Real Estate - Chapter 4

Effect A Sale

A broker may be employed by an owner to effect a sale by locating a ready, willing and able purchaser, and obtaining a binding contract at the listed price and terms. The broker is entitled to compensation when the transaction completes at closing.

Find A Purchaser

A broker may be employed by an owner to simply find a purchaser who is ready willing, and able to purchase. If so, the broker who finds such a purchaser is entitled to compensation whether or not a sale is finalized.

An agent failed to advise a principal regarding the value of the owner's property prior to accepting a listing. Which fiduciary duty did the agent breach? A. Loyalty B. Disclosure C. Accounting D. Obedience

B

What is an agent required to do in an agency relationship? A. Obtain the highest price possible. B. Attempt to obtain the most favorable price and terms on behalf of the principal. C. Obtain the lowest price possible. D. Negotiate the transaction to receive the highest possible commission.

B

A licensee assigned by a broker to act as a single agent of a buyer or seller in a nonresidential transaction is titled a ________.

Designated Sales Associate

The only brokerage relationship that includes fiduciary duties is the _____.

Single Agency

In a nonresidential transaction, a broker may assign one or more sales associates to represent a buyer and one or more sales associates to represent a seller in the same transaction as single agents if both parties have assets of _____ or more.

$1 Million

Broker Joan just received an oral offer to purchase a listed property. No earnest money accompanied the oral offer. Which of the following statements is correct? A. Joan must present the offer. B. Joan should not present the offer since no earnest money deposit was received. C. Joan must advise the customer that an earnest money deposit is required to make an offer valid. D. Joan should reject the offer on behalf of the seller.

A

Broker Tom sold a property which was listed with broker Alice. Tom was unable to attend the closing, so Alice collected the entire commission. Alice refused to pay Tom his share of the commission. What could Alice be charged with? A. Failure to account. B. Collecting an overage. C. Commingling. D. Fraud

A

Mary, an Ohio broker, accompanied a customer to Florida and met with broker Stan in his office in Jacksonville. While Stan showed the customer property and obtained a binding contract for the purchase of a condominium, Mary took some time off and went to the beach. On returning to Stan's office, Mary discovered Stan had written a contract and demanded a share of the commission. Which statement is correct? A. Stan may share the commission with Mary. B. Mary violated the real estate license law by accompanying the customer to Florida. C. If Stan pays Mary a share of the commission, Stan will be in violation of the license law. D. If Stan pays Mary a share of the commission, both Stan and Mary will be in violation of the license law.

A

Who owes fiduciary duties in a single agency relationship? A. The broker only. B. The principal only. C. Both parties. D. Neither party.

A

Single Agency & Fiduciary Duties

A principal is defined in 475, F.S., as the party with whom a broker has a single agency relationship. A single agent represents either a buyer or a seller, but never both. A broker, in a single agent relationship, owes fiduciary duties to his or her principal only. A sales associate or broker associate is a general agent of the broker and a subagent of the broker's principals. As a subagent, he or she owes the same fiduciary duties to the broker and all of the broker's principals. Fiduciary duties include loyalty, obedience, full disclosure, and confidentiality. Fiduciary duties are owed only in a single agency relationship. There are no fiduciary duties owed in a transaction brokerage or no brokerage relationship.

Dual Agent

A real estate licensee may not operate as a disclosed or non-disclosed dual agent. Florida defines a dual agent as a broker who represents, as a fiduciary, both the prospective buyer and the prospective seller in a real estate transaction.

A licensee can create an agency relationship _____ or _____.

Accidentally, Inadvertently

A broker has appointed two sales associates to act as agents in a nonresidential transaction, one for the seller and one for the buyer. Which statement is correct? A. This is an illegal dual agency. B. The sales associates are referred to as designated sales associates. C. Buyer and seller must have combined assets of $1 million. D. The FREC will revoke the licenses of the broker and both sales associates.

B

All of the following activities are exempt from the requirement to provide disclosures under the Brokerage Relationship Disclosure Act, EXCEPT: A. Sales staff at a new development center. B. Showing property to a party that is not being represented. C. A bona fide open house or model home showing that does not involve eliciting confidential information, the execution of a contractual offer or an agreement for representation, or negotiations concerning price terms, or conditions of a potential sale. D. Responding to general factual questions from a potential buyer or seller concerning properties that have been advertised for sale.

B

Payment of Commission

Brokers may agree to split a commission with permission of the parties. If one broker refuses to share the commission with the other as agreed, the broker can be charged with failure to account, which is a form of fraud. A Florida broker may pay a referral fee to, or share a commission with, a broker licensed or registered by another state or foreign country. The out-of-state or foreign broker may accompany the customer to Florida but may not participate in the transaction in any manner. If the out-of-state or foreign broker comes into Florida and provides real estate services within the transaction, no referral fee or commission can be paid. A Florida broker may not pay compensation (including gifts or reimbursements), fees, or share a commission with unlicensed individuals in exchange for soliciting or referring business.

According to the Brokerage Relationship Disclosure Act, which is the only brokerage relationship form that must be signed or initialed? A. Single Agency Disclosure B. Transaction Broker Disclosure C. Consent to Transition to Transaction Broker D. Important Information Disclosure

C

In which of the following situations does a general agency relationship exist? A. When a broker is employed to market a property. B. When a sales associate is working with a customer. C. When a sales associate is employed by a broker. D. When a broker is employed by a buyer.

C

Which of the following statements is correct regarding a broker's authority to act on behalf of the principal? A. A broker can refuse offers on behalf of the principal. B. A broker can buy the listed property without consent of the principal. C. A broker must follow all legal instructions of the principal or withdraw. D. A broker must ignore the instructions of a principal when the instructions are not in the best interest of the principal.

C

Disclosures

Current law requires that the consumer be given a disclosure document that applies to all residential sales. This disclosure requirement does not apply to: - Nonresidential transactions. - Auctions. - Rental or leasing of real property, unless given an option to purchase all or a portion of the property improved with four or fewer residential units. - Appraisals. - Dispositions of any interest in business enterprises or business opportunities, except for property improved with four or fewer residential units.

All of the following provide control of agency relationships, EXCEPT: A. F.S. 475 B. Common law C. The Brokerage Relationship Disclosure Act D. The Department of Financial Services

D

As an agent, a broker is employed and acts on behalf of whom? A. A buyer B. A seller C. A customer D. A principal

D

Each of the following is contained in the definition of a residential transaction, EXCEPT: A. Unimproved property intended for four units or fewer. B. Agricultural properties of ten acre or less. C. Leases with options to purchase all or a portion of improved property of four or fewer residential units. D. Dispositions of business interests involving property of five or more residential units.

D

Each of the following relationships is adversarial, EXCEPT: A. Arm's length. B. Buyer beware. C. Caveat emptor. D. Fiduciary.

D

In which circumstances are licensees expected to act with fairness and honesty? A. Single agency only. B. Transaction Brokerage Only. C. Consent to Transition to Transaction Broker. D. Important Information Disclosure.

D

When can an agent disclose confidential or harmful information about a principal? A. At any time. B. During the fiduciary period only. C. After the transaction is completed and the fiduciary relationship is over. D. Never.

D

When can both parties in a transaction pay a broker a commission? A. When the broker has performed. B. When both parties are aware of the dual commission. C. When both parties are being represented by the broker. D. When both parties agree to dual commission.

D

Which of the following statements best describes a transaction broker? A. A transaction broker is an agent of both parties. B. A transaction broker has fiduciary duties to the seller. C. A transaction broker has fiduciary duties to the buyer. D. A transaction broker may provide limited representation to both parties.

D

Which of the following statements best describes policy and procedures manuals? A. Policy and procedures manuals are maintained by all real estate offices. B. Policy and procedures manuals are required by law. C. Policy and procedures manuals are a major cause of arguments. D. Policy and procedures manuals are useful in maintaining good relations within a brokerage office.

D

Brokers are required to retain copies of all disclosure documents for transactions that have resulted in a contract being entered into for a period of at least _____ years.

Five

In agency law, an agent whose continuing authority is limited to a single trade or business has a _____ agency.

General

A licensee who uses words or actions that mislead a member of the public can result in the creation of a(n) _____.

Implied Agency

Designated Sales Associate

In any real estate transaction other than a residential sale, but only if the buyer and seller have assets of $1 million or more, the broker at the request of the customers may designate sales associates to act as single agents for different customers in the same transaction. The designated sales associate has the same duties as a single agent including disclosure requirements. In addition to the single agent disclosure, the buyer and seller, as customers, must both sign disclosures stating that their assets meet the $1 million threshold and that they are requesting that the broker use the designated sales associate form of representation.

The Consent to Transition to Transaction Broker notice is required to be _____ or _____ for transition to occur.

Initiated, Signed

Written Disclosure

It is presumed that all licensees are operating in the capacity of a transaction broker unless a single agency or a no broker relationship is established in writing. Single Agent notice: Real estate licensees (unless exempt or transaction brokers) are required to provide to any potential seller or buyer at first contact, appropriate notice regarding their relationship to consumers. "At first contact" means before, or at the time of, entering into a listing agreement or an agreement for representation or before the showing of property, whichever occurs fist. Consent to Transition to Transaction Broker notice: A single agency relationship may be changed from a single agent to a transaction broker provided the agent first obtains the seller or buyer's written consent. The Consent to Transition to Transaction Broker notice MUST be initialed or signed by both parties. If any party refuses to sign or initial this form, transition cannot be made. This is the only disclosure that must be signed. No Brokerage Relationship notice: A licensee who has a no brokerage relationship with a buyer or seller must provide the No Brokerage Relationship Notice to the buyer or seller before the showing of property.

No Brokerage Relationship

Licensees may also choose to enter into a no brokerage relationship with a customer. A customer is defined as a member of the public not represented in a single agency relationship. The licensee with no brokerage relationship may be providing service, but is not providing representation.

For a broker to legally be paid a kickback or rebate, he or she must have performed a _____, held an appropriate _____, and all parties must be _____ of the payment.

Service, License, Advised.

Before showing a property, allowing a buyer to sign an offer to buy or seller to sign a leasing agreement, a licensee must provide the party with a written brokerage relationship form when acting in the capacity of a _____ or _____ relationship.

Single Agency, No Brokerage

If the principal refuses to sign or initial the Consent to Transition to Transaction Broker notice form, the broker is required to act as a _____.

Single Agent

In agency act, an agency that is empowered to perform a single act on behalf of his or her principal has a _____ agency.

Special

Types of Agencies

Special Agent: A special agent is empowered by his or her principal to perform a single act on behalf of the principal. General Agent: A general agent has a continuing relationship with the principal but is empowered to perform acts limited to a specific trade of business. Universal Agent: A universal agent is authorized under agency law to act for and represent the principal in all matters, without limitation.

A sales associate is a(n) _____ of the broker's principal.

Subagent

Procuring Cause

The broker who successfully performs by locating a willing, ready, and able buyer is said to the the procuring cause of the sale and is the only broker entitled to the commission. Procuring cause is the unbroken chain of events that resulted in the conclusion of the sale.

A member of the public may select from one of three options when working with a broker, which are _____, _____, and _____.

Transaction Broker, Single Agency, Nonrepresentation

Agency relationships are legally based on _____ and _____.

Trust, Confidence

Transaction Broker

While a single agent represents either the buyer or seller in a fiduciary capacity, a transaction broker provides limited representation to the buyer and/or the seller, who is referred to as a customer.

Brokers in a nonresidential sale are not required to use _________.

Written Disclosures