Contracts Flashcards
The real estate disclosure law, which came into effect January 1, 1988, refers to the:
Agency Relationship Disclosure Transfer Disclosure Statement Residential Listing Agreement Agent Visual Inspection Disclosure
Agency Relationship
Licensees must disclose to all parties involved who they work for, whether it be for the buyer, the seller, or both.
During an “exclusive right to sell” listing contract, the principal no longer wishes the broker to work for them. The principal may:
- cancel the listing and cannot be held liable for damages
- revoke the listing, however the seller may be held liable for damages
- do nothing. The principal understands that an exclusive right to sell listing contract cannot be broken
- be forced to stay with the broker.
revoke the listing, however the seller may be held liable for damages
An exclusive right to sell listing agreement is an employment contract and like all contracts can be broken. However the broker could sue for the monetary value of his time, advertising, and expertise.
Per the statute of frauds, which of the following must be in writing?
A warehouse lease agreement for the winter months A lease listing for 1 year A 10 month lease for a single family dwelling An agreement by a purchaser of real property to pay a debt secured by a mortgage or deed of trust on the property purchased
An agreement by a purchaser of real property to pay a debt secured by a mortgage or deed of trust on the property purchased
An agreement for real property that is paid for by a mortgage must be in writing.
When a money award for damages does not satisfy the damages on a defaulted contract, a lawsuit for specific performance can be brought by all of the following, except:
the seller who is selling 1000 acres of apple orchard farm land someone possessing power of attorney for a principal who lives in another state the person buying the single family home a broker who has a current license acting on behalf of their principal
a broker who has a current license acting on behalf of their principal
To sue for a specific performance, the individual must be the principal on the contract. In this example the broker is not.
A licensee who is working with their client to sell their real property to a third party is said to be operating under the law of:
agency partnership trustor escrow
An agent representing a principal in a transaction for real property is working under the law of agency.
agency
An agent representing a principal in a transaction for real property is working under the law of agency.
When transferring certain real property, the California Civil Codes states that a transfer disclosure statement is to be delivered by which of the following?
The trustee when part of a trustee sale The transferor Probate court as part of the probate sale A wife to her husband in part of a divorce situation
The transferor
Per the California Civil Code, if you are part of a divorce, a probate sale, or trustee’s sale you are exempt from delivering a transfer disclosure statement.
All of the following are required for a contract to be valid, except:
legal capacity mutual consent must be in writing lawful objective
must be in writing
Certain agreements are only enforceable if they are in writing. Having it in writing is not an essential part of every contract. (It is recommend that you ALWAYS get everything in writing and signed by all parties.)
When does an agent inform others that they are working on behalf of a buyer?
Once escrow is closed Immediately Once escrow opens After the home inspection is complete and contingencies removed
Immediately
An agent must disclose who they are representing as soon as possible to all parties involved.
Seller Johnson listed his home for sale with agent Mike. The listing stated “cash only offers to be considered and possibly accepted”. Agent Mike brought a buyer who was qualified with a VA loan. Seller Johnson rejected the offer from agent Mike. What is agent Mike entitled to in regards to commission?
none of the commission Half of the commission All of the commission ¾ the commission
none of the commission
Since the offer was not the exact terms in the listing contract, the agent is not entitled to a commission.
An individual who is delegated to legally act for another person is known as:
a fiduciary representative an attorney in fact a loan officer in gross a matter in court
an attorney in fact
An attorney in fact is a person who is authorized to perform business-related transactions on behalf of someone else (the principal). In order to become someone’s attorney in fact, a person must have the principal sign a power of attorney document.
A broker who looks for buyers and accepts a deposit from a buyer to purchase a piece of real property without the express written authorization and acknowledgment from the owner to sell the property is:
guilty of not having an enforceable bilateral contract with the seller acting correctly because the real property is a pocket listing acting as an agent for the buyer, not the seller guilty of having an implied contract with the seller
acting as an agent for the buyer, not the seller
The agent is working for a buyer. When a broker is employed by a buyer the broker has a fiduciary duty to the buyer.
Of the following, what is not needed in the formation of a contract?
performance consideration offer acceptance
performance
Parties may enter into a contract, however they may never fulfill (perform) the obligations of the contract.
Concerning an interest in real property, when two parties want to create an enforceable broker/ principal relationship, what is the most important thing to create first?
sign a written agreement regarding the commission amount sign a written employment contract sign a written offer to purchase real property sign a written letter that the broker can promote the property for purposes of selling it
sign a written employment contract
There are several important things to consider when dealing with the sale of real property. However a written enforceable employment contract is the most important and necessary form to sign first in order for these real estate activities to take place.
Broker Steve has been employed by Seller Mike. Broker Steve has been showing the property to many interested home buyers and has been telling everyone that the roof was in great shape and did not have any issues or leaks, when in fact Seller Mike specifically told Broker Steve that the roof was old and had several leaks and would need to be replaced. Buyer Brian soon discovered that after the first rainstorm the roof was in terrible disrepair and leaked badly. Who would Buyer Brian have recourse against?
The seller and the broker for fraud and damages associated with the roof The broker alone for fraud and not telling the truth The seller alone. They should have fixed the roof before selling the house No one since real property in the state of California is sold as is
The seller and the broker for fraud and damages associated with the roof
The buyer would have the grounds to bring a lawsuit against the seller and the broker. When you enter into an agency relationship, the principal is responsible for the agent. However, the seller would also be able to sue the broker for breaching his fiduciary duty and committing fraud.
Of the following, an agency cannot be created by:
necessity written formal agreement subordination agreement ratification
subordination agreement
A subordination agreement prioritizes one debt over another, such as in a first and second mortgage. An agency relationship cannot be created on the basis of lies, deceit, or trickery.
Of the following, which cannot create an agency relationship?
Written contract The agent offering to work for the principal Implied contract Oral contract
The agent offering to work for the principal
For agency to be created, an agreement must be reached between the parties. An agent cannot offer to work for a potential principal and expect to have an agency relationship created without the principal’s acceptance.
Of the following, which would not be legal for a licensee to do?
Show properties only on Wednesday after 3 pm Tell the buyer that the listed condo is the nicest in the valley Refuse to bring a verbal offer to purchase to the attention of their principal Not tell prospective buyers that the foundation has documented structural issues
Not tell prospective buyers that the foundation has documented structural issues
Real estate licensees must always disclose material facts about a property. A defect in the foundation of a property is a material fact.
The law of agency states that real estate agents have legal responsibilities to their principals. Which of the following does not apply?
Treat all parties involved fairly Disclose all material facts about the real property Research what the reserves and expected expenses may be for the maintenance of a business Ensure all documents are signed and received by the proper parties involved
Research what the reserves and expected expenses may be for the maintenance of a business
There is no requirement for a real estate agent to research the reserves and expected expenses when referring to the law of agency.
For a contract of real property to be enforceable, the consideration must be relative and of sufficient value in order to enforce a suit for:
damages lawful objective exchange specific performance
specific performance
The value of the real property must be equal to the amount of money being offered before a court will order someone to specifically perform the terms of a contract.
The Law of Agency consists of the rights, liabilities, and duties between:
the principal and their agent the agent and the third party the principal and the third party whom the agent deals with all of these
all of these
The law of agency is concerned with all of these relationships.
The fiduciary obligation to protect a client’s confidential information should continue:
until the end of escrow 1 year for as long as you are working together after the listing agreement term
after the listing agreement term
The information shared is of a confidential nature and the fiduciary duty continues even after the close of escrow.
According to the Civil Code, when serving as a buyer’s agent, the real estate agent has a fiduciary duty to:
the employing broker the seller the buyer everyone involved in the transaction
the buyer
A real estate agent working as a buyer’s agent has a fiduciary duty to the buyer.
The broker works on behalf of their principal. All of the following defines the relationship between the two parties, except:
a broker/client relationship an agency relationship a fiduciary relationship a power of attorney relationship
a power of attorney relationship
A broker does not have an attorney in fact (power of attorney) relationship as part of their normal duties with their principal.
When a licensee acts exclusively as a buyer’s agent, they can:
present offers to the seller and seller’s agent act as the agent for the seller act as the agent for both buyer and seller present offers to other buyers
present offers to the seller and seller’s agent
When the agent is working exclusively for the buyer, they can present purchase offers to the seller and seller’s agent.
When showing property to potential buyers, what must the listing agent disclose to the third party (buyer)?
Any material facts that the listing agent believes are of importance All known material facts about the real property Only the material facts that the seller informed the listing agent about All material facts about the property including all of the seller’s financial’s
All known material facts about the real property
The agent must always disclose all material facts about the property, however the principal’s personal information should never be disclosed.
Agent Mitchell has a listing to sell a home owned by owner Donald. Which of the following actions by the licensee would result in creating an agency relationship with a potential buyer?
negotiating for the buyer presenting all offers from buyers to the seller talking to buyers about ways to finance the property showing the property to buyers
negotiating for the buyer
When the licensee is negotiating for the buyer, they are looking out for the buyer’s best interest and a fiduciary duty is formed. This action creates an agency relationship.
How can a minor or incompetent person acquire property without requiring court approval?
Obtaining a valid power of attorney to place a lien on real property on behalf of the individual Acquire real property by way of a gift or an inheritance Have a guardian purchase the property for them none of these
Acquire real property by way of a gift or an inheritance
A minor may receive title to real property without court intervention. Sometimes a power of attorney or guardian is needed, but a court would determine that.
When the broker is an agent to a seller, what is owed to the buyer?
To answer all questions regarding the seller's profit with the sale of their home Only a duty to disclose anything that may relate directly to the sales price The duty to be fair and honest The same fiduciary obligation that the seller is given
The duty to be fair and honest
When the licensee is an agent of a seller, they have a fiduciary duty with that seller and must be loyal to them. The licensee also has responsibility to the buyer, such as being fair and honest with the buyer.
Two months ago a seller had accepted an offer from a buyer to purchase their real property. The contract was in writing and signed by both parties. Later, the seller refused to complete the transaction because they felt their property would increase in value in the near future and wanted to maximize their profit from the sale of the real property. From the information we know, how long would the buyer have to pursue legal action against the seller due to the breach of the written contract?
90 days 30 days 3 years 4 years
4 years
The Statute of Limitations for a breach of contract claim is 4 years.
According to the Statute of Frauds, all contracts must be in writing in order to be enforced in the court of law. Of the following choices, the statement that is not an example of this would be:
an agent who is employed to do a 1031 exchange an agent who is employed to sell a business opportunity a lease agreement which is less than one year an opportunity for a broker to sell the goodwill of a business
a lease agreement which is less than one year
Real estate leases that are longer than one year require a written contract.
When a licensee acts as a buyer’s agent on a home listed by their broker, the broker has a fiduciary duty to:
the seller the buyer the parties involved the person who writes the check
the seller
When acting as the buyer’s agent on a home that is listed by their broker, the broker’s fiduciary duty is to the seller.
A licensee receives an offer for a property they have listed. It’s in writing, however it’s below the asking price and they know the seller will never accept it. Of the following, which would not be acceptable for the licensee to do?
Advise the principal that they can always write a counter offer and submit it to the buyers Meet with the principal, write up a counter offer, have the seller sign it, and submit it back to the buyer Change the terms to what the licensee thinks the seller would accept Present the offer and all other offers received
Change the terms to what the licensee thinks the seller would accept
You can never change the terms of what the buyer wrote on the purchase agreement.
Seller Andrew sold a home to Buyer Bill. Buyer Bill was deemed to be legally mentally incompetent. In this type of situation, the contract would be:
unenforceable enforceable void voidable
void
If either person is legally incompetent, then the contract is void.
Which of the following is required to create a legal and valid contract?
Consideration that is unknown or not specific Illegal use Recording and acknowledgement An offer and acceptance
An offer and acceptance
The only proper choice to comply with a valid contract is offer and acceptance.
To be enforceable, a contract for real property must:
include an arbitration clause none of these be in writing be made in the same city or town where the buyer’s live
be in writing
To enforce a contract, it would need to be in writing.
According to the Civil Code, which of the following is a fiduciary duty of the agent working for a buyer?
Advising the buyer on how to vest title on the home being purchased none of these Advising the buyer to use a certain escrow company Acting with the utmost care, integrity, and honesty when working with buyers
Acting with the utmost care, integrity, and honesty when working with buyers
The law of agency states the agent must be honest and loyal to their principal.
Licensee Rob acts as an agent for both the buyer and seller and did not disclose that fact to both parties involved. It was not disclosed because licensee Rob was unaware that both buyer and seller considered him as their agent. Agent Rob is now involved in a:
accidental dual agency single agency assigned agency minor agency
accidental dual agency
Acting for both buyer and seller makes the licensee a dual agent. If this occurs without the licensee being aware of this, then it’s considered an accidental dual agency.
Seller Charles put his property up for sale with agent Samantha for $100,000. The property sold very quickly and seller Charles was impressed how quickly everything occurred. Agent Samantha showed the property to buyer Pip and made buyer Pip aware that the seller was having financial difficulties and with that information, buyer Pip submitted an offer for $90,000 which seller Charles accepted. Which of the following is true about agent Samantha’s actions?
Agent Samantha was ethically wrong in what she did, however the offer was accepted and no harm was done Agent Samantha violated her fiduciary duty to the seller and acted in excess of her authority Nothing is wrong with agent Samantha's actions since she sold the property quickly and the seller was having financial troubles The offer was accepted, therefore agent Samantha did nothing wrong
Agent Samantha violated her fiduciary duty to the seller and acted in excess of her authority
An agent has the duty to always put their clients best interest above all.
Investor Joe owns a duplex priced at $100,000 and has a mortgage debt that is outstanding at $30,000. This property was sold using a 1031 exchange for a four-plex priced at $170,000 with a first mortgage balance of $100,000. For the exchange to be completed, on what profit amount will the owner have to pay property gain taxes on the profit of the first property?
$0 $100,000 $70,000 $30,000
$0
To take advantage of the 1031 exchange rule, a seller must roll over the property gains into the new property to avoid any property gain taxes. In this scenario, the investor did just that.
A manager for real property may be compensated in all the following ways, except:
paid a percentage of gross receipts paid a commission for a new lease paid a commission on major repairs or charges to the lease property paid by receiving discounts on purchases or supplies
paid by receiving discounts on purchases or supplies
It is recommended that property managers not receive discounts or be paid commission from contracts, purchases or other expenditures. The only time this is acceptable is when the discount or the commission paid is fully disclosed to the property owner and is agreed upon in writing.
If a seller declines to fill in their section of the Real Estate Transfer Disclosure Statement, the agent should:
complete the listing agent’s portion of the transfer disclosure statement and submit it to the buyer none of these eliminate the Real Estate Transfer Disclosure Statement, since the property is being sold “as is” complete the seller’s portion on behalf of the seller
complete the listing agent’s portion of the transfer disclosure statement and submit it to the buyer
By law, the seller is required to fill in and complete their portion of the transfer disclosure statement. The seller is expected to comply with the law and fill in their portion as the seller of the property, however if they decide not to complete the form, the agent should fill in their information then submit it to the buyer.
Of the following, which is not needed to create an agency relationship?
fiduciary duty principal to be competent a written agreement to pay consideration an agreement between all parties in place
a written agreement to pay consideration
An agent can represent either a buyer or seller without receiving compensation. An example would be if a buyer asks the agent to help them get pre-approved for a mortgage loan. The agent would not receive compensation for doing so. They would, however, be able to be the agent for the buyer on the purchase of their home.
Otis bought the Browns’ house through the Browns’ listing agent Jacob. In October there was a heavy rainstorm and the roof leaked in several different spots. Otis took everyone involved in the real estate sale to court. During the trial it was announced that the seller Browns told their agent, Jacob, about the leaky roof and that its’ condition was in disrepair. Agent Jacob withheld this information from buyer Otis because Otis “did not ask about the roof”. What is the most likely outcome of the trial?
Buyer Otis recovered damages from agent Jacob Buyer Otis recovered damages from seller Browns Buyer Otis recovered damages from seller Brown who then recovered damages from agent Jacob No one recovered damages from anyone, caveat emptor!
Buyer Otis recovered damages from seller Brown who then recovered damages from agent Jacob
The poor condition of the roof is a material fact and whether or not the buyer asked about it, it must be disclosed. The seller told the agent about the roof. The agent should have disclosed that material fact to the buyer. The buyer, Otis, would get damages from the sellers, who then would get damages from agent Jacob.
Which of the following does not require agency disclosure?
A lease for 10 months The sale of a mobile home through a broker The exchange of a life estate through a realtor The sale of a life estate
A lease for 10 months
The law of agency requires agency disclosure for lease terms greater than one year.
A seller tells their listing agent that the pool is uneven and leaks. The broker does not inform the buyers of this material fact. A few months after the buyer purchases the property, the buyer discovers the pool is leaking and is uneven. The buyer immediately files a lawsuit against the seller and the broker. The seller also files a lawsuit against the broker. What is the most likely outcome?
The seller would not not be liable, however the broker would be responsible The broker would not be liable, however the seller is responsible The buyer would win against the seller and the agent and the seller would win against the agent Buyer beware! The lawsuit is frivolous and nothing happens to anyone
The buyer would win against the seller and the agent and the seller would win against the agent
The broker has a fiduciary duty to disclose all material facts that they were made aware of by the seller. The buyer would sue the seller and agent, while the seller would sue the agent for not disclosing the material facts to the buyer.
Of the following, which would create a dual agency situation?
A listing agent working peacefully with the selling agent The listing agent has five open escrows simultaneously Two brokers have a listing for the same property An agent is representing both the buyer and seller in the same transaction and all parties are aware and agree
An agent is representing both the buyer and seller in the same transaction and all parties are aware and agree
Dual agency occurs when the same agent represents both parties, buyer and seller, in the same transaction.
Mr. and Mrs. Childers bought a property and they were not informed that it contained an oil tank buried in the ground that is used for heating the home. They would have the right to:
demand that the seller to remove the oil tank and replace it with a gas line sue the broker for not disclosing the material fact rescind the contract file a report with the environment protection agency
rescind the contract
The oil tank that is used for heating the home is a material fact and should have been disclosed. The buyers could rescind the contract.
When a false transfer disclosure statement is given to a buyer that omits facts about the property , how long does the buyer have to bring a lawsuit against the seller and the broker?
6 months 1.5 years 2 years 1 year
2 years
A buyer has two years to bring a lawsuit against the seller and the broker for a false disclosure statement that omits material facts.
If a seller refuses to disclose that his property is in a flood zone on the transfer disclosure statement, what should the licensee do to protect themselves?
Decline the listing Take the listing and tell prospective buyers about the flood zone Take the listing to prevent the seller from selling it himself and keep quiet about the flood zone Take the listing and allow his principal to do what they want
Decline the listing
It is illegal not to disclose the material fact that the property is in a flood zone. The agent should not take the listing and the agent should encourage the seller to be truthful with all disclosures in regard to the property .
When is a real estate agent obligated by law and the state regulations to communicate any offers to a principal?
Always Always, unless an offer has been accepted already Only if it’s in writing in writing or verbal. The licensee must present all offers to their principal
Only if it’s in writing
Real estate licensees are obligated by law and state regulations to communicate all written offers to the principal. Verbal offers are not offers.
According to the California Civil Code, real estate relationships can be terminated in many ways. Which of the following is on that list?
termination by lis pendens termination by completion termination by easement termination by conditions
termination by completion
Completion of an escrow by a broker would terminate the agency. The purpose has been completed
In the formation of a contract, which of the following would not make the contract voidable?
illegal purpose a minor who entered into a contract fraud the person entering the contract was incapacitated at the time
illegal purpose
The illegal purpose makes the contract void, the others would make the contract voidable. The main difference between the two is that a void contract cannot be performed under the law, while a voidable contract can still be performed, although the unbound party to the contract can choose to void it before the other party performs.
If a contract is obtained under duress, that contract is:
discharged void unenforceable voidable
voidable
The person who was under duress can void the contract if they choose to.
In order for a seller who owns 1-4 units to be in compliance with the California Civil Code regarding Real Estate Transfer Disclosure Statements, the owner must:
have the broker representing them fill out and sign the form on their behalf hire a professional home inspector to review the property and fill out the disclosure make a reasonable effort to inspect the property, then complete the disclosure have a licensee fill out the report
make a reasonable effort to inspect the property, then complete the disclosure
A seller must always make a reasonable effort to inspect the property and complete the form.
Of the following, which answer describes why it is critically important to disclose who represents whom in a real estate transaction?
because of the doctrine of imputed notice because of the ethical and professional responsibility to do so all of these because of the legal effect of the disclosure
all of these
All of the answers given are valid reasons for the agency disclosure.
A binding contract between two parties can become voidable if:
it is beyond two years of signing the contract it is reworded it is not dated it is legally retracted by one or both parties
it is legally retracted by one or both parties
A contract valid may become voidable when the injured party evokes their right to rescind the contract. The injured party should take action immediately as the court may note a delay in action from the acceptance of the contract to the rescission request. For example, signing a contract while intoxicated may make the agreement voidable.
Which of the following scenarios would entitle a prospective buyer to damages against a real estate broker?
The broker exceeds the authority given to them by the principal The broker executes a contract in the name of the seller because the seller and broker have a proper power of attorney agreement The broker conveys incorrect information based upon what the seller informed them The broker gives the buyer's deposit to the seller, and then weeks later the contract fails through no fault of the agent
The broker exceeds the authority given to them by the principal
A real estate licensee would be liable for damages to the buyer if the licensee acts in excess of the power given to him by the principal (seller).
Of the following, none of the individuals may enter into a valid real estate contract to purchase property, except:
a mentally incompetent person minors emancipated minors a state prisoner
emancipated minors
Emancipated minors have the same rights as adults when it comes to purchasing real property.
If a broker misrepresents his principal’s property, what could possibly happen to the principal?
Damages may be awarded to the buyer The seller may owe damages to the buyer for broker misrepresenting facts Cancellation of the sale by the prospective buyer Any of these
Any of these
The principal is ultimately responsible for their agent’s actions regarding the owner’s property.
Broker Robert is showing buyer Sarah property that he has under contract. Broker Robert is aware of a major defect in the plumbing. Broker Robert should:
inform buyer Sarah of this issue, because it is a material fact about the property say nothing regarding the issue and get the property sold keep quiet. The property is sold “as is” and nothing has to be disclosed disclose to buyer Sarah only if she inquires
inform buyer Sarah of this issue, because it is a material fact about the property
A real estate licensee must disclose all known material facts. A material fact would have influence over a principal’s decision. A major plumbing defect would definitely affect the decision of a reasonable person.
Agency can be terminated in many ways. Of the following, which is not a way to terminate agency?
Fulfillment of the agreement Death of the broker Notice to perform Death of the principal
Notice to perform
Agency relationships can be terminated in many ways, such as by death and fulfillment of the agreement. A notice to perform is not a way to terminate an agency.
Which of the following is the best way to describe a broker’s duty in keeping their principal informed and updated on the transaction?
Standard code of conduct Real estate agents ethical code Continuing education Fiduciary duty
Fiduciary duty
Per the definition of fiduciary duty, the broker must provide loyalty and the utmost care to their principal and must always keep them informed throughout the transaction.
A licensee who is acting as an agent for their principal in the sale of property can do the following without authority from the principal:
enter into a contract to sell the property with a buyer change what is written on the purchase agreement so that it will be accepted by the seller accept a purchase contract from a buyer that is signed and will become binding if the seller accepts it cancel the purchase agreement if the buyer does not agree with additional terms the seller provides
accept a purchase contract from a buyer that is signed and will become binding if the seller accepts it
The agent cannot bind the principal to a contract. The licensee works for the principal, therefore the principal has final say.
In order for a contract to be legal, which of the following would be considered consideration?
A promissory note that has a set amount of interest A promise to apply clay roofing tiles on a building that has yet to be built A promise to clean someone's pool once a week for 10 years all of these
all of these
A promise is sufficient consideration for a contract.
Why is it considered essential that every party to a real estate transaction receive a full and complete disclosure of who is representing whom?
imputed authority ethical and professional responsibility legal effect all of these
all of these
Complete and full disclosure of who is representing whom to all parties involved is critical for all of the listed reasons.
What is the name of a contract between the seller of real property and a licensed real estate agent, in which the seller agrees to pay a commission to the licensee if they produce a “ready, willing and able” buyer for the real property and the licensee complies and does all the due diligence procuring a buyer?
a bilateral executory contract a bilateral executed contract a unilateral executed contract a unilateral executory contract
a bilateral executory contract
Bilateral suggests that both parties have signed and are bound to the contract. Executory means that the contract has not been executed as of yet.
The law of agency states that an agent has imputed authority of their principal when dealing with third parties. What does that imputed power allow?
The agent has a fiduciary duty to the principal It always binds the principal to terms that are negotiated on their behalf It has an included power of attorney It usually binds the principal as long as the authority is granted to the agent
It usually binds the principal as long as the authority is granted to the agent
Imputed authority implies the agent’s apparent authority. If the third party has reasonable expectation that the agent is acting within their authority, the agent’s principal would be bound by the actions of the agent.
A real estate licensee may represent both sides of a real estate transaction, and:
a commission may be paid by each of the principals all of these must be present all principals involved must be aware that they will be represented by the same person the agency relationship has been disclosed and written consent is given by all parties involved
all of these must be present
A licensee may represent both sides in a transaction as long as the proper disclosure is completed which makes both principals aware and consent is given. A commission may be received from the buyer and the seller.
Along with due diligence, care, and skill, a real estate agent must also fully disclose all material facts of the property to the principal. If there is any purposeful concealment of material facts by the agent, this could be regarded as:
fraud an arbitration clause all of these commingling
fraud
Purposeful concealment of material facts is fraud.
A broker who is hired by a property owner to sell their property must reveal all significant and material information to the seller. Of the following, which would be considered significant and/or material information and must be revealed?
The potential buyer is a female The agent has been told by another broker that a higher priced offer is coming within the hour The potential buyer is of single status The new buyer will need financial assistance with closing costs
The agent has been told by another broker that a higher priced offer is coming within the hour
The knowledge that a higher price offer is on its way is a material fact and must be disclosed to the principal as it may influence their decision.
The commission of a real estate listing for a lease property would typically be paid as a percentage of:
a percentage of the down payment for the lease the total rent collected over the period (or time) of the lease, but can be negotiated a percentage of only the first year’s lease payment a $100 flat fee
the total rent collected over the period (or time) of the lease, but can be negotiated
The commission of a leased property is determined by adding the total amount of rent over the whole term of the lease. The commission paid can be any negotiated amount and is always in writing in the lease listing agreement.
Seller Julie listed her vacation home with Agent Ann. When the sale is executed, the commission will be 7% if Agent Ann is able to find a buyer who is ready, willing, and able to purchase the property at the list price, or more. Agent Ann will utilize her best efforts to find a buyer for the listing. What kind of contract must be in place for any of this to happen?
A unilateral executed contract An Encumbered Property Agreement A bilateral executory contract A willing and able buyer agreement
A bilateral executory contract
The goal of a listing agent is to have the seller and a buyer agree to a bilateral executory agreement, with promises made from both the seller (transfers ownership) and the buyer (pays an agreed amount). It’s executory because it is yet to be performed.
The very best way to create an agency relationship is:
by being nice to everyone in writing by receiving a commission by working with the best broker
in writing
An agreement in writing is the very best way to create an agency relationship between an agent and a principal.
Compliance with agency relationship law, which is enacted and part of the civil code, is required in which of the following transactions?
A “for sale by owner” of a single family beach home Transfer of the wife’s interest in a property to the husband in preparation of a divorce all of these A lease for a period lasting for more than one year
A lease for a period lasting for more than one year
Civil code requires real estate licensees to disclose the agency relationship to all parties involved in a transaction. In a lease lasting more than one year, an agent may be involved thus creating an agency relationship.
Tenant Greg verbally agrees to mow the lawn for Owner Amanda. Week after week, Owner Amanda asks Tenant Greg to mow the lawn, yet nothing is done. After repeated attempts from Owner Amanda to have Tenant Greg mow the lawn, Owner Amanda writes up a contract and forces Tenant Greg to sign the contract stating that Owner Amanda will evict Tenant Greg if he does not comply with this action. This stipulation will make the contract:
enforceable illegal voidable void
voidable
Any contract that is signed under threat is voidable.
