Chapter 8: Real Estate Agency Law

Question 1

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

Answer 1

gratuitous agent

A gratuitous agent is one who acts as an agent for another without compensation.

Question 2

The relationship of a broker and their salesperson is

Answer 2

a principal/agent relationship

A real estate broker and all affiliated licensees are engaged in a principal/agent relationship.

Question 3

An agency relationship can be terminated by:

Answer 3

-the death of either party.
-either the principal or agent without agreement of the other.
-performance.
All of the above

All of the options are methods of terminating an agency relationship

Question 4

The parties to an agency relationship are the:

Answer 4

principal and agent.

The parties to an agency relationship are the principal and agent.

Question 5

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

Answer 5

fiduciary

A fiduciary is a person holding a position of trust, with said position imposing a number of legal duties.

Question 6

A principal can be held liable for their agent’s acts while acting within the scope of authority given in the agency agreement. This principle of holding the principal liable is called:

Answer 6

vicarious liability

The action against the principal is based upon the theory of vicarious liability wherein one party can be held liable for the acts of another.

Question 7

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

Answer 7

the principal

Utmost good faith and obedience are two fiduciary duties owed to the principal.

Question 8

In California, a verbal agency disclosure is legally adequate when

Answer 8

A verbal agency disclosure is never acceptable.

California requires a written agency disclosure form to be given and acknowledged in all real estate transactions of one to four dwelling units.

Question 9

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

Answer 9

an attorney in fact.

When signing for another under a properly executed power of attorney, the person will sign the name of the person they represent, and then signs their own name, followed by attorney in fact (Jesus Martinez by Mary Martinez, attorney in fact.)

Question 10

A listing agent becomes a dual agent if the listing agent:

Answer 10

offers part of the commission agreed to in the listing agreement to the buyer’s agent.
presents an offer from a buyer who is represented by another licensee to the seller.
advises the buyer of a serious defect in the seller’s property.
None of the above

Dual agency is created when both buyer and seller or two buyers negotiating for the same property are represented by the same broker.