Agency Law (Chpt 2)
Which one of the following is TRUE about a California real estate broker? - A broker may not hire unlicensed personnel such as a bookkeeper to maintain the client trust account. - A broker is not required to supervise affiliated licensees if they are hired as independent contractors. - Brokers are not liable for the actions of affiliated licensees if supervision and control is not adequately exerted. - A broker should establish a policy and procedures manual.
A broker should establish a policy and procedures manual. Each brokerage company operating in California should have a Policy and Procedure Manual. The broker must be active in a supervisory role, whether the licensee is an employee or independent contractor, and may hire unlicensed personnel as long as they do not engage in licensed real estate activity.
Which one of the following is FALSE? - salesperson is an agent of the broker and a subagent of a buyer or seller represented by the salesperson. - A listing agreement is a contract between the salesperson and the seller. - A subagent is an agent of an agent.
A listing agreement is a contract between the salesperson and the seller. A listing agreement is a contract between the seller and the salesperson's supervising broker. It is not an agreement between the seller and the salesperson. The subagent is the agent of an agent. Any licensee who is licensed under a broker is an agent of the broker who is the agent of the client. Chapter 6, Agency Relationship, page 145 and Chapter 2, Subagent, Page 27
Under single agency representation, which of the following IS NOT a common law fiduciary duty owed to the principal? Compassion Loyalty Obedience Care Accounting Disclosure
Compassion The common law fiduciary responsibilities owed during a single agency relationship are care, loyalty, accounting, accounting, obedience, and disclosure. Chapter 2, Fiduciary Responsibilities Owed To the Principal, Pages 34 to 36
Which one of the following is FALSE regarding dual agency? - Dual agency exists when a salesperson represents both the buyer and seller in the same transaction. - Dual agency exists when the same salesperson represents two buyers making an offer for the same property. - Dual agency relationships are legal. - Dual agency does not require written disclosure as long as the agent verbally explains the nature of the relationship to the parties.
Dual agency does not require written disclosure as long as the agent verbally explains the nature of the relationship to the parties. Any agency relationship, whether single agency or dual agency, requires a written disclosure of the agency relationships. This is assigned in California Civil Code 2079.14. Chapter 2, Dual Agency Representation, Page 48 and 49
Which one of the following is FALSE regarding agency agreements? - They are personal service contracts. - The death, legal incompetency or bankruptcy of either the principal or agent will terminate the agreement. - They may not be assigned. - If either the principal or agent terminates the agreement, the remaining party can force the terminating party to perform.
If either the principal or agent terminates the agreement, the remaining party can force the terminating party to perform. In the case of personal service contracts, if either the principal or agent terminates the agency agreement, neither party can force the other to perform. Chapter 2, Terminating an Agency Relationship, Page 42 and 43
The person who hires another and delegates authority to that person to act on their behalf is known as... - a customer. - an agent. - a principal. - a third party.
The principal is the individual who hires another, the agent, and delegates to that agent the authority of representing the principal's interests. Chapter 2, Principal, Page 26
An exclusive agency listing can best be described as: - a type of listing agreement that guarantees the listing broker a commission no matter who brings the buyer. - a listing agreement between a seller and broker wherein the seller agrees to pay a commission to the listing broker, unless the seller finds the buyer. - a type of listing agreement wherein the seller agrees to pay the listing broker any amount remaining after the seller has received a predetermined amount from the sale.
a listing agreement between a seller and broker wherein the seller agrees to pay a commission to the listing broker, unless the seller finds the buyer. An exclusive agency type of listing contract gave the exclusive right to market a property to one broker. The listing broker would be paid a commission by the seller and, in turn, would split the commission with the competing broker who found the buyer. This type of listing, however, still allowed a seller to sell the property himself without owing a fee to the listing broker. Chapter 2, History of Agency as it Relates to the Real Estate Brokerage Business, Page 19
An enforceable agency relationship can be entered into by... - an individual appointed by the court to represent the interests of one who does not have legal capacity. - a minor. - an obviously intoxicated person. - All of the above
an individual appointed by the court to represent the interests of one who does not have legal capacity. Agreements that are entered into while one party is intoxicated or when a party is a minor (who doesn't have the legal authority to appoint another as an agent) can be voided. A person who is appointed by a court to represent one who doesn't have the legal capacity to act for himself/herself can enter into an agency relationship. Chapter 2, Creating an Agency Relationship, Page 28
An agency relationship is NOT terminated: - if either the principal or the agent dies or becomes legally incapacitated. - when the principal and agent mutually agree. - once a suit for specific performance is instituted. - when the purpose for which it was created has been fulfilled.
once a suit for specific performance is instituted. Agency relationships are personal in nature. A personal service contract cannot be used for a specific performance suit. The other three listed options are ways that a personal contract can be terminated. Chapter 2, Terminating an Agency Relationship, Page 42 and 43
The Easton case led the California legislature to require expanded duties of a real estate licensee to a third party to include all of the below, EXCEPT: - utmost loyalty and lawful obedience. - the duty of a real estate licensee to conduct a reasonably competent and diligent visual inspection of the property offered for sale. - to disclose all material facts to third parties that a licensee knows or should have known if a reasonable and diligent inspection had been performed. - honest and fair dealing and to act in good faith.
utmost loyalty and lawful obedience. A real estate licensee is required to conduct a reasonably competent and diligent visual inspection of the property for sale and to disclose the facts to third parties that such an investigation would reveal. Licensees are required to disclose any material facts that he/she knows about the property or could easily know of, and to treat third parties with honesty and good faith. Chapter 2, Duties Owed to the Third Party, Page 38