Texas Law of Agency

What should accompany an offer to explain a compensation method which differs from the traditional splitting of the broker's fee?

A cover letter

When a buyer-client picks out a home to make an offer on, what will the agent give the buyer?

A market analysis

Which of these persons would be least likely to want to sign a buyer agency?

A real estate investor

Who has the power to create agency on behalf of the broker?

A sales agent from the broker's office

What is addendum in the real estate law?

A set of documents attached to the listing agreement

What does "special provisions" mean under the buyer's representation agreement?

A space provided to write any other items not addressed in the agreement

What are the classification of real estate agents?

A universal agent, a general agent, and a special agent

Which of the following statements best defines a third party? A. A person who is not a principal in a real estate transaction B. A person who is a principal in a real estate transaction C. A person who is either a principal or customer in a real estate transaction D. A person who is representing a FSBO party

A. A person who is not a principal in a real estate transaction

What can NOT the broker do with special agency? A. To affirm offers and counter-offers on a property not having the permission of the client B. To market analysis of what real price of the property is C. To advertise the property in the best manner D. To inform and guide the client throughout the transaction.

A. To affirm offers and counter-offers on a property not having the permission of the client

Listing agent Bob was notified by another agent that buyer Jan had rejected client Bob's offer. When does agent Bob have to inform his client of the refusal?

ASAP

Which duty requires that an agent must be able to account for all monies, documents and other property he or she receives from the principal?

Accountability

When does a customer become a client?

After signing a representation agreement

In real estate the fiduciary relationship between agent and principal is called?

Agency

What is the legal definition of the principal?

Agent's employer who delegates him / her the responsibility of representing the interests of the principal

Which is NOT a reason why understanding agency is important? A. There has been an increase in real estate litigations in recent years. B. There are too many "ready, willing, and able" buyers C. There are multiple brokers involved in a transaction. D. Public perception of real estate agents is often negative.

B. There are too many "ready, willing, and able" buyers

Seller Bill told Broker Bob about a how during heavy rains, a creek floods his basement. Bill instructed Bob not to disclose this information. After some discussion, Bill has refused to any corrective action and demanded no disclosure. What action should Bob take?

Broker Bob should withdraw from the listing.

Brokers use Intermediary Relationships to represent

Buyer and Seller

Which statement is TRUE about marketing a property whose owner has AIDS? A. Moving into such a home could expose the new owners to AIDS. IB. t's important to get the owner to sign a statement that the licensee can keep in the marketing file. C. Disclosing this information to a potential buyer would be a violation of the Fair Housing Act. D. The licensee should have copies of an AIDS brochure on hand to give to potential buyers.

C. Disclosing this information to a potential buyer would be a violation of the Fair Housing Act.

Agent Paul is bound to inform his client of all facts that might affect the client's interests - both what Paul knows and what he "should have known." Which of these situations would not be something Paul "should know?" A. There is a crack in the basement wall. B. The air conditioner does not work. C. The owner of the property is HIV positive. D. The basement windows have broken seals.

C. The owner of the property is HIV positive.

Which of the following is NOT a reason buyers would want to create agency with a broker? A. To be able to view more properties B. To rely on the skills of the broker during negotiations C. To have an agent show their property to potential buyers D. To have access to market analysis and expert opinions

C. To have an agent show their property to potential buyers

A Buyer's Representation Agreement authorizes the broker to do all but: A. find an appropriate property for the buyer. B. look for types of properties the buyer has requested. C. accept a contract for the buyer. D. help the buyer negotiate the price.

C. accept a contract for the buyer.

What is not a classification of agency?

Contractual

What does a written agency agreement do?

Creates a clear, concise, and understandable agreement regarding the responsibilities of both parties

If both parties to a transaction have different licensees representing them, what is the relationship of one agent's client to the other agent?

Customer

Which is NOT a potential consequence of a lawsuit involving unintended agency? A. Errors and omissions insurance may pay the lawsuit damages. B. The agency may lose commission. C. The contract could be cancelled. D. The lawsuit will be dismissed since the agency relationship was created accidentally.

D. The lawsuit will be dismissed since the agency relationship was created accidentally.

Intermediary agency manages the transaction in a certain way. Which is not the way intermediary agency is handled? A. The supervising broker is a representative of both seller and buyer B. One of the broker's agents represents a seller, while another of his agents represents the buyer C. A single licensee is a representative of both parties D. The supervising broker does not represent both seller and buyer

D. The supervising broker does not represent both seller and buyer

If a client insists that a defect is not to be shared with a potential buyer, what is the best course of action for the broker?

Drop the client.

What is the most understandable way to create agency with a seller?

Express agency

In a real estate transaction, how long does the duty of confidentiality last?

Forever

Agent Phil works for a firm that has a policy of representing sellers only. Why could this be a disadvantage for Phil?

He can never receive a commission from the sellers' purchase off their next home.

What is the primary reason it is important for agents to understand agency?

It is critical to help lessen the risk of potential lawsuits

Why should an Agent request a letter of loan approval from a lender?

It will help ensure a smooth and successful closing.

What was created to allow brokers to cooperate with one another?

MLS

Which service is a tool for sharing information with other brokers?

MLS

Who is ready, willing, and able buyer?

Person that agrees to buy the property under the terms the seller has set forth and has the financial and legal ability to do so

How does a Broker assign a contract?

Placing the words, " and/or assigns" in the contract.

What is a person called after he or she establishes an agency relationship with a licensee?

Principle

Seller Bart has told Agent Sam that his property had a flue fire that caused smoke damage. Bart has refused to make any repairs or disclose the defect. How should Sam respond?

Sam should withdraw from the listing.

Licensee Amy arrives at the home of Tim and Sue to do a listing presentation. What is the most important part of her presentation?

Showing them that she would be the right agent for them

What form of agency do brokers use to represent one client?

Single Agency

When the sales person shows another broker's listing to a customer what happens?

Subagency has started.

What are the penalties for licensees who didn't disclose their agency relationship as it stated in the license law?

Suspension

Who is responsible for sending a sales person's license back to the TREC?

The Broker.

What action should a Seller take, when he or she knows that a Broker is providing misinformation regarding the listing?

The Client should correct the Broker, so they both don't risk liability.

If a broker's agent performs an illegal act who is responsible for that action?

The broker

Why do brokers like to be buyer's agents?

The buyer will be loyal to the buyer's agent

What is the disadvantage of representing only sellers?

The licensee never gets a commission for representing the buyer.

Which of the following would not terminate a buyer's agency?

The seller elects to terminate.

When is a seller liable for fraud or misrepresentation committed by their agent?

The seller is liable only if he/she knew about the agent's misrepresentation or fraud

Why do a great number of brokers limit themselves geographically?

They want to save money and time to meet the requirements of the clients

What can NOT the broker do with special agency?

To affirm offers and counter-offers on a property not having the permission of the client

Which of the following is the best reason for a buyer to have an agent?

To enhance the buyer's negotiating position

When is procuring cause generally not an issue?

When a buyer contracts with a buyer's broker

In which circumstance does an agent working with a buyer have no relationship with the seller?

When a buyer hires a licensee to help purchase a For Sale By Owner (FSBO) property

When should a licensee withdraw from an agency relationship?

When a client asks the licensee to break the law

When did written agreements start to prove the exchange of property in Texas?

When the Spanish authorities made land grants to big groups of people

Which situation below could be seen as a conflict of interest to the buyer?

When the buyer finds out their broker is also representing the seller and has not been notified

Where are the fiduciary duties to be given to once agency is made up?

a client

The term "consumer representation" refers to

a client's belief that an agent should know more about real estate than the average person.

The broker cannot be held responsible for

a client's misrepresentation to a customer during a showing.

Almost all transactions that involve a lender will require

a title search.

Information given to the broker from the seller should be

accurate.

Subagency was developed to

allow brokers to share their listings.

To receive maximum service the buyer needs to be

client

In Texas, most buyers

do not hire an attorney.

When a seller lists his property with an office, who in the office is representing the seller?

everyone in the office

A Buyer's Representation Agreement is a(n)

exclusive contract.

The clearest way to create agency is called what?

express agency

The best way for a broker to avoid lawsuits is to

follow all agency disclosure rules.

What kind of agency is created when the licensee does not write an agreement?

implied

It is commonly understood that giving information to an agent

is the same thing as telling his or her client.

Special agency is also known as

limited agency

If a prospective buyer asks an agent if a former occupant has AIDS, HUD advises that the agent should:

not respond.

When turning a buyer into a client, a broker can form agency

once the buyer is prequalified.

Salespersons should provide fiduciary services

only to Clients.

The salesperson who wants to increase business should

reach out for more listings.

A buyer who makes an offer contingent upon selling another property is not

ready

A salesperson's responsibility to TREC does not consist of

serving on a political action committee.

When a broker has two buyer-clients who want to make an offer on the same property, the best thing he or she can do is

take good notes and be completely honest with the clients.

The licensee has the same responsibility to the client as

the broker

Who can sue for a commission?

the broker

It is vital for the broker of an office to always provide initial and ongoing training to sales people because

the broker is liable for all the actions of the sales people in his/her office.

The person in the real estate office who is responsible for everything is

the broker of record.

According to the agency representation agreement, who pays the commission if the seller or listing broker fails to pay it all?

the buyer

If a buyer is concerned about crime,

the buyer should be sent to the local law enforcement agency for information.

The licensee should tell

the buyer to get a title search.

The effective date of a contract is the date when

the last licensee who had his client or customer make the last initials on the last counteroffer contacts (by phone, in person, or in writing) the licensee on the other side of negotiations and announces that everything has been accepted.

When a special agency is created with a client, the broker is responsible for everything but

the loan approval.

The buyer asks the buyer's agent if he can move in early. This is allowed when

the owner gives permission.

When practicing property management, the broker is representing

the property owner.

The buyer may have to pay the broker's commission when

the seller and listing broker will not.

A client could be held liable for the actions of the broker and his or her licensees if

the seller was aware that the licensee was misrepresenting the facts.

Besides the broker, the other person who could be liable for the subagent's action is:

the seller.

An agent is allowed to offer advice and counsel:

to his or her principal.

Listing brokers are willing to cooperate with other brokers

to meet the seller's needs more quickly.

When a person or court gives an agent full control over someone's life and belongings to meet a specific need it is called

universal agency.

When a licensee wants to turn a buyer into a client, it is not important to ask

what neighborhood the client is interested in.

The first things parties in a transaction should know is

which Agent represents which party.

The licensee has an obligation to tell the customer

who the licensee is already representing.

Buyer Ted makes an offer on a property but he needs to wait to see if his transfer to the area comes through before closing. Ted is not

willing