Fiduciary Duties Flashcards
1
Q
A
2
Q
In Illinois, fiduciary duties are called ___ duties.
A
Statutory
3
Q
What are the 6 fiduciary duties that an agent owes their client?
A
Care
Loyalty
Accounting
Obedience
Disclosure
Confidentiality
4
Q
The duty of ___ rises above any personal interests of the agent.
A
loyalty
5
Q
Illinois has replaced common-law duties with ___ duties
A
statutory
6
Q
Agent is entrusted with confidential information and has ___ responsibilities to the principal
A
Fiduciary
7
Q
The relationship between a real estate licensee and the parties involved in a transaction is not simple. In addition to the parties’ assumptions and expectations, the licensee is subject to a wide range of legal and ethical requirements designed to protect which 3 things?
A
The seller, the buyer, and the transaction
8
Q
In Illinois, agency relationships are governed under ___ law.
A
statutory
9
Q
In Illinois, what defines the rights and duties of the principal and the agent?
A
Law of Agency
10
Q
In Illinois, what are the 3 types of laws that interpret the relationship between real estate licensees and their clients are…
A
Law of agency
Contract law
Real Estate licensing laws
11
Q
According to the Real Estate License Act of 2000, confidential information may NEVER be shared even in a situation where a court of law has issued a warrant for the disclosure of this information. True or false?
A
False
12
Q
In Illinois, the client is the ___ to whom the agent gives advice and counsel
A
principal
13
Q
In Illinois, the ___ is entitled to the factual information and honest dealings as a consumer
A
customer
14
Q
In Illinois, the customer is entitled to the factual information and honest dealings as a consumer, but never receives advice and counsel or confidential information about the ___.
A
principal
15
Q
In Illinois, the customer is entitled to the factual information and honest dealings as a consumer, but never receives advice and counsel or confidential information about the principal. Therefore, the real estate licensee works for the ___
A
client
16
Q
In Illinois, the customer is entitled to the factual information and honest dealings as a consumer, but never receives advice and counsel or confidential information about the principal. Therefore, the real estate licensee cooperates with the ___.
A
customer
17
Q
Who’s primary duty is it to comply with the brokerage agreement and cooperate with the agent?
A
The principal
18
Q
A seller’s agent has the responsibility to provide the seller with accurate CMA. Which fiduciary duty is this an example of?
A
Care
19
Q
The seller’s agent has the responsibility to advise their client on the best pricing options as they relate to market competition. Which fiduciary duty is this an example of?
A
Care
20
Q
The seller’s agent has the responsibility to advise their client on preparing the property to be seen on the market. Which fiduciary duty is this an example of?
A
Care
21
Q
The seller’s agent has the responsibility of showing the property and responding to inquiries promptly. Which fiduciary duty is this an example of?
A
Care
22
Q
The seller’s agent has the responsibility to suggest options during the negotiation process. Which fiduciary duty is this an example of?
A
Care
23
Q
The seller’s agent has the responsibility to follow through on all required inspections and appraisals. Which fiduciary duty is this an example of?
A
Care
24
Q
The seller’s agent has the responsibility of following through on all required paperwork including mandated disclosures. Which fiduciary duty is this an example of?
A
Care
25
The seller's agent has the responsibility of bringing any physical defects to the attention of the seller as they become known. Which fiduciary duty is this an example of?
Care
26
Which of the following is not one of the SELLER's agent's fiduciary duties of Care as defined in Fiduciary Responsibilities?
A) Following through on all required inspections and appraisals
B) Showing the property and responding to inquiries promptly
C) Showing properties that meet the needs of the buyer
D) Bringing any physical defects to the seller's attention as they become known
Showing properties that meet the needs of the buyer
27
The buyer's agent has the responsibility of showing properties that meet the needs of the buyer. Which fiduciary duty is this an example of?
Care
28
The buyer's agent has the responsibility to suggest other properties that might also fit the needs of the buyer. Which fiduciary duty is this an example of?
Care
29
The buyer's agent has the responsibility to provide an accurate CMA so that the buyer can make an informed decision. Which fiduciary duty is this an example of?
Care
30
The buyer's agent has the responsibility to point out potential problems that need to be addressed by inspectors, attorneys, or lenders. Which fiduciary duty is this an example of?
Care
31
The buyer's agent has the responsibility to bring any physical defects and material facts to the buyer's attention as they become known. Which fiduciary duty is this an example of?
Care
32
A real estate licensee owes the principal certain ___ duties.
fiduciary
33
Care, obedience, loyalty, disclosure, accounting, and confidentiality are the ___ duties of the real estate licensee.
fiduciary
34
Which of the following is not one of the BUYER's agent's fiduciary duties of Care as defined in Fiduciary Responsibilities?
A) Pointing out potential problems that may need to be addressed by inspectors, attorneys, or lenders
B) Following through on all required inspections and appraisals of the seller's property
C) Bringing any physical defects to the buyer's attention as they become known
D) Suggesting other properties that might also fit the needs of the buyer
Following through on all required inspections and appraisals of the seller's property
35
The agent has the fiduciary responsibility to follow all lawful and ethical instructions from their client. Which fiduciary duty is this an example of?
Obedience
36
The agent has the fiduciary responsibility to deny any requests that would break Fair Housing Law or REALTOR Code of Ethics, and discuss any of these requests with their sponsoring broker. Which fiduciary duty is this an example of?
Obedience
37
According to the fiduciary duty of Obedience as defined in fiduciary responsibilities, which agent is responsible for following all lawful and ethical instructions from the client?
A) Buyer's
B) Seller's
C) Both
Both
38
According to the fiduciary duty of Obedience as defined in fiduciary responsibilities, which agent is responsible for denying any requests to break Fair Housing Law or REALTOR Code of ethics?
A) Buyer's
B) Seller's
C) Both
Both
39
A client requests that their agent does something that might violate Fair Housing Law. According to the fiduciary duty of Obedience as defined in fiduciary responsibilities, who should the agent discuss this request with?
Sponsoring broker
40
Sarah is a real estate agent in Illinois, who is representing her client, Bob. Bob is licensed as an attorney in Florida, who is looking to purchase an investment property in Chicago. Bob asks Sarah if she can do something for him that she knows would be a violation of Illinois state law. Bob is unaware that his request would be a violation of Illinois state law because it would not violate Florida state law. What should Sarah do?
Deny Bob's request and contact her sponsoring brokerage
41
The agent has the responsibility to always act in the client's best interest as opposed to the agent's or anyone else's best interest. Which fiduciary duty is this an example of?
Loyalty
42
Which agent has the fiduciary duty of loyalty to always act in the client's best interest as opposed to the agent's or anyone else's best interest?
A) Buyer's
B) Seller's
C) Both
Both
43
The agent has the responsibility to never disclose confidential information to another agent just to "make the deal happen." There is no "in between you and me" in the role of fiduciary. Which fiduciary duty is this an example of?
Loyalty
44
Which agent has the responsibility to never disclose confidential information to another agent just to "make the deal happen?"
A) Buyer's
B) Seller's
C) Both
Both
45
An agent may disclose a client's confidential information with another agent in order to make a deal happen without violating any of their Fiduciary responsibilities as an agent, as long as it is agreed upon between both agents that the information will stay "between you and me." True or false?
False
46
An agent has the fiduciary responsibility to ___ all known latent defects and material facts to the buyer's or seller's attention.
Disclose
47
Because of the agent's fiduciary duty of disclosure, which agent must REQUEST all appropriate state and federal disclosure forms from the opposite agent?
A) Buyer's
B) Seller's
C) Both
Buyer's
48
Completing requests of all state and federal forms relating to any defects that have been brought to the client's attention, would fall under which fiduciary responsibility?
Disclosure
49
Because of an agent's fiduciary duty of disclosure, if any defects become known, who is required to complete state and federal forms relating to the disclosure?
The seller
50
Which agent has the fiduciary duty to PROVIDE any state or federal forms rand any other associated material relating to the disclosure of any known defects to the opposite party and the opposite party's agent?
The buyer's agent
51
Which fiduciary duty requires the agent to be responsible for handling all property entrusted to them by their client?
accounting
52
If an agent is acting as the escrow agent, they must make sure the handling of all funds is done in accordance with state law. Which fiduciary duty does this fall under?
accounting
53
The ___ agent has the responsibility to make sure that the handling of funds is done in accordance with state law
escrow
54
Which fiduciary responsibility states that an agent may never disclose their client's reason or motive for buying or selling, if it affects their negotiating position?
Confidentiality
55
A buyer's agent may disclose the maximum amount their client can afford or is willing to pay without breaching confidentiality. True or false?
false
56
If a seller's agent discloses the minimum amount their client will accept, which fiduciary responsibility might be violated?
Confidentiality
57
An agent should not disclose the minimum or maximum amount their client is willing to accept or pay. Which fiduciary responsibility would this fall under?
Confidentiality
58
Which party is obligated to follow fiduciary duties of confidentiality-- the buyer's agent, the seller's agent, or both agents?
Both
59
A buyer's agent may disclose their client's reason for wanting to buy the property if it can affect their position in the negotiation process. True or false?
False
60
Under the fiduciary duty of ___, the agent should know all facts pertinent to the principal's affairs. Such as the physical characteristics of the property being transferred and the type of financing that will be used.
Care
61
If an agent is representing the ___, care and skill would include helping the client arrive at an appropriate listing price, discovering & disclosing facts that affect the client, and properly presenting the contracts that the client signs.
seller
62
If an agent is representing the ___, their duty of care would mean properly marketing the property and helping the client evaluate financing alternatives as well as the terms and conditions of offers to purchase
seller
63
Because of their duty of ___, an agent representing the buyer is expected to help the buyer evaluate offers and counteroffers with their buyer's interest in mind.
care
64
Because of their duty of Care, an agent representing the ___ would be responsible for locating suitable property and evaluating property values.
buyer
65
An agent representing a buyer is expected to evaluate neighborhoods and property conditions. Which fiduciary duty is this an example of?
care
66
The fiduciary duty of ___ obligates the agent to act in good faith at all times by obeying the principal's instructions in accordance with the contract.
obedience
67
Agents may obey instructions from their client even if they are unethical, because of their fiduciary duty to obedience. True or false?
false
68
A seller tells the listing agent "I don't want you to show my house to anyone that is not white." The Fair Housing Law states that it is illegal to refuse to show a property to someone on the basis of race, however agent also has the fiduciary duty of loyalty to always act in the client's best interest as opposed to the agent's or anyone else's best interest. Can the agent honor their client's request?
No
69
The agent's fiduciary duty of obedience never extends to illegal actions such as violating the Fair Housing Law. True or false?
True
70
A seller tells the listing agent "I don't want you to show my house to anyone that is not white." The Fair Housing Law states that it is illegal to refuse to show a property to someone on the basis of race, however agent also has the fiduciary duty of loyalty to always act in the client's best interest as opposed to the agent's or anyone else's best interest. Would it be illegal for the agent to honor their client's request?
Yes
71
A seller tells the listing agent "I don't want you to show my house to anyone that is not white." The Fair Housing Law states that it is illegal to refuse to show a property to someone on the basis of race, however agent also has the fiduciary duty of loyalty to always act in the client's best interest as opposed to the agent's or anyone else's best interest. What should the agent do?
Withdraw from the agency relationship with this client
72
Who's interests should always come first according to the duty of loyalty?
The client / principal
73
Agents should always consider how the result of negotiations for their client will affect the amount of money they will receive in commissions after closing. True or false?
False
74
Agents must perform all services with the goal of promoting who's interests?
The client / principal
75
It is the agent's duty to keep the ___ informed of all facts or information that could affect a transaction.
client / principal
76
The duty of ___ includes informing the client of any relevant information or material facts that the agent either knows or should have known about.
Disclosure
77
The agent is obligated to disclose facts that a reasonable person would feel are important in choosing a course of action, unless those facts are unfavorable to the principal's position. True or false?
False
78
Who is responsible for completing disclosure forms either before or at the time of signing a listing agreement?
The seller
79
An inspector informs an agent that the seller whom they are representing did not disclose the extent of the reported defects after the disclosure form has already been completed. Is the seller's agent obligated to disclose this new information to the buyer's seller?
Yes
80
The seller's agent only needs to disclose any defects to the buyer's agent if the seller completes a disclosure form. True or false?
False
81
The Illinois Association of REALTORS Residential Real Property Disclosure Report requires that ___ of one to four unit residential properties fill out property disclosure forms that reveal any material defects they are made aware of in the real estate for sale.
Sellers
82
The Illinois Association of REALTORS Residential Real Property Disclosure Report shifts the responsibility for full disclosure from the ___ to the ___.
From the agent to the seller
83
In Illinois, completed disclosure forms are given to ___ before an offer is made
Buyers
84
In Illinois, if a disclosure form with any negative disclosures is delivered to a buyer AFTER an offer has been accepted, how long does the buyer have to cancel the contract?
Three business days
85
In Illinois, if a seller learns of a new problem after a contract is signed and up until closing, how must they disclose this to the buyer?
In writing
86
In Illinois, under which circumstances should a real estate licensee help the seller complete a disclosure form?
The real estate licensee should NEVER help the seller complete this form
87
In Illinois, licensees are required to deliver true copies of all executed or initialed documents to the people who signed or initialed them within...
24 hours
88
In Illinois, all funds entrusted to a licensee must be deposited in a special escrow account. Unless the terms of the contract specify a different time frame, when must the licensee deposit these funds following the signing of a sales contract or lease?
By the next business day
89
Unless contract terms specify a different time frame, Illinois licensees have one business day to deposit all funds entrusted to them into a special ___ account following the signing of a sales contract or lease.
Escrow
90
___ is the practice of using escrow funds as the licensee's own money and is illegal.
Conversion
91
In Illinois, it is ___ for a real estate licensee to deposit funds received from a closing into their personal bank account.
Illegal
92
How long should records of escrow account transactions and reconciliations be kept on file in Illinois?
At least five years
93
Client information obtained during the term of a brokerage agreement must be kept ___.
confidential
94
A seller's agent may only disclose their principal's urgency to sell or willingness to accept less than the listing price if...
The principal has authorized disclosure by word or conduct
95
Although an agent may not disclose personal or confidential information about their principal, what information must ALWAYS be disclosed?
Known material facts about the property's physical condition
96
Any fact that, if known, might reasonably be expected to affect the course of events is a(n)...
Material fact
97
Fiduciary/statutory duties are set forth in Article ___ of the Real Estate license Act of 2000
15
98
According to Article 15 of the Real Estate License Act of 2000, the agent must perform in terms of the ___ between a sponsoring broker and the client
Brokerage agreement
99
According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interest of their client by timely presenting all ___ to and from the client, unless the client has waived this duty.
offers
100
According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interest of their client by disclosing all ___ concerning the transaction of which the licensee has actual knowledge, unless that information is confidential information
material facts
101
According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interests of their client by timely accounting for all ___ and ___ received in which the client has, may have, or should have had an interest.
money and property
102
According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interest of their client by obeying specific directions of the client as long as they aren't contrary to applicable ___, ___, or ___
Statutes
Ordinances
Rules
103
According to Article 15 of the Real Estate License Act of 2000, the agent must comply with applicable statues and regulations, including ___ and ___
Fair Housing
Civil Rights
104
Statements of opinion are only permissible as long as they are offered as opinions and without any intention to ___.
deceive
105
Generalized, vague exaggeration of a property's benefits is called ___.
puffing
106
Is "puffing" illegal?
no
107
Even though puffing is not illegal, licenses must ensure that none of their statements can be interpreted as ___.
fraudulent
108
___ is the intentional misrepresentation of a material fact with the intent of causing harm or taking advantage of another person.
fraud
109
Making false statements about a property would be considered as ___
fraud
110
Intentionally concealing or failing to disclose important facts about a property would be considered as ___.
fraud
111
Misrepresentation or omission may result in licensee liability, even if it was not intentional. True or false?
true
112
___ occurs when the licensee should have known that a statement about a material fact was false.
Negligent Misrepresentation
113
If a licensee makes a false statement to a consumer, who would be liable for any damages that resulted afterward?
The licensee
114
While showing a potential buyer an average looking house, the broker described even the most plain features of the home as "beautiful." Even though these statements were obviously the broker's personal opinion, they were said to encourage a positive feeling about the property. What is this an example of?
Puffing
115
A broker neglected to inform their buyer that the lot next door was recently sold to a waste disposal company for use as a toxic dump. This might be an example of what?
Fraudulent misrepresentation
116
The Illinois Real Estate License Act states that a licensee shall NOT be liable to a client for providing false information if the false information was provided to licensee by a customer, unless the licensee knew or should have known that the information was false. True or false?
True
117
The Illinois Real Estate License Act states that licensees shall treat all customers ___, and shall not negligently or knowingly give them ___
Honestly
False Information
