Chapter 3 (Textbook) Quiz: Agency

Question 1

A real estate agency exists between the:

a. seller and buyer
b. broker and principal
c. borrower and lender
d. landlord and tenant

Answer 1

b. broker and principal

Question 2

A fiduciary relationship is best described as:

a. ethics and honesty
b. ethics and trust
c. trust and confidence
d. loyalty and confidentiality

Answer 2

d. loyalty and confidentiality

Question 3

A real estate salesperson is a(n):

a. direct agent
b. agent by virtue of his or her contract with a broker
c. employee of the seller
d. employee of the buyer

Answer 3

b. agent by virtue of his or her contract with a broker

Question 4

The use of cooperating agents is illegal under California law.

a. true
b. false

Answer 4

b. false

Question 5

A real estate agency can be created by all of the following, EXCEPT:

a. ratification
b. agreement
c. estoppel
d. doctrine of realty determination

Answer 5

d. doctrine of realty determination

Question 6

All of the following are methods of terminating a real estate agency, except for:

a. estoppel
b. mutual consent
c. completion of agency
d. expiration of time

Answer 6

a. estoppel

Question 7

A home seller must inform his or her real estate agent when the seller is aware of:

a. termite infestation discovered earlier
b. a leaky roof
c. an inoperative fireplace
d. all of the above

Answer 7

d. all of the above

Question 8

All of the following are true, EXCEPT:

a. real estate salespersons and brokers are required to be licensed
b. a real estate broker, not the salesperson, is appointed by the principal to be the agent
c. dual agency does not require written confirmation
from the buyer and seller
d. dual agency means the real estate broker represents both the buyer and seller

Answer 8

c. dual agency does not require written confirmation

from the buyer and seller

Question 9

A listing agent owes the buyer:

a. the duty to see that the property is sold at the lowest possible price
b. a disclosure of known defects
c. a fiduciary relationship
d. the right to know the seller’s lowest acceptance price

Answer 9

b. a disclosure of known defects

Question 10

An independent contractor would expect which of the following from her broker?

a. a vacation schedule
b. paid medical insurance
c. a regular schedule for work
d. to be responsible for her own withholding taxes

Answer 10

d. to be responsible for her own withholding taxes

Question 11

If a real estate salesperson decides to work for a new broker, the existing listings obtained by the salesperson belong to whom?

a. the salesperson
b. the former broker
c. the new broker
d. the seller, who can automatically cancel the listing

Answer 11

b. the former broker

Question 12

Unless instructed to hold the check uncashed, a buyer’s deposit must be placed with the appropriated party or account within how many business days?

a. three
b. five
c. seven
d. nine

Answer 12

a. three

Question 13

Ms. Lightdeer showed a property to Mr. and Mrs. Chu without having an agency agreement with the owner. Later, the owner accepted the offer to purchase, which was submitted by Ms. Lightdeer on behalf of Mr. and Mrs. Chu. The owner consented to Ms. Lightdeer’s unauthorized acts. Under these circumstances, an agency could be created by:

a. fiduciary
b. estoppel
c. ratification
d. assumption

Answer 13

c. ratification

Question 14

The maximum amount per individual claim against the Bureau of Real Estate Recovery Fund is:

a. $10,000
b. $20,000
c. $50,000
d. $100,000

Answer 14

c. $50,000

Question 15

A real estate broker who has been appointed in writing to be a property owner’s agent to find a buyer under a specified set of terms is best described as a:

a. general, ostensible agent
b. general, actual agent
c. special, actual agent
d. special, ostensible agent

Answer 15

c. special, actual agent

actual: directly appointed by a principal
ostensible: not directly authorized to act on behalf of principal

Question 16

A real estate agent mistakenly states that the portable dishwasher is included in the sales price of the home. This agent is guilty of:

a. false promise
b. misrepresentation
c. divided agency
d. secret profit

Answer 16

b. misrepresentation

Question 17

When a real estate agent mixes his or her personal funds with that of a principal, the agent is guilty of:

a. commingling
b. conversion
c. trust funding
d. embezzlement

Answer 17

a. commingling

Question 18

In today’s real estate market, when a real estate agent uses agents from other real estate companies to help find a buyer, the other agents are called:

a. principals
b. listing agents
c. cooperating agents
d. finder agents

Answer 18

c. cooperating agents

Question 19

A salesperson has signed a listing agreement that has gone under contract. The buyer’s inspection report, which was sent to the broker and salesperson, shows a number of items that the seller’s disclosure did not mention. The buyer terminates the contract. In this case all of the following are true except:

a. the buyer’s earnest money will be returned in full
b. the salesperson is due a commission
c. the seller, broker, and salesperson will now have to disclose the items the buyer found
d. the broker can restart efforts to sell the home

Answer 19

b. the salesperson is due a commission

Question 20

All of the following are true, EXCEPT:

a. all real estate brokers are required to establish reasonable procedures to supervise the activities of salespersons transacting business under the name of the broker
b. “as is” home sales are allowed in California if proper disclosures are given
c. by law, real estate salespersons are required to have a written contract with their employing broker
d. a majority of real estate complaints against agents are valid enough to warrant disciplinary action by the real estate commissioner.

Answer 20

d. a majority of real estate complaints against agents are valid enough to warrant disciplinary action by the real estate commissioner.

Question 21

A real estate broker is allowed to keep $200 of his or her money in a trust fund to handle bank service charges.

a. $200
b. $300
c. $400
d. $500

Answer 21

a. $200

Question 22

The top producing salesperson Jane, at ABC Realty has become a broker and decided to open her own office. She currently has 10 listings with ABC Realty. What will happen to those listings when Jane opens her new office?

a. Jane will have to leave the listings but will be paid a full commission when they close.
b. Jane may take her listings since they belong to her.
c. Jane will have to leave the listings with ABC since they belong to the brokerage.
d. Jane is required to pay ABC Realty a fee to take the listings to her new firm.

Answer 22

c. Jane will have to leave the listings with ABC since they belong to the brokerage.

Question 23

Which of the following might be considered an example of secret profit and a violation of the law?

a. Seller sells for 50 percent more than he or she paid for the property
b. Buyer believes the property is worth more than the asking price
c. Broker receives a referral fee from a title company without telling the principals in the sales transaction
d. Broker earns a commission after showing the property to only one buyer, who then purchases within one week

Answer 23

c. Broker receives a referral fee from a title company without telling the principals in the sales transaction

Question 24

Under a buyer’s agency, the fiduciary relationship is between the broker and the:

a. seller
b. buyer’s broker
c. buyer
d. seller and buyer

Answer 24

c. buyer

Question 25

When a California real estate broker sells a property in another state where the California agent is not licensed, the use of a licensed broker in the other state does not allow the California broker to share in the commission:

a. true
b. false

Answer 25

b. false