Brokerage relationships and ethics

Question 1

A representative; one who is authorized to act on behalf of another.

Answer 1

Agent

Question 2

Conducting negotiations on one’s own behalf without being subject to the other party’s control or influence.

Answer 2

At arm’s length

Question 3

One with whom the broker or sales associate hopes to be successful in accomplishing the purpose of employment. A member of the public who is or may be a buyer or seller of real property and may or may not be represented by a real estate licensee in an authorized brokerage relationship.

Answer 3

Customer

Question 4

A broker who represents both the buyer and the seller of a transaction in a fiduciary capacity.

Answer 4

Dual agent

Question 5

A person in a position of trust and confidence with respect to another person.

Answer 5

Fiduciary

Question 6

The intent to misrepresent a material fact or to deceive to gain an unfair advantage or to harm another person.

Answer 6

Fraud

Question 7

A representative authorized by the principal to perform only acts related to a business or to employment of a particular nature.

Answer 7

General agent

Question 8

A false or misleading statement of a material fact; concealment of a material fact.

Answer 8

Misrepresentation

Question 9

The party employing the services of a real estate broker; amount of money borrowed in a mortgage loan, excluding interest and other charges.

Answer 9

Principal

Question 10

Comments or opinions not made as representations of fact and thus not grounds for misrepresentation.

Answer 10

Puffing

Question 11

The sale of improved residential property of four or fewer units, the sale of unimproved residential property intended for use as four or fewer units, or the sale of agricultural property of ten or fewer acres.

Answer 11

Residential sale

Question 12

A broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction.

Answer 12

Single agent

Question 13

One authorized by a principal to perform a particular act or transaction, without contemplation of continuity of service as with a general agent.

Answer 13

Special agent

Question 14

A person authorized to assist and represent the agent and whose duties are delegated by the original agent.

Answer 14

Subagent

Question 15

A broker who provides limited representation to a buyer, a seller, or both in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent.

Answer 15

Transaction broker

Question 16

A representative authorized by the principal to perform all acts that the principal can personally perform and that may be lawfully delegated to another.

Answer 16

Universal agent

Question 17

4. Which statement BEST describes the duty of loyalty in a single agent relationship?
   a. The broker must act in the best interest of the principal.
   b. The broker must disclose all latent defects to prospective buyers.
   c. The broker is held to a standard of care that requires knowledge concerning the land and physical characteristics of the property.
   d. The broker must be able to account for all funds received on behalf of the principal.

Answer 17

A

Question 18

5. A real estate broker who works in a limited capacity for both the buyer and the seller in the same transaction is
   a. a dual agent.
   b. a transaction broker.
   c. bound to fiduciary duties to both the buyer and the seller.
   d. a single agent of both the buyer and the seller.

Answer 18

B

Question 19

7. A broker has listed a seller’s property. The seller has disclosed to the broker that the ceramic tile is loose in the dining room because the cement did not adhere to the tile. The loose tile is not readily visible because it is covered with an area rug to protect the seller’s toddler. The broker has satisfied his legal obligation if he tells the the buyer
   a. that the floor plan appears to be in good condition.
   b. that ceramic tiles in the dining room are loose.
   c. that the buyer can order an inspection at his own expense if he is concerned about the floor.
   d. nothing unless he is asked specifically about the title floor’s condition.

Answer 19

B

Question 20

8. A transaction broker has all of the duties listed below EXCEPT
   a. limited confidentiality
   b. to use skill, care, and diligence.
   c. to disclose all known facts that materially affect the value of residential real property and are not readily observable to the buyer.
   d. obedience.

Answer 20

D

Question 21

9. A brokerage relationship is terminated under which circumstances?
   a. The broker agent renounces the brokerage relationship.
   b. The purchase and sale contract is signed.
   c. At the will of either party without notice.
   d. An offer is accepted.

Answer 21

A

Question 22

10. A seller lists her home for $116,900. The seller tells the sales associate that she needs to get at least $112,000 for the home. Following Sunday’s open house, the sales associate receives two offers on the home. The first offer for $116,900 is contingent on the seller’s financing a portion of the down payment. The second offer is for $112,000, with the buyer to secure her own financing. The sales associate should
    a. seek his broker’s advise regarding which offer to present.
    b. present the full price offer to the seller.
    c. present the second offer to the seller.
    d. present both offers, explaining the details of each to the seller.

Answer 22

D

Question 23

11. In the common public relationship that exist in a typical real estate transaction, buyers and sellers are said to be dealing
    a. in a fiduciary capacity
    b. at arm’s length with each other.
    c. in an agency status with each other.
    d. under the doctrine of ethical confidentiality.

Answer 23

B

Question 24

12. If a principal gives the broker instructions that will result in loss or harm to the principal, the broker
    a. is justified in not carrying out such instructions.
    b. should carry out such instructions with out question.
    c. should only carry out only that portion of the instructions that will not cause loss or harm to the principal.
    d. should inform the principal of possible harm inherent in the instruction, and then either do as instructed or withdraw from the relationship.

Answer 24

D

Question 25

13. A broker’s obligations to consumers with whom the brokerage firm has no brokerage relationship include the duty of
    a. full disclosure.
    b. accounting for all funds.
    c. loyalty.
    d. limited confidentiality.

Answer 25

B

Question 26

15. Which relationship is a general agency relationship?
    a. Brokerage company employed under a listing contract
    b. Relationship between the employing broker and a broker associate
    c. Sales associate working with a prospective buyer
    d. Relationship between a sales associate and the seller who has listed property with the brokerage.

Answer 26

B

Question 27

16. A real estate licensee makes a nonfactual statement about a property and the buyer accuses the licensee of fraud. The buyer is NOT required to prove that the
    a. misstatement was made by the licensee.
    b. misstatement made by the licensee was material to the transaction.
    c. buyer was damaged by the misstatement.
    d. information misstated could be proved to be false with due diligence.

Answer 27

D

Question 28

17. A transaction broker involved in a residential sale discovered before the closing that a large recycling facility will be built approximately three-quarters of a mile from the home site. The transaction broker should
    a. disclose the information to both the buyer and the seller.
    b. inform only the buyer of this fact.
    c. inform only the seller of this fact.
    d. ignore the information to protect the transaction.

Answer 28

A

Question 29

18. A real estate sales associate must disclose to a prospective buyer that
    a. a former occupant of the property committed suicide in the home.
    b. the seller has been diagnosed with HIV.
    c. the family room addition does not comply with local building codes.
    d. families of other racial groups live in the immediate area.

Answer 29

C