Law of Agency 9-12 Test 3

An example of breach of warranty under DTPA might be

ALL are examples of breach of warranty: -a new-home builder who refuses to repair a defective wall stud discovered by the homeowner two months after moving in. -a new-home builder who fails to repair/replace a dishwasher that floods the basement the night the new residents move in. -the air-conditioning company that refuses to return calls to a homeowner about the defective air-conditioning unit just installed by the company.

Bonnie, a broker associate with Lowland Realty, signs a buyer representation agreement with buyer Terri. Armando is the designated broker for Lowland Realty. Who is the agent of the buyer?

Armando

What term is used to describe a licensed broker who works for another real estate broker?

Broker associate

Lena is a broker associated with Yokohama Realty. She holds which license?

Broker's license

Which of the following phrases BEST represents how a seller generally regards brokers other than the listing broker who may show their property?

Conduits of information to customers

What is the relationship between professional ethics and law in court proceedings?

Courts will use industry ethics in interpreting and applying legal actions against professionals.

Which of the following classes is NOT listed in the Texas Canons of Professional Ethics canon that prohibits discriminatory practices?

Credit rating

Irma, a non-licensee, inherits a large sum of money. Her husband, Danny, is an associate broker with Honshu Realty. Irma agrees to finance her husband's dream of opening his own brokerage office under the condition that she be a co-owner of the business and that 75% of the monthly net income be deposited to her separate checking account. Which statement is TRUE?

Danny could pay the fee as long as Irma does not perform any brokerage activities.

Broker Jerry has received two offers on one of his listings, each for $87,500. One couple is Hispanic. Which topic would NOT be relevant to address during Jerry's presentation of the two offers to his client?

Ethnicity of each buyer

Which of the following practices is a violation of the Deceptive Trade Practices Consumer Protection Act (DPTA)?

Failing to tell the seller that a broker is receiving commission from the buyer

George Lender is the broker operating a real estate office. George employs three associate brokers and two salespersons, and one assistant. Who in Lender's office can hold a listing?

George Lender

Broker Nelson Forbes wants to sue a seller-client because he was not paid his commission. Which of the following must Forbes prove to bring suit?

He was a licensed broker at the time the brokerage services began.

Which information should a broker who is acting as subagent to the seller obtain from the listing broker?

How earnest money deposits will be handled

Which of the five canons of professional ethics explains the licensees' need to exercise prudence and caution in order to avoid misrepresentation by acts of commission or omission?

Integrity

Which of the following is a required element of fraud?

Intention to deceive

Why should a listing broker who decides to offer other brokers a less-than-attractive commission split be sure a property owner understands this intent?

It may mean that other brokers will be less motivated to find a suitable buyer.

How is the commission rate that will be paid to a buyer's broker determined?

It's negotiated between the buyers and the buyer's agent.

In a typical conversation between a broker who works alone and a property owner who is interested in selling, which topic might require the MOST extensive explanation of subagency?

MLS

Which is NOT an essential element of a cause of action for fraud?

Mistake

Deceptive acts in a real estate transaction may have a greater impact on the consumer than in other areas because

all of these are reasons for a greater impact on the consumer: -laws place substantial responsibility on brokers for the acts of their sales associates. -most real estate transactions involve large sums of money. -there is a risk of misunderstanding and error as a result of information being transmitted through information is transmitted through a third party rather than through direct communication between buyers and sellers.

An enforceable waiver of rights to sue under DTPA would require that

all these conditions be met to have an enforceable waiver of rights: -the waiver be in writing and signed by the consumer. -the consumer be represented by legal counsel. -the consumer and the defendant be in relatively equal bargaining positions.

The relationship between a broker and licensees associated with the broker is

an agency relationship and a fiduciary relationship.

According to the Canons of Professional Ethics, Consumer Information Form 1-1 must be

displayed in the broker's office.

What is the correct name of the largest organization in the country for real estate professionals?

National Association of REALTORS®

Tom was a buyer broker for Patrick when they purchased the home next to Paul, who is Peter's brother. When Tom showed Patrick the property, Tom said that the roof had been replaced five years ago, when he knew that the roof was really 10 years old. Patrick insisted on placing a higher offer on the property than Tom advised because he was intent on living next to his brother. When the roof leaked, Patrick later accused Tom of fraud. Will Patrick be successful in his fraud case against Tom?

No, Patrick did not rely on the roof information to make his decision to buy.

Broker Gary, owner of Orkney Realty, has verbally agreed to represent his friend Jerry in the purchase of a new home and will seek his 3.5% commission from the seller. Everything goes according to schedule until the day of closing. The seller arrives and refuses to close because his listing broker, John of Dumbarton Realty, failed to present another higher offer for the property that had arrived the week before Jerry's. Jerry is delighted because he had changed his mind about purchasing anyway, and he doesn't think he should have to pay Gary because he didn't buy the house. What recourse does Gary have to secure his commission?

None

Which real estate licensees in Texas are required to adopt and subscribe to the NAR Code of Ethics?

Only REALTORS®

George, designated broker for Aberdeen Realty, sponsors Tina's license. She successfully finds a property through the MLS for her best friend Blake. Unfortunately, Tina discovers the day before closing that George has left town on a family emergency. Tina needs her share of the sales commission to make her house and car payment. Although she is unable to contact George and get his written authorization for the closing office to cut her a separate check, TRELA would permit Tina to

She must wait for George to return. do none of these things: -have Blake pay her directly, then reimburse Blake when she gets her commission check from Aberdeen Realty. -instruct the closing office to make the entire check out in her name and then refund George his portion when he returns. -instruct the closing office to place her share of the commission with the listing broker then ask the listing broker to pay Tina directly.

Which of the following bodies would likely investigate an accusation of an ethics violation by a real estate licensee in Texas?

TREC

Which of the following acts by a broker would fall under the list of deceptive practices as defined by the Deceptive Trade Practices Consumer Protection Act?

Telling the buyer that the tiles in the foyer were American made, when they were imports

When talking with a property owner who is interested in establishing an agency relationship, which of the following forms should a licensee discuss first?

Texas Real Estate Commission's (TREC) Information About Brokerage Services

How do anti-discrimination laws in Texas compare with national anti-discrimination laws?

Texas state laws are in compliance with national laws.

Which BEST describes the role of an intermediary broker?

The broker offers representation to both parties.

Which of the following statements BEST defines ethics for real estate professionals?

The minimum standards of appropriate conduct

A local city ordinance prohibits owners and landlords from discriminating based on student status (i.e., renting to college students). Which of the following is a TRUE statement?

The ordinance is enforceable so long as the federal and state classes are also protected in the city ordinance.

Which of the following work situations is allowed for a licensed broker but NOT for a licensed salesperson?

Work independently

The ethical canon of fidelity concerns the licensee's responsibilities for being

faithful.

A broker wishing to act as an intermediary in a transaction would NOT be required to

file notice of intermediary status with the local association of REALTORS®.

Under DTPA, "documentary material" would include all of the following EXCEPT

hearsay conversation.

In an intermediary transaction, the broker's objective is to

help the client meet his goals.

The Texas Supreme Court has ruled that for an "as is" agreement to be enforceable, it must pass several tests, one of which is

known defects must be disclosed by the seller.

Unless the consumer proves that the conduct was committed knowingly or intentionally, DTPA provides that the consumer may NOT collect for

mental anguish.

Rosie Ruiz, a listing associate with Camp Zama Realty, does not mention to a prospective buyer that the 100-acre tract of land might soon be incorporated within the city limits. The announcement was in the local paper that morning. Rosie had not read about it because she seldom bothers to read the paper. Rosie has

misrepresented by omission.

Broker Misty fails to notify a potential buyer-customer that the property being viewed is next door to a registered sex offender. Misty has violated

no law, because Texas does not require an owner or agent to disclose this information.

Broker Tom has received a considerably less than full-price offer on one of his listings from a subagent. As he is leaving to deliver the offer to his seller-client, Tom receives a call from subagent Drue, who says she is typing up an offer that she will deliver tomorrow morning after she has the buyer sign. Drue mentions a price that is almost full price. Tom should

present the first offer but mention Drue's offer to his seller.

Dumfrie is a licensed sales associate with Loch Ness Realty whose sponsoring broker is Fitzroy McClean. Fitzroy and Loch Ness Realty would

probably not be held liable if Dumfrie embezzles funds from a hospital where Dumfrie does volunteer work.

The doctrine of law that says the broker is responsible for the acts and conduct of all sponsored salespersons and broker associates during the ordinary course of employment is the doctrine of

respondeat superior.

The penalty under TRELA for discriminating against an owner, potential buyer, landlord, or potential tenant includes

suspension or revocation of license.

The protected class of sexual orientation is included in

the National Association of REALTORS® Code of Ethics.

Misrepresentation does NOT always include

the intention to deceive.

Which of the following responses would be the BEST answer to a listing seller who asks you, "Why should you have to split the commission. Why doesn't the buyer pay a share of the commission?"

"Commission splitting is the customary way that real estate licensees earn money on transactions."

Which of the following statements would be the BEST way to begin an explanation of a brokerage's policy on intermediary brokerage to a customer who is interested in entering a seller agency agreement?

"Intermediary brokerage is a method of handling the transaction if a suitable buyer for your property is identified who does not have a relationship with another broker."

Broker Judd has the listing for a property that customer Nelson wants to buy. A licensee in Judd's office has explained intermediary brokerage to Nelson. Nelson responds, "I don't want any part of that dual agency! I've had that once and no one paid attention to my interests." How should Judd reply?

"What we can offer you is intermediary brokerage, which is different than the dual brokerage of the past. With intermediary brokerage, a licensee will be appointed to place your interests above all others."

During the listing presentation, it would be appropriate for broker Ted to present the statutory written statement regarding brokerage services. Ted should also caution the sellers that until they definitely decide to list with him, they should not reveal information that may later hurt their negotiation position with a buyer because Ted might later be required to reveal that information should he be dealing with a buyer-client. What else should Ted discuss with the sellers during the listing presentation?

-The listing agreement they will use -Ted's office policy regarding intermediary brokerage -Ted's office policy regarding commission splits with "other" brokers

Key to the success of a licensee's defense that she relied on information from another source depends on the licensee proving that she

-did not know, and could not have known, the information was false or inaccurate. -gave written notice to the consumer before closing that she was relying on the written information. -received the information in writing.

Consumers are protected under DTPA from

-false, misleading, and deceptive practices. -unconscionable actions. -breaches in warranty.

Susan is a broker associate with Highland Realty, where she specializes in residential property management. Jerry is the principal broker. Unless prohibited by her contract with Jerry, Susan could

-open a trust account in her own name for rental monies. -place an ad without mentioning Jerry's name. -pay a referral fee directly to another broker.

For a broker to bring suit against a consumer to recover compensation, TRELA requires the broker to show proof

-that the consumer signed a written agreement to compensate. -that a buyer was advised to check title prior to signing the sales contract. -that the broker's license was active at the time services began.

A licensee who discriminates against a person's race violates laws that have been in place in the United States for approximately

150 years.

Discuss specific examples of when a consumer might perceive a licensee's "opinion" as "fact" thus making the conduct actionable against the licensee under the revised DTPA.

A reasonable buyer would know puffery to be an exaggerated statement and not rely on it, whereas misrepresentation occurs when a reasonable buyer would rely on the statement, as it is coming from an expert in the field. Examples: Home values in this neighborhood are going to skyrocket in the next five years! Enjoy a view that will never be obstructed! Kelly's seller client told her that their home was 2,500 square feet, when it was really 2,200 square feet. Kelly did not verify the square footage of home. It was listed and sold as a 2,500-square-foot home.

Which of the following descriptions would be accurate and appropriate for a listing broker to use when describing the role of a subagent to a seller?

A subagent is a licensee who does not work for me but is someone with whom I would make a cooperative agreement to represent you and your interests.