C1U6 The Law of Agency

Question 1

Generally an agent works for:

a. the principal
b. the third person
c. the subagent
d. the California Bureau of Real Estate

Answer 1

a. the principal

Question 2

A minor:

a. may be a licensed real estate agent
b. is anyone younger than 21 years of age
c. may be a licensed real estate salesperson
d. is anyone younger than 18 years of age

Answer 2

d. is anyone younger than 18 years of age

Question 3

Someone appointed to carry out a particular transaction is:

a. a general agent
b. a special agent
c. a secret agent
d. a subagent

Answer 3

b. a special agent

Question 4

An independent contractor is distinguished by:

a. responsibility for Social Security and other payments
b. no flexibility in setting work hours
c. little control over work methods
d. no legal obligation to an employer

Answer 4

a. responsibility for Social Security and other payments

Question 5

The California Real Estate Law treats a real estate salesperson as:

a. an independent contractor of the broker
b. an employee of the broker
c. a sole proprietor
d. a partner of the broker

Answer 5

b. an employee of the broker

Question 6

A salesperson is a broker’s:

a. principal
b. agent
c. subagent
d. third person

Answer 6

b. agent

Question 7

An agency agreement to perform an act that requires a writing:

a. must itself be in writing
b. may be oral or written
c. cannot be an express agreement
d. violates the statute of frauds.

Answer 7

a. must itself be in writing

Question 8

To be enforceable, all real estate contracts:

a. may be oral or written
b. must be in writing
c. must comply with the equal equities of rule
d. must be completed within 90 days of origination

Answer 8

b. must be in writing

Question 9

As a contract, a real estate agency agreement:

a. can have any objective
b. needs only to be made by parties with the capacity to contract
c. does not need to be supported by consideration
d. must meet the requirements for a valid contract

Answer 9

d. must meet the requirements for a valid contract

Question 10

Real estate commission rates:

a. are established by the California Bureau of Real Estate
b. should be no lower than 2%
c. should be no higher than 10%
d. are not fixed by law

Answer 10

d. are not fixed by law

Question 11

All real estate agency agreements must:

a. expire in 90 days
b. be in writing
c. be signed before a buyer is solicited
d. be approved by the California Bureau of Real Estate

Answer 11

b. be in writing

Question 12

The MOST commonly used form of real estate listing agreement is:

a. the open listing
b. the exclusive agency listing
c. the exclusive authorization and right-to-sell listing
d. the net listing

Answer 12

c. the exclusive authorization and right-to-sell listing

Question 13

A real estate agent owes duties to:

a. the principal
b. the third person
c. the subagent
d. all of these

Answer 13

d. all of these

Question 14

The agent owes the principal the duty of:

a. loyalty
b. compensation
c. extraordinary care and skill
d. dual representation

Answer 14

a. loyalty

Question 15

A real estate agent must make full disclosure of:

a. all material facts known by the agent
b. all the material facts revealed by the owner of the property
c. material facts that are known by the agent or that would be a reasonable inspection of the property
d. all actual or potential property defects, of whatever kind

Answer 15

c. material facts that are known by the agent or that would be a reasonable inspection of the property

Question 16

The principal owes the agent:

a. only the duty of compensation
b. the duty of obedience
c. the duty of care
d. the duties of a fiduciary

Answer 16

c. the duty of care

Question 17

A real estate seller must disclose:

a. only visible property defects
b. structural additions or repairs only if made by the seller
c. material facts concerning the property’s value or desirability
d. only defects that would be revealed by a property inspection

Answer 17

c. material facts concerning the property’s value or desirability

Question 18

Exaggerating a property’s value or desirability:

a. is permissible
b. is expected in the average transaction
c. is justifiable as harmless “puffing”
d. is never permitted

Answer 18

d. is never permitted

Question 19

The Recovery Account is available to:

a. brokers
b. salespeople
c. people victimized by a real estate licensee
d. real estate licensees victimized by their clients

Answer 19

c. people victimized by a real estate licensee

Question 20

An agency relationship may NOT be terminated by:

a. completion of an agreement
b. expiration of the terms of the agreement
c. agreement of the parties
d. someone outside the agency relationship

Answer 20

d. someone outside the agency relationship