Chapter 1 True/False

Question 1

A icensee’s duty to keep customers and clients information confidential survives the real estate transactions.

True
False

Answer 1

True-A licensee shall continue to keep information confidential after the transaction is complete and after the licensee is no longer providing brokerage services to the party.

Question 2

A buyer asks the listing licensee to write an offer on the licensee’s listing. The licensee’s firm has a multiple representation relationship.

True
False

Answer 2

False-The buyer does not have an agency agreement with the listing firm. Because the listing firm represents only the seller in this transaction, the firm does not have a multiple representation relationship.

Question 3

A licensee must disclose all material facts to a customer in a real estate transaction.

True
False

Answer 3

False-A licensee must disclose all material adverse facts to all parties in a transaction, but a licensee only has to disclose material facts to clients. Material adverse facts are all important and negative facts. Material facts are important facts but can be positive.

Question 4

If a firms’ client withdraws consent to multiple representation with designated agency, the firm and its licensees must remain neutral even if the other client in the transaction has chosen multiple representation with designated agency.

True
False

Answer 4

True- If a client withdraws consent to designated agency, the firm and its agents must “go neutral” for the remainder of the transaction. The firm and its agents could discuss amending the agency agreements with the clients to address the mismatched agency choices or could discuss referring a client to a different firm for the transaction.

Question 5

When a licensee lists a business, the licensee must determine if the sale includes real property.

True
False

Answer 5

True-Business sales do not necessarily include the building in which the business is located.

Question 6

A builder who enters into 10 building contracts in one year must have a real estate license.

True
False

Answer 6

False-A person needs a real estate license when selling real estate or a business. When a builder executes a contract to build a property rather than sell it, the contract is for the sale of personal property, not real estate—and the pattern of sales requirement for a real estate license does not apply. If the builder includes the sale of land with the building contracts, the pattern of sales rule applies.

Question 7

If a licensee has to choose between complying with a duty owed to all persons or a duty owed only to a client, the licensee should comply with the duty owed to all persons.

True
False

Answer 7

True-The duties owed to all persons supersede the duties owed to a client if the two are ever in conflict.

Question 8

Licensees provide agency representation to clients and customers in a real estate transactions.

True
False

Answer 8

False-A firm represents a client in a real estate transaction through the agency relationship. A firm does not represent a customer in an agency relationship because a firm and a customer do not have an agency agreement relationship.

Question 9

A buyer hires XYZ as a buyer’s firm. The buyer asks XYZ for information on properties that have recently sold in the neighborhood so the buyer can determine what to offer for a property listed with ABC. An agent of XYZ provides data sheets to the buyer and explains that the list price on the home is too high. The XYZ agent complied with the licensee’s duties under agency law.

True
False

Answer 9

True-The buyer’s agent represents the buyer and should provide data in addition to opinions and advice about the property, including opinions about the list price.

Question 10

A personal representative who creates a pattern of sales does not need a real estate license.

True
False

Answer 10

True-A personal representative may sell more than five properties in one year to settle the estate. Although a pattern of sales is established, the personal representative is not required to have a real estate license.

Question 11

To qualify for the tax benefits of an exchange, a seller could exchange a personal residence for a four-unit apartment building.

True
False

Answer 11

False-The qualify for the tax benefit, a seller must exchange property held for productive use in a trade, a business or as an investment for like property. A property owner’s personal residence would not qualify as an exchange for tax purposes.

Question 12

A buyer’s firm must notify a seller or a listing firm of the firm’s agency relationship with a buyer.

True
False

Answer 12

True-A licensee representing a buyer who is negotiating with the seller or listing firm must notify the seller or listing firm of the buyer agency relationship.

Question 13

A licensee only needs to comply with agency disclosure in residential transactions involving properties with one to four dwelling units.

True
False

Answer 13

False-A licensee must provide agency disclosure in all real estate transactions.

Question 14

A firm cannot limit a salesperson’s practice to only buyer agency.

True
False

Answer 14

False-A firm can limit or define the real estate transactions in which agents can participate. A firm’s agent is a legal extension of the firm.

Question 15

Clients can verbally consent to multiple representation with designated agency but must withdraw consent in writing.

True
False

Answer 15

False-Clients must consent to multiple representation with and without designated agency in writing. A client can withdraw consent at any time and must do so in writing.

Question 16

A person does not need a real estate license to be a property manager.

True
False

Answer 16

True-The act of showing a unit to a prospective tenant does not require a real estate license. A license is required if the property owner wants the property manager to sign the lease on behalf of the property owner or negotiate the terms on behalf of the property owner.

Question 17

A buyer’s licensee for Firm A writes an offer on one of Firm B’s listing. Firm A and Firm B are cooperating firms.

True
False

Answer 17

True-Two firms participating in the same transaction are cooperating firms. Cooperating firms can be the listing firm and a firm acting as a sub agent, or the listing firm and the buyer’s firm.

Question 18

If a licensee gives a disclosure to customers form to a buyer, the buyer must work with that licensee.

True
False

Answer 18

False-A disclosure to customers form does not create a contractual obligation on behalf of the recipient.

Question 19

If a firm is representing multiple parties in a transaction and the clients consent to multiple representation with designated agency, the firm’s licensees can provide their respective clients information and advice that benefits that client at the expense of the other client’s interest.

True
False

Answer 19

True-In multiple representation with designated agency, the firm’s licensees are permitted to negotiate, provide information, opinions and advice on behalf of their clients.

Question 20

A licensee disclosure in writing to a buyer that the seller’s basement has a leak even though the seller asked the licensee not to disclose this. The licensee complied with the licensee’s duties under agency law.

True
False

Answer 20

True-Licensee must disclose to each party all material adverse facts that the licensee knows and that the party does not know or could not discover through reasonably vigilant observation.

Question 21

In a multiple representation relationship without designated agency, the firm and its licensees remain neutral during transaction negotiations.

True
False

Answer 21

True-The firm provides the services agreed upon in the agency agreements entered into with each client but may not place the interests of any client ahead of any other in the negotiations.

Question 22

A firm can only represent multiple parties in a transaction when all parties consent to the representation and the firm provides full written disclosure to all parties in the transaction.

True
False

Answer 22

True-Because of the potential conflicts, multiple representation relationships require written consent and disclosure to the represented parties.

Question 23

An attorney does not need a real estate license to list a house.

True
False

Answer 23

False-listing a house is a brokerage service, which means one must be licenses to list a house. An attorney can draft a contract for a client but cannot provide brokerage services without a real estate license.

Question 24

When a buyer executes an option to purchase with a seller, the buyer must purchase the property.

True
False

Answer 24

False-If a buyer executes and option to purchase with a seller, the buyer does not have to purchase the property, but if the buyer chooses to exercise the option and purchase the property, the seller must sell it to the buyer according to the terms of the option.

Question 25

A buyer must sign a disclosure to customer form in all residential transactions involving properties with one to four dwelling units.

True
False

Answer 25

False-A licensee if required to ask for the buyer’s/seller’s signature on a disclosure to customers form in residential one-to-four family transactions; however the buyer/seller is not required to sign the form.