Chapter 8: Real Estate Agency Law

Question 1

The party granting authority to another to act in the party’s behalf is known as the __________ .

Answer 1

principal

Question 2

The duty of loyalty means that the agent must not to do: (name two)

Answer 2

1. make any secret profits from the agency relationship.
2. place the agent’s interests above those of the principal.

Question 3

A person authorized to act for another under a properly executed power of attorney is known as:

Answer 3

an attorney in fact.

Question 4

An agency relationship that is created when a party gives approval to unauthorized actions after the fact is known as an:

Answer 4

agency by ratification.

Question 5

A real estate salesperson owes legal duties to: (name three)

Answer 5

1. third parties.
2. his/her broker.
3. the principal.

Question 6

A person holding a position of trust is known as a __________ .

Answer 6

fiduciary

Question 7

An agency relationship can be terminated by: *(name three)

Answer 7

1. either the principal or agent without agreement of the other.
2. performance.
3. the death of either party.

Question 8

A principal can be held liable for the actions of his/her agent while acting within the scope of authority given in the agency agreement under the principle of:

Answer 8

vicarious liability.

Question 9

John and Mary have accepted an offer to purchase their house. John will be in Asia at the time of the closing and wants to authorize Mary to sign the closing papers for him. John will need to execute __________ authorizing Mary to sign his name to all closing documentation in his absence.

Answer 9

a special power of attorney

Question 10

The parties to an agency relationship are the:

Answer 10

principal and agent.

Question 11

A listing agreement must:

Answer 11

be in writing

Question 12

The fiduciary duties of good faith and obedience are owed to:

Answer 12

The principal

Question 13

Agency relationships can be created by all of the following ways, EXCEPT by:

Answer 13

verification

Question 14

A dual agent must:

Answer 14

disclose the dual agency in writing and obtain the written consent of all parties to the transaction.

Question 15

The highest level of fiduciary duties owed by a real estate agent are owed to:

Answer 15

the principal.

Question 16

An individual given the authority to act for another in all matters, personal or business, is known as a:

Answer 16

general agent.

Question 17

The relationship of a broker to his/her salesperson is:

Answer 17

a principal/agent relationship.

Question 18

A real estate salesperson acting as a buyer’s agent:

Answer 18

is an agent of his/her broker and a subagent to the buyer.

Question 19

A person representing another’s interest with no expectation of compensation is known as a:

Answer 19

gratuitous agent.

Question 20

In California, a verbal agency disclosure is legally adequate when:

Answer 20

A verbal agency disclosure is never acceptable.