CHAPTER 23: RISK MANAGEMENT
Which of the following communication records must (as opposed to should) be kept?
Copies of required communications to principals.
Which of the following is a common risk relating to the agency relationship?
Failing to inform and disclose properly.
Which of the following statements about a company procedures manual as a risk management device is true?
It can be a guide to compliance with the law.
How does disclosure manage risk?
It deflects and reduces risk by preventing others from claiming they were misled.
How does sharing the qualifying function with a lender protect a licensee?
It reduces the chance of presenting an offer from an unqualified buyer.
In what sense is the use of standardized forms a risk management procedure?
It reduces the risk of committing an unauthorized practice of law.
How is an intentional misrepresentation penalized?
License discipline, fines, and possible incarceration.
Keeping thorough records of every transaction is not only a risk management technique, it is
a legal requirement.
In performing a comparative market analysis, a licensee must be careful to
avoid creating a false impression that the licensee is a certified appraiser.
To reduce risks inherent in reporting transaction progress to a client, the licensee should
avoid statements of opinion and speculation in all reports.
A licensee risks violating antitrust law by
being present at a conversation where the setting of commission rates is discussed.
In fulfilling a listing agreement, one of the major risk areas is
exceeding the authority of the agreement.
Even after giving buyer and seller the required information about property condition disclosures, the licensee may still be subject to legal action for
failing to disclose known adverse facts.
The standard E & O policy covers damages resulting from
negligence, error or omission in carrying out professional services.
The best way to minimize the risk of violating fair housing laws is to
obtain education in the content and intent of the laws.
Of the following risk management strategies, the one that aims at minimizing both the severity and the likelihood of loss is
reduction.
Insurance is a method of
risk outsourcing.
All of the following are areas of risk for unintentional misrepresentation EXCEPT
stating that a client should seek legal counsel.
Regarding contracts and forms,
the principals may make changes as long as they sign or initial each change.
A simple way of reducing the risk of committing an error or omission in the contracting process is
use a checklist of all items, contingencies, dates and responsibilities that must be met.
