Ch 12 B - VA Standards
A real estate salesperson will receive her share of the brokerage fee from which person? Select one: A. Either buyer or seller, based on their agreement B. The attorney conducting the closing C. Her employing broker D. The listing broker
(disciplinary procedures & sanctions) A salesperson may ONLY receive compensation from her employing broker. The correct answer is: Her employing broker
A salesperson could have his license suspended or revoked for which of the following reasons? Select one: A. Raising the price on a contract in order to influence a lender B. Giving a false address in order to obtain a license C. Encouraging a homeowner to sell since minorities are moving into the neighborhood D. Any of the above
(disciplinary procedures & sanctions) All of the answer choices are violations of the Real Estate Board Regulations. The correct answer is: Any of the above
Licensees must respond to Board inquiries within: Select one: A. 10 days B. 15 days C. 21 days D. 31 days
(disciplinary procedures) A licensee must respond to an "inquiry" (question or demand for non-financial records) within 21 days. Remember that this is different than a "request" from the Board. A "request" is for financial records, which must be presented to the Board within 10 days. The correct answer is: 21 days
The Real Estate Board may investigate the activities of a salesperson: Select one: A. At any time B. Only upon receipt of a written complaint setting forth the alleged violation C. Only with the approval of the principal broker D. After 3 complaints have been received
(disciplinary procedures) The Board may investigate a licensee at any time that it chooses. The process may be initiated upon receipt of a written complaint, or through the Board's own discretion. The correct answer is: At any time
A broker may NOT accept which of the following listings? Select one: A. Open listing B. General listing C. Net listing D. Neither B nor C
(improper commissions) Net listings (where a licensee keeps all proceeds over certain amount) are prohibited in Virginia. Therefore, accepting a net listing is a violation of the licensing law. An open listing is an agency agreement between a seller and any number of brokers, wherein the seller promises to compensate the broker if the broker sells the property. Note that a general listing is the same thing as an open listing. The correct answer is: Net listing
Sarah Smith sees an ad from Broker Mark for a custom built home with mountain views, hardwood floors, a theatre room, and a professional kitchen. She goes to the address and finds that the listed property is actually a motor home. Mark is guilty of: Select one: A. Commingling B. Bait and switch C. Conversion D. None of the above
(misrepresentation/omission) This is an example of a "bait and switch" misrepresentation, which is prohibited for all licensees (salesperson or broker, active or inactive). The correct answer is: Bait and switch
Brokers must retain records of real estate transactions for at least: Select one: A. 2 years B. 3 years C. 4 years D. 5 years
(record retention) Records pertaining to real estate transactions and escrow account activity must be maintained by the broker for 3 years. The correct answer is: 3 years
A real estate salesperson's license may be revoked if the licensee: Select one: A. Sells insurance from the real estate office where she is employed B. Gives a reduced commission rate to a family member C. Charges more than the legal maximum commission rate D. Advertises a listing at lower than listed price
(advertising restrictions) A licensee can only advertise property at the price that was agreed upon by the seller of the property. Doing otherwise might be classified as misrepresentation, and a failure of the licensee's fiduciary duties towards her client. Also note that there is no such thing as a maximum commission rate. The correct answer is: Advertises a listing at lower than listed price
A broker placed one of her signs on property without permission from the owner. The broker is guilty of: Select one: A. Misrepresentation B. Violation of anti-trust laws C. Improper dealing D. Disparate impact
(disciplinary procedures & sanctions) The regulations stipulate that signs may ONLY be placed on property with permission of the owner. This is addressed in the "Improper Dealing" section of the regulations. The correct answer is: Improper dealing
The Board may investigate a complaint based on: Select one: A. A written complaint B. Its own initiative, without any written complaint C. Matters outside the scope of its authority D. Both A and B
(disciplinary procedures and sanction) The Board may investigate misconduct based on a written complaint from any person (client, customer, other licensee) or by exercise of its own discretion. The correct answer is: Both A and B
According to Virginia License Law and the regulations of the Board, a salesperson may accept a net listing: Select one: A. With a written consent from the owner only B. By written contract between the owner and the principal broker C. If the owner is a non-resident of Virginia D. Under no circumstances
(disciplinary procedures & sanctions) Net listings are illegal in Virginia. As such, a salesperson may never legally accept a net listing. The correct answer is: Under no circumstances
Broker Foster manages an apartment building for Owner Smith. Foster used the security deposits of two tenants (Petri and Gonzales) for general maintenance on the apartment building. Was this action permissible? Select one: A. Yes, because deposits are held to cover the cost of repairs B. Yes, as long as the owner is aware of it C. No, security deposits are held for tenants in an escrow account and are not part of the operating funds D. No, using these deposits for repairs would eliminate the need to charge damage repairs when tenants move out
(escrow accounts) The tenant's security deposits may be used to repair any damages (except fair "wear and tear") to the tenant's apartments. The Virginia License Law and Board Regulations require that such funds to be placed in an escrow account. The correct answer is: No, security deposits are held for tenants in an escrow account and are not part of the operating funds
Every real estate office in Virginia is required to: Select one: A. Have one telephone for every five agents B. Have a desk for every five agents C. Keep records for a period of ten years D. Keep records for a period of three years
(financial records and escrow management) Records of all transactions, including receipts and disbursements of funds belonging to others (escrow account records), must be kept for three years from the date of ratification or consummation, whichever is later. The correct answer is: Keep records for a period of three years
The purpose of Virginia License Law and the Rules and Regulations is to: Select one: A. Make brokers and salespersons more professional B. Protect the public interest C. Enable licensed real estate professionals to earn more money D. Comply with federal law
(standards of conduct) The purpose of the License Law is to protect the public interest. The correct answer is: Protect the public interest
Sarah the Salesperson sold a property for Owner Fred. Fred thought Sarah did such a good job, he sent her a $500 bonus. If Sarah keeps the $500, she: Select one: A. Is in violation of the VA License Law B. Is not in violation of the VA License Law, so long as she informs her broker C. Is not in violation of the VA License Law, so long as she informs the buyer D. Is in violation of the VA License Law, unless she fails to inform the Board
(commissions) Salespersons and associate brokers can ONLY receive compensation from their employing broker. If Sarah were to accept the $500, she would be receiving compensation from a person other than her broker. That is a violation of the VA License Law. However, if Fred (the client) paid the bonus to Sarah's broker, the broker could pass it along to Sarah without violating the VA License Law. The correct answer is: Is in violation of the VA License Law
A licensed real estate salesperson may receive money to manage real property from: Select one: A. His or her broker B. Any property owner C. Any broker D. A friend, relative, or builder
(disciplinary procedures & sanctions) A salesperson may ONLY receive a commission or other valuable consideration for acts of real estate brokerage (including property management) from his or her employing broker. The correct answer is: His or her broker
Salesperson Ellen shows many different properties to her clients over the course of several weeks. In the end, these clients decide to stay where they are and to quit looking for a home. They give Ellen $500 as compensation for all of her hard work. Ellen deposits the money into her personal checking account. Such action is: Select one: A. Legal, if Ellen maintains a record of the transaction B. Illegal, because Ellen can only accept money from her broker C. Legal, if Ellen performed as agreed D. Illegal, unless properly disclosed
(disciplinary procedures & sanctions) As a salesperson, you may only accept money or other valuable consideration from your employing broker. The correct answer is: Illegal, because Ellen can only accept money from her broker
Bob, an associate broker, sold a property. Several weeks after closing, the seller sent him $250 and a thank you note for a job well done. Bob accepted the check since he worked hard and felt the bonus was deserved. In the situation described, which of the following statement is true? Select one: A. Bob may keep the bonus since he has a broker's license B. Bob may accept the bonus if more than 30 days have passed since closing C. Bob may keep the money because of the fiduciary relationship between himself and the seller D. Bob has violated the Board regulations
(disciplinary procedures & sanctions) Associate brokers cannot accept payment directly from a client. Like salespersons, an associate broker must ONLY be paid by the principal broker. The correct answer is: Bob has violated the Board regulations
A broker is a member of the local MLS service. Commission rates charged by members of the MLS are established by: Select one: A. The MLS service B. The Virginia Real Estate Board C. The broker and the seller D. The local association of REALTORS
(disciplinary procedures & sanctions) Commission rates are only negotiable between the broker and the seller of the property. The correct answer is: The broker and the seller
An owner lists property with a broker. The owner specifies how much she wants to receive from the sales proceeds, then allows the broker to propose a selling price. This type of agreement: Select one: A. Assures a quick sale because the broker knows the seller's exact position B. Is attractive to many sellers since they don't need to get involved in the negotiation C. Is illegal since it would allow the broker to take advantage of an uninformed seller D. Is common and completely legal
(disciplinary procedures & sanctions) Did you assume this was a net listing, which is illegal in Virginia? Look at the facts closely. The questions does not specify that the broker keeps any amount over what the seller "wants to receive," but only that the licensee has asked him to suggest a selling price. In fact, through a competitive market analysis, licensees often do propose a selling price. However, it is always the seller who has the final say on what the selling price will be. The correct answer is: Is common and completely legal
The Board may take disciplinary action against a licensee: Select one: A. If a written complaint contains prima facie evidence that a violation has occurred B. If the licensee admits guilt C. After conducting a hearing D. Either B or C
(disciplinary procedures & sanctions) In general, the Board may take disciplinary action if the licensee admits guilt or after conducting a hearing. If the licensee admits guilt, the Board may not take additional actions beyond the agreed upon punishment. Also note certain actions related to the Transaction Recovery Fund are automatic (no hearing required). The correct answer is: Either B or C
The Board determines that a licensee misrepresented information on her license application. In this situation, which of the following statements is true? Select one: A. The Board may take disciplinary action B. The Board may order criminal penalties C. The licensee must forfeit all commissions earned D. The licensee must submit to re-examination
(disciplinary procedures & sanctions) In this situation, the Board's most probable disciplinary action is suspension or revocation of the license. The person could also be subject to other action by the courts. The correct answer is: The Board may take disciplinary action
When a salesperson takes a listing, the commission amount is determined by the: Select one: A. Salesperson B. Salesperson's employing broker C. Seller and salesperson D. Seller and broker
(disciplinary procedures & sanctions) License Law and Board Regulations are silent on the amount of a commission. Since the broker (agent) is employed by the seller (principal), commission is determined by what the seller is willing to pay and what the broker is willing to accept as a basis for the broker's agency. The correct answer is: Seller and broker
Salesperson Lynch receives a referral check from an out-of-town broker, Kirks, for sending him a prospective buyer. What is the first thing Lynch should do? Select one: A. Inform his employing broker B. Endorse the check and give it to his employing broker C. Write a thank you note to Kirks D. Deposit the check and say nothing
(disciplinary procedures & sanctions) Lynch should endorse the check and give it to his employing broker. Receiving a commission or valuable consideration from anyone other than an employing broker is a violation of the Real Estate Board Regulations. The correct answer is: Endorse the check and give it to his employing broker
If a salesperson is accused of violating License Law, the Real Estate Board will: Select one: A. Send a copy of the charges to the salesperson at his last known business address B. Send a copy of the charges to the salesperson's broker at the broker's place of business C. Revoke the salesperson's license pending a hearing D. Ask the court to attach any commissions due the salesperson, pending outcome of the investigation
(disciplinary procedures & sanctions) Note that the Real Estate Board will send copies of the charges to the salesperson at his home address, NOT THE BUSINESS ADDRESS. The employing broker will also be notified at his place of business. The Board does not have the authority to revoke a license pending a hearing, or to attach commissions pending an investigation. The correct answer is: Send a copy of the charges to the salesperson's broker at the broker's place of business
A salesperson would be subject to disciplinary action by the Real Estate Board for which of the following actions? Select one: A. Paying a finder's fee to an unlicensed person B. Acting for both buyer and seller with their mutual consent C. Refusing to hold an open house, at the request of his broker D. Accepting a referral fee from an out-of-state broker, through his employing broker
(disciplinary procedures & sanctions) Of the listed choices, only "paying a finder's fee to an unlicensed person" is a violation of the License Law. Accepting a referral fee through your employing broker is permissible. However, you can never share a commission with an unlicensed individual. The correct answer is: Paying a finder's fee to an unlicensed person
A postal employee has a friend, Berry, who is a real estate salesperson. Every once in a while, she gives Berry information about people leaving the area so he can contact them as potential clients. When this information leads to a sale, Berry pays her $100 for the tip. Which of the following statements is true? Select one: A. This is permitted since it is only done occasionally B. This a questionable business practice and may constitute mail fraud C. This is not permissible because the $100 fee must be paid to Smith through Berry's employing broker D. This is a violation of Virginia License Law
(disciplinary procedures & sanctions) Paying valuable consideration to an unlicensed person for an act of real estate is a violation. Even if Berry's broker paid the fee, it would still be a violation of the law. The correct answer is: This is a violation of Virginia License Law
In accordance with Real Estate Board Regulations, all records of transactions and closings maintained by a broker must be: Select one: A. Kept for a period of 7 years B. Made available for inspection by the representatives of the Real Estate Board C. Kept indefinitely D. Turned over to the buyer at closing
(disciplinary procedures & sanctions) The broker is ONLY required to maintain his records for 3 years. Upon request, the broker must make records available for review by agents from the Real Estate Board during normal business hours. The correct answer is: Made available for inspection by the representatives of the Real Estate Board
An offer is written for a property late Friday night, but the salesperson is getting ready to leave town for the weekend. What should the salesperson do? Select one: A. Immediately present the offer B. Tell the buyer it will have to wait until Monday C. Tell the seller that there is an offer, but it will have to wait until Monday to be presented D. Ask another salesperson in the office to present the offer
(disciplinary procedures & sanctions) The salesperson must present the offer to the seller immediately. Failure to do so is grounds for discipline. The correct answer is: Immediately present the offer
Owner Chaney tells Broker Fowler that she will list her property if he guarantees that she will receive $38,500 cash once the sale is complete and all expenses have been paid. Fowler may have anything over that amount as commission. Broker Fowler should tell Owner Chaney: Select one: A. That she is describing an open listing B. That she has an unrealistic opinion on the value of the property C. That she is describing an exclusive agency listing D. That he cannot accept the listing
(disciplinary procedures & sanctions) This describes a "net" listing, where the owner specifies a specific amount of return on the sale after all the expenses are paid. The Regulations specifically prohibit this type of listing. The correct answer is: That he cannot accept the listing
It is a violation of Virginia License Law to induce another person into selling their property by representing that: Select one: A. Your brokerage firm will accept a lower commission rate B. The seller needs a larger house C. People from Hungary are moving into the neighborhood D. None of the above
(disciplinary procedures & sanctions) This is an example of blockbusting, which is a violation of fair housing laws. Violating fair housing laws is a violation of the License Law. The correct answer is: People from Hungary are moving into the neighborhood
In an attempt to obtain listings, a broker authorizes her licensees to offer incentives to any person who lists property with her firm. Which of the following statements is correct? Select one: A. The broker has violated Board regulations, which preclude paying valuable consideration to an unlicensed person B. The broker must limit this incentive program to 30 days C. Such actions could be viewed as creative selling, which does not violate License Law or Board regulations D. The brokers actions violate anti-trust laws
(disciplinary procedures & sanctions) This is creative marketing. Remember that you can pay valuable consideration to the principals in a contract if there is proper disclosure. The correct answer is: Such actions could be viewed as creative selling, which does not violate License Law or Board regulations
If a broker acts for more than one party in a real estate transaction without the full knowledge and consent of all parties, it is: Select one: A. Acceptable, if no one is defrauded B. Acceptable, as a result of the listing contract C. Acceptable, if the compensation is less than $500 D. Grounds for suspension or revocation of a license
(disciplinary procedures & sanctions) Under no circumstance may a broker represent more than one party in a transaction UNLESS everyone knows about it and agrees to the arrangement. The License Law identifies this as grounds for suspension or revocation of a license. The correct answer is: Grounds for suspension or revocation of a license
If the Board receives a written complaint about a licensee, what is the first thing they will do? Select one: A. Suspend the respondent's license B. Advise the licensee of the charges C. Hold a hearing in order to allow the licensee to defend himself D. Review the complaint to determine if there is a possible violation of License Law or Board regulations
(disciplinary procedures and sanctions) After receiving a complaint, the very first thing the Board will do is to see if it alleges a violation of License Law. Even when true, a complaint could be about an issue that is not a violation, or something that is entirely outside of the Board's jurisdiction. The correct answer is: Review the complaint to determine if there is a possible violation of License Law or Board regulations
When a salesperson is alleged to have violated the License Law, which of the following statements is true? Select one: A. An investigation will be conducted unless the law specifically provides otherwise B. The salesperson is entitled to a jury trial before any action can be taken C. The salesperson's license will be temporarily suspended until the board can schedule a formal hearing D. The salesperson's broker is automatically charged with the same violation
(disciplinary procedures and sanctions) An investigation only is conducted if there is a credible allegation of wrongdoing in the complaint. The correct answer is: An investigation will be conducted unless the law specifically provides otherwise
A violation of the Virginia License Law may subject a broker to: Select one: A. Suspension of his license and a fine B. A fine only C. Revocation of his license and a fine D. All of the above
(disciplinary procedures and sanctions) For a violation of the License Law, the Board has the right to fine, suspend a license, revoke a license, or refuse to renew a license. The Board may, and often does, impose a combination of these penalties. The correct answer is: All of the above
A salesperson is charged with a violation of the License Law. Which of the following statements is true? Select one: A. She is entitled to a hearing before the Board can take disciplinary action, unless the law provides otherwise B. She has the right to present witnesses in her defense, provided those witnesses are licensed real estate professionals C. Her license will be temporarily suspended until the Board can hold a hearing D. Her employing broker will lose his license if the salesperson is found guilty
(disciplinary procedures and sanctions) Generally, licensees are afforded the right to a hearing before the Real Estate Board takes disciplinary action. However, the law specifies that a license will be automatically suspended or revoked, without benefit of hearing, in several situations. Also, the Board may subpoena any person, licensed or not, if their testimony will have a bearing on the case. The correct answer is: She is entitled to a hearing before the Board can take disciplinary action, unless the law provides otherwise
If a salesperson is in violation of Virginia License Law or regulations, the Board may discipline the salesperson by doing any of the following actions, EXCEPT: Select one: A. Suspending the person's license B. Revoking the person's license C. Imposing a fine of $5,000 for each violation D. All of the above
(disciplinary procedures and sanctions) The Board can only fine the licensee up to $2,500 per violation. The correct answer is: Imposing a fine of $5,000 for each violation
Salesperson Brenda is affiliated with Broker Bob, who has a listing with Seller Alex. Salesperson Brenda receives a check from Seller Alex after finding a buyer to purchase the home. If Brenda wants to keep the money and NOT violate VA License Law, she could: Select one: A. Cash the check if she deserves it B. Endorse the check over to Bob C. Put the check in her escrow D. Cash the check, but inform Bob
(disciplinary procedures) Licensees can only receive compensation from their employing broker. Therefore, Brenda must either return the check to Alex or give it to Bob--she cannot keep it. However, if she gives it to Bob, he could choose to give her a bonus in the same amount as the check received from Alex. Bob (not Brenda) is required to maintain an escrow account. Nevertheless, whether the money is placed in escrow is irrelevant--Brenda cannot receive compensation from someone other than her broker. The correct answer is: Endorse the check over to Bob
Hearings before the Virginia Real Estate Board must be held in accordance with the: Select one: A. Virginia Association of Realtors Regulations B. Uniform Commercial Code (UCC) C. Administrative Process Act D. Supreme Court Judicial Procedures Act
(disciplinary procedures) Note that the License Law gives the Real Estate Board authority to conduct hearings in accordance with the Administrative Process Act. The correct answer is: Administrative Process Act
If the Board receives a written complaint about a licensee's actions, what does the Board always do? Select one: A. Suspend the license until a formal hearing can be conducted B. Impose a monetary penalty of up to $1,000 C. Hold a hearing to allow the licensee to defend herself D. Investigate to determine whether a violation might have been committed
(disciplinary procedures) The Board will only take action on matters that it has control over. For example, if the complaint was about something that is not a violation (or not applicable to license law), the Board can choose to dismiss the case. A hearing is held only after probable cause has been determined through the initial investigation. The correct answer is: Investigate to determine whether a violation might have been committed
The Real Estate Board has power to take all of the following actions, EXCEPT: Select one: A. Investigate the actions of any real estate broker or salesperson B. Suspend or revoke any license issued by the Real Estate Board C. Impose a fine D. Impose a criminal penalty
(disciplinary sanctions) The Board has authority to suspend, revoke, or deny a license, and to impose monetary penalties for violating the law and regulations. The Board has no authority to impose a jail sentence; this can only be done by a court of law. The correct answer is: Impose a criminal penalty
The Board believes that a broker is not properly managing her escrow account. Upon request, the court appoints a receiver to manage the account. After investigation, the Board finds that the broker is innocent of any wrong doing. Who is responsible for the expenses and fees of the court-appointed receiver? Select one: A. The court that appointed the receiver B. The broker, as a necessary expense to establish her innocence C. The Board, using money from the Transaction Recovery Fund D. The Board, using money from its operating budget
(escrow accounts) The Board must bear the expense if the licensee is innocent. The Board pays such costs from its operating funds, not the Transaction Recovery Fund. The correct answer is: The Board, using money from its operating budget
Gene, an independent broker, lists a property. Susan, also an independent broker, sells the property. Gene agrees to split the commission with Susan, but neither one advises the seller or the buyer of their agreement. According to Virginia regulations: Select one: A. Neither Susan nor Gene is in violation of the law B. Gene is guilty of paying valuable consideration to another party, thereby creating a dual agency C. Susan is guilty of accepting money from someone other than her employing broker D. The seller must be informed of any such payment, prior to signing the listing agreement
(improper commissions) Prior to entering into any brokerage relationship, a licensee shall advise the prospective client of the type of brokerage relationship proposed and the broker's compensation. The licensee must also disclose whether the broker will share such salary or compensation with another broker who might have a brokerage relationship with another party to the transaction. The correct answer is: The seller must be informed of any such payment, prior to signing the listing agreement
Rainy Yeng has been transferred out of the area on an extended work assignment. She plans to rent her condominium in that time period, and asks Salesperson Cindy to handle the rental. Rainy tells Cindy that she wants $500 per month for the rental and Cindy may have any amount over $500. May Cindy accept this rental listing? Select one: A. Yes, Cindy may accept this rental listing because brokerage fees are always negotiable between the owner and the agent B. No, but the listing may be accepted by Cindy's broker, who in turn will pay Cindy the brokerage fee C. Neither Cindy nor her broker may accept this listing D. Cindy may accept this listing if her license is current
(improper commissions) The situation described is a NET listing for a rental, which is illegal in Virginia. The listing can ONLY be accepted if the fee is expressed as a percentage of the rental or as a fixed amount. Even then, a listing can ONLY be accepted by the broker. Salesperson Cindy cannot accept the listing under the circumstances. The correct answer is: Neither Cindy nor her broker may accept this listing
Allison is a broker who knowingly stated an false material fact. The purpose was to cause the customer, Milton, to act in a way that results in a personal loss. Allison is guilty of: Select one: A. Fraud B. Misrepresentation C. Inducement D. Larceny
(misrepresentation, fraud) This is fraud because Allison actually knows that the statement is false. Further, the licensee intends for the buyer/seller to rely upon that information to his detriment (which was probably meant to benefit the licensee). The correct answer is: Fraud
Billy the Broker represents Suzy Seller in an effort to sell her home. Bob the Buyer makes an offer that is $20,000 below what Suzy is asking. Knowing that Suzy would reject such a low offer, Billy tells Bob to "forget it." Has Billy violated the VA License Law? Select one: A. No, because he acted in Suzy's best interests B. No, because Billy is a broker C. Yes, because Suzy must communicate directly with Billy D. Yes, because Billy failed to present the offer to Suzy
(misrepresentation/omission) All licensees (salesperson and broker) are prohibited from making omissions related to a transaction, including a failure to present offers in a timely manner. The correct answer is: Yes, because Billy failed to present the offer to Suzy