CH 8 Real Estate Agency Law

A real estate broker has listed a property using a written listing agreement. He locates a buyer for the property: another one of his clients. He receives a commission from the seller for 6% of the property's listing price. This is an example of: Select your answer below: A.buyer agency B.dual agency C.net listing D.seller agency

B.dual agency A dual agency is one where the same agent represents both the seller and the buyer in the same transaction. This requires the written consent of both parties.

A listing agent must reveal material facts to the seller because the agent is a/an: Select your answer below: A.attorney in fact B.fiduciary C.guardian D.receiver

B.fiduciary Because the broker/client relationship is founded on trust and confidence, it is a fiduciary relationship. An agent's fiduciary duties include disclosure of material facts to the principal. A listing agent must not withhold any information from the seller that might affect his decisions concerning the sale of his property.

Which of the following elements is not necessary for the creation of an agency relationship? Select your answer below: A.A competent principal B.Mutual agreement between principal and agent C.Payment of consideration D.A fiduciary relationship

C. .Payment of consideration Creation of an agency relationship does not require an exchange of consideration; an agency may be gratuitous. But whether or not the agent will be paid, the relationship is always a fiduciary relationship.

When would an agent not have to comply with the requirement of presenting all offers to purchase to the principal? Select your answer below: A.When the agent notifies the principal in writing that he will not present a particular offer B.When a new offer is substantially lower than an offer already received C.When the agent is acting under written instructions of the principal D.When the agent is acting as a gratuitous agent

C.When the agent is acting under written instructions of the principal If the seller gives express instructions to the agent not to present any more offers, then the agent should not present any more offers.

Principal

The person who has an agent represent her/him to work with third parties

third party

This is the person typically going to purchase the house

A latent defect is a hidden problem in a structure or some other aspect of a property that is not observable in a casual inspection of the property. True or False

True Real estate agents and sellers have a duty to tell prospective buyers about any latent defects they are aware of. Examples include faulty wiring and leaky roofs.

Duty of Loyalty

a fiduciary duty owed by an agent not to act adversely to the interests of the principal

agent

a person who acts or does business for another

An ostensible or apparent agency is sometimes called an agency by _______________.

estoppel

A property manager with broad authority to handle matters concerning a client's property on an ongoing basis is considered to be a/an _______________.

general agent

A special agent

has more limited authority. She is authorized only to do a specific thing or conducting a specific transaction. A real estate broker is usually a special agent. In most cases, a broker is authorized to represent a seller or a buyer in connection with a single transaction.

Authority that is necessary in order to carry out duties already expressly authorized by the principal is known as _______________.

implied authority

Broker Arbogast had an open listing on a residential property. He verbally agreed to pay one-half of any commission to Broker Bates if Bates found a buyer. Bates succeeded in arranging a sale of the property, but Arbogast refused to pay half of his commission to Bates. How would a court decide this case? Select your answer below: A.Bates would not be able to collect because of the open listing B.Bates would not be able to collect because verbal commission split agreements are unenforceable C.The matter would be referred to the Real Estate Commissioner for arbitration D.Bates would be able to file a civil action and collect his commission

D.Bates would be able to file a civil action and collect his commission Based on the facts given, Bates would be legally entitled to half of the commission. A commission split is a customary arrangement, and this type of agreement between brokers does not have to be in writing. The fact that this was an open listing would have no effect on Bates's eligibility to share the commission.

An agency relationship is best created through: Select your answer below: A.conduct B.consideration C.cooperation with other brokers D.express agreement

D.express agreement An agency relationship is ordinarily created through express written agreement. An agency created only through conduct or cooperation with other brokers may leave considerable doubt as to whom the agent represents. Consideration is not necessary in the creation of an agency relationship.

Stated in words, whether spoken or written. Real estate agency / power of attorney / express agreement / estoppel / ratification / implication

Express agreement An agency is created by express agreement when the principal's authorization of the agent is stated in words, either orally or in writing.

ABC Realty manages an office building for Smith under a contract that has six months of its term remaining. If Smith sells the property, the new owner is obligated to honor the existing contract for the remainder of its term True or False

False The agency relationship is between ABC Realty and Smith. The sale of the property terminates the agency.

A real estate agent who is representing a seller, but fails to make that clear to a buyer and gives the buyer the impression that she is acting as the buyer's agent.

Inadvertent dual agent A seller's agent who gives a buyer the impression that she is representing the buyer may be considered an inadvertent dual agent.

The broker of the salesperson who lists a property.

Listing broker The listing broker is the broker the listing salesperson works for.

The broker of the salesperson who finds a buyer for a property.

Selling broker The selling broker is the broker the selling salesperson works for.

The salesperson who procures a buyer for a property. This person may or may not have taken the listing for the property sold.

Selling salesperson The selling salesperson is the procuring cause of the sale, the agent who found the buyer.

The residential earthquake hazards booklet does not need to be provided to buyers of homes built after: Select your answer below: A.1937 B.1960 C.1967 D.1978

B.1960 he Homeowner's Guide to Earthquake Safety must be given to any buyer of a residential property built using light-frame construction before 1960.

Which of the following, by itself, would not result in a transfer of property? Select your answer below: A.Deed of conveyance B.Equitable estoppel C.Marriage between two property owners D.Public dedication

B.Equitable estoppel The doctrine of equitable estoppel prohibits a party from taking a position that contradicts her previous conduct, if someone reasonably relied on that previous conduct. The doctrine is unrelated to property transfer. Answer C is slightly weaker since marriage generally does lead to transfer of property to the community (though not necessarily of property existing before the marriage.)

Which of the following persons would be responsible to her employer for results only? Select your answer below: A.Employee B.Independent contractor C.Principal D.Stockholder

B.Independent contractor n independent contractor is a person who sets her own schedule, works with little supervision, and is paid for each task accomplished, often by commission.

A real estate agency disclosure must be given to the buyer and seller by a real estate licensee in all of the following transactions, except: Select your answer below: A.Exchange of life estates B.Lease agreement for nine months C.Sale of an estate of inheritance D.Sale of real property with an attached mobile home

B.Lease agreement for nine months A lease agreement does not involve the sale of real property, so an agency disclosure statement is not necessary.

A property is subject to a Mello-Roos lien. The listing agent received an offer from the buyer, who was represented by a buyer's agent. Who is responsible for making sure that the buyer knows about the presence of the lien? Select your answer below: A.Buyer B.Seller C.Listing agent D.Buyer's agent

B.Seller The seller is responsible for disclosing to the buyer that the property is subject to a Mello-Roos lien. A Mello-Roos lien is a type of special assessment used to fund community facilities.

Which of the following would terminate an agency (listing) agreement? Select your answer below: A.A qualified buyer submits a full-price offer B.The death or incapacity of the seller or the broker C.The seller rejects the buyer's offer D.The buyer rejects a seller's counteroffer

B.The death or incapacity of the seller or the broker If the seller or the broker dies or becomes legally incapacitated, the agency relationship between them is terminated by operation of law.

The listing agent provides the seller with a copy of the natural hazards disclosure statement. The seller and the listing agent fill out the natural hazards disclosure statement and deliver it to the buyer. What disclosure responsibilities does this relieve the agent and the seller of? Select your answer below: A.The duty to disclose latent defects in the property B.The duty to disclose risks from disasters such as earthquakes and floods, although these must still be disclosed on the transfer disclosure statement C.The duty to disclose special assessment liens D.The duty to disclose the agency relationship

B.The duty to disclose risks from disasters such as earthquakes and floods, although these must still be disclosed on the transfer disclosure statement he natural hazards disclosure statement is used to disclose whether a property is subject to hazards such as earthquakes or floods. Any material fact, even those disclosed elsewhere, must be disclosed on the transfer disclosure statement.

An agent fails to do a visual inspection of a house as required by law. How many years after occupying the property can the buyer bring an action against the agent for failure to inspect the property? Select your answer below: A.One year B.Two years C.Five years D.Seven years

B.Two years A buyer has two years from the date of possession to bring legal action against an agent for failure to perform the required visual inspection.

A seller, in her interactions with her listing broker, would be known as a/an: Select your answer below: A.agent B.client C.customer D.patron

B.client The principal who engaged the agent's services is known as a client. Third parties, such as prospective buyers, are known as customers.

A purchase and sale agreement has been signed. The listing agent realizes that the neighboring homes have been red-tagged based on failing septic systems. The licensee should: Select your answer below: A.do nothing since the contract has already been signed B.immediately inform both the buyer and seller C.not disclose the issue because of the duty of loyalty to the seller D.require a soil percolation and analysis test from the sellers

B.immediately inform both the buyer and seller When a real estate agent discovers a latent defect -- or even a red flag suggesting a potential latent defect, as in this case -- the agent should disclose the problem to the parties to the transaction.

Creating an Agency Relationship

A principal and an agent mutually consent that the agent will act on behalf of the principal and be subject to the principal's control, thereby creating a fiduciary relationship. The duties and liabilities that an agency relationship entail arise automatically, as soon as the relationship is established. So it's important to understand the different ways agency relationships can be created. Under general agency law, agency relationships can be created by express agreement, ratification, estoppel, or implication.

Which of the following transactions would require a transfer disclosure statement? Select your answer below: A.Sale of a four-unit residential property B.Foreclosure sale of residential property C.Sale of residential property between spouses as part of a divorce settlement D.All of the above

A.Sale of a four-unit residential property Sales of one- to four-unit residential properties are subject to the transfer disclosure statement requirement. Exceptions are made for certain kinds of sales, including foreclosure sales, probate sales, transfers between spouses, and sales of properties in new subdivisions.

Which of the following is a true statement regarding buyer agency? Select your answer below: A.The agent does not represent the seller or the listing agent, and will therefore not be liable for their misconduct B.The buyer's agent owes the duties of loyalty and confidentiality to both parties C.A buyer's agency agreement is created as part of the listing agreement D.A buyer's agent cannot be compensated if the buyer purchases a property that is not listed by a broker

A.The agent does not represent the seller or the listing agent, and will therefore not be liable for their misconduct A buyer's agent represents only the buyer, not the seller or the seller's agent. He is not liable for anything done by the seller or seller's agent.

f a salesperson is considered to be an independent contractor for purposes of income taxation, which of the following is true? Select your answer below: A.The broker will still be liable for the misconduct of the salesperson B.The broker will withhold taxes and social security C.The salesperson must be paid a regular salary D.The broker will give the salesperson detailed instructions for marketing each property

A.The broker will still be liable for the misconduct of the salesperson

A real estate agency would not terminate in which of the following situations? Select your answer below: A.The principal refuses an offer to purchase that is presented by an agent B.The agent unilaterally renounces the agreement C.The principal dies D.The subject property is destroyed by a flood

A.The principal refuses an offer to purchase that is presented by an agent Rejection of an offer terminates the offer, but it does not terminate the agency relationship between the seller and the real estate broker.

Ratification

An agency is created by ratification if the principal gives approval after the fact to acts that weren't authorized at the time they were performed. An example would be Bill owns a large piece of land, Agnes, a real estate agent tell him that she can bring a buyer and pay a premium for the land, Bill isn't really willing to sell the land, but agrees if Agnes brings him a attractive offer he would be willing to sell. Then an agency relationship between Bill and Agnes is created by ratification.

What would be the best definition of "single agency"? Select your answer below: A.The agent has not disclosed that he represents both parties B.The agent represents both buyer and seller C.The agent represents either buyer or seller D.The agent is acting in excess of his or her authority

C.The agent represents either buyer or seller In a single agency, the agent represents only one party to a transaction. This is the opposite of dual agency.

If a principal no longer desires an agent's services, which of the following is correct? Select your answer below: A.The principal may not unilaterally revoke an agency B.The agent may compel the principal to complete the contract under the theory of specific performance C.The principal may revoke the agency, but may be liable for damages under the contract D.The principal may revoke the contract without liability for damages

C.The principal may revoke the agency, but may be liable for damages under the contract

If a principal no longer desires an agent's services, which of the following is correct? Select your answer below: A.The principal may not unilaterally revoke an agency B.The agent may compel the principal to complete the contract under the theory of specific performance C.The principal may revoke the agency, but may be liable for damages under the contract D.The principal may revoke the contract without liability for damages

C.The principal may revoke the agency, but may be liable for damages under the contract Either party to an agency can unilaterally revoke or renounce the relationship, but may be liable for any damages that breaching the agency contract caused.

A licensee who is acting as the buyer's agent should let other parties to the transaction know that: Select your answer below: A.after submitting a purchase agreement B.once the transaction goes to escrow C.as soon as possible D.once the offer has been accepted

C.as soon as possible An agent should inform the parties of her agency status as soon as possible. The disclosure must be confirmed in writing before or at the same time either party signs a purchase agreement.

A broker takes a listing. The seller accepts an offer from a buyer who's being represented by a salesperson who works for the listing broker. The broker is now classified as a: Select your answer below: A.buyer's agent B.general agent C.dual agent D.subagent

C.dual agent If the buyer and the seller in a transaction are both represented by the same broker, or by different salespersons affiliated with the same broker (an in-house transaction), then the broker is a dual agent. When the broker is a dual agent, any affiliated salespersons involved in the transaction are also dual agents.

A seller's agent intends to give part of her commission to the buyer. The agent: Select your answer below: A.is guilty of fraud B.will be subject to discipline by the Real Estate Commissioner C.must disclose this fact to the seller D.may freely do so

C.must disclose this fact to the seller Any relationship between a seller's agent and the buyer is a conflict of interest and a material fact that the agent must disclose to the seller. There is nothing necessarily illegal about sharing the commission with the buyer, as long as it is properly disclosed.

Estoppel

Another way in which an agency relationship can be created is by estoppel. Under the legal doctrine of estoppel, a person is prohibited from taking a position that contradicts her previous conduct, if someone else has relied on the previous conduct. Here's how an agency may be created by estoppel. Someone (an apparent agent) acts on behalf of another without authorization. That other person allows a third party to believe that the actions were authorized. The principal is estopped (prohibited) from denying an agency relationship, because that would be unfair to the third party.

Someone who is acting without the principal's authorization, but reasonably appears to a third party to be acting with authorization, is called a/an _______________.

Apparent agent

A dual agency requires the agent to: Select your answer below: A.obtain the written consent of both parties B.observe his fiduciary duties to both parties, including the duty of confidentiality C.treat both parties impartially D.All of the above

D.All of the above Dual agency requires the agent to treat both parties impartially and fulfill fiduciary duties to both of them, which includes protecting each party's confidential information. A dual agent must obtain the written consent of both parties.

Which of the following is not a step in the disclosure process as required by the Real Estate Law? Select your answer below: A.Acknowledgment B.Confirmation C.Disclosure D.Election

D. Election An agent must give the parties the agency disclosure form, and have them sign a copy to acknowledge that they received it. In addition, the parties must sign an agency confirmation statement at the same time as they enter into a contract.

A broker misrepresented his principal's property when showing it to a buyer. The actions of the broker may subject his principal to: Select your answer below: A.rescission of the sale by the buyer B.court action for damages resulting from fraud C.civil liability for the broker's misrepresentations D.All of the above

D.All of the above A principal is liable for the actions of his agent when the agent is acting within the scope of his authority. Therefore, the principal could be subject to a civil suit for any damages that result from the fraudulent misrepresentation. The misrepresentation would also be grounds for rescission of the purchase agreement.

Agency law is concerned with the duties and rights among: Select your answer below: A.agent and principal B.agent and third party C.principal and third party D.All of the above

D.All of the above Agency law governs relationships among agents, principals, and third parties.

Barry hired Broker Teri to find a warehouse to lease. Carrie hired Teri to find a lessee for her warehouse. Each party agreed to pay Teri a commission. Teri negotiated a lease between the two parties. Barry knew Teri also represented Carrie, but Carrie didn't know that Teri represented Barry. Which of the following is correct? Select your answer below: A.Barry and Carrie are both liable for commissions B.Barry is liable for a commission C.Carrie is liable for a commission D.Neither party may be liable for a commission

D.Neither party may be liable for a commission The situation described is an undisclosed dual agency. Although one party knew of the arrangement, to be legal both parties must know of and consent to the dual agency. If a dual agency is undisclosed, neither party may have to pay the commission.

When may a broker fill out the seller's portion of the transfer disclosure statement? Select your answer below: A.When given express authority to do so by the seller B.When authorized to do so by an escrow agent C.Only when acting as a dual agent D.Never

D.Never A broker may never fill out the seller's portion of the transfer disclosure statement. The seller may not delegate this responsibility to her agent.

A broker received a second offer on a property, but did not present it. Instead, he held it as a backup offer while the seller considered the first offer. Which of the following statements is correct? Select your answer below: A.This was permissible, because it was a discretionary act of the broker's implied actual authority. B.This was permissible, as long as the second offer was less than the first offer. C.This was not permissible, because the broker breached his fiduciary duty to the buyer. D.This was not permissible, because the broker is obligated to present all offers to the seller promptly.

D.This was not permissible, because the broker is obligated to present all offers to the seller promptly. A seller's agent has a fiduciary duty to the seller to promptly present all offers, even one that's lower than another offer. (Remember that the seller's agent does not have

If a broker accepts a deposit from a prospective buyer without express written authorization from the seller, she is: Select your answer below: A.guilty of a breach of her fiduciary duty to the seller B.guilty of commingling customer funds with her own funds C.operating within her implied actual authority D.acting as the buyer's agent

D.acting as the buyer's agent A seller's agent who accepts a buyer's deposit without the express authorization of the seller acts as the buyer's agent, but only in regard to the deposit.

The seller's agent is most likely to be liable for damages to a buyer if she: Select your answer below: A.executes a contract in the seller's name under proper authorization through a power of attorney B.fails to disclose that the seller is eager and might take a lot less than the asking price C.holds the buyer's check uncashed while waiting for the seller's acceptance, after authorization to accept deposits D.exceeds the authority given to her by the seller

D.exceeds the authority given to her by the seller An agent may be liable to third parties for actions that exceed the scope of authority granted by her principal (and the principal generally will not be liable for those actions).

A real estate agent's relationship with her principal would be described as all of the following, except a/an: Select your answer below: A.agency relationship B.fiduciary relationship C.broker/client relationship D.power of attorney

D.power of attorney A real estate agent ordinarily does not have a power of attorney from her principal. (She might be given power of attorney in unusual circumstances -- for instance, if a seller will be out of the country and wants the agent to be able to sign a purchase agreement on his behalf.)

If a real estate broker has a signed listing agreement with a seller, the broker cannot renounce her agency before the listing expires. True or False

False An agency can be renounced at any time. If the renunciation is a breach of contract, the agent may be required to pay damages to the principal. But the agent cannot be forced to continue representing the principal.

Agency confirmation statements must be provided to the buyer and the seller after the transaction closes. True or False

False An agency confirmation statement, which discloses which parties the agents are representing, must be provided to each party before or at the same time he or she signs the purchase agreement.

The listing agent is required to disclose which party he's representing only to the seller, and the selling agent is required to disclose which party she's representing only to the buyer. True or False

False Both agents are required to disclose their agency status to both the seller and the buyer in the agency confirmation statement.

A real estate broker is required to withhold taxes from a salesperson's compensation. True or False

False If a salesperson qualifies as an independent contractor for tax purposes, the broker is not required to withhold taxes from the salesperson's compensation.

Jones signs a 120-day listing with Acme Real Estate, Inc. Thirty days later Jones dies. Because Acme is a corporation with a perpetual existence, the listing will remain in force until the end of the 120-day term. True or False

False If either the principal or the agent dies, the agency is terminated. Jones was the principal.

An agent doesn't have to reveal a latent defect to prospective purchasers if the listed property is being sold "as is," indicating that the seller isn't claiming the property is in good condition. True or False

False Latent defects must be disclosed to the buyer, even if the property is being sold "as is."

Abernathy and Broker Hunt own some raw land. Hunt has a 10% interest; Abernathy owns the other 90%. They decide to sell the land and list the property with Hunt's firm. Ten days later, Abernathy notifies Hunt he is revoking the listing. He can do this because he owns a majority interest. True or False

False The listing can't be revoked, because it is an agency coupled with an interest.

CH 8. 9.1 True/ False Quiz (5 Questions) Someone who is hired as an employee works independently and is not closely supervised. True or False

False This describes an independent contractor, rather than an employee. An employee is supervised and controlled much more closely than an independent contractor.

An oral (spoken) agency disclosure is sufficient, as long as there are witnesses to the disclosure. true or false

False Agency disclosures must be in writing. Each party must sign an agency disclosure form and an agency confirmation statement (typically part of the purchase agreement) to acknowledge the disclosures.

A salesperson is usually classified as an employee acting on behalf of the broker she works for. True or False

False For tax purposes, a real estate salesperson is usually an independent contractor rather than an employee. Even so, the license law makes the broker responsible for supervising the salesperson.

Puffing refers to a real estate agent's exaggerated statements about the quality of a property, statements that generally could be the basis of a lawsuit filed by a buyer. True or False

False Puffing generally can't be the basis for a misrepresentation lawsuit. Because of the exaggerated and subjective nature of the agent's statements, the buyer should have been able to tell that they were not factual assertions.

An agency relationship is terminated when a principal rejects an offer that meets all the terms of a listing agreement. True or False

False The rejection of an offer does not fulfill the purpose of the agency, and it does not amount to a revocation by the principal. The principal, however, may be liable to the agent for a commission for the offer that was brought in.

implication

In some situations where there's no express agreement, an agency relationship may be created by implication. This can occur when one person is behaving in a way that implies that he's acting as another person's agent. If the other person believes that the first person is acting as her agent, and the first person fails to correct that impression, he may be held to owe agency duties to her.

Ch 8. 7.1 (Term- Matching Quiz (8 Questions) The salesperson who takes the listing on a home. This agent may or may not be the one who eventually procures a buyer for the listed home.

Listing Salesperson he listing salesperson is the one who takes the listing on the home.

express agreement

Most agency relationships are created by express agreement (written or oral) between the principal and agent. Consideration is not required for an agency agreement.

Ch 8.1 Quiz - Creating an Agency Relationship (5 Questions) An instrument authorizing someone to act as another's agent, to the extent stated in the instrument. For example, the instrument might be used to authorize a person to sell another's real property. Real estate agency / ratification / estoppel / express agreement / power of attorney / implication

Power of attorney A power of attorney is an instrument (a legal document) in which a principal authorizes another to act as her agent. An agent with a power of attorney is called the principal's attorney in fact.

The later authorization or confirmation of an act that was not authorized when it was performed. Power of attorney / express agreement / estoppel / implication / real estate agency / ratification

Ratification An agency is created by ratification when a principal later authorizes or accepts the benefits of an act that was not authorized when it was performed.

A real estate broker who lists a property is generally considered to be a/an _______________.

Special agent

General Agency Law

These rules concerning an agent's powers and duties are part of general agency law, which is a body of law that applies to agency relationships in nearly any context.For example, it applies to the agency relationship between lawyer and client, or between trustee and beneficiary. It also applies to the relationship between a real estate agent and a seller, buyer, landlord, or tenant.

Can an agency relationship exist event when the principal isn't compensating the agent for her services? true or false

True

Ch. 8. 6.1 (True/False: 6 Questions) If revoking the agency breaches a contractual agreement, the principal may be liable for any damages suffered by the agent because of the breach. True or False

True f the agent suffers damages as a result of the breach of contract, the principal may have to compensate the agent.

In relation to his principal, a real estate broker is almost always considered an independent contractor rather than an employee. True or False

True A broker's principal is concerned with the ultimate result of the broker's work, not how the broker goes about achieving the result.

Ch. 8. 9.1 True / False Quiz (6 Questions) A broker lists a property and then shows it to a couple who have come to regard him as their agent. He doesn't disclose his agency relationship with the seller to them. His conduct may have created an inadvertent dual agency. True or False

True An inadvertent, or accidental, dual agency occurs when a seller's agent unintentionally develops an agency relationship with a prospective buyer.

A breach of contract is a violation of a duty established by an agreement between the parties, whereas a tort is a violation of a duty fixed by law. True or False

True For example, a real estate agents breach of the duty of honesty and good faith in delling wiht 3rd parties is a tort not a breach of contract

A tort is a negligent or intentional wrongful act involving a breach of duty imposed by law. True or False

True Someone who commits a tort may be held liable and required to compensate the injured party.

An agency disclosure form explains the duties of a seller's agent, a buyer's agent, and a dual agent True or False

True The agency disclosure form explains the different types of real estate agency relationships and sets forth the duties of each type of agent.

For a salesperson to be classified as an independent contractor, her compensation must be substantially commission-based and she must work under a written contract with the broker. True or False

True These are the two prerequisites to being treated as an independent contractor for tax purposes. They are IRS requirements.

A real estate agent is taking a listing. The seller insists that the agent not disclose that the property is located in a geologically unstable area. The agent should refuse to handle the listing. True or False

True An agent may not conceal information concerning latent defects, even if the seller demands it. The agent's duty to follow the law trumps the agent's duties of loyalty and obedience to the principal.

An in-house transaction is one in which the listing salesperson and the selling salesperson work for the same broker. True or False

True It's an in-house transaction when the buyer and the seller are brought together by two different agents who work for the same broker.

A's conduct led P to believe that A was acting as her agent, although they didn't have an express agency agreement. Estoppel / real estate agency / implication / express agreement / power of attorney / ratification

implication An agency relationship may be created by implication, based on the conduct of the agent, even when there is no express agreement.

Apparent Authority

is agency authority that someone appears to have, although the principal didn't actually grant it. An authorized person who is behaving like an authorized agent is refereed to as an apparent agent or an ostensible agent.

Actual Authority

is authority granted to the agent by the principal. The agent is given express actual authority whenever the principal specifically directs him to do something. The authorization may be spoken or written.

A general agent

is authorized by the principal to handle the affairs related to a business or trade, or to handle all the business at a certain location; for example, a property manager.

In transactions where the agent is representing a seller or a landlord, a third party is sometimes referred to as this.

Customer A buyer or a tenant may be referred to as a customer.

What is the main difference between the natural hazards disclosure statement and the real property transfer disclosure statement? Select your answer below: A.The transfer disclosure statement is limited to information that the seller has, while the natural hazards disclosure requires additional research B.The transfer disclosure statement is filled out by the seller, while the natural hazards disclosure is filled out by local authorities C.The transfer disclosure statement is required for all properties, while the natural hazards disclosure is only for residential properties D.The transfer disclosure statement is the seller's responsibility, while the natural hazards disclosure is the buyer's responsibility

A.The transfer disclosure statement is limited to information that the seller has, while the natural hazards disclosure requires additional research The transfer disclosure statement and the natural hazards disclosure statement are both prepared by the seller. The transfer disclosure statement requires only disclosure of known latent defects, though, while the natural hazards disclosure statement requires disclosure of whether the property is in a zone subject to earthquakes, floods, or other natural hazards according to government maps.

A buyer's agent helps the buyer prepare an offer and also helps arrange financing by helping with the loan application and submitting it to a lender. The licensee is: Select your answer below: A.a fiduciary to the buyer with respect to both transactions B.a fiduciary under the purchase agreement, but not with respect to the loan C.a fiduciary with respect to the loan, but not the purchase agreement D.not a fiduciary, because she'll receive a commission for both transactions

A.a fiduciary to the buyer with respect to both transactions An agency relationship, whether it is in the context of a real estate transaction or a loan transaction, is a fiduciary relationship, meaning the agent is in a position of trust and confidence in relation to a principal.

When a dual agency exists, it is legal if: Select your answer below: A.both buyer and seller agree to it B.both brokers agree to it C.the seller and the agent agree to it D.it is disclosed when the transaction closes

A.both buyer and seller agree to it Both buyer and seller must give written consent to a dual agency. The disclosures must be made as soon as practicable, and before the parties sign a contract.

After a sale closed, the seller discovered that her broker had sold the property to his own brother. The seller: Select your answer below: A.could sue for damages or to rescind the transaction B.could sue for damages, but only if the buyer paid less than the listed price C.could not file a complaint with the Real Estate Commissioner D.could not sue, since the broker acted within the law

A.could sue for damages or to rescind the transaction The broker breached his fiduciary duties by not disclosing his relationship with the buyer, and he may be liable to the seller for damages. This applies even if the buyer paid the full price. (It's possible that the broker deliberately suggested a low listing price, knowing that his brother was interested in the property.)

Under the Real Estate Law in California, a salesperson is usually an: Select your answer below: A.independent contractor, because he is paid on a commission basis only B.employee, because he is working under the license of his supervising broker C.independent contractor, because his broker will closely supervise how the salesperson works D.employee, because taxes will be withheld from his paycheck

A.independent contractor, because he is paid on a commission basis only A salesperson is customarily an independent contractor. He is ordinarily paid only on a commission basis, and taxes aren't withheld from his earnings. Although his broker has supervisory responsibility for the salesperson's professional activities, the broker does not closely direct those activities.

A salesperson working for a listing broker: Select your answer below: A.owes fiduciary duties to the seller B.owes fiduciary duties to the buyer C.is limited by the terms of the power of attorney D.is not limited by the broker's scope of authority

A.owes fiduciary duties to the seller A listing broker always represents the seller. A salesperson affiliated with the listing broker therefore also represents the seller and owes fiduciary duties to the seller. In a dual agency situation, the broker and the salesperson would also owe fiduciary duties to the buyer, but that would be in addition to the fiduciary duties they owed to the seller.

A buyer who is given an amended transfer disclosure statement receives: Select your answer below: A.the right to rescind the contract within either three or five days B.the right to sue for specific performance C.a guarantee that the property is free of latent defects D.a guarantee that title is marketable

A.the right to rescind the contract within either three or five days A buyer who receives either an original or an amended transfer disclosure statement may rescind the purchase agreement if he is unsatisfied with the contents of the disclosure. The rescission must occur within three days if the disclosure was delivered in person, or five days if it was delivered by mail.

A broker negotiated the sale of a client's acreage. Shortly after the seller accepted the buyer's offer, the broker found out that the buyer's agent had recently arranged for the same buyer to pay a much higher price per acre for similar acreage nearby. In this situation: Select your answer below: A.nothing can be done about it now that there's already a contract B.the broker should disclose this information to the seller C.the broker should contact the other agent and try to renegotiate the contract D.the contract is void for inadequate consideration

B.the broker should disclose this information to the seller he true market value of the property is always a material fact that must be disclosed, even if a binding contract has already been formed. If the discrepancy between the sales price and the market value is great enough, the seller might find it advantageous to breach the contract, risk a lawsuit, and attempt to obtain a higher price.

In an in-house transaction, all of the following are true EXCEPT: Select your answer below: A.a broker can present an offer on one of her own listings B.the broker will negotiate only on behalf of the seller C.the broker must obtain both parties' written consent D.the broker owes certain fiduciary duties to each party

B.the broker will negotiate only on behalf of the seller In an in-house transaction, the broker is a dual agent, and therefore can't negotiate on behalf of only one party. The broker owes fiduciary duties to each party and must obtain written consent to the dual agency from both parties. (The affiliated licensees in an in-house transaction are also acting as dual agents. In California, a licensee acts on behalf of her broker and owes the same agency duties as the broker does in a particular transaction.)

A buyer's agent has a fiduciary duty to: Select your answer below: A.advise the buyer on how best to take title B.use utmost care when dealing with the buyer C.instruct the buyer which title insurance company to use D.disclose to the seller the maximum the buyer will pay for the property

B.use utmost care when dealing with the buye Among the fiduciary duties that an agent owes to her principal is the duty to use utmost care in carrying out her work. An agent may not advise a principal on legal issues such as how to take title; legal issues should be referred to an attorney at law.

An agency relationship may be created in all of the following ways, except: Select your answer below: A.agent agrees to appointment by the principal B.voluntary offer by the agent C.oral contract D.agreement without consideration

B.voluntary offer by the agent An agency relationship can't be created unilaterally by a potential agent's offer. The principal would have to accept the agent's offer--in an express agreement or by ratification, for instance--to create the agency. Neither consideration nor a written agreement is necessary in order to establish an agency relationship. (A real estate agent must have a written agreement in order to sue for compensation, however.)

Which of the following ways of terminating an agency might lead to a suit for damages? Select your answer below: A.Death of one party B.Mutual consent of the parties C.Revocation by the principal D.Sale of the listed property

C. Revocation by the principal A principal may revoke an agency, but the revocation may serve as a breach of contract. If the agent suffered any damages because of the breach, the principal may be liable for those damages.

Flatt listed his home with Broker Short. Broker Short found a prospective buyer and induced Flatt to accept the buyer's offer by promising to find Flatt a suitable home for purchase before the first transaction closed. Short was unable to do so. Which of the following is correct? Select your answer below: A.Short is not bound to perform because the promise was not put into writing B.Flatt may rescind the sale of his house and not be liable C.Flatt may sue Short for damages in a civil suit D.Flatt may file a criminal complaint regarding Short's negligence

C.Flatt may sue Short for damages in a civil suit Because Short didn't perform as promised and Flatt relied on the promise, Flatt may sue for any damages this failure to perform caused (for instance, rent Flatt paid while continuing to look for a new property to purchase). Flatt may not rescind the sale of his house, because Broker Short's promise was not part of the contract with the buyer.

Which of the following ways of terminating an agency might lead to a suit for damages? Select your answer below: A.Death of one party B.Mutual consent of the parties C.Revocation by the principal D.Sale of the listed property

C.Revocation by the principal A principal may revoke an agency, but the revocation may serve as a breach of contract. If the agent suffered any damages because of the breach, the principal may be liable for those damages.

Broker Westland dies and his daughter Susan, who is also a broker, inherits his business. With respect to his 50 current listings, which of the following is true? Select your answer below: A.Susan automatically receives commissions if any of those listings sell B.She can call the sellers and tell them that she is now the listing broker C.She is not the listing agent unless she negotiates a new listing agreement with each of those owners D.She may no longer work with any of those client

C.She is not the listing agent unless she negotiates a new listing agreement with each of those owners When Westland died, the agency relationship between him and each of his clients terminated by operation of law. Even though his daughter inherited his brokerage business, she would still have to enter into a new agency relationship with each seller in order to keep his listings.

A prospective buyer submitted an offer to Broker Randolph that met the asking price. As Randolph was on his way out of the office to present the offer to the seller, one of Randolph's salespersons brought in another offer on the same property that was $5,000 less. Randolph should: Select your answer below: A.inform the salesperson that the property already has sold on the seller's terms and conditions B.present the offers in the order they were received C.present the two offers at the same time D.present the second offer only if the first offer is turned down

C.present the two offers at the same time An agent has a fiduciary duty to present all offers to the principal. The agent must present all offers promptly; it is up to the principal to decide which offer to accept.

An agent has as much authority as: Select your answer below: A.he believes he has been granted through a contract B.is allowed under general agency law C.the principal has granted him D.third parties dealing with him believe he has

C.the principal has granted him The scope of an agent's authority is no greater than the authority that has been actually or implicitly granted by the principal.

A real estate salesperson's status as independent contractor is important in connection with: Select your answer below: A.the extent to which the salesperson may work outside of the broker's control and supervision B.the broker's responsibility for the salesperson's actions C.withholding of social security and income taxes D.workers' compensation

C.withholding of social security and income taxes

A person who has engaged the services of an agent. In the real estate context, this person could be a seller, a buyer, a landlord, or a tenant.

Client The principal in a real estate agency relationship is called the client.

Any agent who did not take the listing on the property and who attempts to find a buyer.

Cooperating agent Any agents who show property that they did not list are cooperating agents. (The cooperating agent who finds the buyer is the selling agent.)

Rafael signed an offer and gave the seller's broker a personal check that was to serve as his deposit. He specified that the broker was to hold the check uncashed until the offer was accepted. The broker should: Select your answer below: A.not submit the offer since he does not have the express authority to accept a buyer's deposit B.submit the offer but request that Rafael pass the check directly to the escrow company C.submit the offer and deposit the check directly into escrow D.submit the offer and hold the check until the offer is accepted

D.submit the offer and hold the check until the offer is accepted A seller's broker may hold a buyer's deposit check uncashed until the seller accepts the buyer's offer. (The broker should inform the seller that he's doing this.) If the seller did not expressly authorize the broker to accept deposits on her behalf, then the broker is acting as the buyer's agent during this period, although only in regard to the check.

One of the requirements for a selling agent is to provide a transfer disclosure statement. This must be given to: Select your answer below: A.the county recorder B.the listing brokerage and all its agents C.the MLS D.the prospective buyer

D.the prospective buyer

The principal allowed a third party to believe that the agent had authority, although the agent actually did not. As a result, the principal cannot later deny the agency relationship. real estate agency / express agreement / power of attorney / ratification / estoppel / implication

Estoppel An agency may be created by estoppel if the principal allows a third party to believe that the agent's unauthorized actions were in fact authorized. The principal is estopped from denying the agency.

Ch. 8. 2 Study Questions (6 Questions) If a seller's agent does not have _______________ to accept a deposit check but accepts a deposit from the buyer anyway, then he is acting as the buyer's agent in regard to the deposit.

Express authority

In a lawsuit, if the injured party prevails, the standard remedy awarded by the court is punitive damages. True or False

False The standard remedy is compensatory damages, intended to compensate the injured party for losses suffered. Punitive damages are sometimes added to compensatory damages to punish the defendant and to discourage others from similar wrongful conduct.

CH. 8. 5.1 (True / False Questions Questions: 9) A transfer disclosure statement is required in any transfer of a one- to four-unit residential property. True or False

False Although a transfer disclosure statement is required in most transfers of residential property with up to four units, there's an exemption for transfers related to foreclosure, probate, or divorce proceedings or otherwise ordered by a court.

In a residential transaction, an agent is required to make an inspection of the property, including condominium common areas and ordinarily inaccessible areas. true or false

False For residential property with up to four units, an agent must perform a competent and diligent visual inspection of the property, but does not need to inspect condominium common areas or inaccessible areas.