Chapter 12 : Law of Agency

Question 1

A warranty of __________ is an agent’s guarantee to third parties that his/her actions fall within the scope of authority given by the _________.

Answer 1

Answer:
A warranty of authority is an agent’s guarantee to third parties that his/her actions fall within the scope of authority given by the principal.

Question 2

When licensees fulfill their disclosure obligations with relevant and meaningful information, they reduce their risk of consumer _______ and ______.

Answer 2

When licensees fulfill their disclosure obligations with relevant and meaningful information, they reduce their risk of consumer complaints and lawsuits.

Question 3

The agency relationship may be terminated by the death, insanity or bankruptcy of either the principal or agent.

(1) True
(2) False

Answer 3

The agency relationship may be terminated by the death, insanity or bankruptcy of either the principal or agent.

Answer : True

Question 4

s a licensee who hosts an open house required to provide a Disclosure of Representation in Trading Services form to a potential buyer who attends the open house with his or her own licensee?

Answer 4

s a licensee who hosts an open house required to provide a Disclosure of Representation in Trading Services form to a potential buyer who attends the open house with his or her own licensee?

Answer : NO

Question 5

When is a licensee required to provide a Disclosure of Risks to Unrepresented Parties form to an unrepresented party?

Answer 5

When the licensee is currently representing a client in a real estate transaction and also provides trading services to an unrepresented party in that same transaction, where a Disclosure of Representation in Trading Services form would have to be provided to that unrepresented party.

Question 6

Is a licensee required to provide a Disclosure of Representation in Trading Services form to all consumers who attend an advertised open house hosted by the licensee?

Answer 6

No, it is not required as long as the licensee does not solicit or receive information from potential buyers at the open house about their motivation, financial qualifications, or needs in respect of real estate.

Question 7

The disclosure of representation in trading services requirement under section 5-10 of the Rules can be fulfilled by using BCREA’s Working with a REALTOR® brochure.

(1) True
(2) False

Answer 7

(2) False.

Section 5-10 can only be fulfilled by using the Council’s Disclosure of Representation in Trading Services form.

Question 8

When is a licensee required to provide a Disclosure of Representation in Trading Services form to a consumer?

Answer 8

Before providing trading services to or on behalf of a party to a trade in real estate; however, there are exceptions if the licensee is only hosting an advertised open house or is only providing factual responses to general questions from the consumer.

Question 9

An agent may disclose the confidential information of a principal with the principal’s express permission.

(1) True
(2) False

Answer 9

An agent may disclose the confidential information of a principal with the principal’s express permission.

Answer : True

Question 10

In order for a licensee to represent a consumer, the consumer must sign the Disclosure of Representation in Trading Services form.

(1) True
(2) False

Answer 10

(2) False.
It is optional for consumers sign the Disclosure of Representation in Trading Services form (and many other Council disclosure forms).

Question 11

A conflict of interest is ___________.

Answer 11

A conflict of interest is a situation in which there is a temptation for the agent to act in his or her own interest or a third party’s interest rather than in the sole interest of the principal.

Question 12

When a licensee provides a Disclosure of Risks to Unrepresented Parties form to an unrepresented party, the licensee must also provide _________ form.

Answer 12

When a licensee provides a Disclosure of Risks to Unrepresented Parties form to an unrepresented party, the licensee must also provide a Disclosure of Representation in Trading Services form.

Question 13

When is a licensee required to provide a Notice to Seller Regarding Assignment Terms form?

Answer 13

Whenever a licensee, providing trading services to or on behalf of a buyer, presents an offer to the seller (or seller’s licensee) that does not contain the assignment terms contained in the Real Estate Services Regulation.

Question 14

What are the three key duties owed by a principal to an agent?

Answer 14

What are the three key duties owed by a principal to an agent?

1. The duty to comply with the agency agreement,
2. The duty to remunerate the agent, and
3. The duty to indemnify the agent.

Question 15

A licensee designated by the brokerage to act as the sole agent of a client is referred to as a _________ ________.

Answer 15

A licensee designated by the brokerage to act as the sole agent of a client is referred to as a designated agent.

Question 16

When is a licensee required to provide a Disclosure of Interest in Trade form?

Answer 16

When a licensee or an associate of a licensee (being provided real estate services by the licensee) is to directly or indirectly acquire or dispose of real estate.

Question 17

What is an agent at common law?

Answer 17

At common law, an agent is any person who contracts to act for or on behalf of another, who in turn, is known as the principal.

Question 18

Can an individual licensee at a brokerage represent a buyer when another licensee at the brokerage is representing a seller in the same transaction?

Answer 18

Yes, provided the brokerage practices designated agency.

Question 19

The type of agency relationship that describes the situation where the licensee represents only one party in a given transaction as a client is a ______ ______ ______.

Answer 19

The type of agency relationship that describes the situation where the licensee represents only one party in a given transaction as a client is a sole agency relationship.

Question 20

Any person of sound mind can apply to be licensed as a real estate agent.

(1) True
(2) False

Answer 20

(2) False. Under the Real Estate Services Act, a real estate licensee must be, among other things, at least 19 years of age.

Question 21

The key section of the Rules that contains the important duties owed by brokerages and licensees to their clients is ________.

Answer 21

The key section of the Rules that contains the important duties owed by brokerages and licensees to their clients is section 3-3.

Question 22

Dual agency has been completely banned in British Columbia.

(1) True
(2) False

Answer 22

(2) False. There is a narrow exception for providing dual agency set out in the Rules (the real estate must be in a remote location, that location must be underserved by licensees, and it must be impracticable for the parties to be provided with trading services by different licensees).

Question 23

What is the duty of full disclosure?

Answer 23

A fiduciary duty of an agent to act in a transparent manner with respect to his or her principal’s affairs.

Question 24

What should a licensee do if a seller instructs him or her not to disclose a material latent defect in the property?

Answer 24

The licensee must tell the principal that the instructions are unlawful and that he or she cannot comply with them. If the principal insists on the agent following the instructions, the agent should discontinue acting for the principal.

Question 25

A licensee may provide trading services to a consumer in a no agency relationship.

(1) True
(2) False

Answer 25

(1) True; however, the types of trading services that may be offered to the consumer (who will be known as an “unrepresented party”) are limited.

Question 26

Compared to the services that a licensee can offer a client, the services that he or she can offer an unrepresented party are:

(1) substantially similar.
(2) non-existent.
(3) greater.
(4) greatly limited.

Answer 26

Answer:

(4) greatly limited.

Question 27

What is a major risk to unrepresented consumers identified in the Disclosure of Risks to Unrepresented Parties form?

Answer 27

That the licensee’s undivided loyalty is to his or her client and that he or she has no loyalty to the unrepresented party.

Question 28

When is a licensee required to provide a Disclosure of Expected Remuneration (Payment) form to a seller?

Answer 28

When a licensee acting for the seller presents an offer to acquire real estate to a seller.

Question 29

An “unrepresented party” in a real estate transaction is

Answer 29

An “unrepresented party” in a real estate transaction is someone who is not a client of a licensee in the real estate transaction.

Question 30

When a principal later consents to being bound by the authorized acts of an agent, this is referred to as _______ ___ _____.

Answer 30

When a principal later consents to being bound by the authorized acts of an agent, this is referred to as agency by ratification.

Question 31

When is a licensee required to provide a Disclosure of Risks Associated with Dual Agency form to a consumer?

Answer 31

Before a licensee provides trading services in the narrow exception permitted for providing dual agency – when the trade in real estate is in a remote location that is under-served by licensees and it is impracticable for the parties to be provided trading services by different licensees.

Question 32

When is a licensee required to make a disclosure of remuneration?

Answer 32

When a licensee receives or anticipates receiving, directly or indirectly, remuneration, other than remuneration paid directly by a client, in connection with the client and/or real estate services provided.

Question 33

All of the fiduciary duties that a licensee owes to his or her client end when the relationship between the two end.

(1) True
(2) False

Answer 33

(2) False. The duty of confidentiality lasts beyond the end of the relationship between the licensee and his or her client.

Question 34

In what circumstances must a listing licensee disclose a material latent defect in a seller’s real estate to a buyer?

Answer 34

When a licensee, providing services to the seller, is aware of an undisclosed material latent defect in the real estate, and no written disclosure of the defect has already been made by the seller.

Question 35

For a licensee to offer dual agency, it must be _______ for the parties to be provided trading services by different licensees, among other things.

Answer 35

For a licensee to offer dual agency, it must be impracticable for the parties to be provided trading services by different licensees, among other things.

Question 36

An agent in a conflict of interest has not necessarily done something wrong.

(1) True
(2) False

Answer 36

(1) True. The presence of a conflict of interest does not automatically mean that the agent has done something wrong. Some conflicts are unavoidable and the law focuses on how the agent handles the conflict.

Question 37

Under section 5-18 of the Rules, if a licensee has two current clients in a conflict of interest with each other, the licensee is permitted to represent both clients if both clients sign an Agreement Regarding Conflict of Interest Between Clients.

(1) True
(2) False

Answer 37

(2) False. A licensee may only continue to represent one client if both clients sign an Agreement Regarding Conflict of Interest Between Clients.