Ch. 5 - National Brokerage
The Criminal Antitrust Penalty Enhancement and Reform Act increased the maximum criminal penalty for individuals to what amount?
$1 million
What is an agent called who represents only one person in the transaction, either the buyer or the seller?
Single agent
When a home is listed, what is the most limited agency that can be created?
Special agency
Puffing is best characterized as which of the following
Subjective opinion
Obedience of the agent to the principal means what?
The agent must follow those instructions regardless of personal feelings about them, as long as they do not violate the state or federal laws.
Seller Joe Needy lists his home for $40,000 and the broker tells the prospective buyer to submit a low offer because the seller is desperate. The buyer offers $38,000 and the seller accepts. Which statement is TRUE about this situation?
The broker violated the agency relationship.
Which party has legal authority to sign a sales contract for a property that is part of an estate?
The executor of the estate
Which of the following statements best defines agency?
The fiduciary relationship between the agent and the principal
Which of the following benchmarks might be used by a licensee when selecting a brokerage?
The firm employs a number of successful agents.
Should a policy manual contain a section on referral fees?
Yes, all licensees should be given the same information in writing.
Agent Sue listed and sold the same property. Agent Sue is owed a
a listing and selling commission.
An agency relationship is based on
authorization and mutual consent
A contract in which an owner hires a broker to market the property creates an agency relationship between
broker and seller.
An agency relationship
can occur through implication (what you might say or do) without a written contract
A contract that conveys an interest in real estate must
contain a legal description of the property.
A multiple listing service (MLS) is an organization of member brokers who agree to
cooperate in the sale of properties listed by other brokers in exchange for a share of the broker's resulting commission.
The broker, who has listed a property for sale, has the obligation to
do whatever the owner has instructed him to do legally.
A lease conveys exclusive use and
it may also restrict some uses.
Which duty requires that the agent act in good faith and obey the principal's directions?
Obedience
Which of these listing agreements is considered a unilateral contract?
Open
Which type of listing allows a seller to sell the property himself or herself without having to pay any commission to any broker?
Open Listing
What are the three most common types of listings?
Open Listing, Exclusive Right to Sell Listing, and Exclusive Agency Listing
Under what type of contract is a seller obligated to sell, but the buyer is not obligated to buy?
Option
What is a form of implied agency relationship created by the actions of the parties involved rather than by written agreement?
Ostensible agency
Landlord Frank terminated Jerry's lease because gross sales did not meet expectations. Jerry agreed to what type of lease?
Percentage Lease
What kind of lease contains a recapture clause?
Percentage: A percentage lease may include a recapture clause that indicates that if the tenant does not obtain the desired gross sales, the owner has the right to terminate the lease.
An agency relationship is created in each of the following situations EXCEPT which?
A broker shows a tenant an apartment.
Which BEST describes the role of a fiduciary?
A fiduciary relationship is established when a property manager agrees to represent an owner in leasing the owner's property.
Which statement best defines the concept of "quiet enjoyment?"
A landlord's obligation to provide the tenant with reasonable privacy and freedom from interference
Which of these statements is true? -Once a listing agreement is signed by all parties, it cannot be changed. -The seller can change the listing agreement whenever he or she wants. -A listing agreement can be modified, but only if all parties agree in writing. -A listing agreement can change by the mutual verbal agreement of all parties.
A listing agreement can be modified, but only if all parties agree in writing.
What do we call the unreasonable restriction of business activities that results from conspiracy among members of a trade?
Restraint of trade
Which contract provision allows for the transfer of the contract to another person?
Assignment of a Contract
In most states, in all residential transactions when must licensees give potential sellers or buyers a written disclosure form?
At first substantive contact
If a cooperating broker accepts the offer of subagency from a listing broker, to whom does the cooperating broker owe fiduciary duties?
Seller
"Let's not do business with AVC Real Estate Company; they discount their commissions" is an example of what?
Boycott
In what section on an MLS listing form would an agent look at to determine the type of foundation used in the construction of the home?
Building Information
In which contract provision would the length of the lease be outlined?
Clear Statement of Term
Which of the following is NOT a form of agency?
Closed agency
The difference between an exclusive right to sell listing and an exclusive agency listing has to do with what issue?
Commission
The principles of an agency relationship include all of these factors except which one?
Compensation
An agency relationship may be involuntarily terminated by which of the following?
Condemnation of the property
Which of the following duties is NOT owed to a customer?
Confidentiality
Which of these components is NOT required in most listing agreements?
Consent to dual agency
Which of the following situations might impact a listing agreement?
Death of a Broker
What do you call a licensed real estate salesperson, working under the supervision of a real estate broker, who has been assigned to represent a client when a different client is also represented by such real estate broker in the same transaction?
Designated agent: Designated agency means a broker may designate a licensee to act exclusively as the agent of the seller, and designate another licensee to act exclusively as the agent of the buyer in the same transaction.
The principal of Notice is sometimes called what?
Disclosure
What exists when a real estate firm or a real estate licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction?
Dual agency
When the real estate agent has produced a buyer who is ready, willing and able, the agent has generally done what?
Earned a commission
According to contract law, every valid contract is also what?
Enforceable or unenforceable
Broker Jill has an agreement with seller Alice that says Jill will receive compensation if anyone except Alice sells Alice's home. What kind of agreement is this?
Exclusive agency
The listing type that assures a broker that he or she will receive compensation no matter who procures the buyer is what kind of agreement?
Exclusive right to sell
Which of the following statements best defines closing costs?
Expenses above the price of the property that buyers and sellers normally are required to pay to complete a real estate transaction
All of the following may involuntarily terminate an agency relationship except which?
Expiration of the agreement term
Which of the following types of information can a licensee legally provided to both a principal and a customer?
Facts
Which of the following duties best describes what an agent owes customers?
Fairness, care and honesty
Bill has informed his landlord that he will be moving in 30 days. What action has Bill taken regarding his lease requirement? He has provided an advance order of moving. He has given notice. He has given due process. He has given notice of vacating
He has given notice: Proper notice by either party may terminate a periodic leasehold, or a tenancy at will.
Sally is a subagent working for Seller Pat. What does Sally owe to Buyer Brad?
Honesty and fair dealing
In which situation can a licensee give legal advice?
If the licensee has a separate attorney license
When must a seller receive a copy of the listing agreement?
Immediately after the agreement is signed by all parties
Which statement is FALSE?
In a community property state, if a husband owns property separately from his wife, he cannot sell the property without her permission.
Licensee Jim listed a property and Licensee Sally sold the property to her client. Jim and Sally work for the same brokerage. This type of sale is known as what?
In-house sale
Buyers Sam and Linda Pope are entering into a contract with sellers, Jim and Alana Jones in which part of the sale price of the property will be deferred. What kind of contract is it?
Installment sales contract: An installment sales contract is a bilateral agreement between a seller and a buyer in which the seller defers receipt of some or the entire purchase price over a specified period of time.
Which of the following information would you NOT likely find on an MLS listing?
A record of previous property owners
Which is TRUE about listings?
A seller can sell his or her own home and owe no commission if he or she signs an exclusive agency listing.
Which of the following contracts must be in writing to be enforceable? A parol contract A six-month lease A two-year lease An executory contract
A two-year lease
What is special about a universal agent?
A universal agent has power of attorney.
When the agency relationship has been terminated, the licensee is no longer considered the principal's agent and does not owe any further duties to the principal, except for the following?
Accounting
What document is used to make adjustments to an existing sales contract?
Addendum
Which of these items is not included in a lease agreement? Use provisions Demising clause Description of premises Alienation clause
Alienation clause
What is the process to make changes to a listing agreement contract?
All parties must agree to in writing to any changes.
What does a carryover clause do?
Allows the broker to collect a commission for some period of time after the listing expires.
Seller Janet delivers a disclosure statement to Buyer Amanda. Amanda reads it over and decides everything looks good enough to continue with the purchase. A few weeks later, a major hail storm damages the roof and now it leaks. So the original disclosure is no longer accurate. Which statement is false?
Amanda can require Janet to replace the roof.
Which of the following is a common complaint buyers have against brokers?
Misrepresentation of the facts
Which of these sources would NOT be a way to determine who holds title to a property?
Mortgage Bank
When a tenant agrees to pay all taxes, insurance, maintenance and repairs, that tenant has what kind of lease?
Net: In a net lease the tenant pays for occupancy, maintenance and operating expenses such as taxes, insurance, utilities and repairs.
Under what conditions can an agent provide advice and counsel to the customer?
Never
Matt Bower is a developer. Will Jones is a builder. Matt agrees to sell Will a lot, but he conditions the sale by insisting that Will agree to list the property with him after the home is built. What is this called?
Tie-in arrangement
What is the primary purpose for agency disclosure?
To remove any confusion about who the agent is working for
Which of the following types of agency is not allowed in most states?
Undisclosed dual agency
In which provision would a landlord describe what activities can take place on the property?
Use of the Premises
In what section of a property disclosure would you find information regarding existing water treatment systems?
Water
An agent's duties to a principal include all of the following except which?
Legal advice
Which is the best method to identify a property?
Legal description
Licensee Mike was owed a commission from seller Jane. Jane has refused to make payment. What recourse does licensee Mike have?
Licensee Mike can seek damages through his broker.
With regard to listings, in which situation would the state licensing authority not get involved? Broker dies. Licensee transfers brokers. Broker loses license. Firm closes.
Licensee transfers brokers.
Which of the following is NOT a form of listing contract termination?
Market breach
"Everyone charges the same so you might as well list with me" is an example of what?
Price fixing
A person who hires an agent to represent his or her interests is known as what?
Principal
The act of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization is called what?
Ratification
What is the best course for a licensee who has been denied compensation due to a fraudulent seller?
The licensee should inform his or her broker.
What is an important legal characteristic of an option to buy agreement?
The optionor must perform if the optionee takes the option, but the optionee is under no obligation to do so.
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?"
The owner of the property is HIV positive.
Licensee Jones is in the process of closing on a sale. However, the property title has been found to have uncorrectable defects. What is the result regarding Jones compensation?
The seller is still liable for licensee Jones' compensation.
Which of the following types of transactions typically contain a property disclosure?
The transfer of a deed based on a open market sale of a residential property
A special agent is also known as a
limited or specific agent.
Paul Shafer is acting as the agent of David Smith. He
must report all offers to Smith.
An agent is
one who represents and acts for another
Agent Fred fronts his cousin Norm money to buy a client's house. Shortly after the closing, Agent Fred flips the house and realizes a substantial profit. Agent Fred's actions might be describe as
self-dealing.
Work agreements
should be standardized.
A contract which neither party can enforce is called
void