Texas Agency Laws 11+

The broker must file the yearly IRS form 1099-MISC for any independent contractor licensee who earns more than

$600.00.

Brokers enter into employment agreements with clients in one of three ways:

1. Listing/Landlord Agreements 2. Buyer/Tenant Representation Agreements 3. Property Management Agreements

In a 1031 transaction, how long does a taxpayer have to find a replacement property and notify the intermediary of the property?

45 days

What types of office administration tasks are important for a licensed assistant to perform?

A good filing system is critical and should include cross-referencing and indexing components.

In addition to specific requirements for agency disclosure, TREC requires that the licensee deliver to prospective parties a second provision known as what?

A written information statement

What is the best defense a company has to offset problems in the area of agency?

A written policy regarding agency relationships practiced and authorized by the brokerage

In what three ways can an assistant aid an agent with appointments?

Act as an "appointment reminder." Compile files with the appropriate blank documents for the agent to take to listing and selling appointments. Meet with appraisers or inspectors as the agent's representative.

How do 100% commission offices receive money from agents for overhead and other office fees?

Agents have a set monthly fee that is due whether or not an agent has any closing for the month.

- Which of the following is NOT a way a broker can help avoid agency problems due to miscommunication, confusion, or misunderstanding?

Allow all licensees to develop their own personalized disclosure brochures in the language and tone they prefer.

When should agency and other working relationships be firmed up?

Always as soon as possible to avoid any confusion on the part of all parties, including the licensee

When can the broker or the client terminate buyer agency?

At any time

Why is discriminatory housing advertising not protected under the first amendment?

Because housing advertising is considered commercial speech and therefore not covered

What are the three common-law categories that determine the level of control an employer has?

Behavioral Financial Type of relationship

Texas agency disclosure laws apply to what type of licensees?

Commercial and residential

Jack sells one of his own $225,000 listings for $220,000. The commission is 7%. Jack has an 80% commission split with his broker. What is Jack's share of the commission? What is his broker's share?

Commission = $15,400 ($220,000 x .07) Jack's share = $12,320 ($15,400 x .80) Broker's share = $3,080 ($15,400 - $12.320)

When must disclosure of agency relationships and whom the licensee currently represents in the transaction take place?

Early in the first substantive meeting about real property

What are agreements between brokers and clients called?

Employment contracts

What does the term "ethics" mean?

Ethics are rules of conduct or accepted behavior based on moral principles.

If a salesperson is classified as an employee, what must the broker withhold from their wages?

Federal income tax State income tax Social Security tax Medicare tax

What are two benefits to being an independent contractor?

Freedom and Flexibility

Under dual agency, what was the broker forbidden to do?

Give advice.

What is one method used by HUD to determine if a real estate office is practicing discriminatory methods?

HUD sends out testers to evaluate a real estate office

What are the 4 requirements for a judge to hear a case regarding commission not being paid by a client?

Have a written agreement. The agreement must be signed by at least the party to pay the commission. Broker must show he/she had an active license at the time of the transaction. The buyer was told at the time of making the offer that he or she should have a title search and/or a title insurance policy.

- Which of these statements about an independent contractor is true?

He or she is paid commission on all sales.

In what USA state(s) is undisclosed dual agency legal?

In none of the states

Which of the following is the best way to create a buyer agency?

In writing

Why do many brokers schedule weekly sales meetings?

It gives the broker an opportunity to get all their agents together at the same time and share important information, and it also provides an opportunity for agents to get to know other agents in the office.

Why is the Code of Ethics called a living document?

It is regularly revised as necessary.

What is a progressive commission split?

It's a type of commission split where the agent's percentage increases as the licensee's sales increase

Why does Section 804(c) of the Fair Housing Act apply to Internet advertisement?

Just as the Department has found newspapers in violation of the Fair Housing Act for publishing discriminatory classifieds, the Department also has concluded that it is illegal for websites to publish discriminatory advertisements.

What causes the highest probability of problems for licensees?

Lack of communication

What are the 3 ways a broker enters into an employment contract with a principal?

Listing/Landlord Agreement Buyer/Tenant Agreement Property Management Agreement

What form is needed to end the relationship between a salesperson and broker?

No form

What are three items that should be covered in the Handling Common Situations section of a policy manual? (See screen 13 for other correct answers.)

Open houses Subagency representation Listing presentation requirements

According to the Internal Revenue Service (IRS) to be considered an independent contractor, sales meetings are:

Optional

What is NOT the way the buyer pays fees?

Service fee

Why must real estate licensees discuss all proposed agency relationships with buyers and sellers (landlords and tenants)?

So they may make an informed decision

- If a licensee joins a company as an independent contractor, which of these will he probably have to pay for on his own?

Social Security Tax

What are two types of ethics?

Social ethics Business ethics Professional ethics

How are real estate assistants compensated for their work?

Some assistants are paid per hour, others are paid a salary plus benefits, and others are paid an hourly rate or salary plus a percentage of commissions they helped close.

What term refers to a variety of dual agency transactions, such as exchanges, syndications, farm sales, and leases of industrial and commercial properties?

Specialized real estate transactions

What two topics do all broker and principal contracts discuss?

Terms of Employment and Compensation

What type of attitude should a salesperson have when interviewing a broker?

That it's up to the salesperson to decide if a broker is worthy of his or her services. Also, the salesperson needs to remember that choosing a broker is a very important decision.

What are the advantages and disadvantages to renting a broker?

The advantages to using a rented broker are the commission splits are less expensive for the agent and an agent could open his or her own office without having a broker license. The disadvantages include office agents not having access to advice from a broker with years of experience and the possibility that the broker's license may be in jeopardy some day for not supervising the salespeople he or she is sponsoring.

Why is keeping easy to find records of the agreement a good idea for both the broker and licensee?

The agreement will need to be provided to the TREC board when the licensee applies. The information will also include the licensee's social security numbers, so should be in a safe place. It is especially important for the licensee to have easy access to the agreement if any conflict occurs between the licensee and broker. The agreement contents should clear up most issues.

If a transaction doesn't complete, under what circumstances would the broker still be entitled to a commission?

The broker is still entitled to receive the commission if the transaction does not complete due to the seller's or buyer's default.

Which of the following is a true statement?

The broker may delegate the appointment process to someone else in the office.

Policies and procedures are written to protect the brokerage and licensees, but they should also be written to serve whom?

The customer and client

Why is coordinating escrow so important and how can an assistant help?

The escrow process can make or break a sale. An assistant can talk to the escrow officer to find out what documents have been returned, what documents are outstanding, if all contingencies have been removed and if all conditions have been met.

What are three reasons why a licensed agent might want to become a real estate assistant?

The licensee doesn't have the personality for pursuing and persuading clients to buy or list property. The licensee may lack confidence when starting out and prefer working as an assistant to gain experience. Financial situations might persuade an agent to seek steady income as an assistant instead of relying solely on commission.

What is the main difference between an employee and an independent contractor?

The main difference between the two is an issue of control, as established by income tax laws.

What are the conditions of the IRS safe harbor test?

The person must be a properly licensed real estate agent. Gross income from all output must be based on production and not on hours worked. A written agreement must exist between the independent contractor and the broker stating that the contractor will not be treated as an employee for income tax purposes.

What section of an independent contractor agreement gives a licensee the ability to represent the broker and enter into agreements with clients?

The section discussing the Associate's authority

When a prospect comes into an open house, our duty is to whom?

The seller

Broker Melinda works for Managing Broker Mary. Broker Sara works for Managing Broker Rich. Sara sells one of Melinda's listings. Who will receive the commission and how will it be handled?

The seller will pay the commission to Managing Broker Mary. Managing Broker Mary will give an agreed upon share to her broker Melinda and another share to Managing Broker Rich. Managing Broker Rich will then pay a share to broker Sara according to their written agreement.

What are some factors a salesperson should consider when choosing a brokerage to work with?

The type of person he/she works well with Type of office environment preferred Does the brokerage have a nicely designed website?

Why is it especially important for licensees to be clear on conditions for termination of an Independent Contractor Agreement?

They need to know the procedures for handling outstanding commissions at the time of termination.

When working with buyers, which of the following is NOT a method of creating agency?

Through a third party

What is the one job a broker has to do for a buyer client?

To find and negotiate the purchase of a home

The ECOA was designed to prohibit what types of illegal actions?

To prohibit discrimination in any aspect of a credit transaction

What is the main purpose of the Code of Ethics?

To protect the public.

Broker Paul listed Tom's home and showed it to Buyer Alan. Their listing agreement specified that Paul would receive a 6% commission, and the safety period was set at six months after the listing expiration. After the listing expired, Tom listed his home with Broker Alice for a 6% commission rate. Alice sold the home to Buyer Alan five months later. What commission does Tom owe and to whom?

Tom owes Broker Alice 6% of the home's selling price. He also owes Broker Paul nothing.

What are 4 negotiating factors an agent should consider when deciding on a brokerage and agreeing to a contract?

Training and support Commission schedule Who answers the phone Miscellaneous benefits

What will brokers avoid if they take control over agency relationships by developing a company disclosure policy?

Unintended and illegal agencies

Why is it necessary for agents to withhold taxes and social security from their part-time or full-time assistants?

Unless there is an independent contractor agreement in place, agents are required to withhold taxes and social security from their assistants pay or they are in violation of federal and state tax laws. If the government discovers the violation, the assistant, the salesperson and even the broker could get into trouble.

What is important to know about unlicensed real estate assistants?

Unlicensed assistants can perform a variety of activities to assist real estate licensees in transactions. However, they may not perform any activity which requires a real estate license.

When is a broker required to provide a Form 1099- MISC to the IRS?

When an independent contractor earns more than $600 in a calendar year.

When seeking employment as an assistant, what topics should be included on a resume?

When seeking employment as an assistant, what topics should be included on a resume?

What two required disclosures concerning agency must licensees make orally or in writing?

Written information statement Agency disclosure form

The worst way to create agency is

accidentally.

Common law

also known as case law, was developed by judges through decisions of courts verses statutes adopted through the legislative process or regulations issued by the executive order.

Anytime that anyone signs a document with a licensee, the person should be given a copy

as soon as possible

Under the National Association of Realtors Code of Ethics and Standards, the buyer's agent must disclose the relationship to the listing agent

at first contact.

Broker fees are typically paid

at the time of closing with funds from the transaction.

In regards to agency discussions, licensees should

feel comfortable discussing agency and make it part of professional meetings.

When a licensee gets busy he could

hire an assistant.

Agency is a relationship

in which a person from the public now has a licensed broker and the broker's salespeople to assist the client in accomplishing either selling a property, buying a property, or leasing a property

A specialized real estate transaction usually

involves 3 or more parties and a number of representatives

A specialized real estate transaction usually

involves 3 or more parties and a number of representatives.

The Notification of Intermediary Relationships form

is a simple form.

Before entering into a buyer agency agreement the real estate licensee is required to provide the buyer with a written statement describing all of these except

lender agency.

Approved intermediary representation by all parties needs to happen

long before closing.

While an agent may decide whom to represent, he or she must

obtain written consent from all parties.

Assistants who are asked to be available for tasks in the field rather than in the office are referred to as

on-call assistants.

Two important components of all broker and principal agreements are

terms of employment and issues of compensation.

An independent contractor agreement would not discuss

vacations.

Rescission is

when both the client and the broker agree to end the relationship that they are in.

The buyer's representation agreement is

written in such a way that the buyer is exclusively represented by one broker and is not to enter into another agreement with another broker.

Following are some tasks that a transaction broker routinely performs:

• Assists the buyer in preparing an offer • Helps the seller in deciding what price to ask • Facilitates communications between the two parties • Helps write a contract • Helps both buyer and seller fulfill the conditions of the contract • Coordinates the closing