Law of Agency
Which of the following statements about appointments in an intermediary brokerage relationship is true?
An intermediary broker must have at least two different licensees to make appointments.
You're a sales agent in Texas, and you just received your part of the commission on a recent sales transaction. With whom can you legally share your commission?
Attorneys who are TREC-licensed real estate professionals
In what way is intermediary brokerage similar to statutory dual agency?
Both require signed consent from both parties to the transaction.
Which of the following is an example of an escalator offer?
Buyer to beat all competing offers by $XX up to a price of $XXX,XXX. Seller to provide copies of competing offer to buyer on acceptance."
In order for misrepresentation to occur, what must happen to the person who relied upon it?
He must be harmed
Kathryn is a broker acting as an intermediary. Is she required to use the Notice of Intermediary Relationship?
No, this form is needed only if the intermediary is going to make appointments, which are optional.
Jordan's former buyer clients call two months after closing. They want his advice about what to do, because there's a leak in the roof that the sellers had repaired. Should Jordan offer his advice?
No. Jordan risks creating a new brokerage relationship with his former client if he offers his advice.
What types of misrepresentation exist?
Positive and unintentional
Who is responsible for providing the title insurance company with an affidavit of title?
seller
In Texas buyer representation agreements, from whom will the broker first seek to obtain payment of the commission?
seller, landlord or their agents
In 1993 TRELA was amended to allow disclosed dual agency. What is another way to describe this type of law?
statutory dual agency
With the growth of buyer agency in the 1980s, more brokers attempted dual agency under common law. The legislature responded in 1993 by amending TRELA to establish what?
statutory dual agency
Which pair of words best complete this sentence? In 1996, Senate Bill 489 in Texas eliminated ______ and replaced it with the legal concept of ______.
statutory dual agency, intermediary brokerage
Which of the following requires that sellers disclose material defects related to the condition of their property?
texas property code
In Texas, when HUD receives a discrimination complaint, it forwards this complaint to what organization?
texas workforce commission civil rights division
When the listing agreement's purpose has been fulfilled, what happens to the agency agreement?
the agency agreement terminates by completion
Before closing, who must ensure that earnest money and a copy of the contract have been provided by the buyer, and then verify that buyer financing is in order?
the agent
In an intermediary relationship, who must treat all parties impartially and fairly?
the broker acting as an intermediary
Who benefits from the limitation of liability for acts of the listing broker in the buyer agency relationship?
the buyer agent
legalese
the formal and technical language of legal documents that is often hard to understand
physical stigma real estate
the home has high levels of radon
puffery
the legal exaggeration of praise, stopping just short of deception, lavished on a product
Pam's property has been physically stigmatized based on a factual condition. This means a condition exists which could negatively impact ____________________.
the physical health of the occupants
If a buyer wants to write an offer and asks for your help but doesn't want to sign an agency agreement with you, who do you represent?
the seller
Who does the agent assisting the buyer in a transaction represent if there's no buyer agency agreement?
the seller
in a buyer customer relationship, who does the licensee represent
the seller
Which of the following is an example of a material fact?
the seller would not have accepted an offer had the fact been known
Which of the following choices has always been an illegal form of dual agency in Texas?
undisclosed dual agency
Although once permitted by common law in Texas, dual agency was never without risk. What fiduciary duty to a client is a dual agent most likely to breach under common law dual agency?
undivided loyalty
Which fiduciary duty is modified in the intermediary relationship?
undivided loyalty
indemnification
The insured is restored to his or her approximate financial position prior to the occurrence of the loss
Which statement best describes the duty of loyalty owed to both clients in a transaction with an intermediary?
The intermediary owes loyalty to both parties, and must remain fair and impartial by not offering advice and opinions to either party.
What's the term for someone who's been given the authority to act on behalf of someone else?
agent
The Texas Occupational Code Section 1101.557 requires that agents relate all information material to the transaction. How does this relate to presenting offers to the seller?
agents must present all offers and explain them
Charlene is a broker interested in incorporating tools to assist her sales staff with the step-by-step procedures required by the PPM. Which of the following would be helpful?
checklits
Explaining important contract dates and obligations to the seller, verifying that the seller has made required repairs, and discussing lender documents and the closing process with the seller are all what?
common agent pre-closing tasks
What type of dual agency became temporarily permissible in 1996, when intermediary brokerage replaced statutory dual agency?
common law dual agency
What term is used for laws that have evolved from case law?
common laws
Making requested repairs, meeting all of the terms of the sales agreement, and requesting the affidavit of title are all what?
common seller pre-closing tasks
The two fiduciary duties that survive the termination of agency are ______.
confidentiality and accounting
Specifically, what does the fiduciary duty of disclosure relate to?
conflicts of interest, material facts, and adverse material facts
In 1993, the Texas legislature modified common law dual agency to create statutory dual agency. What did statutory dual agency permit?
disclosed dual agency
Statutory dual agency, first established in 1993, permitted what type of dual agency?
disclosed dual agency
What does it mean to say that dual agency was permitted by common law?
dual agency was permitted because there was sufficient precedent for it in the courts
Generally, a brokerage firm must have a policies and procedures manual in place before the insurance company will issue it a(n) ______ policy.
errors and omissions insurance
Can a broker acting as an intermediary offer advice and opinions to the buyer or the seller?
no, the broker must remain fair and impartial
self-dealing
personal interest in a transaction that's not disclosed.
Mavis plans to file a lawsuit under the DTPA. How many days prior to filing the lawsuit is Mavis required to send written notification to the licensee that she is suing him for damages?
60 days
Inadvertent misrepresentation
A false statement was made.
stigmatized property
A property that has acquired an undesirable reputation due to an event that occurred on or near it, such as violent crime, gang-related activity, illness or personal tragedy. Some states restrict the disclosure of information about stigmatized properties.
Positive misrepresentation
The false statement caused harm to the person who relied upon it.
agency by estoppel
If a party to the transaction allows a licensee to appear as their agent to a third party, the court does not allow that party to later deny that agency existed. What type of agency is this considered?
Which of the following is true regarding the 2011 amendment to the DTPA?
It helps prevent frivolous lawsuits against real estate licensees.
The Intermediary Relationship Notice is used by the broker to obtain consent to make appointments, if any. What other purpose is served by this notice, if any?
It reaffirms the authorization of the broker to act as an intermediary
What's the purpose of the Equal Credit Opportunity Act?
It requires lenders to make credit equally available to all creditworthy applicants, regardless of the applicant's protected class status.
What's the purpose of the Community Reinvestment Act?
It requires that lenders invest in development and rehabilitation efforts that enable low- and moderate-income individuals and families to afford a home.
Illegal self dealing
Making a profit is not illegal. Illegal self-dealing is having an undisclosed personal interest in a transaction.
The main difference between puffery and misrepresentation is that _______.
Misrepresentation falsely represents material facts that a reasonable person would rely upon
What's the purpose of the Home Mortgage Disclosure Act?
Requires financial institutions to maintain, report, and publicly disclose information about their mortgages
What's an advantage an in-person meeting has over another way of communicating with a potential buyer client?
Since they've had face time with the licensee, buyers are more likely to stay with that broker.
Which of the following is the definition of a client in Texas?
Someone who has agency representation with the real estate sales agent or broker.
A "homes for sale" magazine contains the following ad: "One-bedroom condo. Corner unit with beautiful ocean views. Financing available, 5.25% APR." Which of these statements is true?
The ad is in compliance with TILA because providing the APR doesn't trigger the required disclosure of all credit terms.
In what way is intermediary brokerage different from statutory dual agency?
The broker acting as an intermediary has the option of appointing licensees who can offer advice and opinions to the clients.
fiduciary duties
The duties of obedience, care, and loyalty owed by directors and officers to their corporation and its shareholders.
One element of intentional misrepresentation is that ______.
The person making the false statement knew it was false (or should have known)
Real estate licensees in Texas need to pay attention to updates from what agency, which is responsible for enforcing Texas Fair Housing Law?
The texas workforce commission civil rights division
Teresa is a broker acting as an intermediary. She appoints one of her associated licensees to assist the seller and another associated licensee to assist the buyer. What can the appointees offer the clients that Teresa can't?
advice and opinions
What happens if a house for sale is destroyed by a flood before the representation agreement expires?
agency terminates by operation of law
The Canons of Professional Ethics and Conduct are divided into five sections: ________, integrity, competency, consumer information, and discriminatory practices.
fidelity
Which of these precautions could help protect a licensee attempting dual agency under common law?
have both parties sign a dual agency represenation agreement
About 50% of the borrowers in Neighborhood One are Hispanic, while only 4% in Neighborhood Two are Hispanic. The median home price in both neighborhoods is the same. However, statistics show that there is a significantly greater percentage of minority and low-income borrows who were denied financing for loans on properties in Neighborhood Two and were offered lower rates to live in Neighborhood One. What act is intended to prevent this type of potentially discriminatory lending pattern?
home mortgage disclosure act
When submitting a back-up offer, buyers have __________ bargaining power.
less