EXAM QUESTIONS Flashcards
3 forms of representation in Virginia:
Which one is the 4th not included?
Standard agent, limited service agent, independent contractor.
Commercial agent
Standard Agent is
Has all duties of a standard agent defined in the Virginia Code (statute).
Standard Agent Duties are -
5 part
Duties: Represent client, assist in negotiations, assist in contract, account for money, fiduciary.
Most agents in Virginia are standard agents with all the statutory duties.
Don’t use the word full service agent. Standard agent has all the duties of the code.
Limited Service Agent is
One who is not a standard agent because only a limited number of agency duties provided.
Limited Service Agents must state…
3 part
Must state 1-acting as limited service agent 2) services to be provided and 3- not to be provided.
So it must state standard agent duties that WILL be provided and duties NOT to be provided.
Must advise client of required disclosures such as property disclosure form to provide to buyers
Independent Contractor is
Is a representative for client but is not the client’s agent.
Independent contractors provide…
Provides licensee services as stated in written agreement (e.g. MLS entry only, find a home, etc.)
Independent contractor is not an agent (no agency duties). A non-agency “representative”
Duties are based on the written agreement and licensee laws, not VA agency laws.
Must still be paid by broker. Must have written brokerage agreement.
Must still be honest, account for money and maintain confidentiality.
Dual agency in Virginia is when …
Represent both parties w/ written disclosure. Dual agency is legal in Virginia.
Limited assistance- Dual agent cannot be loyal to either party. Must still disclose and be honest.
Designated agency-
2 different agents from same firm represent the two parties. Broker is dual agent.
Broker, not agent, must make designation. Dual and designated require written consent of both parties.
How does a licensee serve a Unrepresented party (“customer”)-
Licensee may assist unrepresented person who is not his client.
“Ministerial acts” only for customer: Licensee assists customer to fill out contract and state facts.
One cannot provide advice or use discretion or judgment for the unrepresented customer.
Must still be honest and disclose known material adverse facts about property.
But primary responsibility is to your client, not the customer (who you do not represent).
You may show other homes to a customer and sign a buyer agreement for the other homes.
Does Virginia require a brokerage agreement?
What does it include (3 part)?
Virginia now requires a written brokerage agreement for buyers and tenants.
Must include: 1-services to be provided, 2-fees that may be due and 3-expiration date.
Virginia requires a brokerage agreement to be how long?
Expiration date must be in writing and a specific date (e.g. #of days or specific date)
If no expiration date stated, it expires in 90 days (but salesperson is in violation).
Disclosure of brokerage relationship happens at what time?
In what way?
This is where you talk to with an unrepresented party.
One must disclose who you represent upon “first substantive discussion” of specific real estate.
You may disclose orally but should put it in writing at the earliest practical time.
Example: Not required for open house visitor… until they ask specific real estate questions
Commission amount required in agreement must be…
Must be $ amount or % of sales price.
Net listing in Virginia is when?
Is it legal in Virginia?
(illegal)- Where seller “nets” anything over a certain price.
Listing Agreements must be…
Must be in writing. Must provide a copy of signed agreement to client.
Exclusive vs non Exclusive listings means…
Exclusive means you can only have one agent. Non-exclusive allows one to hire other agents
“Exclusive agency”-
If client finds buyer without broker’s help, no commission is due. Broker must be
“procuring cause” (the one who makes the deal happen) to receive the commission.
“Exclusive right” to sell or buy-
If the client does a deal without the broker, broker still gets a commission.
Broker automatically gets a commission if the sale occurs during the listing period.
Open listing-
Not exclusive. Client can hire multiple brokers. Not very common.
Advise client about disclosures-
5 total
Property disclosure (1-4 residential units), Megan's law (sex offender list) And other disclosures (if applicable)- lead-based paint, mold, defective drywall
Advise about Condo/POA docs (if applicable) to buyer that they can…
delivery and buyer’s 3 day right to cancel contract
How brokerage relationship can be terminated:
3 total
Agreement expires, mutual agreement or death of principal.
It is also terminated if client refuses to consent to disclosed dual agency.
No duties owed after termination EXCEPT:
1-account for money, 2-confidentiality
Duties owed to all clients-
3 part
perform per agreement, disclose material facts, assist w/ offers/contracts
Marketing activities duties are owed to
sellers/landlords
not required if home is under contract
Duties to seek property at acceptable price/terms is owed to
buyers/tenants
Independent contractor owes duties to client of…
Independent contractor (not an agent for the client) only needs to perform per agreement.
Your are required to disclose what about the property?
Only required to disclose material facts about the “physical condition” of the
property. This means the home or the property itself.
You are not required to disclose in Virginia:
Anything outside the property boundaries such as highways, railroads, or zoning changes, whether currently existing or planned in the future.
Two ways where licensee is not at fault for statements:
A license may rely on information if obtained from the government
or any Virginia licensed professional (unless it is known to be false)
Licensee may also rely on seller statements (unless the statements are known to be false).
Licensee must request advertising permission for-
4 total
Licensee must have permission regarding when to list a property if advertising allowed on
websites, whether to put a sign on property, if lockbox allowed. Permission can also be revoked anytime.
Who are Licensees-
brokers and salespersons
Principal broker-
person/company licensed to sell/lease properties. Responsible to salespersons.
Associate broker-
person working under a principal broker. May oversee a branch office.
Salesperson-
works under and on behalf of broker.
Listing agreements and buyer agreements belong to…
Listing agreements and buyer agreements are signed by and belong to the broker.
Property manager- Must be real estate licensee if
doing selling/leasing. Handles owner’s property.
What must licensee disclose in writing to buyers?
4part
Disclose most things and disclose in writing (material facts, property defects, brokerage relationship)
Licensees always must disclose material defects even if seller says not to disclose.
Disclosure needed refers to the “physical condition” of the property (land, home, improvements).
Licensee must disclose material adverse facts that are
actually known. There is no duty to discover.
“Physical condition” does not include-
anything outside the boundaries of the property.
When is no disclosure required from licensee to buyer?
3 part
Adjacent property, nearby highways, government land use regulations (buyer beware)
Stigmatized property that does not to be disclosed includes….
(4 part) +1 disclosure
murder, suicide, AIDS, haunted house. Do not disclose. (buyer beware)
Sex offender- Do not disclose. Provide buyer with Megan’s Law disclosure for buyer to check offender list.
All sellers 1-4 units are required to
provide form (even if no broker is involved)
If form not provided until after time of contract signing, the buyer can
terminate the contract by notice w/in 5
days of postmark or w/in 3 days of hand delivery, but before settlement or occupancy. Deposit refunded.
If the form is provided at or before contract signing, then
buyer has no right to terminate.
Who is exempt from property disclosures:
4 part
government sales, foreclosures, divorce sale, or co-owner sells to another co-owner
Licensee required to inform seller to provide the property disclosure to buyer. Only seller fills out the form.
Buyer is responsible to investigate:
2 part
Property condition, plus anything concerning adjacent properties.
Which areas is buyer responsible for investigating?
7 part
Historic district, Chesapeake Bay resource area, flood area, stormwater management area,
dam break area, in solar collection areas, district 15 (mining area).
Buyer must me given form about sex offenders in what form?
Buyer is given Megan’s Law form. Buyer’s responsibility to check sex offender list.
Seller/licensee still responsible to disclose certain items:
5 part
Defective drywall – Must disclose if actually known
Megan’s Law Disclosure Form-
Meth Lab Disclosure – if seller has actual knowledge
Septic System Validity Disclosure- Broker must disclose
Aircraft Noise /Potential Crash Area Disclosure- Owner must disclose
Defective drywall –
Must disclose if actually known
Megan’s Law Disclosure Form-
Disclose buyer/tenant should exercise due diligence regarding any sex
offenders by contacting police department or checking the sex offender website.
Meth Lab Disclosure –
if seller has actual knowledge property was used to make methamphetamine
Septic System Validity Disclosure-
Broker must disclose if owner’s septic system is failing or is operating under a waiver from the VA Board of Health. Must disclose that the waiver is non-transferrable. If not provided by
contract ratification, buyer may cancel w/in 3 days of hand-delivery or 5 days of mailing
Aircraft Noise /Potential Crash Area Disclosure-
Owner must disclose if property is in a military air
installation zone and state the specific noise/accident or crash potential zone based on zoning map.
All advertising must include –
All advertising by licensee must include firm name and licensee name. (No discrimination.)
Print Advertising must include-
licensee/firm name (Broker adverting for all this is the same except no licensee name.)
Online Advertising must include-
3 part
licensee/firm name, PLUS office location (city/state)
The disclosures online must be on main web page/email or have a link to disclosure within 1 click.
Business cards must include-
licensee name, firm name, PLUS contact info (phone or website)
For sale and lease signs must include-
firm name, PLUS office phone number (licensee name suggested)
Web page and emails must include-
If you advertise one’s real estate business, licensee name, firm name and city/state of
primary or branch office (on that page/email or within a click away).
Licensee responsible for website advertising, not
web designer. Listings must be up to date/accurate.
Broker supervision includes -
Advertising must be under supervision of principal or supervising broker
Real Estate Board includes how many members? what kind of members?–
9 members (7 licensed, 2 unlicensed citizens)
Who appoints the Real Estate Board members? and for how long?
appointed by Governor, 4 year terms
Real Estate Board is part of what government division?
A government division of DPOR.
What powers does the Real Estate Board have over licencees?
It cannot impose…
REB Does licensing and can fine, suspend, revoke for DPOR violations. Cannot impose a prison sentence.
REB can administer what 2 things?
Administers VA Fair Housing Act and the VA R.E. Transaction Recovery Fund
Requirements for license -
6 PARTS
1) age 18, 2)High School diploma or equivalent (GED) plus
3) Complete 60 hours pre-license course and license exam
4) Not guilty of fair housing,
5) pass license exam within 12 months prior to applying for license
6) Not convicted of misdemeanor involving moral turpitude, sex offense, drug distribution, physical injury w/in 5 years or any felony (REB can make exceptions)
When is a license required-
if providing brokerage services (selling, leasing, negotiating exchange)
Who is exempt to buy/sell without a license-
company/person selling own home, auctioneer, lawyer do law work only, executor (court sale)
What is the penalty for practicing w/out license –
civil penalty up to $1,000 or amount of compensation received
Active license is when –
Salespersons must be affiliated with (or employed by) a broker.
Principal broker keeps all licenses in .
main office
Any branch office only maintains the what kind of license?
branch license.
Inactive license can/cannot-
Cannot do real estate. But must disclose “owner/licensed agent” if selling own home.
Licensee can reactivate within-
What must they pay and do?
Can reactivate w/in 3 years. Can file activation app $60 and must do any required CE to activate.
Expired license happens when –
If one does not renew by 2 year renewal date. No $ penalty during 30 day grace period.
Reinstate for $100 w/in 1 year. After that, must retake education requirements.
No $ penalty to reinstate license during -
30 day grace period.
To reinstate a license within 1 year you must pay -
After 1 year you must-
Reinstate for $100 w/in 1 year.
After that, must retake education requirements.
If one does real estate unlicensed -
REB can charge $1,000 civil penalty.
REB may also refer to commonwealth attorney as it is a misdemeanor with up to $1,000 penalty.
How to transfer license-
Agent and new broker submit transfer application. Effective immediately. Board sends new license.
License by reciprocity-
if actively licensed 12 of last 36 mos. in another state and meet other requirements.
Referral agent-
cannot list and sell. Can only refer business. Must work under broker. Considered “active”.
Brokerage-
Can be a brokerage company w/ a principal broker or a sole proprietorship individual broker.
Principal Broker-
responsible for supervision of salespersons and associate brokers.
Associate Broker-
One w/ broker license working under principal broker. Can be a supervising broker.
Supervising Broker-
One in charge of an office and supervises those agents. Works under principal broker.
Salesperson-
must work under a broker. Can only be paid by his/her broker.
Business entity license-
Licensees can get this license to work and get paid as an LLC, company, etc.
Team-
can work as business entity for licensed members. Advertisements must include all individual names.
Salespersons can only have one…
Broker can have multiple…
Salespersons can only have one license.
Broker can have multiple licenses.
Unlicensed assistant-
Can do clerical or marketing, etc. Cannot work w/ clients, do open house, trade shows.
Broker Death/Disability or License is Suspended or Revoked-
All licenses must be returned to RE Board
Firm may designate agent to run company for 180 days. Personal rep,executor,family member, employee
Office or salesperson name or address change-
Must notify Board w/in 30 days.
Termination of agent or if agent quits or transfers-
Broker sends license back w/in 10 days to RE Board.
Broker still keeps listings/clients. Broker has the option to allow agent to transfer listings to another broker.
Escrow deposits must be deposited within-
Must deposit w/in business/banking 5 days of contract ratification unless otherwise agreed.
Commingling-
Broker’s personal/business funds mixed with client escrow fund. Stealing is conversion.
Transaction Records-
Broker/Agents must maintain records of transactions for 3 years.
VA RE Transaction Recovery Fund-
Agent loses license if VA pays a claimant for judgment against licensee.
Escrow deposits are held by-
Usually held by buyer’s broker. May be held by broker, settlement company, attorney.
Must be deposited w/in 5 business/banking days of sales contract (or lease) unless agreed otherwise by parties.
Release of escrow-
Only at settlement OR principals agree to release, court order or broker sends 30 day notice.
Broker’s 30 day notice-
Broker may send parties notice payment will be made w/in 30 days absent objection.
If licensee caused escrow violation-
Broker must report violation w/in 3 days to REB (Broker not at fault.)
Board requests for licensee documents-
Must provide w/in 10 days
Board inquiry request-
Must reply w/in 21 days
If licensee convicted or pleaded guilty to misdemeanor involving moral turpitude, sex offense, drug
distribution, physical injury or any felony-
Must report to Board w/in 30 days.
Complaints-
Board may investigate and decide whether to pursue any complaints
Property Owners Association (HOA or Condo) Disclosure to buyer, seller must
Seller to provide disclosure packet to buyer if home is part of an HOA or a condo association.
Seller requests packet in writing to HOA/condo–
Association has 14 days to deliver packet to seller.
How many days does buyer have to cancel after receipt of packet?
Buyer has 3 days to cancel after receipt of packet (even though contract already signed)
Contract Addendum –
an addition to (adds to) the contract
Contract Amendment –
amends (changes) the contract terms
Virginia Landlord Tenant Act (VRLTA) includes:
This Act applies to all residential rentals in Virginia.
Includes single family and multi-family dwelling units. (Single family here means houses, townhouses and
condos.)
Virginia Landlord Tenant Act (VRLTA) excludes
There are a few exceptions to the Act such as hotels, campground, free (no rent) homes, commercial use of property
Maximum security deposit landlord can charge:
Equal to 2 months rent
2 month maximum deposit includes
any upfront insurance or other deposits.
If approved, deposit must be placed in escrow account within
w/in 5 business days of approval.
If not approved, landlord must return deposit within-
(less any damages w/in 20 days.
After lease ends: Return security deposit within
45 days from date tenant moves out.
VA Underground Utility Damage Act:
This Act is to prevent hitting an underground electric or utility line.
Before digging including for sale sign, one must contact Miss Utility so flags can be placed over utilities.
Hand digging is exempt.
If there is a suspected gas leak, licensee should
call 911 or the gas company. (explosion potential)
Virginia Fair Housing prohibits discrimination in all the federal prohibitions:
(7 part)
race, color, religion, national origin, sex, familial status (children under 18), handicap
Virginia Fair Housing added more protected classes in addition to the federal protected classes.
(6 part)
Protected- Elderliness (anyone who is 55+ age),
Senior Community: Allowed for 55+ age persons if 80% of units are 55+ age (or all are 62+).
Protected: source of funds(retired), sexual orientation, gender identity, veteran status
Virginia Fair Housing NOT protected-
3 part
students, smokers, unmarried couples (marital status),
Exemptions to Virginia Fair Housing regulations:
5 part
1) Owner of 1-3 homes without use of a real estate broker
2) Rooms to share (where owner also occupies the home)- may advertise for same sex to share home
3) Religious institutions may require same religion.
4) Private state-owned/supported institutions may require single sex for privacy reasons.
5) Private membership clubs may restrict to members only.
Handicap/Disabled includes
physical or mental disability or “regarded” as having such disability.
hoarding is considered a mental handicap. So is alcoholism
Alcoholism and recovered drug user is mental handicap.NOT current drug user or drug dealing conviction.
VA Fair Housing complaint: Must be filed within
1 year of occurrence.
Maximum penalty for fair housing complaint is
$50,000.
No pets policy:
Landlord can’t reject tenant with assistance dog or monkey or other assistance animal.
Escrow held by-
Broker or settlement company or attorney (not salesperson)
There must always be sufficient funds in escrow for client transactions.
Escrow account requirements-
6 part
Account must be labeled as an Escrow Account. The checks must say Escrow Account
Must be federally insured account
Must be held in Virginia
Must be for a specific property.
Note: If a deal falls through and buyer is entitled to refund, it must be released, not held for a future deal.
Deposit type-
Deposit can be money (or a diamond ring or anything else of value.)
Broker must deposit escrow within
5 business banking days (unless otherwise agreed by the parties).
Release of EMD (earnest money deposit)-
Only to be released for settlement or agreement after termination
The deposit cannot be used for other purposes such as appraisal, inspection costs, etc. even if agreed to.
If deal is terminated-
Parties normally agree and sign a release of escrow deposit.
If no agreement and the broker holds the escrow funds-
3 part
- Wait for a court order to release the funds.
- File an “interpleader” with court. (Give money to court and let the court determine who gets it)
- If broker believes one party is clearly entitled to the funds, broker may send notice that he/she will release the funds to the deserving party if there is no written objection w/in 15 days. Broker is not required to do so but it is an option if it is clear who deserves it.
If no agreement and there is another escrow agent (attorney, title company, etc.), then
wait for court order or interpleader.
