LAW OF AGENCY
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
(a) Texas Business and Commerce Code Rationale: Trade and commerce include: advertising, selling, leasing, distributing goods or services that affect the people of the state of Texas.
Which TREC-promulgated contract contains a fee-sharing agreement? (a) The Farm and Ranch Contract (b) The One-to-Four Family Residential Contract (c) The Residential Condominium Resale Contract (d) All of these contain a fee-splitting agreement
(a) The Farm and Ranch Contract
Which of the following is NOT one of the 5 sources of ethical standards discussed in the text? (a) Hammurabi's Code (b) The Common Good Approach (c) The Virtue Approach (d) The Rights Approach
(a) Hammurabi's Code
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
(a) Intermediary Relationship Notice
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) Property manager
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) Seller, broker
Which of the following is NOT one of the steps discussed in the text in the step-by-step approach to ethical decisions. (a) Sleep on it before deciding (b) Get the facts (c) Make a decision and test it (d) Recognize the issue
(a) Sleep on it before deciding
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) Allow the seller to sell the property himself without paying the broker a commission
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
(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
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
(b) IABS
If a sales agent signs the Independent Contractor Agreement for Sales Associate, he or she (a) Is obligated to attend all brokerage meetings (b) Is not required to be present in the broker's office (c) Is not responsible for his or her association dues and licensing fees (d) Becomes an employee of the broker
(b) Is not required to be present in the broker's office
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"
(d) "substantive"
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) All of these
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
(d) All of these Rationale: See Consumer Protection Notice (CN 1-2)
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
(d) All of these actions create risk for the broker
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
(d) All of these are correct
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) All of these are duties and obligations of an Intermediary
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) All of these statements should be made after a Buyer's Representation Agreement has been signed.
According to the TAR Residential Buyer/Tenant Representation Agreement, Paragraph 11 E, if the buyer purchases one of the broker's listings: (a) The buyer is liable for payment of a commission (b) The broker is considered a volunteer for the buyer (c) The cooperating broker is responsible for the commission to the agent (d) The seller pays the entire commission
(a) The buyer is liable for payment of a commission
A(n) _________ is a contract between an insurance company and a broker/license holder. (a) Errors and Omissions policy (b) HOA (c) Policy and procedure manual (d) Demographic farm
(a) Errors and Omissions policy
A license holder ________ is known as a subagent. (a) not associated with the seller's broker (b) must work in the same real estate office as the listing broker (c) must place the interests of the broker first (d) represents the buyer or seller directly
(a) not associated with the seller's broker
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 procuring cause of sale
An agency relationship exists when one person, the _________, acts for or on the behalf of another person, the _________. (a) Client, agent (b) Agent, principal* (c) Principal, agent (d) Broker, customer
(b) Agent, principal
In Texas, there is no _______ agency relationship with any party to a transaction. (a) Implied (b) General (c) Special (d) Universal
(a) Implied
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) Intermediary without appointments
Which of the following is grounds for suspension or revocation of license by TREC? (a) Splitting a commission with a person other than a license holder (b) Splitting a commission with a Texas real estate license holder (c) Disclosing a material defect of a property (d) All of these are grounds for suspension or revocation of license
(a) Splitting a commission with a person other than a license holder
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
(a) TREC
TREC has included ______________________ for real estate license holders in the Rules of the Commission. (a) The Canons of Professional Ethics and Conduct (b) Pachelbel's Canon (c) The NAR Code of Ethics (d) Texas Ethical Competency and Practices
(a) The Canons of Professional Ethics and Conduct
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.
(c) In order to perform all common duties, a property managers must be licensed by the state.
What does Article 1 of the Canons of Professional Ethics and Conduct of Real Estate License Holders say? (a) License holders must be competent (b) License holders must not discriminate in the sale or lease of housing (c) License holders must be scrupulous and meticulous while performing their duties (d) All of these are included under Article 1
(c) License holders must be scrupulous and meticulous while performing their duties Rationale: Article 1. Fidelity - Absent any specific definition in a set of rules or statute, the common definition of the word or term normally applies. Scrupulously is defined as acting in strict regard for what is considered right or proper; punctiliously exact; painstaking. Meticulously is defined as marked by extreme or excessive care in the consideration or treatment of details; careful. Therefore, one can conclude by these definitions that the license holder must perform his or her duties in a way that exhibits a knowledge of what is right and appropriate under the circumstances and with care about details.
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
(c) The broker collects both selling and buying commissions
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) All of these are included in the DTPA under trade and commerce
A __________ is a broker selling the listing of another broker. (a) Broker Associate (b) Tenant's Agent (c) Landlord's Agent (d) Cooperative Broker
(d) Cooperative Broker
___________ 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
(d) TRELA
TREC rules require that most records for brokerage firms be retained for at least ______ years. (a) 4 (b) 6 (c) 10 (d) 25
(a) 4
Which of the following statements is FALSE? (a) A complaint which names a licensed real estate agent as the subject of the complaint, but does not name the sponsoring broker is not a complaint against the sponsoring broker. (b) A complaint which names a licensed real estate agent as the subject of the complaint, but does not name the sponsoring broker is a complaint against the sponsoring broker. (c) Brokers and their agents have an obligation to the client. (d) All of these statements are false.
(a) A complaint which names a licensed real estate agent as the subject of the complaint, but does not name the sponsoring broker is not a complaint against the sponsoring broker.
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
(a) Comparative Market Analysis
Any stigma that relates to a material defect in a property must be ________. (a) Disclosed (b) Hidden (c) Psychological (d) Ignored
(a) Disclosed
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) Gives the associate the authority to sign listing agreements on the broker's behalf* Rationale: Associate's Authority: Associate may sign listing agreements, buyer or tenant representation agreements and commission agreements on Broker's behalf.
Which federal law ensures that borrowers are provided with timely disclosures of the costs of the real estate settlement process? (a) ADA (b) RESPA (c) Securities Act 1933 (d) Sherman Anti-Trust Act
(b) RESPA Rationale: Real Estate Settlement Procedures Act (RESPA) - ensures that consumers throughout the nation are provided with more helpful information about the cost of the mortgage settlement and are protected from unnecessarily high settlement charges caused by certain abusive practices. The Act requires mortgage loan originators and servicers of residential loans to provide borrowers with timely disclosures of the nature and costs of the real estate settlement process.
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
(b) Rules of the Commission
How intermediary is explained is determined by: (a) The client's wishes (b) The broker's policy (c) The agent's wishes (d) None of these are correct
(b) The broker's policy
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
(b) The buyer and seller Rationale: According to the Texas Real Estate License Act, when one firm sells a property listed by another firm to a buyer that they are not representing, the selling firm represents the seller in a subagency relationship. We say that, for the purposes of this transaction, Broker Daniel becomes a subagent for Broker Susan.
Illegal private conspiracies and combinations formed to eliminate or minimize competition in an industry is known as: (a) Privateering (b) Unfair business practices (c) Poaching (d) Corporate takeovers
(b) Unfair business practices Rationale: Anti-trust (unfair competition) - unfair competition in the marketplace usually stems from illegal, private conspiracies, and combinations formed to minimize or eliminate competition. The most common violations of antitrust laws in real estate involve price-fixing or brokers agreeing to boycott certain competitors.
When may Broker Jeff act as an intermediary according to the TREC IABS form? (a) When he sponsors more than 5 agents (b) With written consent from the parties (c) With either written or verbal consent from the parties (d) If the price of the property is less than $300,000
(b) With written consent from the parties
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
(c) Advertisement
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) Broker's fee
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
(c) Buyer/Tenant Representation Agreement
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
(c) Either party may terminate with or without cause, at any time Rationale: Either party may terminate the agreement, with or without cause, by providing written notice to the other party.
Which statement regarding the TAR Seller's Disclosure Notice is FALSE? (a) The seller is responsible for filling out the form to the best of his or her knowledge. (b) The seller should include all defects and repairs that he or she is aware of. (c) If the seller is unsure about the condition or status of an item on the checklist, then he or she should just leave it blank. (d) All of these statements are false.
(c) If the seller is unsure about the condition or status of an item on the checklist, then he or she should just leave it blank.*
The commission can deny licensure to an applicant based on the applicant's ________. (a) Credit score (b) IQ (c) Moral character (d) Lack of college degree
(c) Moral character
The duties of the agent to the principal can be remembered by using the acronym: (a) PETE (b) NEWCAR (c) OLDCAR (d) HOTROD
(c) OLDCAR
_________ uses adjectives and opinions rather than details or facts and is not considered mis-representation. (a) Phishing (b) Commingling (c) Puffing (d) Pyramiding
(c) Puffing
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
(c) Receive a commission on a real estate transaction
A broker who acts as an intermediary in a transaction: (a) May disclose that the owner will accept a price less than the asking price if he or she feels that it is the right thing to do (b) May disclose any confidential information that he or she deems will help sell the property (c) Shall treat all parties honestly (d) All of these are correct
(c) Shall treat all parties honestly
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
(c) Someone who wants to buy a home and is on a timeline to do so
For a broker to represent the owner: (a) The broker becomes the buyer's agent by entering into an agreement with the buyer (b) The broker's commission is set by TREC (c) The broker becomes the owner's agent by entering into an agreement with the owner (d) All of these are correct
(c) The broker becomes the owner's agent by entering into an agreement with the owner
If a broker _______, it is not a violation of federal law. (a) attempts to fix prices (b) limits competition by assigning market areas (c) negotiates commission rates with clients (d) boycotts discount brokers
(c) negotiates commission rates with clients
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.
(d) An agent must provide a blank copy of the IABS at the first substantive dialogue with a potential client. Rationale: The contact information is required to be filled in at all times. It is a violation to provide a blank IABS without the contact information.
According to TREC's advertising rules, which of the following terms may be used in a real estate team name? (a) Company (b) Realty (c) Associates (d) Group
(d) Group
Which of the following addenda is pre-checked in the TAR Buyer's Representation Agreement? (a) Information Concerning Property Insurance (b) Lead-Paint Addendum (c) Protecting Your Home From Mold (d) Information About Brokerage Services
(d) Information About Brokerage Services
Any dispute arising under the contract that cannot be resolved through informal means will be submitted to _________ prior to resorting to arbitration or litigation. (a) A jury (b) An administrative Law Judge (c) The local board of REALTORS® (d) Mediation
(d) Mediation
Fee-splitting arrangements between brokers are often established in the __________. (a) Buyer's Representation Agreement (b) Seller's Disclosure (c) Texas Real Estate License Act (d) Multiple Listing Service
(d) Multiple Listing Service
Which of the following would NOT be an example of Reasonable Care? (a) Helping the client meet contract deadlines (b) Assisting the seller to arrive at a reasonable listing price (c) Recommending the use of independent advisers when appropriate (d) Not making the buyer client aware of new listings coming on the market so that he can focus on one listing at a time
(d) Not making the buyer client aware of new listings coming on the market so that he can focus on one listing at a time
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
(d) Quarterly Rationale: The IRS requires that independent contractors pay a deposit for the agent's estimated tax liability on a quarterly basis.
___________ prohibits undisclosed referral fees and kickbacks. (a) Sherman Anti-Trust Act (b) Errors and Omissions Insurance (c) Fair Housing Law (d) RESPA
(d) RESPA Rationale: Usually, a defamation claim requires evidence of: a false statement, statement made to someone other than the person who is allegedly defamed, and the damage to the person allegedly defamed (either by intention or reckless disregard for the truth).
According to Paragraph 7.A. in the contract, what are the seller's responsibilities regarding utilities? (a) The seller has no duty to keep utilities on if the house is vacant. (b) The seller must allow buyer to turn on utilities at buyer's expense during the contract term (c) The seller must turn utilities on to allow a buyer's inspection of the property (d) The seller must keep utilities on during the time the contract is in effect
(d) The seller must keep utilities on during the time the contract is in effect
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
(d) Truth-in-Lending* Rationale: Anti-Discrimination Laws - Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967, American with Disabilities Act, Civil Rights Act of 1991, Equal Pay Act of 1963, Rehabilitation Act of 1973, Genetic Information Nondiscrimination Act of 2008.
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
(d) intermediary with appointments only
