law of agency exam

Which of the following are 3rd parties?

-An unrepresented buyer that is looking at a property. -A buyer that is interested in the property and is represented by another real estate company. -A customer that has looked at the property with another agent in your firm.

A broker is required to ________.

-Be sure all of the sales agents have current licenses at all times. -Design what training is needed for an agent to move from one level of authorized activity into another level. -Ascertain that agents understand the things that must be disclosed and the things that cannot be disclosed and how to answer client's questions regarding such prohibited disclosures.

Why would a broker take the time to prepare a policy manual for her office?

-Because the agents need to know what they are authorized to do. -Because the broker does not want misunderstandings with her agents. -Because the Texas Real Estate License Act mandates the broker to provide a manual for her agents.

Which of the following are good risk management tools?

-Describing disclosure issues in detail in the company policy manual -Training for the agents over and above what TREC requires -Keeping good notes of all conversations with clients and customers

A broker's minimum level of service to his client includes _______.

-The broker must keep the client informed of mate¬rial information related to a transaction, including but not limited to the receipt of any offer. -The broker must be available to answer the client's questions. -The broker may not commingle any funds held for another with the broker's own funds.

Which statement about an unlicensed assistant is FALSE?

An unlicensed assistant can answer questions about the price or condition of a property.

The Real Estate License Act allows a licensee to:

Act as an intermediary with written consent

One thing the broker would never put in the company policy manual is telling the agents to _______.

Advise the buyer of the racial make-up of the neighborhood.

Which of the following tasks would be a client-level service to a buyer?

Advise the buyer that seller will accept less than asking price for the property.

Alex had a listing on a property that expired recently. During the term of his listing Alex learned that the sellers are getting a divorce and are very anxious to sell. When his listing expired the seller listed with another company. Now Alex is representing a buyer and is planning on showing her his old listing. What does Alex do about what he knows about the seller?

Alex will have to explain to the buyer that he previously had the listing on this property and he will not be able to disclose any confidential information he may know about the sellers because his duty of confidentiality lives forever. Alex will not be able to provide full disclosure to his buyer client.

If an agent follows all the rules to become an intermediary, he or she has some protection from common law. If they do not follow those rules when representing both parties in a transaction, they become a _______ and are very vulnerable.

Unintended dual agent

Buyer Frieda walks into the office of Agent Enrique, who represents Seller Claudette. Frieda inquires about Claudette's property and they begin discussing the property. Which statement is TRUE?

Enrique must give Frieda a written agency disclosure and a statement that explains agency law.

When a seller lists exclusively with one broker but reserves the right to sell her property by herself, this is referred to as a(n) _______.

Exclusive agency listing

Parties may end the agency relationship under the common law by all of the following methods EXCEPT:

Expiration

Seller C and Broker D have an oral agreement that Broker D will market the seller's property and the seller will pay the broker 4.5% of the listing price when the property sells. Which of the following statements about this situation is TRUE?

If the seller does not pay the commission, the broker will not be able to sue for the commission.

A(n) _______ relationship arises when a party assumes consent to the relationship based solely upon inferences formed from communication with the other party—from a party's actions, conduct or words.

Implied agency

An agency relationship is created by which agreement when a party assumes that consent to a relationship was based solely on the other person's actions, conduct or words?

Implied agreement

What is the primary difference between disclosed dual agency and intermediary brokerage?

In dual agency no one can give advice and opinions and with appointments during Intermediary the sales agents appointed can give advice and opinions.

Price fixing can be prevented by:

Informing customers that fees and rates are set by each individual broker

For violations of the Texas Real Estate License Act or the Rules of the Commission, TREC may take any of the following disciplinary actions EXCEPT:

Jail sentences up to 30 days for each violation.

On which topics are real estate licensees expected to have knowledge?

Local housing market

What should NOT be included in a listing agreement?

Minimum standard commission rate

The Rules of the Commission say that a real estate broker or salesperson has a special obligation to exercise integrity in the discharge of the license holder's responsibilities, including employment of prudence and caution so as to avoid _______, in any wise, by acts of _______ or _______.

Misrepresentation, commission, omission

Upon the closing of a transaction, the commission must be paid to which of the following people?

The broker who then pays the salesperson.

Which statement about fixing prices, boycotting competitors, and allocating customers or markets is TRUE?

They are actions in the real estate industry that violate antitrust laws.

The Information About Brokerage Services form explains to sellers that if the broker is representing the buyer, the seller should not tell the broker anything he would not want the buyer to know because _______.

A buyer's agent must disclose to the buyer any material information known to the agent.

What information must an agent disclose to a buyer?

A leaky roof that the agent noticed

Which agreement creates an agency relationship between a seller and a broker?

A listing agreement between the broker and seller.

Under the definition of a broker as set forth in the Texas Real Estate License Act, all of the following statements are true EXCEPT:

An individual who sells his or her own property is automatically considered a broker.

Which of the following statements is TRUE regarding commissions charged by brokers?

Broker A and Broker B may individually set their own minimum commission rates.

Buyer B signs a Buyer Representation Agreement with Salesperson D, who is sponsored by Broker C. Which of the following is TRUE in this situation?

Broker C is technically Buyer B's agent, but Salesperson D has the authority to act as the buyer's agent.

Which of the following agreements is NOT considered a listing agreement?

Commission agreement with unrepresented seller

What statement must be included in all listing agreements?

Commissions are negotiable.

Which action is an example of the duty of honest and fair dealing by a broker or salesperson?

Conveying accurate information about material facts to all parties.

A real estate agent is expected to be knowledgeable as a real estate professional. As set forth in the Rules of the Texas Real Estate Commission, this duty includes all of the following EXCEPT:

Having expert knowledge of other related industries, including appraisal and law

With which type of termination do the parties to an agency relationship agree to end the relationship?

Mutual agreement

Violations of the Texas Deceptive Trade Practices Act and the Rules of the Texas Real Estate Commission include all of the following actions EXCEPT:

Not disclosing that a previous resident of the house in a transaction died of AIDS-related complications.

What type of contract is created when two people verbally agree to do something?

Oral contract

To prevent implied agency, it is vital that all real estate professionals disclose agency relationships to all potential customers. The agent must give _______ disclosure of agency representation upon initial contact with a party; _______ disclosure is required upon substantive discussion.

Oral/written

Brad is an unlicensed assistant at a busy real estate firm. Which tasks is he allowed to perform?

Place signs on property

In an agency relationship, the agent represents the interests of whom?

Principal

A buyer's agent cannot provide which of the following services?

Provide an opinion about the legality of the title

What must be included in a TREC-adopted listing contract form?

Provision informing the parties to the contract that real estate commissions are negotiable.

Which federal law prohibits kickbacks?

RESPA

What is the correct description of a client's agreement to an agent's actions that go beyond the authority stipulated in the listing agreement?

Ratification

Real estate professionals are not expected to have knowledge of matters outside of the realm of the license law. Because of this, a real estate professional should always refrain from offering advice or opinions in these areas and should _______.

Refer the client or the customer to a professional for help

Frank is an agent in the San Antonio area. He recently went out on a listing appointment and was concerned because it appeared that the property may have a foundation problem. There were cracks in the sheetrock in several rooms and Frank noticed a crack around back in the exterior brick. He told the sellers that they needed to call a foundation company. A few months later the seller asks Frank to come back out. The sheetrock had been repaired and had all new paint. It looked good. Frank asked about the foundation company and the seller said it was just normal settling. Frank listed the property and it sold quickly. Now the buyer is calling saying they called a foundation company who told them they had been to the house before and told the seller it needed repairs. Now what?

Since Frank saw the problem earlier he should have asked the seller for the foundation report. Frank and his broker may have liability if it goes to court.

In the 1970s no one was representing buyers yet. It was common for a listing broker to offer to compensate another broker if the other broker would help him or her represent the seller and get the property sold. This was the practice of _______.

Sub-agency

When a licensee represents a principal through cooperation with and the consent of the broker representing the principal, the licensee most likely is regarded as a(n) _______.

Sub-agent

Who has the authority to conduct hearings and issue penalties against real estate licensees that violate the license act?

TREC

Undisclosed dual agency would be a violation of which of the following laws?

Texas Deceptive Trade Practices Act

What is the name of the set of rules written by the National Association of REALTORS® that has been guiding real estate agents for many, many years?

The Code of Ethics

An agent representing a seller must advise the buyer of which of the following facts?

The abstract covering the real estate should be examined by an attorney chosen by the buyer and to obtain a title insurance policy.

If a client or customer asks a licensee for legal advice:

The licensee should recommend that the party seek the opinion of a lawyer.

What is a characteristic of express contracts?

The parties explicitly state the terms and conditions of the agreement.

Which statement about terminating a listing is TRUE?

The principal always has the right to fire the agent, but if the agent and the principal have a listing agreement, the agent may still have contractual rights.

When does the agent need to provide an IABS form?

When he is meeting with an unrepresented property to show them a home they are asking questions about.

What is the safest way to enter into a relationship?

Written agreement