Chapter 4 - Agency and Its Responsibilities

Question 1

What does estoppel prohibit?

Answer 1

Estoppel prohibits the principal from denying that a person is his or her agent if the principal has misled another to his prejudice into believing that person is the agent.

Question 2

What is ratification?

Answer 2

Ratification is approval (confirmation) of a transaction which has already taken place.

Question 3

If the seller’s agent informs the buyer that the seller will take less than the list price, the agent _________ the fiduciary duty of confidentiality to the seller.

Answer 3

violates the duty

Question 4

The Real Estate Agency Relationship Disclosure Act is also called what? And when did it become law?

Answer 4

Civil Code

1988

Question 5

The three steps of agency disclosure are:

Answer 5

disclose, elect and confirm

Question 6

What must include your real estate license number?

Answer 6

Business cards, stationary, advertising materials, websites, email and regular email.

Question 7

A real estate agency disclosure form must be given to all parties when the transaction involves the sale of a ________ ________.

Answer 7

Residential triplex

Question 8

True/False
The seller’s agent cannot keep silent about any material facts that affect the value of the property (for example, the property is in an earthquake zone or backs up to a freeway or school).

Answer 8

True

Question 9

What happens if an agent does not disclose dual agency to both parties?

Answer 9

• discipline
• not receive commission
• grounds for either party to rescind the contract

Question 10

All real estate listing agreements or contracts should be in ______ and must be in _____ to assure collection of a _________.

Answer 10

Writing and in writing in order to collect a commission.

Question 11

Define open listing.

Answer 11

An open listing is an authorization to sell a property. It may be given to several brokers or the property may be sold by the owner. Who sells it gets the money, including the buyer. There is usually no time limit.

Question 12

Define exclusive agency listing (no commission if owner sells privately).

Answer 12

The exclusive agency listing is a listing providing that only one agent (the listing broker) has the right to be the only person, other than the owner, to sell the property during a specified period and earn commission. Entered into MLS.

Question 13

An exclusive agency listing and exclusive right to sell listing both requires a definite ________________ ______.

Answer 13

Termination date

Question 14

Define exclusive right to sell listing (commission if sold within the listing period).

Answer 14

Most common. Entitles the listing broker named int he agency contract to a commission even if the owner sells the property.

Question 15

True/False
If a seller signs a 90 day exclusive right to sell listing with one broker, cancels it two weeks later, and gives an open listing to another broker who brings in an offer that is accepted, both brokers are entitled to a full commission.

Answer 15

True

Question 16

Define net listing (must be used with other listing – seldom used).

Answer 16

A net listing is an agreement providing that the agent agrees to sell the owner’s property for a set minimum price, any amount over the minim being retained by the agent as commission.

Question 17

Option listing (broker has a reserved right to buy).

Answer 17

Listing broker has the right to purchase the property. A broker with an option listing must disclose to prospective buyers that he/she is acting int he dual role of agent and principal, and present all offers to the seller.

Question 18

What is the MLS?

Answer 18

MLS is an association of real estate brokers that provides a pooling of listings, recent sales, and the sharing of commissions on a specified basis.

Question 19

A “________ ________” is the unethical practice os not giving a new listing to the MLS until the listing broker first tries toe ell that listed property through only the other agents within the company.

Answer 19

Pocket listing

Question 20

A _____ is a licensed broker or salesperson upon whom some of the powers of an agent have been conferred, no thy the principal, but by the agent with the principal’s authorization.

Answer 20

subagent; the subagency can only be created with the principal’s consent

Question 21

Typically, a cooperating broker, like the listing broker, represents the _____ rather than the _______, which is often a big surprise to the buyer.

Answer 21

seller, rather than the buyer

Question 22

Agreements such as between a cooperating buyer and a broker/salesperson must be in ______.

Answer 22

Writing

Question 23

What are “comps?”

Answer 23

Comps are the recent sales prices of similar properties in a neighborhood. Aka the “recent selling prices.”

Question 24

A broker/agent can pay a _______ _____ to an unlicensed individual only for introducing a client to the broker/agent.

Answer 24

finder’s fee.

Question 25

A listing fo ra residential building containing 1-4 dwelling units must include a notice that the commission is _______.

Answer 25

Negotiable.

Question 26

A 1984 California Court of Appeals division in the case of _______ v. _________ greatly extended the liability of brokers engaged in real estate sales.

Answer 26

Easton v. Strassburger

Question 27

The Real Estate _______ _______ __________ (TDS) identifies items of value attached to the structure or land and states whether these items are operational. Sellers of 1-4 unit dwellings MUST provide this to prospective buyers.

Answer 27

Real Estate Transfer Disclosure Statement; also includes any additional disclosures at all regarding the material property. Otherwise, buyer has 2 years to sue.

Question 28

In an “auction without reserve,” the auctioneer sets a minimum bid to begin an auction. If someone offers to buy at ____% more tan the opening bid, this bid must be accepted, as an auctioneer is required to accept bids in an auction without reserve.

Answer 28

10%

Question 29

A broker can keep $_____ of his/her personal funds in a trust account without being guilty of commingling.

Answer 29

$200

Question 30

What is the unlawful misappropriation and use of a client’s funds by a licensee?

Answer 30

conversion

Question 31

How long do you keep the transaction file for?

Answer 31

3 years

Question 32

Most real estate licensees are considered independent contractors under _____ _______ Tax Laws, but according to California Real Estate Law, and the Real Estate Commissioner, they are considered _________ of the broker.

Answer 32

Federal Income Tax Law

employees of the broker

Question 33

Licenses do NOT have to be displayed, but must be kept at the _________ ________’s main office.

Answer 33

employing broker’s

Question 34

Broker-salesperson contracts must be in writing. This contract IS/IS NOT required to be approved by the DRE.

Answer 34

IS NOT

Question 35

When salesperson leaves a broker, they have ___ days to tell DRE.
When salesperson joins a broker, they have ___ days to tell DRE.

Answer 35

10 days and 5 days.

Question 36

General power of attorney –> attorney in fact.

Answer 36

Allows the person so authorized to perform any act the principal could perform. Specific powers conferred must be written, duly acknowledged and recorded with the county recorder’s office. Death of either revokes the power.

Question 37

Define special power of attorney

Answer 37

Only a specific act. The attorney in fact, under a special power of attorney has the authorization to perform only a specific act. Such as a listing agreement for the listing agent.

Question 38

What is a tort?

Answer 38

A tort is any civil injury or wrong committed upon a person or that person’s property.

Question 39

“Puffing” is a statement of ________ that exaggerates a property’s benefits. It would only be a misrepresentation if a reasonable person would consider it a statement of fact.

Answer 39

opinion

Question 40

_________ Misrepresentations are false statements that are not known to be false at the time they are made.

Answer 40

Innocent Misrepresentations

Question 41

_________ Misrepresentations are false statements believed to be true, but made without reasonable grounds for that belief.

Answer 41

Negligent Misrepresentations

Question 42

________ Misrepresentations are statements made at a time when the broker knows the statement to be false, or statements in which the broker fails to disclose (conceals) material facts.

Answer 42

Fraudulent Misrepresentations

Question 43

True or False?

An unlicensed person may make a secret profit on the purchase of real property, but an agent may not.

Answer 43

True.

Question 44

The prosecution of an unlicensed salesperson acting as a licensed salesperson is handled by the ____ ____’s office.

Answer 44

D.A.’s office

Question 45

By law, sellers, brokers and landlords have no liability for failure to disclose a prior occupant’s death or its cause after ______ years.

Answer 45

three years

Question 46

Termination of agency relationship: operation of law.

Answer 46

Expiration of the agency (listing agreement)
Destruction of Property
Death or Incapacity Broker or Seller (listing only)

Question 47

Termination: Acts of the seller or broker.

Answer 47

Agreement by both broker and seller.
Renouncement of listing by the broker. (Broker refuse to fulfill listing agreement, can be subject to breach of contract.)
Revocation of listing by the seller (seller refusing to sell, but still owes commission).
Close of escrow.

Question 48

A typical agency would deb terminated by death of the principal, destruction of the subject property, or mutual con set of the principal and his/her agent. It would not be terminated by _______.

Answer 48

estoppel

Question 49

A “________ _______” is the dollar a broker receives after all salespersons’ commissions have been paid.

Answer 49

company dollar

Question 50

What is one-stop shopping?

Answer 50

One-stop shopping means the brokerage is involved in multiple facets of property transactions, including escrow and title services, property management and mortgage brokerage.