Chapter 04 - Authorized Relationships: Duties & Disclosures (P06)

Question 1

Unwritten law that is derived from court decisions that tend to reflect the attitudes of the community

Answer 1

Common Law

Question 2

Penalty imposed by civil courts that is typically determined by measurable loss

Answer 2

Compensatory Damages

Question 3

Penalty imposed by civil courts that imposes addition damages to punish the party whose actions gave cause for the suit

Answer 3

Punitive Damages

Question 4

Law, enforceable in court, that is based on written statutes that have been enacted by a unit of the government

Answer 4

Statutory Law

Question 5

Law that gives the FREC the ability to levy monetary fines for violation of Commission rules

Answer 5

Administrative Law

Question 6

Law enacted by the Florida legislature that is intended to protect the public by the regulation real estate and appraisal licensees

Answer 6

Statutory Law (F.S. 475)

Question 7

Law that addresses the rights, duties, and related obligations that arise from an individual that is authorized and entrusted to work on behalf of his or her employer and represents the best interests of that employer

Answer 7

Agency Law

Question 8

Agent’s employer in an agency relationship

Answer 8

Principal

Question 9

Agent authorized by the principal to perform a single act defined in the employment contract

Answer 9

Special Agent

Question 10

Agent authorized by power of attorney to act for and represent the principal in all matters, without limitation

Answer 10

Universal Agent

Question 11

Agent with the principal’s authority to act for him or her on a continuing basis, but with authority limited to a specific trade of business

Answer 11

General Agent

Question 12

Party who has been granted authority to act on behalf of another agent and has the same duties to the principal as the agent who was employed by the principal

Answer 12

subagent

Question 13

Agency that exists when a broker is employed under a single agency listing for the sale of a property and is authorized to locate a purchaser on behalf of the owner

Answer 13

The broker is a Special Agent of the owner for the single act of locating a purchaser

Question 14

Relationship that exists when a broker gives permission to a sales associate to transact real estate on the broker’s behalf

Answer 14

Subagent of the broker’s principal and has the same duties to the principal as the broker

Question 15

The Act (legislation) that specifies and defined the relationship between a broker and the broker’s employer and disclosure requirements in residential real estate transactions

Answer 15

Brokerage Relationship Disclosure Act (BRDA)

Question 16

A member of the public who is NOT represented in a single agency relationship

Answer 16

Customer

Question 17

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

Answer 17

Single Agent

Question 18

The party with whom a real estate licensee has entered into a single agent relationship with

Answer 18

Principal

Question 19

A broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction

Answer 19

Transaction Broker

Question 20

Agency relationship created by a broker who represents both the buyer and seller in a transaction as a single agent

Answer 20

(Illegal) Dual Agency

Question 21

Residential sales transaction

Answer 21

• Sale of improved residential property of 4 units or fewer
• Sale of unimproved residential property of 4 units or fewer
• Sale of agricultural properties of ten acres or fewer

Question 22

Purpose of the “Consent to Transition to Transaction Broker” disclosure notice

Answer 22

Transition from Single Agent to Transaction Broker

Question 23

Written disclosure notices required

Answer 23

• Consent to Transition to Transaction Broker
• No Brokerage Relationship (Notice of Non-representation)
• Single Agent

Question 24

The only disclosure notice that must be signed by the principal

Answer 24

Consent to Transition to Transaction Broker

Question 25

Time period required to keep copies of disclosure documents for residential sales transactions that result in a written sales contract

Answer 25

Five years from the date of execution (regardless of whether the transaction closes or not)

Question 26

Three authorized forms of representation

Answer 26

* Transaction Broker * Single Agent * Non-representation (no brokerage relationship)

Question 27

How the relationship between the broker and the potential customer is determined

Answer 27

By agreement between the broker and the buyer or seller

Question 28

Duties that ALL licensees must perform in any type of customer or agency relationship

Answer 28

* Dealing honestly and fairly * Disclosing all known facts that affect value that aren't readily observable * Accounting for all funds

Question 29

Additional duties required for licensees in a transaction broker or single agent relationship

Answer 29

* Using skill, care, and diligence in the transaction * Presenting all offers and counteroffers in a timely manner

Question 30

Types of offers that must be presented

Answer 30

All offers must be presented, whether written or oral, with or without a binder deposit

Question 31

Possible consequence(s) of failure to present an offer to the employer

Answer 31

Concealment or Breach of Trust

Question 32

Condition(s) under which a broker may be authorized to accept an offer on behalf of his or her employer

Answer 32

When the broker has been authorized by power of attorney by the employer of by terms specified in the listing contract

Question 33

The presumed relationship between the broker and the employer when no representation has been established in writing

Answer 33

Transaction Broker

Question 34

Role of a transaction broker

Answer 34

Provide limited representation to a buyer, a seller, or both in a real estate transaction

Question 35

Transaction broker duties

Answer 35

* Dealing honestly and fairly * Disclosing all known facts * Accounting for all funds * Using skill, care, and diligence * Presenting all offers * Providing limited confidentiality * Performing additional agreed upon duties

Question 36

Items a transaction broker may NOT discuss under the duty of limited confidentiality

Answer 36

May not discuss: * Price (other than listing price) * Motivation * Terms * Other confidential information that may harm that party's bargaining position

Question 37

Fiduciary duties

Answer 37

* Confidentiality of harmful information (other than material defects) * Obedience to all legal instructions * Loyalty to act in the principal's best interest * Full Disclosure of facts or rumors

Question 38

Type of brokerage relationship that establishes a fiduciary relationship

Answer 38

Single Agency (Single Agent) - the only brokerage relationship with fiduciary duties

Question 39

Single agent duties

Answer 39

* Honest and fair * Disclose all known facts * Account for all funds * Skill, care, and diligence * Present all offers * Confidentiality * Obedience * Loyalty * Full Disclosure

Question 40

The individual(s) that a single agent may represent in a sales transaction

Answer 40

A seller or a buyer, but never both

Question 41

Single agent's employer

Answer 41

Principal

Question 42

Individual that the sales associate has an agency relationship with

Answer 42

His or her employing broker, not an agent of the principal

Question 43

Individuals who owe a fiduciary relationship to the principal in a transaction

Answer 43

The broker and the sales associate (or broker associate) who is an agent of the broker)

Question 44

Method by which a single agency relationship must be disclosed

Answer 44

Fully described and disclosed in writing and completed before, or at the time of, entering into a listing agreement or showing property

Question 45

Parties acting in their own best interest in an adversarial relationship

Answer 45

Arm's Length Relationship (Also Caveat Emptor, or buyer beware)

Question 46

Parties that typically operate at an arm's length relationship

Answer 46

Buyer and Seller

Question 47

The opposite of an arm's length relationship

Answer 47

Fiduciary relationship, where the broker is acting in the principal's best interest

Question 48

The reason that a broker may need to transition from a single agent to a transaction broker

Answer 48

To avoid an illegal dual agency since a broker cannot be an agent for both parties in a transaction

Question 49

Typical reason for a written No Brokerage Relationship notice

Answer 49

A For-Sale-By-Owner (FSBO)

Question 50

Broker designates one sales associate to represent buyer and another to represent the seller in the same nonresidential transaction. Buyer and seller must have $1M or more, request single agency representation in a nonresidential transaction

Answer 50

Designated Sales Associate

Question 51

Point in time when the broker is entitle to compensation

Answer 51

In Florida, when a sales contract is signed by all parties (find a purchaser state)

Question 52

Employment contract between the broker and the seller (owner)

Answer 52

Listing Contract

Question 53

Broker is entitled to compensation when employed by an owner to find a purchaser

Answer 53

When the broker provides a ready, willing, and able buyer and the contract is signed by all parties

Question 54

The broker is entitled to compensation when employed by an owner to effect a sale

Answer 54

When the transaction closes

Question 55

Method by which sales commissions are determined

Answer 55

By agreement between the broker and the party or parties paying commission

Question 56

Basis of a real estate sales commission

Answer 56

A percentage of the purchase price

Question 57

Amount of compensation if the compensation has not been specified by terms of an employment contract

Answer 57

A customary commission rate based on the type of property and fee the broker would normally charge

Question 58

Criminal penalty that can be charged against a broker for refusing to pay commission or compensation to another broker or sales associate as agreed

Answer 58

Failure to Account, which is a form of fraud

Question 59

The broker who earns the commission when two or more brokers are competing for a sale

Answer 59

Procuring Cause (the one who produced "a continuous and uninterrupted series of events that resulted in the conclusion of a sale")

Question 60

Illegal action of competing brokers who discuss or establish a uniform price or fee for services

Answer 60

Price fixing or Uniform commission rates

Question 61

Condition under which a broker may collect a commission from both parties in a transaction

Answer 61

With knowledge and consent of both parties in the transaction

Question 62

Illegal act of manipulating a transaction so as to profit at the expense of the employer without the knowledge of the employer

Answer 62

Overage, Secret Profit, of Unjust Commission

Question 63

Legislation that prohibits a broker from giving or accepting a fee, kickback, or anything of value in exchange for the referral of real estate services unless the broker performs that service, is licensed to perform the service, and discloses and receives consent from the parties

Answer 63

Real Estate Settlement Procedures Act (RESPA)

Question 64

Florida broker may pay a referral fee to, or share a commission with, a broker licensed or registered by another state or foreign country

Answer 64

Out-of-state broker may accompany customer to Florida, but may NOT participate in the transaction in any manner

Question 65

Florida broker may pay compensation, fees, or share a commission with unlicensed individuals in exchange for soliciting or referring business

Answer 65

under NO condition (this also includes gifts or reimbursement of expenses)