ch. 1 Law of Agency (Real Estate)
c
Disclosing to a buyer that the current use of a property is in violation of deed restrictions. (a) Customer level (b) Client level (c) Customer / client level
c
A buyer is: (a) Anyone wanting to view homes (b) Someone who wishes to list a home with a broker (c) Someone who wants to buy a home and is on a timeline to do so (d) None of these are correct
d
According to DTPA, trade and commerce includes the ___________ of any good or service affecting the people of Texas. (a) Advertising (b) Distribution (c) Offering for sale or lease (d) All of these are included in the DTPA under trade and commerce
d
According to TREC's advertising rules, which of the following terms may NOT be used in a real estate team name? (a) Company (b) Realty (c) Associates (d) Group
a, b, a
Broker Bradley currently sponsors one agent, Ryan, at his firm XYZ Realty. Ryan has been at XYZ Realty for two months and has listed 3 properties in Bradley's name. Ryan was an agent in California where dual agency is one of the statutory positions of an agent and has not worked an Intermediary transaction as of yet. He, like many new agents, is still a little confused as to how the process works. Monica is a buyer who contact XYZ Realty to show her all of the homes for sale in a large neighborhood near XYZ Realty. Assume that at this stage of the process, Monica is merely an unrepresented buyer-customer. 1. What should Agent Ryan do before showing Monica any of the listings in the area? (a) Have her sign a Buyer's Representation Agreement with him (b) Tell her that she should contact the sellers directly (c) Wait until the sellers reject all previous offers on the properties (d) Explain that some of the listings are in Broker Bradley's name and that he is forbidden by law to show those listings to her 2. If Monica wants to purchase one of XYZ Realty's listings, what CANNOT happen? (a) The firm can sell the listing through intermediary without appointments (b) Broker Bradley can choose to choose intermediary with appointments and work as the listing agent in the transaction (c) Broker Bradley can hire another agent and choose to proceed with the transaction as intermediary with appointments (d) None of these answers are actions that Broker Bradley can take 3. If XYZ Realty proceeds with the transaction using Intermediary without Appointments, which one of the following liability issues could he be facing? (a) A party to the transaction, either Monica or the seller, may later claim that he or she was not treated equally and that he or she paid too much or received too little in his or her transaction. (b) A party to the transaction may later claim that he or she was forced to complete the sale under duress. (c) Agent Ryan could file suit because he is only able to receive compensation as the listing agent even after having to work with both parties. (d) Broker Bradley could face penalties from TREC for acting as an undisclosed dual agent in a real estate transaction.
a
Broker Steve, having no agents, is a solo practitioner in the state of Texas. He has a buyer-client who wants to purchase one of his listings. The process that Broker Steve must use is: (a) Intermediary without appointments (b) Transaction brokerage (c) Intermediary with appointments (d) Dual agency
a
Broker Susan is representing the seller and Broker Daniel is working with a buyer customer. Susan is representing the seller. Who is Daniel representing? (a) The seller (b) The buyer and seller (c) His own firm (d) The buyer only
c
Define: Agency a. Protection against damage or loss b. A person who receives limited brokerage services without establishing an agency relationship c. Based on trust d. Also known as the principal e. A relationship between two parties
d
Define: Client a. Protection against damage or loss b. A person who receives limited brokerage services without establishing an agency relationship c. Based on trust d. Also known as the principal e. A relationship between two parties
b
Define: Customer a. Protection against damage or loss b. A person who receives limited brokerage services without establishing an agency relationship c. Based on trust d. Also known as the principal e. A relationship between two parties
e
Define: Fiduciary a. Protection against damage or loss b. A person who receives limited brokerage services without establishing an agency relationship c. Based on trust d. Also known as the principal e. A relationship between two parties
a
Define: Indemnification a. Protection against damage or loss b. A person who receives limited brokerage services without establishing an agency relationship c. Based on trust d. Also known as the principal e. A relationship between two parties
b
Exclusive agency agreements: (a) Set the broker's commission as the difference between the seller's minimum net and the price the buyer is willing to pay (b) Allow the seller to sell the property himself without paying the broker a commission (c) Grant the broker the a commission even if the seller sells the property himself (d) Are outlawed in many states
b
If a lawsuit is filed, all of the following defenses could potentially help Myra EXCEPT: (a) A signed seller's disclosure that provides details about how the roof was actually installed (b) A certificate showing that Myra took an online class about visual roof inspections. (c) A signed document showing that Myra advised Kristina to get a home inspection but she declined. (d) Written documents from the roofing contractor which show that Myra was basing her statements on their written claims and guarantees.
d
If any person violates the provisions of the Texas Business and Commerce Code, Fraud in Real Estate and Stock Transactions, he or she is liable to the person defrauded for: (a) Attorney's fees (b) Expert witness fees (c) Court costs (d) All of these
d
If one agent in the firm is working with both the buyer and the seller, _______ says that another agent in the firm needs to be brought into the transaction. (a) no intermediary (b) intermediary without appointments (c) cooperative sale (d) intermediary with appointments only
a
In Texas, there is no _______ agency relationship with any party to a transaction. (a) Implied (b) General (c) Special (d) Universal
a
In real estate, an example of a general agent would be a(n) _____________. (a) Property manager (b) Escrow agent (c) Cooperative Broker (d) Intermediary
a
Intermediary with appointments requires that the broker sponsor at least ______ agents. (a) Two (b) Five (c) Ten (d) Twelve
b
Leading a buyer to believe that you are working in the buyer's best interest. (a) Customer level (b) Client level (c) Customer / client level
b, d, b
Myra owns Dirt Cheap Realty and is representing Owen in the sale of a home. Owen has durable power of attorney for his elderly mother, who is incapacitated, and he is helping his mother liquidate her assets. Shortly after Myra lists the home, Owen decides to sell the home to his niece, Kristina, who is just moving back to the area. Myra recommends that she be allowed to represent both parties and indicates that she can save them money this way because she will do the whole transaction for only for 4%. They agree to allow Myra to represent them both, because they believe this will help Kristina pocket the extra 2%. Kristina is a bit concerned about buying an older home because of the maintenance and upkeep. When Myra is showing the home, she proudly discusses the "new roof" that Owen had put on about two years ago. Myra has heard good things from a couple of other license holders about the roofer, so she tells Kristina that the roofer only uses top-of-the line material, so the roof should last a very long time. Myra mentions that most people get a home inspection, but Kristina declines to have the home inspection since her uncle is selling the home. Shortly after moving into the home, Kristina finds out that the roof leaks when it rains, and the roof has two layers of shingles. Only the top layer is relatively new, and the underlayment is badly deteriorated in places. The roof decking is rotten in several places and needs to be replaced. The roofer recommends that Kristina have the entire roof re-done and gives her a price quote of $10,000. 1. When Myra told Kristina that the roofing contractor only uses "top-of-the-line material" and that the roof should last a very long time, she was most likely guilty of: (a) Innocent misrepresentation (b) Negligent misrepresentation (c) Fraudulent misrepresentation (d) Intentional fraud 2. What conditions are present in this situation that give Kristina the right to file a lawsuit against Myra and Dirt Cheap Realty? (a) The misrepresentation was witnessed by a third party and the roof repairs exceed the allowable threshold. (b) The misrepresentation was calculated and devious. (c) The misrepresentation violates the NAR Code of Ethics and fraud can be proven. (d) The misrepresentation was a key element in Kristina's decision to purchase the property and the buyer was harmed by the purchase. 3. If a lawsuit is filed, all of the following defenses could potentially help Myra EXCEPT: (a) A signed seller's disclosure that provides details about how the roof was actually installed (b) A certificate showing that Myra took an online class about visual roof inspections. (c) A signed document showing that Myra advised Kristina to get a home inspection but she declined. (d) Written documents from the roofing contractor which show that Myra was basing her statements on their written claims and guarantees.
c, a, d
Nick is looking for a home and calls Anna at Acme Real Estate Agency to inquire about several properties he saw online. Anna mentions that she represents ACME Real Estate Company and its clients. She also takes Nick's contact information and asks in-depth questions about his needs and wants. Nick states that one of the most important considerations for him is that the home is in a neighborhood that has the highest likelihood of increasing in value. Anna advises Nick about several neighborhoods and recommends some properties that she thinks might be just right for him. She also sends Nick an email with some details about each of the homes. Anna then asks Nick if he would like to schedule an appointment with her to view the properties, and he agrees. 1. What did Anna do that could expose her and her broker to liability? (a) She shared property details with Nick before he signed the Buyer/Tenant Representation Agreement. (b) She scheduled an appointment with Nick to view properties. (c) She did not provide him with the Information About Brokerage Service (IABS) form before discussing Nick's wants and needs. (d) None of these are correct. 2. When Anna meets Nick for the appointment, she spends a few minutes discussing representation and explains the advantages of allowing her to represent him in the purchase of a home. Nick agrees that she should represent him, but he states that he will not sign the Residential Buyer/Tenant Representation Agreement. He prefers an oral agreement and states that he has always been true to his word. What is one of the most important facts for Anna to consider about entering into an oral agreement? (a) She might not get paid. (b) It is against the law for her to represent Nick under an oral agreement. (c) She will not have to worry about intermediary problems when showing any of the listings on the MLS since she would be representing the buyer. (d) Since it is an oral agreement, she will not have to disclose compensation. 3.What course of action can be taken if Anna works very hard to find Nick a home, and then he uses a different license holder to submit the contract and buy the home? (a) The broker may file suit for commission. (b) Anna may file suit for commission. (c) The listing broker may file suit for commission. (d) No one may file suit for commission since they did not have a signed agreement to establish agency.
b
Placing "Property Wanted" ads to find an appropriate property for a buyer. (a) Customer level (b) Client level (c) Customer / client level
b
Refusing to provide a negotiating strategy to a seller. (a) Customer level (b) Client level (c) Customer / client level
c
TREC rules define _____________ as any form of communication by or on behalf of a license holder designed to attract the public to use real estate brokerage services. (a) Realty (b) Marketing (c) Advertisement (d) Fraud
a
TREC rules require that most records for brokerage firms be retained for at least ______ years. (a) 4 (b) 6 (c) 10 (d) 25
a
The Deceptive Trade Practices Act is found in the ___________. (a) Texas Business and Commerce Code (b) Rules of the Commission (c) Texas Real Estate License Act (d) Texas Insurance Code
d
The IRS requires that independent contractors pay a deposit for the agent's estimated tax liability on a _________ basis. (a) Monthly (b) Semi-annual (c) Yearly (d) Quarterly
a
The TAR Independent Contractor Agreement for Sales Associates: (a) Gives the associate the authority to sign listing agreements on the broker's behalf (b) Creates a partnership between the parties (c) Grants ownership of listings to the sales associate (d) All of these are correct
a
The ___________ notifies the parties that both the seller and buyer are clients of the broker. (a) Intermediary Relationship Notice (b) IABS (c) Dual Agency Notice (d) Buyer's Representation Agreement
c
The ____________ is usually a fixed percentage of the sales price negotiated between the broker and the client, payable to the broker. (a) HOA fees (b) Earnest money (c) Broker's fee (d) Down payment
c
The agreement that buyers sign allowing a broker to represent them is called a ______. (a) Buyer/Agent Agreement (b) Seller's Disclosure (c) Buyer/Tenant Representation Agreement (d) None of these are correct
a
The commission charged is negotiated between the __________ and the __________. (a) Seller, broker (b) Seller, TREC (c) Broker, TREC (d) Listing agent, regional brokerage firms
a
The individual who, through a series of uninterrupted activities or actions, brought about the completion of a contract is also known as ______. (a) the procuring cause of sale (b) the closing agent (c) the closing coordinator (d) none of the above
a
The shared information from the MLS can be used by agents to prepare a(n) ________. (a) Comparative Market Analysis (b) Listing Agreement (c) Appraisal (d) Seller's Disclosure of Property Condition
c
Unlicensed assistants may not: (a) Answer real estate office phones (b) Schedule appointments (c) Receive a commission on a real estate transaction (d) Serve as a host at an open house to welcome visitors and distribute fliers
d
What are the duties and obligations of an Intermediary? (a) To treat all parties fairly (b) To decide whether or not to appoint associates (c) To obtain written consent from both parties to act as Intermediary (d) All of these are duties and obligations of an Intermediary
d
What conditions are present in this situation that give Kristina the right to file a lawsuit against Myra and Dirt Cheap Realty? (a) The misrepresentation was witnessed by a third party and the roof repairs exceed the allowable threshold. (b) The misrepresentation was calculated and devious. (c) The misrepresentation violates the NAR Code of Ethics and fraud can be proven. (d) The misrepresentation was a key element in Kristina's decision to purchase the property and the buyer was harmed by the purchase.
d
What does the Consumer Protection Notice (CN1-2) notify of? (a) How to file a complaint against a license holder (b) The Recovery Trust Account (c) TREC regulates brokers, sales agents, and inspectors among others (d) All of these
b
What form must an agent provide to a potential client at the first substantive discussion of a real estate transaction? (a) Buyer's Representation Agreement (b) IABS (c) Canons of Professional Ethics for Real Estate agents (d) The VAMA
a
When a broker in Texas represents both the buyer and the seller, the broker is a(n) _____________. (a) Intermediary (b) Dual agent (c) Appointed broker (d) Ostensible agent
d
When an agent and potential party enter into a ____________ discussion of a real estate transaction, the party must be provided with a TREC-prescribed agency information form. (a) "written-only" (b) "oral-only" (c) "face-to-face" (d) "substantive"
b
Where would you find the Canons of Professional Ethics and Conduct for Real Estate License Holders? (a) Texas State Constitution (b) Rules of the Commission (c) NAR Code of Ethics (d) TAR Code of Ethics
d
Which of the following actions creates risk for the broker? (a) Mishandling trust funds (b) Unintentionally creating an unwritten agency relationship with a potential buyer/seller (c) Failing to give the proper disclosures in a timely manner (d) All of these actions create risk for the broker
c
Which of the following is NOT an advantage of a brokerage policy of Seller Agency Only - No Intermediary? (a) The broker does not have to make appointments (b) The broker and agents are free to negotiate for the seller without conflict of interest (c) The broker collects both selling and buying commissions (d) All of these are advantages of Seller Agency Only
d
Which of the following is NOT anti-discrimination legislation that affects employers? (a) Age Discrimination in Employment Act (b) Rehabilitation Act of 1973 (c) Genetic Non-Discrimination Act of 2008 (d) Truth-in-Lending
a
Which of the following is not one of the 4 statutory agency relationships allowed in Texas? (a) Dual Agency (b) Seller Agency (c) Buyer Agency (d) Intermediary
d
Which of the following is true regarding Intermediary rules for a transaction? (a) The transaction must be an in-house sale (b) Both sides of the transaction must be clients of the broker (c) The broker must have written consent from both parties (d) All of these are correct
c
Which of the following statements is correct? (a) Property mangers do not need to have a real estate license. (b) Unlicensed assistants can show property for an agent. (c) In order to perform all common duties, a property managers must be licensed by the state. (d) Unlicensed assistants cannot show a property, but can open a door for prospective buyers and tenants.
d
Which of the following statements should a license holder only say AFTER a Buyer's Representation Agreement has been signed? (a) "My professional opinion is that the market value of this property is $350,000." (b) "I will write up the offer of $347,000 for you at my office." (c) "It is my professional opinion that this house is overpriced for the neighborhood." (d) All of these statements should be made after a Buyer's Representation Agreement has been signed.
d
Which specialization has a tendency to use oral agreements over written on both sides of the transaction? (a) Farm and ranch transactions (b) Commercial sales (c) Commercial leasing (d) All of these
d
Which statement is INCORRECT? (a) The IABS can be sent as an attachment in an email or a link in the body of an email with specific reference to the IABS form in the body of the email. (b) The IABS can be provided in the body of an email. (c) An agent may overnight the IABS to a potential client. (d) An agent must provide a blank copy of the IABS at the first substantive dialogue with a potential client.
c
Which statement is correct? (a) Only the broker can terminate the Independent Contractor Agreement for Sales Associate (b) Only the agent can terminate the Independent Contractor Agreement for Sales Associate (c) Either party may terminate with or without cause, at any time (d) Either party may terminate only with proof of cause
a
Who can suspend or revoke a sales agent's license under a DTPA violation? (a) TREC (b) A court of law (c) Congress (d) The agent's sponsoring broker
b
Why is timing critical when taking a listing? (a) Listings must be entered into the MLS the same day (b) Confidential information shared by the seller before an agency agreement is in place could result in harm to the seller's future negotiating position (c) There are time limits attached to oral representation (d) Timing is never an issue in taking a listing
d
___________ requires that TREC investigate complaints against license holders according to a risk-based approach. (a) The Secretary of the State (b) The Secretary of the Commission (c) The Governor (d) TRELA