Briefing Exam 2

Question 1

1. All of the following are essential to the creation of an agency relationship, EXCEPT:

a. Competent parties
b. Agreement to pay consideration
c. Agreement between principal and agent
d. Fiduciary relationship

Answer 1

b. Agreement to pay consideration

The payment of consideration need not be involved in an agency relationship. One may gratuitously undertake to act as an agent and will be held to the standards of agency upon assumption of those duties.

Question 2

2. An agency relationship can be created by all of the following, EXCEPT:

a. principal’s agreement.
b. implication of the law.
c. oral agreement.
d. agent volunteers.

Answer 2

d. agent volunteers.

A real estate licensee cannot become your agent by simply volunteering. An agency relationship can be created by written agreement or it may be implied by the acts of the principal and agent. It can also be created by oral agreement.

Question 3

3. The phrase that best describes the nature of a broker’s duty to keep a principal fully informed is:

a. ethical conduct.
b. continuing responsibility.
c. fiduciary obligation.
d. trustworthy business principles.

Answer 3

c. fiduciary obligation

Among the obligations that a fiduciary owes to his or her principal are the duties of loyalty, obedience, and full disclosure; to be fair and honest; the duty to use skill, care, and diligence; and the duty to account for all monies.

Question 4

4. When acting as agent for seller Jones, real estate broker Smith:

a. is obligated to render faithful service to Jones.
b. can modify the terms of any contract that Jones enters into.
c. can give Jones legal advice.
d. can eliminate any offers on Jone’s property that Smith believes are not good enough.

Answer 4

a. is obligated to render faithful services to Jones.

As a fiduciary the broker (and salesperson) have a duty to be faithful to the principal.

Question 5

5. Under the law of fiduciary relationship is created between the broker and the seller on execution of the listing agreement. As far as the broker’s responsibility to third parties, the broker:

a. must be fair and honest.
b. has no obligation.
c. needs to disclose material facts only when asked about them.
d. should disclose the lowest price the seller is willing to except.

Answer 5

a. must be fair and honest.

In addition to his/her fiduciary obligations to the seller, an agent must be fair and honest to third parties. Because of the close personal relationship between broker (agent) and seller or buyer (principal), the broker often learns certain confidential information about the client and/or financial situation of the principal. This information cannot be disclosed by a broker, even after the transaction is completed and the fiduciary relationship terminated.

Question 6

6. The law of agency is concerned with the rights and duties between and among the:

a. agent and the principal, whether disclosed or undisclosed.
b. principal and third parties with whom the agent deals on behalf of the principal.
c. agent and the third parties with whom the agent deals on behalf of the principal.
d. all of the above.

Answer 6

d. all of the above.

All three choices describe the fiduciary relationship between the real estate agent and the principal.

Question 7

7. Which of the following statements does not correctly describe a fiduciary?

a. A fiduciary owes loyalty to the principal.
b. A fiduciary must conform to the principal’s legal instructions.
c. A fiduciary is an agent.
d. A fiduciary is a neutral third party.

Answer 7

d. A fiduciary is a neutral third party.

The broker has a fiduciary duty to work in the best interest of his/her client.

Question 8

8. A power of attorney can be terminated by the:

a. death of the attorney-in-fact.
b. revocation by the principal.
c. incapacity of the parties to the power of attorney.
d. all of the above.

Answer 8

d. all of the above.

A power of attorney is a written instrument authorizing a person, the attorney-in-fact, to act as the agent on behalf of another to the extent indicated in the instrument. All of the choices would result in the termination of the power of attorney.

Question 9

9. An attorney-in-fact can best be described as a(n):

a. duly authorized person who has been granted both actual and implied powers to act as a principal for another.
b. properly authorized party who is acting as a dual agent.
c. attorney appointed by the count to administer an estate of a deceased person.
d. legally competent person who has been given the power of attorney by another competent person.

Answer 9

d. legally competent person who has been given the power of attorney by another competent person.

An attorney-in-fact is a competent and disinterested person who is authorized by another person to act in her or her place.

Question 10

10. All of the following are essential elements of an agency agreement except:

a. payment of consideration.
b. fiduciary relationship of the agent to the principal.
c. agreement by the principal.
d. a competent principal.

Answer 10

a. payment of consideration.

Choices (b), (c), and (d) are all essential elements for the creation of an agency relationship. The payment of consideration is not related to the creation of an agency relationship.

Question 11

An agency relationship may be created by:

a. agreement.
b. ratification.
c. estoppel.
d. all of the above.

Answer 11

d. all of the above.

Most agency relationships are created by written agreement. An agency relationship can also be created by ratification (consenting to acts of the agent) and estoppel ( principal stopped from denying an inconsistent position in the representation).

Question 12

12. Seller A let buyer B assume that Broker C was his agent. This type of agency relationship is an example of:

a. ratification.
b. estoppel.
c. ostensible authority.
d. none of the above.

Answer 12

c. ostensible authority.

Ostensible authority is that authority which a third person reasonably believes an agent possesses because of the acts or omissions of the principle. Ratification is the adoption or approval of an act performed on behalf of a person without previous authorization, such as the approval by a principal of an agent, after the acts have been performed. Estoppel is a legal doctrine which prevents a person from alleging something to be true or a fact which is contrary to a previous affirmation or allegation made by that same person.

Question 13

13. An agency relationship may be created by all of the following except:

a. an oral agreement.
b. necessity or emergency.
c. subsequent ratification.
d. subornation.

Answer 13

d. subornation.

Subornation (suborn) means to bribe or induce someone to unlawfully or secretly perform some misdeed or to commit a crime. Don’t confuse this with subordination. The other answers are methods which agencies may be created.

Question 14

14. An agency relationship may be terminated by:

a. expiration of the term.
b. death of the agent.
c. agreement.
d. all of the above.

Answer 14

d. all of the above.

All of the choices are ways to terminate an agency relationship.

Question 15

15. In the correct order, list the chain of events necessary to comply with the agency disclosure law:

a. confirm, disclosure, elect
b. investigate, disclosure, confirm
c. disclose, elect, confirm
d. disclose, confirm, reconfirm

Answer 15

c. disclose, elect, confirm

According to the agency disclosure law, the correct order is Disclosure, Elect, Confirm (memory aid: DEC).

Question 16

16. A real estate licensee offered to rebate part of his commission to the buyer if the buyer would increase his offer to a level that the agent knew would be high enough for the seller to accept. Under these circumstances;

a. this information must be disclosed to the seller before the offer is accepted by the seller.
b. this action is a violation of the licensing law and would lead to immediate disciplinary action.
c. the licensee could be held liable for damages in a civil suit even though this information was given to the seller prior to the seller’s acceptance.
d. all of the above.

Answer 16

a. this information must be disclosed to the seller before the offer is accepted by the seller.

Any information material to the transaction must be disclosed to the seller prior to acceptance of the offer by the seller. This would include any agreement by a licensee to rebate a portion of his/her commission to the buyer.

Question 17

A licensed real estate broker representing the seller becomes the gratuitous agent (no fee) of the buyer and accepts all of the fiduciary responsibilities as the buyer’s agent when he or she:

a. shows property to the buyer.
b. arranges financing for the buyer including a purchase-money loan.
c. gives the buyer a list of certified appraisers.
d. simply offers to write up the offer to purchase the seller’s property.

Answer 17

b. arranges financing for the buyer including a purchase-money loan.

If the agent representing the seller goes as far as setting up the buyers financing, he/she becomes the buyer’s agent and thus assumes all fiduciary responsibilities as the buyer’s agent.

Question 18

18. A real estate licensee who misrepresents a property to a buyer while acting as agent for the seller may face:

a. disciplinary action by the Bureau of Real Estate.
b. civil action.
c. criminal action.
d. all of the above.

Answer 18

d. all of the above.

Even though a real estate agent is representing the seller, he/she must still be fair and honest to all the parties to the transaction. Misrepresenting the property to the buyer may subject an agent to choices (a), (b), and (c).

Question 19

19. Nondisclosure of a dual agency by a broker can result in:

a. contract rescission
b. loss of commission
c. disciplinary action
d. any of the above

Answer 19

d. any of the above

Failure to disclose a dual agency can result in recession of the contract. The agency may also lose his/her commission and be subjected to disciplinary action by the Bureau of Real Estate.

Question 20

20. If you are a subagent of the listing broker, you are working for the:

a. buyer
b. seller
c. listing broker
d. lender

Answer 20

b. seller

“Subagent” means a person to whom an agent delegates agency powers. However, “subagent” does not include an associate licensee who is acting under the supervision of an agent in a real property transaction.

The marketing of real property by real estate agents is often a cooperative effort. The listing broker usually makes an offer of compensation to a cooperating broker (subagent) by placing the property on the Multiple Listing Service. Some MLS’s make the offer of subagency automatic, while for other, the offer of subagency is optional and requires an affirmative act by the listing broker. If the principal (seller) specifically authorizes his or her broker to appoint a subagent and thus establishes a new contractual and fiduciary relationship, the subagent represents the principal in the same manner as the listing broker.

Question 21

21. A material fact that must be disclosed to a purchaser would include all of the following except:

a. a leaky roof
b. a septic tank
c. the racial composition of the neighborhood
d. plans for a nearby freeway

Answer 21

c. the racial composition of the neighborhood

The racial composition of a neighborhood is not considered a material fact. Discussing this with the purchaser may be considered a violation of fair housing laws.

Question 22

22. A real estate agent is under a duty to use which of the following in the performance of his/her duties?

a. care
b. skill
c. diligence
d. all of the above

Answer 22

d. all of the above

Among the obligations that a fiduciary owes to his or her principal are the duties of loyalty, obedience, and full disclosure; to be fair and honest; the duty to use skill, care and diligence, and the duty to account for all monies.

Question 23

23. A real estate broker should regard himself/herself as a:

a. fiduciary
b. substitute for an attorney
c. legal adviser
d. none of the above

Answer 23

a. fiduciary

The broker acts as a fiduciary in the transaction.

Question 24

24. When a licensee is acting as the buyer’s agent, this fact must be disclosed to others:

a. as soon as is practicable
b. after the offer has been presented and accepted
c. when the loan is funded
d. after the licensee receives a commission

Answer 24

a. as soon as is practicable

The form of agency relationship must be disclosed as soon as practicable.

Question 25

25. Which of the following statements is most nearly correct concerning buyer’s agency:

a. it is not legal in California
b. In buyer’s agency, the seller is forbidden to pay any commission, directly or indirectly, to the buyer’s agent
c. Buyer’s agency often gives rise to disputes over who is the “procuring cause.”
d. The buyer’s broker has no agency relationship with the seller or the listing broker, and is therefore not liable for their actions.

Answer 25

d. The buyer’s broker has no agency relationship with the seller or the listing broker, and is therefore not liable for their actions.

Statement of fact.

Question 26

26. Which of the following best describes a “dual agency”?

a. An agent only represents one principal.
b. The agent acts concurrently for both the buyer and seller or the listing broker, and is therefore not liable for their actions.
c. The agent is authorized to do all acts connected with a particular trade, business, or employment.
d. The agent is only authorized to perform only those acts specifically authorized by the principal.

Answer 26

b. The agent acts concurrently for both the buyer and seller or the listing broker, and is therefore not liable for their actions.

A dual agency is an agency relationship in which the agent acts concurrently for both of the principals in the transaction. A dual agency is lawful if it is created with the full knowledge and consent of both parties.

Question 27

27. Which of the following describes the unlawful form of dual agency called “ divided agency”?

a. The agent acts concurrently for both the buyer and seller but keeps them divided by not ever letting them communicate directly.
b. The agent represents only one principal, but divided the duties to be performed with another agent.
c. The agent acts concurrently for both the buyer and seller in a transaction without the knowledge and consent of both parties.
d. The agent represents the seller and two buyers.

Answer 27

c. The agent acts concurrently for both the buyer and seller in a transaction without the knowledge and consent of both parties.

When the agent becomes the agent of both the buyer and seller, without the knowledge and consent of both, the agency may be more accurately described and identified as a “divided agency.” When the agency is a divide agency, it is a violation of Section 10176(d) of the Business and Professions Code (the Real Estate Law).

Question 28

28. A “dual agency” is legal if:

a. All parties are told before close of escrow.
b. The buyer and seller consent to it.
c. The broker and escrow company agree to it.
d. All parties are told after they sign the contracts.

Answer 28

b. The buyer and seller consent to it.

The safest rule to apply is that when you represent both parties, in any way, you become a dual agent. When the agent become the agent of both, without the knowledge and consent of both, the agency is considered illegal.

Question 29

29. Which of the following statements is correct?

a. A dual agency is always a divided agency
b. A divided agency is NOT always a dual agency
c. A dual agency is NOT necessarily a violation of law
d. A dual agency is always a violation of law

Answer 29

c. A dual agency is NO0.T necessarily a violation of law

This is a very tricky question, read it carefully. The term dual agency does not, in itself, describe an unlawful activity. In fact, the law is reasonably clear when it states that an agent cannot legally act for two principals in negotiations with each other unless both have knowledge of, and consent to, the dual agency. [B & P Code 10176(d)]. Thus, we find that an agent can represent both parties in the same transaction.

Question 30

30. Owner Johnson tells broker Stone that he wants to sell his house as soon as possible and would accept $350,000. Stone tells buyer Smith that Johnson has financial troubles and will accept a much lower price, possibly as low as $300,000. Johnson ultimately accepts an offer from Smith for $300,000. Broker Stone is guilty of:

a. nothing since his job is to find a buyer no matter what.
b. violating the fiduciary duty to buyer Smith.
c. unethical behavior but not a serious breach of his fiduciary responsibility to Johnson.
d. unethical behavior and a violation of the fiduciary responsibility.

Answer 30

d. unethical behavior and a violation of the fiduciary responsibility.

Brokers Stone’s actions are a clear violation of his fiduciary responsibility to the seller. This would also be a violation to the Realtors Code of Ethics since the seller did not authorize broker Stone to disclose such information to the buyer. If Johnson’s financial troubles were in fact true and he authorized broker Stone to inform the buyer of such, it would not be a violation.

Question 31

31. Who is more likely to earn the commission?

a. The one who communicated the offer to the seller.
b. The one who communicated the seller’s acceptance of the offer to the buyer.
c. The one who secured the biggest down payment from the buyer.
d. The one who secured the offer.

Answer 31

b. The one who communicated the seller’s acceptance of the offer to the buyer.

Until the seller’s acceptance is communicated to the buyer, there is no contract. Therefore, the one who communicates the seller’s acceptance to the buyer is more likely to earn the commission.

Question 32

32. When is a properly licensed real estate salesperson most likely to get his/her commission?

a. When both the buyer and seller have signed the deposit receipt.
b. When the grant deed is signed.
c. When the grant deed is recorded.
d. When escrow closes.

Answer 32

d. When escrow closes.

Be careful in reading this question. The sales person is most likely to get his/her commission when escrow closes.

Question 33

33. Johnson, a real estate broker, listed a property. Suzi, a salesperson working for broker Sims, received an offer. Donna, a salesperson working for broker Johnson, got the offer accepted. Who earned the commission?

a. Johnson
b. Sims
c. Suzie
d. Donna

Answer 33

a. Johnson

As the listing broker, Johnson earned the commission under the terms of the listing agreement. A commission split may occur since the offer came in through another broker.

Question 34

34. A real estate commission is usually based on the:

a. listing price.
b. selling price.
c. down payment.
d. loan amount.

Answer 34

b. selling price.

Real estate commissions are usually based upon a percentage of the selling price.

Question 35

35. Typically, when leasing real property, the commission of the leasing agent is based upon a percentage of:

a. the first years rent.
b. cash paid by the lessee.
c. total rent collected during the term of the lease.
d. none of these.

Answer 35

c. total rent collected during the term of the lease.

Usually, the commission of a leasing agent is figured on the total rent to be collected over the term of the lease. The commission can be any amount negotiated and specified in the employment contract.

Question 36

36. As the agent for the seller, a real estate broker negotiated a sale. By agreement, the licensee can be paid his commission in the form of:

a. valuable personal property.
b. assignment of a note.
c. buyer’s personal check.
d. any of the above.

Answer 36

d. any of the above.

All of the choices may be the commission if agreed-upon in advance.

Question 37

37. A licensed real estate broker who specializes in property management activities usually receives commissions:

a. based on a percentage of the rents expected to be collected over the life of the leases.
b. equal to first and last month’s rent.
c. based on a percentage of the gross rents collected.
d. based on the first year’s rent.

Answer 37

c. based on a percentage of the gross rents collected.

A broker specializing in property management generally receives commissions based on a percentage of the gross rents collected, not those that would be anticipated over the term of the leases.

Question 38

38. Broker Adams represents a buyer in a single-family home transaction. As an incentive, he agreed to rebate part of his commission to the buyer. Broker Adams is required to:

a. notify the seller of the rebate.
b. notify the Real Estate Commissioner of the rebate.
c. notify the Internal Revenue Service of the rebate.
d. notify no one as this is a financial matter that affects only the broker and the buyer.

Answer 38

a. notify the seller of the rebate.

Failure to disclose to the seller that the buyer will receive any part of the commission may subject the broker to disciplinary action under B. & P. Code 101 76(a). This section declares such action to be “substantial misrepresentation.” A monetary inducement given to the buyer is a material fact and could affect the seller’s negotiation.

Question 39

39. With regards to a fiduciary relationship, a broker is a seller, as:

a. trustor is to a trustee
b. beneficiary is to a trustor
c. beneficiary is to a trustee
d. mortgagor is to a mortgagee

Answer 39

c. beneficiary is to a trustee

Similar to beneficiary/trustee as the trustee is holding the deed of trust for the benefit of the lender (beneficiary) and works on behalf of the beneficiary.

Question 40

40. You are a California real estate broker. A project is referred to you by an out-of-state broker and a sale is consummated by you. You want to split your commission with the cooperating broker. Under the California Real Estate Law:

a. you may pay a commission to a broker of another state.
b. you cannot divide a commission with a broker of another state.
c. you can pay a commission to a broker of another state only if he/she is also license in California.
d. none of the above.

Answer 40

a. you may pay a commission to a broker of another state.

B & P Code 10137: “it is unlawful for any licensed real estate broker to employ or compensate, directly or indirectly, any person for performing any of the acts within the scope of this chapter who is not a licensed real estate broker, or a real estate salesman licensed under the broker employing or compensating; however, a licensed real estate broker may pay a commission to the broker of another state.”

Question 41

41. A real estate broker, licensed only in California, verbally agreed to split a commission with a real estate broker not licensed in California:

a. This is a violation of the California real estate law.
b. This is permissible.
c. This is permissible but the broker must first get permission from the real estate commissioner.
d. This is unenforceable in a California court as the agreement was not in writing as required by the California business and professions code.

Answer 41

b. This is permissible.

In California, a real estate broker acting in the capacity of an independent contractor may agree verbally, or in writing, to split a commission with another broker. Such a contract is enforceable in the California courts.

Question 42

42. When is a properly licensed real estate sales person most likely to get his/her commission?

a. When both the buyer and the seller have signaled the deposit receipt.
b. When the grant deed is signed.
c. When the grant deed is recorded.
d. When the escrow closes.

Answer 42

d. When the escrow closes.

In reading this question. The sales person is most likely to get his/her Commission when escrow closes. He/she has earned his/her commission when a substance of the offer is communicated to the buyer.

Question 43

43. If a broker does not get his commission, he is legally entitled to:

a. Sue the seller in court.
b. File a complaint with the real estate commissioner.
c. File a complaint with the federal director of housing and urban development.
d. All of the above.

Answer 43

a. Sue the seller in court.

This is a state civil matter and must be settled in a civil action filed by the broker against the party who has not paid the commission. The California real estate commissioner does not get involved with commission dispute. There is no agency of the federal government that handles commission dispute.

Question 44

44. A salesman asked the listing broker, who was not his employing broker, to advance him $600 against the commission the listing broker had agreed to pay to the selling agent. The listing broker paid the selling salesman the $600 even though the deal had not yet closed escrow:

A. The listing broker had violated a real estate law.
B. This is permissible if it is in writing.
C. This is fraud.
D. None of the preceding apply as brokers are allowed to pay commissions to anyone they wish.

Answer 44

A. The listing broker had violated a real estate law.

A salesman may only collect a commission from his employing broker. Likewise a broker may not pay a commission to anyone other than his employed salesman. The listing broker has violated the Real Estate Law, Section 10137.

Question 45

45. In the case of a sale of property where the decreased died without leaving a will, the commission would be set by:

A. The administrator
B. The attorney
C. The California code of civil procedure
D. Court order

Answer 45

D. Court order

The court referred to be the probate court.

Question 46

46. The real estate commissioner may fine a broker which of the following amounts for illegal payment of commission to an unlicensed person: 
A. $100
B. $1,000
C. $10,000
D. None of the preceding

Answer 46

D. none of the preceding

The commissioner does not levy fines. This is done by the court. The commissioner may temporarily suspend or permanently revoke the license of a real estate licensee for such illegal payment of commission.

Question 47

47. The maximum commission a broker may charge for the cell of residential property is:

A. Set forth in the real estate law.
B. Determined by the broker’s contract with his principal.
C. 6% of the total sales price of the residence.
D. Determined by local custom.

Answer 47

B. Determined by the broker’s contract with his principal.

There is currently no law which controls what amount may be charged by the broker. Therefore, it is set by agreement between the parties.

Question 48

48. A real estate broker negotiated the sale of a real property and acted as agent for the seller. By agreement, the licensee can be paid his commission in the form of a(an):

A. Assignment by seller of first monies due seller from buyer on a mortgage.
B. Assignment of a note.
C. Buyer’s personal note.
D. Any of the above.

Answer 48

D. Any of the above.

Choices a, b, and c could all be commission payments due the broker by the seller.

Question 49

49. An owner of a home listed it at a price which would leave him $18,800 after the broker had received a 6% commission. If the broker sold the property at the listed price, how much commission would he received:

A. $1,088
B. $1,193
C. $1,200
D. $1,064

Answer 49

C. $1,200

If the seller agrees to pay the broker a 6% commission, and this is the only expense given, the seller will receive 94% of the selling price.

$18,800 amt. to seller/94% = $20,000 SP

$20,000 x 6% (commission to broker) = $1,200 to broker

Question 50

50. The property leases for $30,000 for 25 years. The commission is:

A. 7% the first year
B. 5% the next nine years
C. 3% the next two years
D. 1% of the remaining

What is the commission earned after 19 years?

A. $19,500
B. $15,000
C. $14,700
D. $13,500

Answer 50

A. 7% the first year; A. $19,500

7% the first year = $2,100 x 1 yr = $2,100

5% the next 9 years = $1500 x nine years = $13,500

3% the next 2 years = $900 times 2 years = $1800

1% of remaining = $300 times 7 years = $2,100

$2100 + $13,500 + $1800 + $2100 = $19,500

Question 51

51. A salesman asks a broker other than his own for $100 advance on his next commission. If the broker pays it, he is:

A. In violation of the law.
B. Within his rights.
C. A good friend.
D. Committing conversion.

Answer 51

A. In violation of the law

A real estate broker may never pay money to another broker’s salesman.

Question 52

52. The commission on the sale of a $170,000 property was 6% of the selling price. Two salesman had worked on the property, one listed and the other sold. It was agreed that they would split the commission, 35% to one salesman, 25% to the listing salesman, and 40% going to the employing broker. How much did the selling salesman receive:

A. $3,570
B. $2,550
C. $4,080
D. $10,209

Answer 52

A. $3,570

$170,000 x .06 = $10,200
$10,200 x .35 = $3570

Question 53

53. A parcel of land sold for $800 less than the listed price of $20,000. If the broker agreed to reduce his commission to 4%, his commission would amount to:

A. $1,152
B. $768
C. $76.80
D. $115.20

Answer 53

B. $768

$20,000 - $800 = $19,200

$19,200 (selling price) x .04 (broker’s commission) = $768 (commission)

Question 54

54. A property sold for $31,000. The broker agreed to a 6% sales commission. What would the salesman receive if his share was 45% of the agreed commission:

A. $1,860
B. $837
C. $1,023
D. None of the preceding

Answer 54

B. $837

$31,000 selling price x 6% = $1860 total commission x 45% = $837 to salesperson

Question 55

55. Which of the following types of sale requires a disclosure that the sales commission is negotiable?

A. 30-unit apartment complex
B. Commercial property
C. Industrial property
D. 1-4 unit residential property

Answer 55

D. 1-4 unit residential property

B and P code section 10147.5 is now operative. It reads: 10147.5 (a) any printed or form agreement which initially establishes, or is intended to establish, or alters the terms of any agreement which previously established a right to compensation to be paid to a real estate licensee for the sale of residential real property containing not more than four residential units, or the sale of a mobile home, shall contain the following statement in not less than 10-point boldface type immediately preceding any provision of such agreement relating to compensation of the licensee.

Notice the amount or rate of real estate commissions is not fixed by law. They are set by each broker individually and may be negotiable between the seller and broker.

Question 56

56. An agent must submit all new offers to the owner until:

A. Open of escrow.
B. Close of escrow.
C. When the agent decides.
D. When the broker decides.

Answer 56

B. Close of escrow.

Offers must be presented even after the seller has accepted an offer. It is a violation, when acting as a listing agent, to willfully fail to present any written offer to purchase received prior to the closing of the sale, unless expressly instructed by the owner not to present such an offer, or unless the offer is patently frivolous.

Question 57

57. Jackson leased his home to Sullivan with a verbal agreement to sell the property to Sullivan. Jackson knows that Sullivan has been making significant improvements to the property in reliance on that verbal agreement. Jackson now declines to sell the property to Sullivan. Which of the following best describes the rights of the parties?

A. Jackson must sell because he made an ostensible agreement.
B. Sullivan has no right to enforce the verbal agreement.
C. Jackson must sell because the doctrine of estoppel will apply in this case.
D. Jackson does not have to sell because of the Statute of Frauds.

Answer 57

C. Jackson must sell because the doctrine of estoppel will apply in this case.

The doctorine of estoppel would apply when one person allows another to rely on statements made to the detriment of that person. In this case, Jackson allowed Sullivan to rely on a verbal promise to sell and to make substantial improvements to the property. The court will stop Jackson from refusing to sell.

Question 58

58. An agent becomes the agent of the seller when both the seller and the agent sign:

A. The purchase agreement
B. The transfer disclosure statement
C. The agency disclosure statement
D. The listing agreement

Answer 58

D. The listing agreement

The listing agreement creates the agency relationship between the seller and the listing agent.

Question 59

59. Commissions rate price fixing is a violation of the:

A. Truth-in-lending
B. Real estate settlement procedures act
C. Anti-trust laws
D. California fair employment and housing act

Answer 59

C. Anti- trust laws.

Price-fixing is a violation of the Sherman antitrust laws.