Fiduciary Responsibilities

Question 1

What Exactly Is Agency Disclosure?

Answer 1

“Ayo ya’ll know I’m so and so’s agent, right?” to EVERYONE

Question 2

What is the first substantial contact?

Answer 2

girl this is so broad and undefined, but you have to give either the buyer or seller - whomever you working with- a little “working with real estate agents” brochure when you first meet them.

Question 3

How many days does an agent have if they did not review the wwrea in person?

Answer 3

3 days

Question 4

the firck does “advance consent to dual agency” mean??

Answer 4

This means that the customer is entering into a single agency relationship but agrees to dual agency in the future, if it comes to that. This is usually only sought out by brokers who practice dual agency (otherwise it wouldn’t be very useful).

Question 5

Notice my language there? Agents are not required to present this form for property management or lease transactions.

Answer 5

Working With Real Estate Agents (WWREA) Disclosure

Question 6

Note: Agents must take the time to review this disclosure form with the prospective client. Simply having the form attached to their email signature or emailing it for the customer to read over and sign without explanation is unacceptable.

Answer 6

WWREA

Question 7

Who doesn’t need the WWREA?

Answer 7

tenets and property managers

Question 8

In essence, a broker who wants to sell a property in which they have ownership interest can NOT represent a buyer for the sale of that property unless: (3)

Answer 8

The transaction is for a commercial real estate sale in which the broker has less than a 25% ownership interest,

The buyer receives a written disclosure of the broker’s ownership interest, and

The buyer consents to that broker representing them despite their ownership interest.

Question 9

The second part of the rule talks about a brokerage’s right to list a property owned by one of the brokers affiliated with their firm. The brokerage IS ALLOWED to represent a buyer in a transaction where an affiliate broker owns the property if: (2)

Answer 9

The broker representing the buyer does not have an ownership interest in the property for sale, and

The buyer receives a written disclosure of the affiliated broker’s ownership interest in the property for sale.

Question 10

The rules that DON’T apply when representing a seller in an auction sale include: (3)

Answer 10

(c) Brokers must provide the buyer or seller with the Working With Real Estate Agents Disclosure form at first substantial contact.

(d) Brokers representing one party in a transaction must not try to represent another party without first getting informed, written consent.

(e) Brokers working as the seller’s agent or subagent must inform the buyer that they represent the seller’s interests.

Question 11

Often, these duties are taught (and remembered!) by the acronym OLDCAR:

Answer 11

obedience
loyalty
disclosure
confidentiality (except for material facts)
accounting (no commingling. illegal.)
reasonable skill/care

Question 12

Do you owe sponsors OLDCAR?

Answer 12

no

Question 13

If you’re at all tempted to think that this duty is not all that serious, let me remind you of our discussion on disclosure — that you are obligated to disclose what you know and what you should have known.

Answer 13

so know what you’re doing

Question 14

The North Carolina Residential Property Disclosure Act

Answer 14

These forms ask the seller questions related to material facts about the property they’re selling.

Question 15

North Carolina is a caveat emptor state, which means

Answer 15

The responsibility rests on the buyer to ask the appropriate questions required to uncover material facts about a property.

Question 16

If a seller fails to provide the required disclosure forms by the time that the buyer makes an offer to purchase the home, the buyer can cancel the sales contract without penalty IF….which is when?

Answer 16

they exercise this right before it expires.

The end of the third calendar day after they receive the disclosure statement

The end of the third calendar day after the sales contract is made

The transaction reaches settlement or they occupy the property (if it’s a sale or exchange)

The transaction reaches settlement (if it’s a purchase pursuant to a lease with option to purchase)

Question 17

Which forms do sellers use to disclose material facts about their property to buyers?

Answer 17

Mineral and Oil and Gas Rights Mandatory (MOG) Disclosure

Residential Property and Owners’ Association Disclosure Statement (RPOADS)

Question 18

Seller Mike lives in a different state, but wants to sell his property. He hires Listing Agent Linda and asks that she do a walkthrough of the property and fill out the property disclosure statement based on what she sees. Should Linda comply with Mike’s request?

Answer 18

No. The seller is required to complete the form, not the agent.

Question 19

When it comes to material facts you’ll encounter as a real estate licensee, they’ll tend to fall in one of these general categories: (4)

Answer 19

Facts about the property itself (property condition)

Facts related to the property (outside factors that could impact the property’s value or use)

Facts related to the principal’s ability to complete the transaction

Facts the agent knows are important to a party in the transaction

Question 20

Puffing or puffery is

Answer 20

the use of exaggeration in talking about a property’s qualities.Fun fact about puffing: It’s not actually considered misrepresentation. It’s simply marketing. It presents opinions rather than facts and is usually not considered a legally binding promise.

Question 21

negligent misrepresentation vs omission

Answer 21

Negligent misrepresentation in real estate involves providing false information, while negligent omission is failing to disclose important information.

Question 22

Treble Damages

Answer 22

entitles a person who is injured by one of the unfair or deceptive acts described in this law to treble damages. This means that the agent caught engaging in these acts could be liable for three times the damages.

Question 23

Latent Defects vs. Patent Defects

Answer 23

Latent Defects are hidden problems in a property that the buyer couldn’t have discovered during a normal inspection, while Patent Defects are obvious issues that are easily seen or should have been discovered by the buyer during inspection.

Question 24

License holders are not obligated to disclose the psychological stigma of a property so long as it has no material effect on the condition of the property.. these are called _______ properties.

Answer 24

stigmatized

Question 25

Info You CAN’T Disclose:

Answer 25

Don’t disclose the AIDS/HIV status of any individuals in a real estate transaction.

legally prohibited from disclosing information related to the status of federally protected classes.

Question 26

Megan’s Law is

Answer 26

the 1994 federal law (and later, subsequent state laws) that requires authorities to make information available to the public regarding registered sex offenders. The federal law allows individual states to decide what info will be made available and how it should be disseminated.

Question 27

You _____ be held liable for failing to disclose info on the Sex Offenders Registry.

Answer 27

will not

Question 28

is wrongful or criminal deception intended to result in financial or personal gain.

Answer 28

fraud

Question 29

Conversion means to (accounting definition)

Answer 29

use trust funds for a purpose other than the purpose for which they are held.

Question 31

In addition, trust money must be disbursed in a proper manner without unreasonable delay. Rule 21 NCAC 58A.0116 defines this as

Answer 31

no later than three banking days after the agent receives the money.

Question 32

Under North Carolina law, transaction documents and escrow records must be maintained for ____ years from the time of closing.

Answer 32

3

Question 33

___ you clients when it comes to law, not _____

Answer 33

As a general rule, teach your clients; don’t tell them what to do.
Give clients the tools or information they need, but do NOT provide legal advice or step outside of your scope of authority as their agent.

Question 34

provisional brokers always receive their commission from their

Answer 34

broker-in-charge.

Question 35

If a license holder will be receiving income or compensation from multiple sources, that fact needs to be disclosed to all parties. Why?

Answer 35

Money complicates things, Makayla. Disclosing all incomes ensures everyone knows who is being compensated and what duties they are being compensated for.

Question 36

The federal Fair Housing Act, passed in 1968, prohibited

Answer 36

discrimination in real estate practices
Race

Color

Religion

National origin

Sex (including gender identity and sexual orientation)

Disability

Familial status (parents/guardians with children under 18 years old)

Question 37

Agents have a duty to disclose any commission, referral fees, kickbacks, and other payments from

Answer 37

third parties or customers.

Question 38

When a broker fails to uphold or fulfill their duties to a principal or to a customer, they could face one or more of the following consequences:

Answer 38

Disciplinary action from NCREC: Throughout this chapter you’ve seen references to the license laws that relate closely to an agent’s OLDCAR duties. If an agent violates those duties, the license laws, or rules set by NCREC, they could face a public reprimand or have their license suspended or revoked.

Civil liability: If an agent’s breach of duty harms a principal or a customer, they could sue the agent or their affiliated brokerage firm. The agent would then be liable for the damages caused by their improper actions.

Criminal liability: If an agent violates the license law, it is also a Class 1 misdemeanor. For higher crimes, like fraud or embezzlement, an agent could face fines and/or imprisonment.

Question 39

If an agent’s improper actions are within the scope of their authority, the agent’s _____ could be held liable for the damages caused by the agent’s actions.

Answer 39

client

Question 40

When an agent violates the license law, it is also a _____ misdemeanor

Answer 40

class 1 misdemeanor

Question 41

A couple of things to note about a principal’s duty to compensate the agent: (2)

Answer 41

The agency agreement between the principal and the agent should spell out how compensation, if any, is earned and when it is due.

A listing agreement is NOT a contract to sell the property, but to procure a ready, willing, and able buyer. If the agent produces a buyer who makes a full-price offer without any contingencies or conditions, that agent has earned their commission — regardless of whether or not the seller accepts the offer.

Question 42

what is tort

Answer 42

principal’s/agent’s harmful actions that lead to legal liability

Question 43

seller humayra knows about a major highway construction coming up, but does not tell her broker. is she in the wrong?

Answer 43

As a seller, Client Humayra is not obligated to disclose material facts like the construction of the highway. She has not failed in her duties to her agent. Principals owe their agents the duties of good faith and compensation: Good faith means they need to cooperate with the agent and not do anything to hurt the agent’s performance of duties. This includes things like making the home available to the agent, providing direction, and making themselves and their property available for showings. Compensation means the principal must pay the agent as agreed when the agent earns it. When working with a seller, this usually means that the agent finds a ready, willing, and able buyer.

Question 44

Fernando, a broker, does not tell his buyer-client that the previous owner died by suicide in the home. Evaluate his choice. What consequences will he face?

Answer 44

No criminal, civil, or administrative action may be brought against a licensee if they don’t disclose that the property was the site of natural death, suicide, or homicide. (Ditto if the property has been owned or occupied by someone with HIV.) Fernando has done nothing wrong.

Question 45

A principal has what obligations the third parties in the transaction

Answer 45

honesty and contract execution