Chapter 11

Question 1

agency
relationship

Answer 1

legal relationship where
one party (the agent) acts on
behalf of another party (the
principal) to perform certain
tasks or make decisions

Question 2

agent

Answer 2

person or entity authorized
to act on behalf of another
party (the principal) to
perform specific tasks or
make decisions

Question 3

customer

Answer 3

party who engages the
services of an agent but does
not have a formal agency
relationship with them

Question 4

disclosure

Answer 4

act of providing relevant
information to parties in a
transaction, including any
material facts or potential
conflicts of interest

Question 5

dual
agency

Answer 5

agency relationship where
the same agent represents
both the buyer and seller in a
real estate transaction, or
both the landlord and tenant.

Question 6

facilitator

Answer 6

neutral party who assists
with a real estate transaction
without representing either
the buyer or seller as an
agent.

Question 7

fiduciary
duties

Answer 7

legal obligations of an
agent to act in the best
interests of the principal,
including duties of loyalty,
obedience, disclosure,
confidentiality, and
accountability

Question 8

general
agency

Answer 8

agency relationship where
the agent is authorized to
perform specific types of
tasks or act within certain
limits on behalf of the
principal

Question 9

implied
agency

Answer 9

agency relationship that is
inferred or implied from the
conduct or actions of the
parties, rather than being
explicitly stated in a written
agreement.

Question 10

law of
agency

Answer 10

body of law governing the
legal relationship between
principals and agents,
including their rights, duties,
and responsibilities.

Question 11

principal

Answer 11

person or entity who
authorizes another party (the
agent) to act on their behalf
and represent their interests.

Question 12

single
agency

Answer 12

agency relationship where
the agent represents only one
party (the principal) in a
transaction, excluding any
representation of other
parties

Question 13

special
agency

Answer 13

agency relationship where
the agent is authorized to
perform a specific task or
transaction on behalf of the
principal

Question 14

subagency

Answer 14

agency relationship where
an agent delegates their
authority to another agent,
who acts on behalf of the
principal but is ultimately
accountable to the original
agent.

Question 15

universal
agency

Answer 15

agency relationship where
the agent is authorized to
perform all legal acts and
make decisions on behalf of
the principal

Question 16

What is a key component of the fiduciary duty of confidentiality that a real estate agent owes to their client?

Answer 16

Keeping the client’s personal and financial information private and not disclosing it without the client’s consent.

Question 17

The agency relationship is defined by

Answer 17

the laws of agency

Question 18

An agent informs a buyer that a clause in a contract is standard language. After explaining the clause, the agent assures the buyer that the clause does not mean anything significant. If something goes wrong with the transaction, the agent could be liable for

Answer 18

practicing law without a license

Question 19

An owner’s agent is showing a buyer an apartment building. The buyer notices water stains on the ceiling, and informs the agent. The agent’s best course of action is to

Answer 19

inform the seller

Question 19

A property seller empowers an agent to market and sell a property on his behalf. This is an example of

Answer 19

special agency

Question 20

In an agency relationship, the principal is required to

Answer 20

provide sufficient information for the agent to complete the agents tasks

Question 21

Which of the following is true of the connection between compensation and the agency relationship?

Answer 21

The relationship is independent of any compensation arrangement

Question 22

One of the agent’s fiduciary duties that continues even after a listing agreement expires is

Answer 22

confidentiality

Question 23

If an agency relationship terminates because one of the parties defaulted, which of the following is true?

Answer 23

The defaulting party may have a financial liability

Question 24

A transaction broker should disclose his or her agency relationship to the transaction principals

Answer 24

upon first substantive contact

Question 25

Agent Bob, who works for Broker Bill, obtains an owner listing to lease a building. Bill’s other agent, Sue, locates a tenant for Bob’s listing. In the absence of any arrangement to the contrary, Broker Bill in this instance is

Answer 25

a dual agent

Question 26

An agent fails to discover flood marks on the walls in the basement of a property. The agent sells the property, and the buyer later sues the agent for failing to mention the problem. In this case, the agent

Answer 26

has an exposure to a charge of negligent misrepresentation

Question 27

Implied agency arises when

Answer 27

a party creates an agency relationship outside of an express agreement

Question 28

The essence of the agency relationship between an agent and a principal can best be described as a relationship of

Answer 28

trust, confidence, and good faith

Question 29

The duties of an agent acting as a facilitator are most similar to those of a

Answer 29

dual agent

Question 30

Which of the following situations has the potential for creating an implied dual agency?

Answer 30

A listing agent’s subagent learns that a potential buyer has made false claims about his financial qualifications and does not inform the listing agent

Question 31

If a potential buyer discloses financial qualifications to a seller’s agent, the agent is required to

Answer 31

disclose the information to the seller

Question 32

An agency relationship may be involuntarily terminated for which of the following reasons?

Answer 32

Death or incapacity of the agent

Question 33

Which of the following is TRUE of a designated agency relationship?

Answer 33

The agency agreement must name all associate brokers who are authorized to act as supervisory brokers.

Question 34

Licensee Gretchen of the Jumbo Mountain Agency takes a listing to sell the home of John Hess. Prospective buyer Lucy Bingham asks licensee Calvin Bentley of the same agency to assist her in purchasing the Hess property. What can the broker of the Jumbo agency do to prevent Gretchen and Calvin from creating unwanted dual agency conflicts for Jumbo?

Answer 34

Appoint Gretchen and Calvin as designated agents of the seller and buyer, respectively.

Question 35

Which of the following is a dual agency situation?

Answer 35

One agent represents both sides in a transaction

Question 36

A tenant representative should disclose his or her agency relationship to the owner’s agent

Answer 36

upon initial contact

Question 37

The level of competence that a principal has the right to expect from an agent is generally that which is

Answer 37

comparable to that of other practitioners in the area

Question 38

Among the fiduciary duties imposed on a real estate agent is the requirement to

Answer 38

present all offers to the principal

Question 39

An agent is operating as a disclosed dual agent on a transaction. In this case, the agent

Answer 39

may not represent one party’s interests to the detriment of the other

Question 40

A principal empowers an agent to conduct the ongoing activities of one of her business enterprises. This is an example of

Answer 40

general agency

Question 41

Among the duties of a broker who is acting as a transaction broker, or facilitator, is

Answer 41

disclosing material facts that affect the value of the property to both parties

Question 42

Owner agents must disclose their agency relationship to tenants or buyers

Answer 42

whenever substantive contact is made