Law of Agency
A corporation found guilty of a violation of the Sherman Anti-Trust Act is subject to _______. A fine of $100,000 A fine of $1,000 Nothing
$1000000
For how long must a licensee retain a documentary record of each deposit or withdrawal from a trust account? Three years Four years Five years Six years
4 years
All of the following statements are true about intermediaries EXCEPT: An intermediary must fully represent the interests of both parties. To act as an intermediary, the broker must obtain the written consent of both parties. A salesperson cannot act as an intermediary. The intermediary agent must not disclose confidential information about one party to the other.
An intermediary must fully represent the interests of both parties.
When an agent commits a tort, the principal could be legally freed from the obligation to pay commission, which is called: Prevarication Equivocation Evasion Avoidance
Avoidance
Which of the following statements about written agency agreements is TRUE? A written agreement is the only valid way to create an agency relationship. A written agency agreement that includes a written compensation agreement helps to ensure that the agent is eligible for compensation. The written agreement is the only way that an agent will be held to the duties of an agent. Real estate agents use the TREC listing agreement form to create an agency relationship between the licensee and the buyer.
A written agency agreement that includes a written compensation agreement helps to ensure that the agent is eligible for compensation.
Who is NOT usually the principal in a real estate transaction? An agent A tenant A landlord A buyer
Agent
Real Estate license holders sometimes decide to represent family or friends without charging them a fee. Should their broker be concerned about liability? Since there is no fee, there is no real risk for the agent or their broker. Agents should have all terms and expectations in writing to limit their liabilities. A court would not hold an agent liable when they were just trying to help. The broker will not need to be concerned.
Agents should have all terms and expectations in writing to limit their liabilities.
Brokers must disclose _______ to a client. Material information that would affect the client's decision to buy, sell or lease a property An offer has been received Any conflict of interest that exist for the agent All of the above
All of the above
Which of the following things may an intermediary do for the parties in a transaction? Disclose to the buyer that the seller will accept less than listing price without written permission. Disclose to the seller that the buyer is willing to offer more than asking price without written permission. Treat all parties honestly. Disclose confidential information to either party without the consent of the party affected by the information.
Treat all parties honestly.
The IABS form must be given to all _______. Clients Buyers Sellers Unrepresented customers
Unrepresented customers
Under the duty of agency disclosure, when must a licensee give an individual the written statement of agency law? Upon initial contact At the open house Before the transaction closes Upon first substantive dialogue
Upon first substantive dialogue
Which of the following services would a buyer's agent NOT provide to the buyer? Use the market analysis performed for the seller to influence buyer's offering price. Show the buyer suitable properties. Prepare a market analysis on property strictly for the buyer. Maintain confidentiality for the buyer.
Use the market analysis performed for the seller to influence buyer's offering price.
How long does a purchaser have to file a law suit against the agent and/or seller? Four years from the date of the transaction Five years from the date of discovery of the problem Four years from the date of discovery of the problem None of the above
our years from the date of discovery of the problem
What should an agent do to prevent implied, unintended agency? Disclose agency relationships to all potential customers upon initial contact. Disclose agency relationships after the party makes an offer on a property. It is safe to assume that the parties understand who the agent represents, so no disclosure is necessary. Disclose agency relationships at the closing of the transaction.
Disclose agency relationships to all potential customers upon initial contact.
An intermediary might also be similar to a: Single agent Cooperating agent Dual agent in other states Subagent
Dual agent in other states
When a license holder acts as a broker or salesperson, he or she must uphold all of the following duties to third parties EXCEPT: Duty of honest and fair dealing Duty of confidentiality Duty of accounting Duty of agency disclosure
Duty of confidentiality
Express agency agreements can be _______. Oral only In writing only Ratification Either written or oral
Either written or oral
A listing term ended last week. The agency relationship has been terminated by _______. Revocation Renunciation Expiration Mutual agreement
Expiration
If a buyer assumes that a salesperson represents his or her interests because of the salesperson's actions, an agency relationship might be formed. This is called: Implied agency Oral agreement Express agreement Ratification
Implied agency
Which TREC form meets the requirement for the written statement about agency law? Information About Brokerage Services form Seller's Disclosure Notice Agency Disclosure Information form Information About Agency form
Information About Brokerage Services form
The duty of reasonable care includes which two components? Confidentiality and accounting Agency disclosure and integrity Loyalty and obedience Integrity and competency
Integrity and competency
What is tort liability? Liability for personal injuries or damage to property Liability for an intentional or negligent wrongdoing or a breach of duty Liability for deceptive trade practices Liability for employee law violations
Liability for an intentional or negligent wrongdoing or a breach of duty
Which of the following things is NOT a general duty of a broker or salesperson? Honest and fair dealing Loyalty to all parties Accounting Agency disclosure
Loyalty to all parties
In order for a licensee to maintain an action to recover a commission, which of the following conditions must be met? The licensee has only a verbal agreement with the seller to pay the commission. The agreement or promise to pay is in writing. Only that the licensee is actively licensed with TREC. Only that the commission provision is included in the purchase contract.
The agreement or promise to pay is in writing.
The listing agreement usually creates an agency relationship between: The broker and the buyer The buyer and the seller The broker and the seller The broker and the salesperson
The broker and the seller
What is the purpose of the Rules of the Texas Real Estate Commission? To set forth all rules and statutes that govern the real estate profession To list all prohibited practices and violations for licensed real estate professionals To expand upon and interpret the Texas Real Estate License Act To outline the methods that TREC must follow
To expand upon and interpret the Texas Real Estate License Act
As defined in the Texas Real Estate License Act, what is a sub-agent? A license holder who represents a principal through cooperation with the principal's broker and who is not sponsored by or associated with the principal's broker. A license holder who procures a buyer for a property through a multiple listing service and cooperates with the listing agent. An associated licensee who is appointed by the supervising broker to represent the supervising broker's principal. A license holder who represents both the buyer and the seller in the transaction.
A license holder who represents a principal through cooperation with the principal's broker and who is not sponsored by or associated with the principal's broker.
Two Brokers decided it only made sense to them for each to focus on different market areas. Broker A agreed to only work in the north part of the city and broker B agreed to only work in the southern part of the city. They each told their agents which section of the city was theirs. Were they in violation of any laws? Price fixing Allocations of customers or markets Boycotting Nothing, they have a right to make that decision
Allocations of customers or markets
What does the warranty of authority rule establish? An agent has no tort liability if all parties give written consent. A principal is not liable for the actions of the agent unless the principal is aware of or participates in a misrepresentation or concealment. An agent cannot be held liable if the principal cannot fulfill the terms of the agreement with the third party. The third party has no liability in a purchase and sale transaction.
An agent cannot be held liable if the principal cannot fulfill the terms of the agreement with the third party.
Only a _______ may technically enter into an agency relationship with the buyer or seller. Licensed salesperson Landlord Broker Private owner
Broker
Which of the following professionals does TREC NOT regulate? Building contractors Real estate brokers and salespersons Easement/right-of-way agents Real estate inspectors
Building contractors
Buyer D decides to end his or her agency relationship with Agent D. All of the following statements are true EXCEPT: Buyer D must wait for their agency relationship to expire. Buyer D must give Agent D written notice of the revocation. If Buyer D has breached the terms of the buyer representation agreement, he or she may be liable for damages to Agent D. Buyer D may fire Agent D at any time.
Buyer D must wait for their agency relationship to expire.
In addition to avoidance, the outcomes of tort liability include all of the following EXCEPT: Condescension Professional sanctions Rescission Legal recourse
Condescension
Seller A and Agent A mutually decide to end their agency relationship. Which duties does the agent continue to owe the seller? Good faith and reasonable care Confidentiality and accounting Confidentiality and good faith Good faith and accounting
Confidentiality and accounting
The duty of honesty and fair dealing would require which of the following actions from a broker or salesperson? Conveying accurate information about material facts to all parties Disclosing the principal's confidential information to the third party Acting in the best interests of all parties Disclosing all information about deaths on a property
Conveying accurate information about material facts to all parties
Which of the following statements are true about fiduciary duties? The license holder owes fiduciary duties to all parties. Fiduciary duties are owed by the individual in a position of trust to another individual, meaning that the agent owes these duties to the principal. Fiduciary duties are not the law of agency; they are simply ethical or moral obligations. Fiduciary duties are not described in the Texas Real Estate License Act or the Rules of the Texas Real Estate Commission.
Fiduciary duties are owed by the individual in a position of trust to another individual, meaning that the agent owes these duties to the principal.
Which duty does an agent owe to all parties? Loyalty Obedience Honesty and fair dealing Accounting
Honesty and fair dealing
A single agency brokerage _______. Only represents sellers Only represents buyers Never has a customer Never does an intermediary transaction
Never does an intermediary transaction
A builder wanted to pay an agent directly for bringing in a buyer. Is this permitted under the License Act? Yes, we have to follow the consumer's wishes. Yes, as long as the salesperson tells the broker about the transaction. No, salespersons can only receive money from their broker. No, all commissions must be paid at the title company.
No, salespersons can only receive money from their broker.
All of the following are duties that the principal owes the agent EXCEPT: Compensation Information Obedience Availability
Obedience
In an agency relationship, the _______ authorizes the agent to represent his or her interests. General agent Third party Principal Primary party
Principal
When a principal agrees to an action performed by an agent that is outside the scope of the agent's authority, it is said to be an agency created by which of the following? Express agreement Implied agreement Ratification Written agreement
Ratification
An agent has suddenly become very busy and has decided to hire an assistant. The agent does not know the company policy regarding hiring an assistant. Where should the agent begin to research what the company's policy is regarding hiring assistants? The other agents in the office. Read more about it on google. Read about it in the office manual and then discuss with broker if possible. Read an article in last month's TAR magazine regarding hiring assistants.
Read about it in the office manual and then discuss with broker if possible.
When an agent decides to leave an agency relationship, it is said to be termination of the agency relationship by _______. Revocation Mutual agreement Fulfillment of purpose Renunciation
Renunciation
Broker and Seller agree orally to enter into an agency relationship. Broker promises to represent Seller's interests, and Seller promises to give Broker 4.5% commission from the sale of the house. All of the following statements are true EXCEPT: The agency relationship is valid. This agreement is not binding on the seller. Broker will be held to the duties of an agent. Seller will be held to their promise of commission.
Seller will be held to their promise of commission
A broker can have four positions in an agency relationship, which include all of the following EXCEPT: Tertiary agent Buyer's or seller's agent Sub-agent Intermediary
Tertiary agent
Which of the following statement is TRUE? Having a policy manual is not necessary for a brokerage office. The Texas Real Estate Commission mandates that the broker must have a brokerage policy manual. The Texas Real Estate Commission suggests that the broker should have a brokerage policy manual. Since most agents are independent contractors a policy manual is not needed.
The Texas Real Estate Commission mandates that the broker must have a brokerage policy manual.
When an agent talks to a prospective buyer for the first time about a company listing the agent must tell the prospective buyer _______. To have a good day They can show them the property later today The agent's company is representing the seller of this property The buyer must get pre-qualified before looking at property
The agent's company is representing the seller of this property
An example of extinction (destruction) of subject matter is: The principal becomes bankrupt. The agent fulfills the terms of the agreement. The relationship reaches its expiration date. The house involved in the transaction burns down.
The house involved in the transaction burns down.
A person may not maintain an action to collect compensation for an act as a broker or salesperson that is performed in this state unless the person alleges and proves all of the following EXCEPT: The person was a licensed broker or salesperson or an attorney licensed in Texas at the time the act was commenced. The agreement to pay is in writing and signed by the party against whom the action is brought. The license holder is a member of the Texas Association of REALTORS®. The license holder gave the written notice regarding getting an abstract or a title policy to the buyer.
The license holder is a member of the Texas Association of REALTORS®.
Which of the following statements is TRUE? The principal is the customer and the third party is the client. The third party is the client and the agent works with the principal. The agent works for the client and is employed by the customer. The principal is the client and the third party is the customer.
The principal is the client and the third party is the customer.
Salesperson B represents Seller A. When conducting a tour of the property, Salesperson B notices that the first-floor ceiling is dripping in a corner of a closet, probably from a leaky pipe. He asks Seller A about the drip, and Seller A insists that there is no problem. Seller A does not include any statements about leaky pipes or plumbing problems on the Seller's Disclosure Form. Salesperson B decides that since Seller A insists that there is no problem, he has no obligation as the agent to disclose the drip to potential buyers. Buyer C purchases the property, and after the transaction closes, she notices the drip, which she eventually learns is the result of a broken pipe. She then sends a letter of impending lawsuit to the office of Salesperson B. Which party or parties are probably liable in this situation? The seller only The salesperson and his supervising broker only The seller and the salesperson only The seller, the salesperson, and the salesperson's supervising broker
The seller, the salesperson, and the salesperson's supervising broker
Who should develop an agency policy for a real estate company? Each individual agent The sponsoring broker TREC An Association of REALTORS®
The sponsoring broker
TREC requires that the licensee must advise the buyer in writing that the buyer should either have the abstract to the title examined by a lawyer or he or she should be provided with or obtain a title insurance policy. When must the licensee fulfill this obligation? When the buyer signs a purchase and sale offer Upon initial contact with a potential buyer Upon substantive dialogue with a potential buyer When a buyer signs a buyer representation agreement
When the buyer signs a purchase and sale offer
In order to place a "For Sale" sign on an owner's property, the agent must obtain which of the following things? Oral consent of the seller Oral consent from his supervising broker Written consent from the owner Written consent from his supervising broker
Written consent from the owner
