Ch. 4 Authorized relationships, duties, and disclosure

a residential sale transaction is defined as the sale of agricultural property of ____ or fewer acres.

10

a residential sale transaction is defined as the sale of improved residential property of _____ or fewer units.

4

real estate brokers are required to retain buyer brokerage agreements fora period _____ years.

5

3. Which statement BEST describes the duty of loyalty in a single agent relationship? A. The broker must act in the best interest of the principal. B. The broker must disclose all latent defects to prospective buyers. C. The broker is held to a standard of care that requires knowledge concerning the land and physical characteristics of the property. D. The broker must be able to account for all funds received on behalf of the principal.

A. The broker must act in the best interest of the principal.

12. Designated sales associates are BEST described as A. single agents for the buyer and the seller in nonresidential transactions where the buyer and the seller meet certain asset thresholds. B. the sales associates designated to represent the buyer and the seller in a transaction broker relationship. C. undisclosed dual agents. D. the sales associates in charge of the required brokerage disclosure forms for the brokerage office.

A. single agents for the buyer and the seller in nonresidential transactions where the buyer and the seller meet certain asset thresholds.

13. Which relationship is a general agency relationship? A. Brokerage company employed under a listing contract. B. Relationship between the employing broker and a broker associate .C. Sales associate working with a prospective buyer. D. Relationship between a sales associate and the seller who has listed property with the brokerage.

B. Relationship between the employing broker and a broker associate

4. A real estate broker who works in a limited capacity for both the buyer and the seller in the same transaction is A. a dual agent. B. a transaction broker C. bound to fiduciary duties to both the buyer and the seller. D. a single agent of both the buyer and the seller.

B. a transaction broker

11. A broker's obligations to consumers with whom the brokerage firm has no brokerage relationship include the duty of A. full disclosure. B. accounting for all funds. C. loyalty. D. limited confidentiality.

B. accounting for all funds.

9. In the common public relationship that exists in a typical real estate transaction, buyers and sellers are said to be dealing A. in a fiduciary capacity. B. at arm's length with each other. C. in an agency status with each other. D. under the doctrine of ethical confidentiality.

B. at arm's length with each other.

2. The brokerage relationship disclosure requirements in Chapter 475, F.S., apply to the A. sale of a 20 unit apartment complex B. sale of a condominium unit C. residential lease agreement in a duplex D. sale of a bookstore business and real property

B. sale of a condominium unit

6. A broker has listed a seller's property. The seller has disclosed to the broker than the ceramic tile is loose in the dining room because the cement did not adhere to the tile. The loose tile is not readily visible because it is covered with an area rug to protect the seller's toddler. The broker has satisfied his legal obligation if he tells the buyer A. that the floor appears to be in good condition. B. that ceramic tiles in the dining room are loose. C. that the buyer can order an inspection at his own expense if he is concerned about the floor. D. nothing unless he is asked specifically about the tile floor's condition.

B. that ceramic tiles in the dining room are loose.

5. A licensee of ABC Realty must give the no brokerage relationship notice to A. a buyer who has a single agent relationship with XYZ Realty. B. every prospective buyer and prospective seller in all cases. C. a for sale by owner (FSBO) seller before showing the FSBO home to a buyer customer of ABC Realty. D. every prospective buyer who walks through an open house listed by ABC Realty.

C. a for sale by owner (FSBO) seller before showing the FSBO home to a buyer customer of ABC Realty.

15. A real estate sales associate must disclose to a prospective buyer that A. a former occupant of the property committed suicide in the home. B. the seller has been diagnosed with HIV. C. the family room addition does not comply with local building codes. D. families of other racial groups live in the immediate area.

C. the family room addition does not comply with local building codes.

1. A real estate brokerage company has entered into a single agent buyer broker relationship with the buyer. In order to show this buyer property that is listed with the same brokerage company for which it is a single agent, in what brokerage capacity may the company work with this buyer and seller? A. Single agent for the seller and transaction broker for the buyer. B. Single agent for the seller and single agent for the buyer. C. Any relationship that is agreed to by both the buyer and the seller. D. Both the seller and the buyer must transition to a transaction broker relationship before the buyer can be shown the seller's property.

D. Both the seller and the buyer must transition to a transaction broker relationship before the buyer can be shown the seller's property.

14. Which action will terminate a single agent relationship with the principal who has listed a home for sale with the brokerage? A. Death of a customer interested in the listing. B. Buyer's offer not accepted by the seller C. Decision of sales associate who acquired the listing for the brokerage to leave the company. D. Destruction of the listed property by a large sinkhole.

D. Destruction of the listed property by a large sinkhole.

7. A transaction broker has all the duties listed below EXCEPT A. limited confidentiality. B. to use skill, care, and diligence. C. to disclose all known facts that materially affect the value of residential real property. D. obedience.

D. obedience.

8. A seller lists her home for $116,900. The seller tells the sales associate that she needs to get at least $112,000 for the home. After Sunday's open house, the sales associate receives two offers on the home. The first offer for $116,900 is contingent on the seller's financing a portion of the down payment. The second offer is for $112,000 with the buyer to secure her own financing. The sales associate should A. seek his broker's advice regarding which offer to present. B. present the full price offer to the seller. C. present the second offer to the seller. D. present both offers, explaining the details of each to the seller.

D. present both offers, explaining the details of each to the seller.

Which brokerage relationship duty applies to all three types of brokerage relationships? A) Accounting for all funds B) Confidentiality C) Using skill, care, and diligence D) Loyalty

The answer is accounting for all funds. Loyalty and confidentiality are single agent duties. The duty to use skill, care, and diligence is a duty of transaction broker and single agent relationships. Accounting for all funds applies to no brokerage, transaction broker, and single agent relationships

Which type of transaction requires that the parties to the transaction receive brokerage relationship disclosures? A) Appraisals of residential real estate B) Agricultural property of 10 or fewer acres C) Business opportunities that include five or more residential units D) Auctions of residential real estate

The answer is agricultural property of 10 or fewer acres. Agricultural property that consists of 10 or fewer acres is considered a residential sale under Florida license law.

Which brokerage relationship duty applies only to a transaction broker relationship? A) Full disclosure B) Deal honestly and fairly C) Exercise limited confidentiality D) Account for all funds

The answer is exercise limited confidentiality. Full disclosure is a single agent duty. Dealing honestly and fairly and accounting for all funds apply to all three disclosure relationships. Exercising limited confidentiality is a brokerage relationship duty unique to transaction broker relationships.

Which brokerage relationship duty applies only to a single agent relationship? A) Deal honestly and fairly B) Full disclosure C) Exercise limited confidentiality D) Account for all funds

The answer is full disclosure. Four duties apply only to single agent relationships: confidentiality; obedience; loyalty; and full disclosure.

On Sunday at an open house, a sales associate receives two offers on a home listed for $300,000. One offer is for $250,000 cash at closing. The second offer is for $295,000 contingent upon the buyer securing a mortgage for 90% of the sale price. What action should the sales associate take? A) Present both offers, explaining the details of each contract to the seller. B) Present the higher-priced offer first, and if declined, present the second offer. C) Present only the higher-priced offer because it will result in the highest commission. D) Present the offer received first, and if declined, present the second offer

The answer is present both offers, explaining the details of each contract to the seller. Unless a party has previously directed the licensee otherwise in writing, the licensee must present all offers and counteroffers in a timely manner.

The brokerage relationship disclosure requirements in Chapter 475 apply to which transaction? A) Sale of a coffee shop in a residential neighborhood B) Sale of three vacant lots zoned for single-family use C) Lease of a single-family home D) Sale of a 150-unit condominium complex

The answer is sale of three vacant lots zoned for single-family use. Brokerage relationship disclosure requirements apply to residential transactions. A residential sale is defined as the sale of improved residential property of four or fewer units, the sale of unimproved residential property intended for use as four or fewer units, and the sale of agricultural property of 10 or fewer acres.

Is a broker required to retain the brokerage relationship disclosure documents, and if so, for how long, if a written nonresidential transaction that used designated sales associates fails to close? A) The broker must retain the disclosure documents for two years even if a nonresidential transaction fails to close. B) The broker must retain the disclosure documents for five years even if a nonresidential transaction that used designated sales associates fails to close. C) The broker must retain the disclosure documents for 90 days to give ample opportunity for the parties to close the deal. D) The broker is required to retain disclosure documents only for contracts that go to title closing

The answer is the broker must retain the disclosure documents for five years even if a nonresidential transaction that used designated sales associates fails to close. Brokers must retain brokerage relationship disclosure documents for five years for all nonresidential transactions that use designated sales associates that result in a written contract to purchase and sell real property. This requirement includes files of properties that may have failed to close.

In commercial real estate transactions that meet specific criteria, a real estate brokerage may use one sales associate to work as a single agent of the buyer and another sales associate to act as a single agent of the seller. Which criteria must be met? A) The broker must serve as a neutral party and not give guidance or representation to the buyer and the seller. B) The buyer and the seller must each have assets of at least $2 million. C) The buyer and the seller must agree to sign the Transition to Two Single Agents Notice. D) The buyer and the seller must agree to sign the Irrevocable Consent to Service Agreement.

The answer is the broker must serve as a neutral party and not give guidance or representation to the buyer and the seller. The buyer and the seller may request, in certain commercial real estate transactions, that two sales associates be designated, with one to act as a single agent for the buyer and the other to act as a single agent of the seller. The broker serves as a neutral party helping to facilitate the process without giving guidance or representation to the parties in the transaction.

Which statement is unique to the transaction broker relationship? A) The customer is not responsible for the acts of the licensee. B) The buyer or the seller must give written consent to enter into the brokerage relationship. C) The licensee must disclose all known facts that materially affect the value of the real property. D) The agent is obligated to a duty of obedience.

The answer is the customer is not responsible for the acts of the licensee. The duty of obedience is unique to the single agent relationship. In all three brokerage relationships, when dealing in residential real estate, the licensee must disclose all known facts that materially affect the value of the real property. The licensee is not required to give written notification of the brokerage relationship duties in a transaction broker relationship. The buyer or the seller is not required to sign the disclosure unless transitioning from one brokerage relationship to another.

Which information must be disclosed to a prospective buyer regarding a particular property? A) The property owners are selling their home because they have filed for divorce. B) The property is located in a flood zone area that requires flood insurance coverage. C) The public K-12 schools assigned to the neighborhood's district have a particular student-teacher class ratio. D) Neighborhood residents comprise several ethnic groups.

The answer is the property is located in a flood zone area that requires flood insurance coverage. Licensees have a duty to disclose to buyers all known facts—such as defects—that materially affect the value of a residential property. Material defects have to do with the property; it does not concern information about previous occupants.

In Florida, which type of brokerage relationship is presumed? A) Single agent B) General C) No brokerage D) Transaction broker

The answer is transaction broker. Under Florida law, it is presumed that all licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established.

Which action does NOT terminate a single agent brokerage relationship with the seller? A) Withdrawal of an offer to purchase B) Bankruptcy of the principal C) Fulfillment of the brokerage relationship's purpose D) Death of a seller's broker

The answer is withdrawal of an offer to purchase. The brokerage relationship exists between the brokerage company and the seller. Therefore, withdrawal of an offer to purchase does not terminate the single agent relationship entered into with the seller.

A general agent is authorized by the principal to handle a specific business transaction. t/f

The statement is false. A general agent is authorized by the principal to perform acts associated with the continued operations of a certain business of the principal.

An agency relationship between a principal and a broker may be terminated by the principal for any reason. t/f

The statement is false. A principal is not free to revoke an agency relationship in all circumstances. The principal may revoke an agency if the agent breaches one or more of the fiduciary duties. Several other events could terminate an agency relationship, such as the fulfillment of the agency's purpose, mutual agreement to terminate the agency, or bankruptcy of the principal.

A single agent relationship may be changed to a transaction broker relationship at any time during the relationship between the agent and the principal, provided the agent first obtains the principal's verbal consent to the change in relationship. t/f

The statement is false. A single agent relationship may be changed to a transaction broker relationship at any time during the relationship between the agent and principal, provided the agent first obtains the principal's written consent to the change in relationship.

Confidential information learned during the course of the single agency cannot be divulged by the broker until the transaction has concluded and the agent-principal relationship has ended. t/f

The statement is false. Confidential information learned during the course of the single agency cannot be divulged before or after the transaction has concluded and the agent-principal relationship has ended.

The transaction broker relationship includes the duty of obedience. t/f

The statement is false. Obedience is a single agent duty.

Residential sales are defined as the sale of improved residential property of two or fewer units, the sale of unimproved residential property intended for use as two or fewer units, or the sale of agricultural property of five or fewer acres. t/f

The statement is false. Residential sales are defined as the sale of improved residential property of four (not two) or fewer units, the sale of unimproved residential property intended for use as four (not two) or fewer units, or the sale of agricultural property of 10 (not 5) or fewer acres.

The appropriate type of brokerage relationship is determined by the customer. t/f

The statement is false. The appropriate type of brokerage relationship is determined by the broker.

The broker serves as an advisor to the buyer and the seller in certain nonresidential transactions. t/f

The statement is false. The broker serves as an advisor to each designated sales associate—not to the buyer or the seller.

A person who gives or delegates authority to another is called the agent, while the person who accepts the authority is called the principal. t/f

The statement is false. The opposite is true: a person who gives or delegates authority to another is called the principal; the person who accepts the authority is called the agent.

Bankruptcy of a prospective buyer may terminate a buyer broker relationship. t/f

The statement is true. A brokerage relationship between a principal (or a customer) and a broker may be terminated because of bankruptcy of the customer.

A single agent is defined as a broker who represents, as a fiduciary, the buyer or the seller but NOT both in the same transaction. t/f

The statement is true. A single agent is a broker who represents, as a fiduciary, the buyer or the seller but not both in the same transaction.

Administrative law consists of rules and regulations created by the FREC to govern real estate practice in Florida. t/f

The statement is true. Administrative law is a body of law created by administrative agencies in the form of rules, regulations, orders, and decisions

Real estate brokers are required to retain buyer brokerage agreements for a period of five years. t/f

The statement is true. Brokers must retain brokerage relationship disclosure documents and buyer broker agreements for five years for all residential transactions that result in a written contract to purchase and sell real property and all nonresidential transactions that use designated sales associates.

Designated sales associates may only be used for certain nonresidential transactions. t/f

The statement is true. In a nonresidential real estate transaction where the buyer and the seller each have assets of $1 million or more, the broker at the request of the buyer and the seller may designate two sales associates to act as single agents for the buyer and the seller in the same transaction.

The seller, in a single agent relationship, is the principal. t/f

The statement is true. In a single agent relationship with the seller, the seller is the principal and the broker is the agent of the principal

The transaction broker relationship requires that the licensee exercise limited confidentiality, including not divulging the sellers' motivation for selling their property. t/f

The statement is true. Limited confidentiality prevents the disclosure of the seller's motivation to sell the property.

Brokers must account for all funds entrusted to them with regard to a real estate transaction. t/f

The statement is true. Such holdings are considered trust funds or escrow funds and must be kept separate from the broker's funds.

A real estate brokerage company has entered into a single agent buyer broker relationship with the buyer. In order to show this buyer property that is listed with the same brokerage company, both the seller and the buyer must transition to a transaction broker relationship before the buyer can be shown the seller's property. t/f

The statement is true. The broker may not be a single agent of the buyer and a single agent of the seller in the same transaction. Because the seller and the buyer have each entered into single agent relationships with the brokerage firm, they must both give written consent to transition to transaction broker relationships.

The designated sales associate disclosure notice includes the duties of a single agent. t/f

The statement is true. The disclosure notice includes special language regarding confidential information and also includes duties of a single agent.

The duty to account for all funds is a duty in a no brokerage (nonrepresentation) relationship. t/f

The statement is true. The duty to account for all funds is a no brokerage relationship duty. In fact, the duty to account for all funds is a duty in all three brokerage relationships.

The duty to disclose all known facts that materially affect the value of residential real property that are not readily observable to the buyer is a duty of all three types of brokerage relationships. t/f

The statement is true. The duty to disclose all known facts that materially affect the value of residential real property that are not readily observable to the buyer is a single agent duty, a transaction broker duty, and a no brokerage relationship duty.

Nonrepresentation is one of three types of brokerage relationship options. t/f

The statement is true. There are three brokerage relationship options. They are: nonrepresentation (no brokerage relationship), single agency, and transaction broker.

Licensees must fulfill the duties of a transaction broker when that form of representation is selected. t/f

The statement is true. There is no requirement to give a written disclosure when working in a transaction brokerage capacity. However, licensees must fulfill the duties of a transaction broker when that form of representation is selected.

Residential transactions residential trans, not a residential trans a. rental of residential property b. 3 unit residential property c. 7 acres agricultural property d. auction of real prop

a-not b-res c-res d-not

Agency relationships (fill in blank) agent, statutory law, at arms length, unwritten law, principal a. laws created by the florida legislature are called ____. b. common law is sometimes called ______. c. people who deal ____ conduct negotiations on their own behalf without trusting the others fairness or integrity. d. a person who delegates authority to another called the ____. e. an ___ is the person entrusted wit another business.

a-statutory law b-unwritten law c-at arms length d- principal e- agent

Transaction Brokerage Relationships limited, transaction brokers, fuduciary a. in florida, it is presumed that licensees are operating as ____. b. a transaction broker provides ____ representation to a buyer, a seller or both. c. transaction brokers exercise ____ confidentiality. d. transaction brokers do not represent either buyer or seller in a ____ capacity.

a-transaction broker b-limited c-limited d-fuduciary

Brokerage Relationships principal, customer a. transaction broker b. no brokerage relationship c. single relationship

a. customer b. customer c. principal

Michael was transferred to Seattle, so he wanted to sell his florida residence. harbor reality entered into single agent relationship with Michael. harbor reality later transitioned to a transaction broker relationship with Michael. sales associate Melissa was working with Michael on behalf or harbor reality. Michael told Melissa that the air-conditioning compressor would run for about an hour and then overheat and stop running. Melissa kew that Michael was anxious to sell, so she did not mention the air conditioning compressor to the buyer. a. does the fact that Michael had a transaction broker relationship with harbor reality excuse nondisclosure of the air conditioning compressors condition? b. can the sales associate be disciplined for failing to inform the buyer that the compressor would overheat? c. can merissas broker be held accountable for not dislclosing the air conditioning compressors condition to the buyer?

a. no, transaction broker relationship duties include the duty to disclose all known facts that affect value of residential property. the fact that a transaction broker relationship existed did not relieve harbor reality from the duty to disclose the air conditioning compressors condition. b. yes, Melissa can be charged with violating section 475.278.FS failure to disclose facts that materially affect the value of property c. yes, the broker fro harbor reality in addition to the sales associate can be disciplined for not disclosing the air conditioning compressors condition

3 duties in a no brokerage (nonrepresentational) relationship

account for all funds, deal honestly and fairly, disclose all known facts that affect value of residential property

an _____ is the person entrusted with another business.

agent

people who deal _____ ____ _____ conduct negotiations on their own behalf without trusting the others fairness or integrity.

at arms length

the duty of _____ prevents an agent from revealing to the third party, without the principal permission, perusal or private information that might lessen the principals bargaining position.

confidentiality

the buyer or the seller in a nonrepresentation relationship with the broker is called the ______.

customer

the broker serves as an advisor to the ____ ____ _____.

designated sales associates

the consent to transition to transaction broker notice includes a list of the _____ that a transaction brokers owes to the ____.

duties, customer

in a transaction broker relationship, the brokerage does not represent the buyer or seller in a ______ capacity.

fiduciary

fill in the blanks for reasons that a brokerage relationship may be terminated: ______ of the brokerage relationships purpose. ____ ____ to terminate. ______ of the sellers property. ____ of a sellers broker or seller before the broker finds a ready, willing, and able buyer. _____ of the principal or the customer.

fulfillment, mutual agreement, destruction, death, bankruptcy

______ ______ is a broker agents duty to keep the principal fully informed at all times of all the facts or information that might affect the transaction or. the property value.

full disclosure

a sales associate is a _____ agent of the employing broker.

general

a transaction broker is a broker who provides ______ representation to a buyer, seller, or both the buyer and seller in the same real estate transaction.

limited

The single agent disclosure must be made before, or at the time of,__________ _____________ or before the _____________ of property, whichever occurs first.

listing agreement, showing

the duty of _____ requires the broker to place the principals interest above those of the other persons with whom the broker deals.

loyalty

3 brokerage relationship options in florida

nonrepresentatino, single agent, transaction broker

designated sales associates are used only in _____ transactions

nonresidential

the duty of _____ obligates an agent to act in good faith according to the principals lawful instructions.

obedience

a person who delegates authority to another is called the _____.

principal

the no brokerage relationship notice must be given before the ____ ___ ____.

showing of property

designated sales associates have the duties of _____ _____.

single agent

the designated sales associates act as____ _____ for the buyer and the seller in the same transaction.

single agents

laws created by the florida legilature are called ____ _____.

statutory law

In Florida, there is a presumption that the brokerage is working in a _______ _______ relationship.

transaction broker

common law is sometimes called _____ ______.

unwritten law

a single agent relationship may be changed to a transaction broker relationship, provided the agent first obtains the principals ____ _____ to the change in relationship.

written consent