Real Estate - Ch 2 - Licensing & Regulation

If a judgment has been awarded to a claimant, what must the claimant do before the Board will authorize payment from the Transaction Recovery Fund? A. the claimant must determine the assets and property belonging to the debtor B. the respondent must assign all commissions and personal property to the claimant or the Board C. the respondent must file bankruptcy and sell all property D. the respondent must submit to interrogatories by claimant

>> CORRECT ANSWER IS: A (virginia real estate transaction recovery fund) After the claimant has obtained a judgment he must pursue all legal avenues to recovery on the judgment. This would mean seizing and selling all of the assets of the respondent. Then and only then may the claimant file for payment from the Fund.

If the Board has honored a claim and authorized payment from the Transaction Recovery Fund, the claimant subrogates his or her rights to the Board. The Board now has the right to: A. file a claim, against the licensee, for recovery of the amount of the claim paid B. file a claim, against the licensee, for recovery of the amount of the judgment awarded by the court C. only to revoke the license, as provided by Virginia law D. sentence the licensee to a prison term of not more than 12 months

>> CORRECT ANSWER IS: A (vrginia real estate transaction recovery fund) The Board can only seek to recover the amount which they paid out on behalf of the licensee. The court ordered judgment could include other damages.

Jack the broker sends Mike the prospect an email, which describes the real estate services Jack provides and encourages Mike to call. In his email, Jack makes the required disclosure in the middle of his email, in bold lettering. Jack's email: A. complies with the regulations B. does not comply with the regulations C. is not regulated by the Board D. complies with the regulations so long as Mike does not receive it

>> CORRECT ANSWER IS: B (internet advertising) According to the regulations, email advertising must include the requisite disclosures at the beginning or end of each message.

A license may be suspended without benefit of a hearing: A. for failure to pay the assessment to the TRF within 10 days B. if a licensee does not pay the assessment to the TRF C. if there is a violation of the regulations of the Board D. under no circumstances

>> CORRECT ANSWER IS: B (virginia real estate transaction recovery fund) Disciplinary action can be taken against a licensee without benefit of a hearing for failure to pay the assessment to the TRF within 30 days of the 2nd notice

If the Board has authorized a payment from the Transaction Recovery Fund, what effect does it have on the licensee against whom the complaint was filed? A. the licensee has 4 years to repay the Fund B. the licensee's license will be automatically revoked C. the licensee's license will be automatically suspended D. the licensee may continue to sell real estate, if a court has adjudicated him or her bankrupt

>> CORRECT ANSWER IS: B (virginia real estate transaction recovery fund) Once a payment is made from the Fund, the licensee's license is revoked without benefit of a hearing.

If a broker has repaid the Real Estate Board for amounts awarded from the Transaction Recovery Fund, which of the following is true? A. his or her license is automatically reinstated B. the Real Estate Board could withhold issuance of a new license, forever C. he may apply for a new license within 30 days D. he or she will be reinstated at the level of salesperson, NOT as a broker, for a period of 2 years

>> CORRECT ANSWER IS: B (virginia real estate transaction recovery fund) The Real Estate Board has the right to refuse the issuance of a license to any person who has EVER had his or her license revoked or suspended. When a claim is paid, the broker's license is automatically revoked, by law. The fact that the broker repaid the fund is immaterial.

A licensee was out of town on personal business. When she returned on July 5 she realized that her license expired on May 31. What must the licensee do if she wants to remain licensed? A. reapply for her new license as a new applicant B. meet the current educational requirements C. meet the current educational requirements and pay the reinstatement fee D. apply to have her licensed placed on inactive status

>> CORRECT ANSWER IS: C (licensing procedures) If it is over 30 days from the expiration date, you must pay a reinstatement fee (as opposed to a renewal fee) and satisfy all continuing education requirements to keep your license.

Which of the following statements regarding the Transaction Recovery Fund is correct? A. if the fund falls below $400,000, the Director may assess only active licensees to restore the Fund B. a licensee accused in the claim must sell all personal possessions to satisfy the claim C. a claimant may collect up to $20,000 D. when a claim is paid, the respondent's license will be automatically suspendedA. if the fund falls below $400,000, the Director may assess only active licensees to restore the Fund B. a licensee accused in the claim must sell all personal possessions to satisfy the claim C. a claimant may collect up to $20,000 D. when a claim is paid, the respondent's license will be automatically suspended

>> CORRECT ANSWER IS: C (virginia real estate transaction recovery fund) The Board may assess both active and inactive licensees if necessary to restore the Fund. The license of the respondent is revoked not suspended.

When a salesperson takes a listing, the amount of the commission is determined by the: A. salesperson B. salesperson's employing broker C. seller D. seller and broker

>> CORRECT ANSWER IS: D (disciplinary procedures & sanctions) The law and regulations are silent on the amount of commission. Since the broker (agent) is employed by the seller (principal) the commission is determined by what the seller is willing to pay and what the broker is willing to accept as a basis for the broker's agency.

Why have states have enacted real estate license laws?

1. To ensure a minimal level of competence in real estate professionals. 2. Protect the public by requiring licensees to adhere to standards of ethical conduct and professionalism.

The Real Estate Board may investigate the activities of a salesperson: A. on its own motion B. only upon receipt of a written complaint setting forth the alleged violation C. only with the approval of the principal broker D. only after 3 complaints have been received

>> CORRECT ANSWER IS: A (disciplinary procedures & sanctions) The Board may investigate a licensee at any time that it chooses.

Margie passed her license exam in October, 2003. In December, 2004, she applies for her license. Which of the following is true? A. she must retake the exam B. the Board will issue her license if she can provide proof that she passed the exam C. the Board will issue her license provided that she is current with all applicable educational requirements D. she must affiliate with a licensed Virginia broker

>> CORRECT ANSWER IS: A (licensing procedures) Under Virginia law, you must apply for either an active or inactive license within 12 months (1 year) from the date you pass the exam. Otherwise, you must retake the exam.

What could occur if a licensee violates ethical and professional standards?

They may face temporary or permanent loss of the legal right to practice real estate.

real estate commission

To enable it to discharge its responsibilities, a state empowers its _________________________ to institute binding regulations for licensees.

A woman tells her sister that she would like to buy a piece of property that the sister has listed, but that she does not want her sister to tell the seller of their relationship. The sister listing the property should: A. tell the seller the prospective buyer is a relative B. let another person buy the property and turn the deed over to the sister C. sell the property without disclosing the relationship D. find another listing agent to avoid conflict of interest

CORRECT ANSWER IS: A (agency disclosures) You must disclose any interest you have in property, such as a family relationship with the buyer.

An unlicensed investor plans to open a real estate brokerage business. The business will be operated as a sole proprietorship. Which of the following is true? A. the business name must include the name of the investor B. the investor must hire a broker to manage the business C. the business can only be organized as a corporation D. unlicensed persons cannot own a real estate brokerage

CORRECT ANSWER IS: B (licensing requirements) Unlicensed investors may own brokerage firms so long as they hire a broker to manage the business and do not themselves directly engage in acts of brokerage.

Board regulations require that complete records of real estate transactions A. be retained by the broker indefinitely B. be sent to Richmond for audit, upon request C. are subject to audit by board investigators D. be maintained in a federally insured institution in Virginia

CORRECT ANSWER IS: C (disciplinary procedures & sanctions) The Board has authority to audit records. Records must be kept for a period of three years.

Brokers license:

- individual: active or inactive - corporation - limited liability company - partnership - non-resident

A real estate commission's authority is generally

- regulatory - judicial - administrative

A licensee contacts a homeowner in an attempt to obtain a listing for the property. When must agency disclosure be provided to the homeowner? A. at the time the owner agrees to list the property B. at the first meeting C. when the licensee presents the first offer to purchase D. agency disclosure is required only to buyers, not sellers

>> CORRECT ANSWER IS: A (agency disclosures) Agency disclosures must be made when there are substantive discussions about a specific property. In this case, there will be substantive discussions when or if the seller agrees to list.

What is the recovery fund?

A reserve account funded through license fees and collected fines.

What is enacted to ensure that the public will be able to collect on settlements for damages and money judgments against licensees?

Bonds and recovery funds

Who must repay all amounts withdrawn from the recovery fund, during which time the person's license is suspended.

Licensee

A broker has her license suspended for violating state license law. The licenses of her four sales people are:

Not valid

Who MUST enforce license laws and regulations?

Real estate commissions

Consideration includes ...

money compensation, exchange of free services, or any other valuable good or service that a person expects to be paid.

A broker who is acting under another name ...

must register the name as a fictitious business identity.

Real estate license laws commonly exempt the following from licensing requirements:

- employees of a property owner who are not paid on a per-transaction basis, such as an on site rental agent in an apartment complex - employees of transient lodging facilities such as motels and hotels - managers of residential condominiums or cooperatives - dealers in cemetery lots - attorneys performing regular legal duties for a principal - persons acting in a court-appointed capacity

State licensing agencies issue two principal types of license:

a broker's license and a salesperson's license.

The purpose of the recovery fund is to:

ensure that judgments against licensees will be collectible.

A broker operates an office in a town on the state line. A buyer from the adjoining state wants to see homes on both sides of the border. In this case, the broker:

may not show the buyer homes in the other state without a non-resident license

In addition to establishing real estate license requirements, state license laws

provide for the establishment of a real estate regulatory entity to administer and enforce licensing legislation.

The most common brokerage identity is

the sole proprietorship.

If an employing broker's license expires, is suspended, or is revoked,

then the licenses of all of the broker's salespeople are likewise voided.

An applicant for a salesperson's license does not need

to have a commitment from an employing broker to obtain a license.

Any person ...

who performs a real estate service on behalf of another party for consideration must be duly licensed under state law.