accept a lower price. However, the facts in this situation do not indicate the seller's consent to such a disclosure.

Who represents the buyer in the traditional real estate transaction? Select one: A. Listing broker B. Selling broker C. Selling salesperson D. No one

D: Traditionally, no one represents the buyer. The listing broker represents the seller and the selling broker represents the seller as a sub-agent of the listing broker. Accordingly, the selling salesperson represents the seller as a sub-agent as well (through the selling broker, to the listing broker, to the seller). The buyer could be represented if he or she enters into a bona fide buyer-broker agreement.