Law of Agency Exam review
George and Carla are sales agents at Lakeside Realty. If Georges client wants to make an offer on Carla's listing, what should the broker at lakeside realty do?
Act as an intermediary
George and Carla are sales agents at lakeside realty. If Georges client wants to make an offer on Carlas listing, what should the broker at Lakeside Realty do?
Act as an intermediary
George and Carla are sales agents at lakeside realty. If Georges client wants to make an offer on Carlas listing, what should the broker at Lakeside Realty do?
Act as an intermediary in the transaction.
Why is it important that a brokerage firm actively enforce the polices and procedures documented in the firms policies and procedures manual?
Active enforcement helps to ensure compliance from members of the firm and helps protect the broker against claims that there was no expectation of adherence.
Someone who acts on behalf of someone else is the definition of what?
An agent
In what way or ways do consumers compensate brokers for their services?
As a flat fee, fee for service, and/or percentage of sale
When does Texas require a seller agents to disclose their agency relationship with the seller to the buyer?
At first contact with the buyer
Which duty requires a client to take an active and present role in a real estate transaction?
Availability
How is sub-agency established?
By an express or implied agreement between the client, the listing agent, and the sub-agent
The Texas Administrative Code specifies fidelity, integrity, and competency as what type of requirement?
Canons of Professional Ethics and Conduct
Specifically, what does the fiduciary duty of disclosure relate to?
Conflicts of interest, material facts, and adverse material facts
Who is a person whos been placed in a position of loyalty and trust in a real estate transaction?
Fiduciary
Which act or statute states that the persons or persons who committed the fraud, as well as anyone who knew about the fraud, failed to disclose it, and benefited from it, can be held liable for actual damages?
Fraud in Real Estate and Stock Transactions
Property managers most often serve as which type of agent?
General
What's the first question a licensee should ask a prospective buyer?
How did you get my name?
When working with potential buyers who say they just want a little information but wont sign a buyer representation agreement, why should you recommend the become clients?
If they wont sign an agency agreement, there's a higher chance they wont be loyal to you
Failing to properly safeguard and deposit an earnest money check is an example of what type of violation?
Improper handling of trust money
Which duty requires the client to provide complete, accurate, and timely information to the agent?
Information
As a sellers agent, which of the following would you be prohibited from answering?
Is this a family neighborhood?
The intermediary relationship notice is used by the broker to obtain consent to make appointments, if any. What other purpose is served by this notice, if any?
It reaffirms the authorization of the broker to act as an intermediary
When working under a sponsoring broker, what is an action that a licensee may take?
List a property in their brokers name
If an agent tells a seller client that a property is worth less than it really is in order to get a quick sale which fiduciary duty has been breached
Loyalty
Who is required to complete a property disclosure notice in Texas
Most sellers of single-family residential properties
Who is responsible for disclosing the location of registered sex offenders
Neither the seller, listing agent, nor the broker
Can a broker acting as an intermediary offer advice and opinions to the buyer or the seller?
No, the broker must remain fair and impartial
Under which types of agency agreement may a buyer and agent operate?
Open, exclusive right to represent, and exclusive agency
Which term defines a prospective buyer, seller, landlord, or tenant, or the authorized representative of any of those parties, in a real estate agreement
Party
What type of ownership interest needs to be disclosed in writing to all parties?
Property held directly or indirectly by the licensee's immediate family member, the licensee's firm, or a member of the licensee's firm
Whats an employment agreement with a property owner who wants to lease out the property
Property management agreement
In the buyer customer relationship, which of the following is something you do?
Represent the seller
Whats the purpose of the Home mortgage disclosure act
Requires financial institutions to maintain, report, and publicly disclose information about their mortgages
Sam is a licensee working with George to help him exchange a property with Carla. Which of the following arrangements will allow both Carla and George to get advice and opinions about the exchange?
Sam acts as an intermediary and appoints a licensee to George and another licensee to Carla
When working with a client on a real estate sale, a real estate licensee is usually acting as which type of agent?
Special
What type of help and information may a listing agent offer a customer without implying representation?
State facts and offer assistance, after disclosing seller representation
In what capacity is a broker from another agency, who represents the owner in a cooperation with the listing broker, working?
Sub-agent
A buyer who discovers after closing that a seller wasnt honest about the property condition on required disclosures can?
Sue the seller
Which of the following options is something that you would only do for a buyer client and not a buyer customer?
Suggest an earnest money amount based on the practices in your area.
What's something you can do in a buyer client relationship that you cant do in a buyer customer relationship?
Suggest negotiation terms
Who benefits from a stronger negotiation strategy in the buyer agency relationship?
The Buyer
In Texas, TREC is charged with passing rules to enforce, interpret, and explain the provisions of which entity or law?
The Real Estate License act
Which agency is responsible for enforcing the Texas Fair Housing Law?
The Texas Workforce Commission Civil Rights Division
Which of the following is a violation of the rules of intermediary brokerage?
A broker acts as an intermediary in a transaction without written consent from the buyer
Which of the following may be considered a stigmatized property?
A home where a homicide, suicide, or haunting occurred
Whats the risk if a licensee continues to act in the capacity of an agent toward a former client after closing?
A new agency relationship that the licensee didn't intend could be created
In Texas, to whom is it legal for licensed real estate brokers to rebate commissions?
A party to a transaction
What is the most important factor in determining whether a broker will be able to collect the commission he's earned from a buyer?
A written buyer representation agreement signed by the buyer and broker
What is undisclosed duel agency?
When a licensee represents a client, but the customer believes the licensee represents the customer
When does a customer become a client?
When there is an agency agreement in place
The seller agent is required by law to share a written statement about the services offered by seller agents, buyer agents, sub-agents, and intermediaries. With whom must the seller agent provide this information?
With their clients and customers
The seller agent is required to share a written statement about the services offered by the agents, buy agents, sub-agents, and intermediaries. With whom must the seller agent provide this information?
With their clients and customers
Henery is interested in negotiating a commercial lease for his new retail clothing business. Donna is a broker representing the owner of a space that Henry wants to lease. Can Donna legally represent both the owner and Henry in this transaction?
Yes, Donna can represent both parties if she gets their consent to act as an intermediary
Can a licensee who represented seller smith in one transaction represent a different seller, Jones, in another transaction where Smith is the buyer?
Yes, but confidential information learned during the former relationship cannot be disclosed
Is it ethical for a transaction to offer compensation to cooperating agents if the sale closes in 40 days?
Yes, but only if all of the involved parties have knowledge and provide consent
Jennifer is the listing agent for the Greens. While showing the property to potential buyers, Jennifer hears them say that they are willing to pay more than they are going to offer. Can Jennifer share this information with the Greens?
Yes, its in the seller best interest to know that the buyer is willing to offer more money for the property even when they offer less
A seller tells his agent that he has to sell his house quickly because of a divorce proceeding, and that he's willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Has the agent breached the duty of confidentiality owed to the client?
Yes, the agent should have kept this information confidential
Does a broker acting as an intermediary need written consent to appoint a licensee to represent a party?
Yes, the intermediary relationship notice may be used to obtain this consent
What happens to an agency relationship if a house for sale is destroyed by a flood before the representation agreement expires
agency terminates by operation of law
Why is it important that brokerages firms regularly review the contents of the policies and procedures manual, make updates when required, and communicate and train members of the firm on any critical changes?
They want their licensees to know how they should be conducting business on behalf of the firm, what they should and should not do, and why they should not
Whats the purpose of a buyer presentation
To build a rapport
Which of the following best describes the listing agreements purpose?
To identify the obligations of seller and seller brokers to one another
In a real estate transaction in which you represent the seller, what are your duties to other parties in the transaction?
Treat them honestly and fairly
A real-estate licensee is acting as what type of agent when assigned by the broker to represent on party in an in house transaction?
Designated
Your buyer client tells you two weeks before closing that he's lost his job. He doesn't have any other income at the moment, and may not be able to follow through on his purchase of the house you're helping him buy. However, he doesn't want to miss out on his dream home and is optimistic that he'll find something soon, so he asks you to keep it confidential. What should you do?
Disclose this fact to all parties to the transaction if the client refuses to do so
What happens when two fiduciary duties conflict? for instance, your clients ask you not to show their property on evenings and weekends, when most showings occur. To obey (a fiduciary duty) means to fail in reasonable skill and care (another fiduciary duty). What should you do?
Discuss the issue with your clients and let them decide
In Texas licensees must provide the information about brokerage services form at the time of first substantive dialogue. What constitutes first substantive dialogue
The first face to face meeting, email, call, or text in which a specific property is discussed
In what way is intermediary brokerage different from statutory dual agency?
The broker acting as an intermediary has the option of appointing licensees who can offer advice and opinions to the clients
In Texas, who is responsible for supervising associated licensees and reviewing transactional paperwork and advertising?
The broker's
A sales agent has a buyer representation agreement with a buyer. When the transaction closes, the seller pays the agents commission. Who is the sales agent client?
The buyer
In a buyer agency relationship, whom does the licensee represent?
The buyer
If you're the listing agent representing a seller, and a buyer working with another agent has made an offer, who are the third parties in this transaction?
The buyer and their agent
Why might a cooperating broker representing the seller be mistaken for a buyers agent?
The buyer may believe that the broker is representing the buyers interests
Before a broker may act as an intermediary in a transaction, the broker must obtain written consent from the seller and buyer. Which one of the following does the broker use to obtain written consent from the buyer?
The buyer representation agreement
What gives an agent in an agency relationship the authority to act on the clients behalf
The consent of both parties
What gives an agent in an agency relationship the authority to act on the clients behalf?
The consent of both parties
Which fiduciary duty may continue even after the transaction closes?
The duty of accounting
Your clients closed on their property yesterday but you still have some paperwork that you need to deliver to them as soon as possible. Under which fiduciary duty are you acting?
The duty of accounting
Who is ultimately responsible for the actions of a personal assistant?
The licensee and the licensees supervising broker
A prospective buyer is curious why a previous owner is selling such a perfect home. The licensee knows that the previous owner recently died due to complications from AIDS. How should the licensee respond to the prospective buyer's inquiry?
The licensee cant disclose that a previous owner had HIV or AIDS
In the buyer customer relationship, which of the following is an important fact for buyers to understand?
The licensee represents the seller
Before a broker may act as an intermediary in a transaction, the broker must obtain written consent from the seller and buyer. Which on of the following does the broker use to obtain consent from the seller?
The listing agreement
Before a broker may act as an intermediary in a transaction, the broker must obtain written consent from the seller and buyer. Which one of the following does the broker use to obtain from the seller?
The listing agreement
If a buyer wants to write an offer and asks for your help but doesn't want to sign an agency agreement with you, who do you represent?
The seller
Who do you represent if a buyer wants to write an offer and asks for your help, but does not want to sign an agency agreement with you?
The seller
Who does the agent assisting the buyer in a transaction represent if there's no buyer agency agreement
The seller
In a buyer agency relationship, what relationship does the seller have to the licensee?
The seller is the licensee's customer