SECTION 7 - ALABAMA REAL ESTATE LAW VIOLATIONS

A buyer client is preparing an offer on a property. He wants to make sure his offer stands out above all others and is accepted, so he discusses waiving the inspection contingency. What should the agent do? A. Encourage the buyer to get an inspection, and if he still wants to waive it, put it in writing that you advised against waiving the inspection and have him sign. B. Follow the buyer's wishes without question. C. Ignore the buyer's request to waive the inspection. D. Personally perform an inspection.

A

Dee needs to inform the commission within _______ days of the fact that she's just pled guilty to a felony. A. 10 B. 15 C. Five D. Seven

A

Jonathan has come up with a plan. He's going to offer to buy property belonging to his neighbor, who's struggling financially, collect rent from his neighbor, and not make the mortgage payments. He'll rake in the rent until the bank forecloses. Which type of mortgage fraud scheme is this an example of? A. Equity skimming B. False identity C. Property flipping D. Straw buyers

A

To whom must a licensee, representing a buyer, disclose agency status? A. All parties in the transaction B. Broker C. Buyer D. Seller

A

What is a licensee's responsibility related to the paperwork in a real estate transaction? A. Make sure all parties have copies of the paperwork and that it's retained for the statutory period. B. Make three copies of all documents. C. Secure paperwork in the broker's vehicle. D. Shred documents once the transaction is complete.

A

Which one of the following actions if performed by a licensed salesperson is a real estate violation? A. Refusing to show a property because the prospective buyers are minorities B. Refusing to show a property that's outside of a buyer's budget C. Refusing to show a property to a party who's not financially qualified D. Showing a property to qualified buyers

A

Your license status and ___ need to be included on your business cards. A. Brokerage name B. Your brokerage location and jurisdiction C. Your personal contact number D. Your photo

A

__________ means the information is known to the licensee regarding the physical condition of a property or could be plainly noticed by the licensee, regardless of whether it is disclosed by the owner/seller.

ACTUAL KNOWLEDGE

________ means the information is negative information about the property and is usually something that would reduce the property's value

ADVERSE

WHAT DOES MAAP STAND FOR? MATERIAL A_______ ACTUAL P_________

ADVERSE, PHYSICAL

A _______ defect is one that's not immediately evident. A. Disclosed B. Latent C. Material D. Secret

B

At closing, Sam's client Violet said, "Wait...I have to pay an extra $2,000? What's that for?" Sam explained that that fee represented Violet's closing costs. Violet said, "I had no idea I had to pay for those!" What, if anything, has Sam done wrong? A. Sam has done nothing wrong because he's explaining what the fee is for. B. Sam is guilty of an offer-related violation, because he didn't explain this fee to his client earlier. C. Sam is guilty of mishandling his client's funds. D. Sam is guilty of violating the trust that Violet put in him.

B

Beverly is a new licensee. She's at a listing appointment and notices some stains on the ceiling and cracks in the basement walls. What should she do related to these items? A. She should ask her seller clients to make sure that they tell potential buyers about the problem. B. She should ask the sellers about these issues and ensure that they are disclosed to buyers. C. She should hire an inspector to look into the issues. D. She should ignore these so that if there are problems with the property later on, she can claim she didn't know about them.

B

Chester is moving on up! He and his wife are ready to sell their condo and purchase a new place. Chester is a real estate licensee and will list the property himself. What must Chester disclose to prospective buyers? A. Chester doesn't need to disclose anything to buyers. B. He owns the property. C. The sellers are eager to sell. D. The sellers will not accept any offers below $300,000.

B

Daniel has several properties listed around town. He receives a call from a prospective buyer who is very interested in one of the properties and wants to schedule a showing. What should Daniel do? A. Assume the buyer understands that Daniel is the seller's agent. B. Disclose his agency relationship with the seller to the prospective buyer. C. Refer any questions about the property to the seller. D. Schedule the showing.

B

Noah's seller client, Amy, has contracted with Trevor, who wants to buy Amy's property. Another licensee, Jaco, approaches Amy with an offer that's $20,000 more than Trevor's, and he wants Amy to break her contract with Trevor. Which statement about this situation is true? A. Amy is in violation of Alabama law. B. Jaco is in violation of Alabama law. C. Noah is in violation of Alabama law. D. Trevor is in violation of Alabama law.

B

Ronald doesn't have a real estate license. Which of the following acts can he complete? A. Accept a commission B. File paperwork C. Host an open house D. Present an offer

B

Your assistant, Ella, often answers client questions about offers and negotiations. What do we know about Ella? A. She must be at least 20 years old. B. She must be licensed for this to be legal. C. She must have had a least two years of experience in real estate. D. She's a very helpful assistant who goes the extra mile.

B

Submitting a check to AREC that is returned unpaid is _______. A. A document-handling violation. B. A license law violation. C. Known as "commingling" funds. D. Known as "converting" funds.

B?

Ben has been a real estate licensee for two years. Which of these actions may provide grounds for the revocation of his license? A. He reports a fellow licensee's fraudulent activity to his broker. B. He's a witness in a first-degree murder trial. C. He's convicted of drunk driving. D. He's routinely late for showing appointments.

C

Broker Joseph tells his client that a property is zoned as residential, even though he knows it's zoned as commercial. This violation is an example of ______. A. Failing to disclose an agency relationship B. Interfering in a contract C. Making a substantial and willful misrepresentation D. Performing services that qualify as practice of law

C

Dean was very motivated to sell his house and was excited when he got an offer. When he realized the buyer couldn't qualify for the purchase price, he decided to accept a second mortgage without mentioning it to his lender and reduce the sales price accordingly. Which type of mortgage fraud scheme is this an example of? A. Inflated appraisal B. Property flipping C. Silent second D. Straw buyers

C

In Alabama, a ___ is grounds for a real estate license suspension. A. Background check B. Broker affiliation C. Criminal conviction D. Loss of a sale

C

In addition to serving as the listing agent for several clients, your own house is also on the market. You receive a call from another licensee who wants to show her buyer client your house. What must you immediately disclose to the buyer's agent and buyer? A. The house may have been an orphanage 80 years ago. B. You'd sell for far lower than the current asking price. C. You own the property. D. Your housemate had swine flu last month.

C

Seller Trevor calls licensee Nate. "My current agent isn't doing anything to sell my house," Trevor says, "and I need to get it sold! I saw your billboard, and I'm wondering if you can represent me." What should Nate do? A. Nate should call Trevor's agent and see if he can buy out the remainder of the contract between that agent and Trevor. B. Nate should invite Trevor to sign a contract with him. Since Trevor approached him, this is legal. C. Nate should tell Trevor that he's happy to be his agent, but he'll have to wait until his current agency contract has ended. D. Nate should tell Trevor that if he can get his agent to sign a waiver, Nate can represent him.

C

What must an Alabama assistant be in order to answer client questions about offers and negotiations? A. At least 25 years old B. Experienced (at least four years of licensure) C. Licensed D. Very helpful

C

What penalty might a licensee or broker face for failing to submit documents the Alabama Real Estate Commission has requested? A. Civil penalties B. Court costs C. Disciplinary action D. Legal damages

C

Which of the following is NOT a listing agreement violation in Alabama? A. Failing to include a firm expiration date. B. Neglecting to provide the principal with a copy of the listing agreement. C. Neglecting to stage the house effectively for open houses. D. The seller specifies a price, and the licensee gets any amount over that price.

C

Which of the following is true about net listings in Alabama? A. The listing agent is guaranteed at least some commission. B. They don't include compensation for the buyer's agent. C. They often involve a conflict of interest. D. They're legal in all 50 states.

C

Which of the following tasks would require a real estate license? A. Assemble closing documents B. Calculate a commission check C. Host an open house D. Place a for-sale sign in a front yard

C

A licensee who advises a seller client to break an existing contract to accept a better offer is ________________. A. Following the NAR Code of Ethics B. Performing a required service for the client according to Alabama real estate law C. Providing appropriate client service according to NAR and AREC D. Violating Alabama's license law

D

What's an agent's responsibility related to home inspections? A. To encourage buyers to waive an inspection B. To hire an inspector for the buyers C. To perform them D. To recommend a buyer have a professional inspection performed

D

When it comes to contracts for sale or lease in Alabama, which of the following statements is true? A. It's illegal for real estate brokers to have a personal interest in contracts for sale or lease. B. It's illegal for real estate brokers to negotiate the price on contracts for lease, but not for sale. C. It's illegal for real estate brokers to receive a commission for contracts for sale or lease. D. It's illegal for real estate licensees to interfere with contracts for sale or lease.

D

Which of the following actions might be considered a red flag signaling mortgage fraud? A. The buyer has disclosed that she's purchasing the property with her sister. B. The buyer's credit score is outstanding. C. While reviewing the sales agreement, you notice the buyer has impeccable handwriting. D. Your buyer requests a specific appraiser.

D

Which of the following is a true statement regarding handling trust funds in Alabama? A. Brokers may deposit them into the brokerage operating account. B. Licensees own the funds. C. Qualifying brokers must make sure they're safely locked in a drawer. D. Trust fund monies should be deposited in a timely fashion.

D

COMMON SCHEMES: An investor receives title to a property— often by using a straw buyer—doesn't make the mortgage payments, and usually rents out the home until foreclosure occurs.

EQUITY SKIMMING

Joanie is a homeowner on the brink of default. Silas, an investor, offers to buy Joanie's home before it's foreclosed in exchange for Joanie paying him rent. He promises to reconvey the title to her at a later date. What Joanie doesn't know is that Silas, although he's refinanced the home, has no intention of making the mortgage payments. He plans to remove all of the equity and pocket the rent. This is an example of _____________.

EQUITY SKIMMING

COMMON SCHEMES: Borrowers may use a stolen or fictitious identity to obtain a home loan.

FALSE IDENTITY

Knowing she can't qualify for a home loan because of her exceptionally bad credit, Gail applies for a loan using a fake name. This is an example of _________.

FALSE IDENTITY

Don, an appraiser, has submitted a report to the lender in which he has knowingly reported the value of the property to be higher than it actually is. This is an example of a(n) _________ __________.

INFLATED APPRAISAL

COMMONS SCHEMES: An appraiser intentionally submits a misleading report to a lender that indicates an inflated property value.

INFLATED APPRAISALS

WHAT TYPE OF DEFECT? ONE THAT IS NOT IMMEDIATELY EVIDENT

LATENT

__________ means the information is considered important in deciding what course of action a buyer takes regarding the real estate transaction.

MATERIAL

__________ means any problematic property condition that may not necessarily be immediately apparent.

PHYSICAL

COMMON SCHEMES: Illegal when a home is bought, appraised for more than it's worth, and sold within a short time frame. Kickbacks to the parties are commonplace.

PROPERTY FLIPPING

The Kents' property appraised for more than it was worth, and sold within a very short time frame. Rumor has it the parties got a nice kickback from the sale. This may be an example of illegal ________.

PROPERTY FLIPPING

COMMON SCHEMES: The seller or another party provides funds that aren't included in the settlement statement. In order to be legal, rebates must be disclosed to the lender and must appear on the settlement statement. UNDISCLOSED BUYER R________

REBATE

COMMON SCHEMES: A property buyer accepts a second mortgage without disclosing it to the original lender. Often used when a buyer can't afford the down payment on a home

SILENT SECOND

Joe is selling his property and has accepted a second mortgage without letting the original lender know. This is an example of a(n) __________.

SILENT SECOND

COMMON SCHEMES: Concealing a buyer's identity by using another person's name and credit information to obtain a loan. NOMINEE LOANS AKA __________ BUYERS

STRAW

To conceal the buyer's true identity, another person's name and credit information were used to obtain the loan. This is an example of a(n) ___________ or nominee loan.

STRAW BUYER

Is the following statement true or false? What might the commission do if it believes the license law is about to be violated? Well, it may take action without having to allege or prove that the continued violation would cause significant damage.

T

A check used to pay a fee to the real estate commission was returned by the bank for insufficient funds. This is definitely poor financial practice, but is it also a license law violation? YES OR NO?

YES