Chapter 08: Agency Contracts & Related Practices Flashcards
A valid listing agreement may be terminated for any of the following reasons, EXCEPT:
A. sale of the property
B. expiration of the individual listing agent’s license
C. agreement of the parties
D. destruction of the premises
B. expiration of the individual listing agent’s license
(The expiration of the individual agent’s license does not terminate the listing because the licensee is not a party to the agreement. The listing agreement is between the client and the firm)
According to North Carolina Real Estate Commission Rules, all of the following are required to be part of a listing agreement, EXCEPT:
A. signature of all parties
B. the licensee’s license number
C. a definite termination date
D. an automatic renewal clause
D. an automatic renewal clause
(Listing agreements and buyer broker agreements may not provide for an automatic extension of the agreement. However, the client and the firm can agree to extend the listing period by mutual agreement and a properly executed addendum)
By entering into an exclusive agency listing agreement with a seller, a real estate brokerage firm:
A. is not entitled to receive a commission if another agency finds a buyer for the property
B. has become the seller’s designated agent
C. has become the exclusive agent of the seller, but is not entitled to receive a commission if the seller finds a buyer for the property
D. has agreed to renegotiate the commission with the seller should another agency offer a lower commission rate
C. has become the exclusive agent of the seller, but is not entitled to receive a commission if the seller finds a buyer for the property
(An exclusive agency agreement differs from an exclusive right to sell agreement because under an exclusive agency agreement the firm is not paid if the seller finds a buyer on their own)
If a seller needs to net $50,000 after the sale of a property, what is the minimum acceptable sales price if the selling expenses include a 7% commission and $1,200 in additional expenses?
A. $53,763.44
B. $54,784
C. $55,053.76
D. $55,633.25
C. $55,053.76
(If the seller will net 93% of the total sales price (100%-7%), then $50,000 + $1,200 = $51,200÷.93 = $55,053.76)
A property owner lists a property for sale with a broker. The owner told the broker during the listing negotiations that he wanted $138,000 for the property, and anything above that amount the broker could keep as commission. The listing with this type of provision is known as:
A. gross listing
B. net listing
C. open listing
D. nonexclusive listing
B. net listing
(A net listing provides for the brokerage commission to be an excess amount over a predetermined net amount to be received by the seller. Net listings are legal, but they are discouraged by the real estate commission due to their potential for taking advantage of a client)
The fact that the NC listing agreement and buyer agency agreement must be in writing is required by:
A. Statute of Frauds
B. Commission Rule
C. Conner Act
D. Contract law
B. Commission Rule
(Employment agreements are not a right or interest in real estate subject to the statute of frauds, but need to be in writing due to commission rules. The listing agreement must be in writing at the time of the listing and the buyer brokerage agreement must be in writing prior to the submission of the buyer’s offer)
A licensee has just discovered a roofing leak in one of his current listings even though the seller has indicated “no representation” on the Residential Property Disclosure Statement. The listing agent does not inform the selling agent of the defect and since the defect, is hidden, the selling agent does not discover or disclose the problem to the buyer. According to the North Carolina Real Estate Commission, who is held responsible for this nondisclosure?
A. the listing agent
B. the listing agent and the buyer’s agent
C. the seller and the listing agent
D. the seller
A. the listing agent
(There is no obligation of a seller to disclose the defect, though the seller has a mandatory duty to complete the Disclosure Statement. Regardless of how the seller completes the form, the licensee has a duty to disclose all material facts so the liability rests with the listing agent. The buyer’s agent has the same disclosure obligation, however, in this question because the defect was hidden it does not appear to be an item for which the selling broker (buyer’s agent) had liability)
Ricardo is showing the buyer a house in the capacity of seller sub-agent. Prior to being shown any house, the buyer indicates to Ricardo that it is essential he have a fence erected around the backyard of any house he purchases. Ricardo finds the perfect house for the buyer, but it does not have a fenced in backyard nor does the listing information sheet indicate whether fences are allowed or not. Ricardo does not inquire of the listing agent anything about a fence. The buyer purchases the house and later learns that he cannot erect a fence. Which of the following statements regarding these facts are true?
A. The listing agent had a duty to disclose in the listing information sheet that fences were not permitted.
B. Ricardo had a duty to determine if fences were permitted even though the listing information sheet did not indicate anything regarding fences.
C. Since Ricardo and the listing agent are acting in the capacity of seller sub-agent, they have no responsibility to determine if fences are permitted.
D. Since the buyer did not have a buyer agent in the transaction, it is solely his responsibility to check into the permissibility of having a fence.
B. Ricardo had a duty to determine if fences were permitted even though the listing information sheet did not indicate anything regarding fences.
(Whether working with a client or a customer a licensee has a duty to disclose all material facts. A potential buyer can make an issue a material fact by asking about or expressing their intentions. Once Ricardo knew the fence was a material issue to the buyer he was bound to take some action)
Which of the following is TRUE about the North Carolina Residential Property Disclosure Act?
A. All agents in the transaction should facilitate the timely delivery of the property disclosure report to the buyer.
B. The property owner should disclose the condition of the listed property or be subject to a 3-day rescission period on any contract formed.
C. All residential sellers are exempt from this act unless a broker is not involved in the transaction.
D. Buyers must receive the completed disclosure report no later than the beginning of the due diligence period.
A. All agents in the transaction should facilitate the timely delivery of the property disclosure report to the buyer.
(The Residential Property Disclosure Report should be provided to buyers in a timely fashion)
The seller wants to net $165,000 after paying the broker fee of 6% of the sales price. What is the minimum acceptable gross sales price to the nearest dollar?
A. $169,850
B. $174,900
C. $175,532
D. $178,745
C. $175,532
(If the seller will net 94% of the sales price (100%-6%), then $165,000÷.94 = $175,531.915 (rounded up to $175,532))
A seller and a buyer are engaged in a dispute over a forfeited earnest money deposit. The seller has no reasonable basis for refusing to allow the broker to return the earnest money to the buyer who cancelled within their due diligence period. According to the North Carolina Real Estate Commission, what should the broker do about the earnest money?
A. wait for a signed release from the buyer
B. try to obtain mutual consent from all parties as to the disposition of the earnest money and if that is not possible then the funds cannot be released and may be paid into the clerk of courts with proper notice
C. inform the buyer that the seller is being unreasonable and explain that the broker must release the earnest money to the seller
D. disperse the money according to the terms of the Offer to Purchase and Contract
B. try to obtain mutual consent from all parties as to the disposition of the earnest money and if that is not possible then the funds cannot be released and may be paid into the clerk of courts with proper notice
Anti-trust laws prohibit all of the following, EXCEPT:
A. property management companies all agreeing to charge standardized management fees
B. three different brokerage firms allocating markets based on the value of homes
C. real estate companies agreeing not to cooperate with a broker because of the fees that broker charges
D. a broker requiring all the agents of his firm to join the local listing service
D. a broker requiring all the agents of his firm to join the local listing service
(Anti-trust laws apply to activities between firms and their interaction. They do not limit the ability of a firm from setting company policies as to fees, rates or geographical areas)
Earnest money deposits, when paid in the form of a personal check given on an Offer to Purchase and Contract, must be deposited in an escrow account:
A. no later than three banking days after acceptance of contract
B. no later than 72 hours after receipt of money
C. no later than three business days after receipt of the money
D. no later than 72 hours after acceptance of contract
A. no later than three banking days after acceptance of contract
(When dealing with money the rules all reference “banking” not business days. Earnest money must be deposited no later than 3 banking days. If a check was provided NCREC allows BIC’s and firms to start counting the 3 days from the acceptance of a contract)
If a seller and a listing firm have a commission dispute prior to the closing, the listing firm:
A. is not allowed to release any earnest money being held until the commission dispute is settled
B. is to hold up the closing until the dispute is settled
C. must allow the transaction to close
D. cannot release any earnest money until there is a signed release between the seller and buyer
C. must allow the transaction to close
(Licensees may not allow their own individual disputes over commissions and fees to adversely affect the transaction. If the dispute cannot be resolved the firm should allow the transaction to close and then bring a lawsuit against the seller for the commission, but the brokerage cannot hold the transaction between the parties hostage)
Which of the following statement(s) is/are true regarding death of a seller?
1. If a seller dies after signing a listing agreement, the listing agreement is terminated.
2. If a seller signs a sales contract and dies before the closing of the property, the sales contract is terminated.
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
A. 1 only
(Death of the party to an agreement ends an employment contract such as a listing or buyer broker agreement. Once there is a valid and enforceable sales contract, death of the parties does not end that agreement)
