Agency Law, Rules, and Ethics Flashcards
What does the term “ethics” mean?
Ethics are rules of conduct or accepted behavior based on moral principles.
What are two types of ethics?
Social ethics
Business ethics
Professional ethics
What is the main purpose of the Code of Ethics?
To protect the public.
Why is the Code of Ethics called a living document?
It is regularly revised as necessary.
What is one method used by HUD to determine if a real estate office is practicing discriminatory methods?
HUD sends out testers to evaluate a real estate office
Why is discriminatory housing advertising not protected under the first amendment?
Because housing advertising is considered commercial speech and therefore not covered
Why does Section 804(c) of the Fair Housing Act apply to Internet advertisement?
Just as the Department has found newspapers in violation of the Fair Housing Act for publishing discriminatory classifieds, the Department also has concluded that it is illegal for websites to publish discriminatory advertisements.
The ECOA was designed to prohibit what types of illegal actions?
To prohibit discrimination in any aspect of a credit transaction
What is the purpose of the DTPA?
The main focus of the DTPA is to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.
What are the public remedies for a DTPA violation?
Public remedies include temporary restraining orders, temporary or permanent injunctions, and monetary penalties of up to $2,000 per violation but not to exceed a total of $10,000.
How many professional ethics canons are in Title 22 of the Texas Administrative Code (TAC) Chapter 531 and what are they?
There are five professional ethics canons:
Fidelity Integrity Competence Consumer Information Form Discriminatory Practices
What form must be displayed in each real estate broker’s office?
The Consumer Information Form 1-1
A licensee who receives a commission from a service provider must obtain consent from which person?
His or her principal
How can a licensee legally share a fee by giving a gift card to an unlicensed person?
A licensee can give a gift certificate worth not more than $50 to a person who is not licensed. The licensee may not give cash, and the gift certificate may not be exchangeable for cash.
What is the purpose of a RSC-1 form?
For the licensee to disclose service fees collected from residential service companies.
What office procedure should be used to handle RSC-1 forms?
The disclosure form should not be attached to the contract as an addendum, but the form should be retained in the transaction records maintained by the broker as evidence that the disclosure was provided.
What is the trust account used for?
To pay final judgments against persons who were licensed by TREC as a real estate salesperson, broker, or easement and right of way agent at the time the real estate transaction occurred.
What is the fine payout structure for the TREC’s Real Estate Recovery Trust Account?
The maximum payment is $50,000 for a single transaction and $100,000 for all claims against a single license holder.
What is the time limit given to a licensee to turn over escrow monies to his or her broker?
A licensee shall immediately deliver to the sponsoring broker any trust funds received in connection with a real estate transaction not otherwise deposited with a title company.
What is meant by commingling?
Placing escrow monies in a licensee’s operating or personal account
Ethics
rules of conduct or accepted behavior based on moral principles.
Business Ethics
reflects the philosophy of the business. If a company’s purpose is to maximize shareholder returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility.
Morals
are defined as one’s standards of behavior or beliefs regarding what is right or wrong.
Principles
are the foundation for our morals and are defined as fundamental truths or assumptions for beliefs.
Laws
Laws are the minimum standards that a society will tolerate. An action can be legal but unethical, or ethical but illegal.
In 1908
the National Association of Realtors® was formed
In 1913
the Association adopted the industry’s first code of ethical conduct, the Code of Ethics.
The code of ethics
helps to protect the public and benefits Realtors®, brokerage firms, and local associations, by enhancing the professionalism and integrity of the real estate industry.
Articles and Standards of Practice
are part of the code of ethics
Articles
broad statements of ethical principles.
Standards of Practice
explain, interpret, support and amplify the Articles.
Case Interpretations
are specific cases in which the Articles have been applied
Complaints filed with HUD are investigated by
the Office of Fair Housing and Equal Opportunity (FHEO). If the complaint is not successfully conciliated, FHEO determines whether reasonable cause exists to believe that a discriminatory housing practice has occurred.
The ECOA
prohibits discrimination in any aspect of a credit transaction. It applies to any extension of credit, including extensions of credit to small businesses, corporations, partnerships, and trusts.
The Texas Deceptive Trade Practices-Consumer Protection Act
protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty. DTPA prohibits certain acts and practices that tend to deceive and mislead consumers.
An advisory letter is not
formal disciplinary action. Instead, the advisory letter is a notification that there were items revealed in the investigation that do not warrant disciplinary action but, if not corrected, could lead to further complaints and, ultimately, disciplinary action.
A salesperson may not maintain a trust account or act as an escrow agent
Any money received by a real estate salesperson, to be held in trust pursuant to a real estate transaction, must be delivered to the salesperson’s sponsoring broker to be deposited in accordance with the agreement of the principals in the transaction.
