Agency Law, Rules, and Ethics

Question 1

What does the term “ethics” mean?

Answer 1

Ethics are rules of conduct or accepted behavior based on moral principles.

Question 2

What are two types of ethics?

Answer 2

Social ethics
Business ethics
Professional ethics

Question 3

What is the main purpose of the Code of Ethics?

Answer 3

To protect the public.

Question 4

Why is the Code of Ethics called a living document?

Answer 4

It is regularly revised as necessary.

Question 5

What is one method used by HUD to determine if a real estate office is practicing discriminatory methods?

Answer 5

HUD sends out testers to evaluate a real estate office

Question 6

Why is discriminatory housing advertising not protected under the first amendment?

Answer 6

Because housing advertising is considered commercial speech and therefore not covered

Question 7

Why does Section 804(c) of the Fair Housing Act apply to Internet advertisement?

Answer 7

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.

Question 8

The ECOA was designed to prohibit what types of illegal actions?

Answer 8

To prohibit discrimination in any aspect of a credit transaction

Question 9

What is the purpose of the DTPA?

Answer 9

The main focus of the DTPA is to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.

Question 10

What are the public remedies for a DTPA violation?

Answer 10

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.

Question 11

How many professional ethics canons are in Title 22 of the Texas Administrative Code (TAC) Chapter 531 and what are they?

Answer 11

There are five professional ethics canons:

Fidelity
Integrity
Competence
Consumer Information Form
Discriminatory Practices

Question 12

What form must be displayed in each real estate broker’s office?

Answer 12

The Consumer Information Form 1-1

Question 13

A licensee who receives a commission from a service provider must obtain consent from which person?

Answer 13

His or her principal

Question 14

How can a licensee legally share a fee by giving a gift card to an unlicensed person?

Answer 14

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.

Question 15

What is the purpose of a RSC-1 form?

Answer 15

For the licensee to disclose service fees collected from residential service companies.

Question 16

What office procedure should be used to handle RSC-1 forms?

Answer 16

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.

Question 17

What is the trust account used for?

Answer 17

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.

Question 18

What is the fine payout structure for the TREC’s Real Estate Recovery Trust Account?

Answer 18

The maximum payment is $50,000 for a single transaction and $100,000 for all claims against a single license holder.

Question 19

What is the time limit given to a licensee to turn over escrow monies to his or her broker?

Answer 19

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.

Question 20

What is meant by commingling?

Answer 20

Placing escrow monies in a licensee’s operating or personal account

Question 21

Ethics

Answer 21

rules of conduct or accepted behavior based on moral principles.

Question 22

Business Ethics

Answer 22

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.

Question 23

Morals

Answer 23

are defined as one’s standards of behavior or beliefs regarding what is right or wrong.

Question 24

Principles

Answer 24

are the foundation for our morals and are defined as fundamental truths or assumptions for beliefs.

Question 25

Laws

Answer 25

Laws are the minimum standards that a society will tolerate. An action can be legal but unethical, or ethical but illegal.

Question 26

In 1908

Answer 26

the National Association of Realtors® was formed

Question 27

In 1913

Answer 27

the Association adopted the industry’s first code of ethical conduct, the Code of Ethics.

Question 28

The code of ethics

Answer 28

helps to protect the public and benefits Realtors®, brokerage firms, and local associations, by enhancing the professionalism and integrity of the real estate industry.

Question 29

Articles and Standards of Practice

Answer 29

are part of the code of ethics

Question 30

Articles

Answer 30

broad statements of ethical principles.

Question 31

Standards of Practice

Answer 31

explain, interpret, support and amplify the Articles.

Question 32

Case Interpretations

Answer 32

are specific cases in which the Articles have been applied

Question 33

Complaints filed with HUD are investigated by

Answer 33

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.

Question 34

The ECOA

Answer 34

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.

Question 35

The Texas Deceptive Trade Practices-Consumer Protection Act

Answer 35

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.

Question 36

An advisory letter is not

Answer 36

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.

Question 37

A salesperson may not maintain a trust account or act as an escrow agent

Answer 37

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.