Ky Real Estate Test Ch 3 part 1 Flashcards
1
Q
D: Blockbusting
A
A term used in fair housing laws to indicate improper behavior by someone, who will benefit financially from the purchase of real estate, telling the current owner that property values are going down because of “certain” people moving into the neighborhood.
Those “certain” people belong to one of the protected classes: race, sex, religion, color, national origin, handicap, or familial status, and, in certain areas, sexual orientation.
2
Q
D: Closing
A
The time when the real estate transaction is consummated and title to the real estate passes from the seller to the buyer.
This is also referred to as the settlement.
3
Q
D: Closing Statement
A
The document prepared for a real estate closing that includes all of the dollar amounts related to the closing.
Amounts on the statement include the purchase price, earnest money deposit, mortgage costs to be paid by the buyer, prorations for taxes and other assessments, the seller’s current mortgage balance, the amount owed by the buyer at closing, and the net amount to be received by the seller.
This statement may also be referred to as the settlement statement, closing disclosure, TRID or HUD-1. Real estate brokers are required to furnish a debit and credit type closing statement if the closing agent does not furnish one to the buyer and seller.
4
Q
D: Commercial Real Estate/Property
A
This phrase is commonly used to refer to non-residential income producing properties. For licensee purposes, commercial property is defined by the license law as property other than a single-family residential lot or dwelling or multi-family property containing less than four units.
5
Q
D: Credit
A
In a real estate transaction, the dollar amount shown on the closing statement that have either been paid by one of the parties or that is due to one of them.
The purchase price is a credit to the seller because the seller is receiving that amount, while the earnest money deposit is a credit to the buyer because the buyer has paid that amount when entering into the sales contract.
Credits are amounts received at the closing, while debits are amount that are paid at the closing.
Credits are also given for items that are not yet due and owing but will be paid later by a party or have been prepaid, such as property taxes.
6
Q
D: Debit
A
In a real estate transaction, a dollar amount on the closing statement that shows money is owed at closing.
The purchase price will be a debit to the purchaser because the money is owed at closing, while the seller’s existing mortgage payoff will be shown as a debit to the seller because the seller must pay it at closing.
Debits are paid at the closing while credits are amounts received at the closing.
Debits are also given for items that are not yet due and owing but will be paid later by a party or have been prepaid, such as property taxes.
7
Q
D: Deed of Conveyance
A
The deed used to convey title from the grantor to the grantee.
May also be referred to simply as the “Deed,” “Warranty Deed.” or “Special Warranty Deed.”
8
Q
D: Fair Housing
A
The body of local, state, and federal law governing the right of all people to lease and purchase dwelling units without regard to their race, color, national origin, religion (sometimes referred to as creed), sex, familial status, and handicap (sometime referred to as disability).
Certain areas of Kentucky have added sexual orientation as a protected class.
9
Q
D: Fiduciary
A
A relationship of trust where one person, known as the fiduciary, protects the best interests of another person, known as the principal.
The fiduciary is sometimes known as an agent.
A fiduciary relationship is the highest trust relationship known to the law.
10
Q
D: Fiduciary Duties
A
Responsibilities that arise in a fiduciary relationship of trust between the agent and the principal.
Duties owed by the agent to the principal include loyalty, confidentiality, accounting, care and diligence, accounting, obedience to lawful instructions, and full disclosure.
11
Q
D: Fraud
A
Intentionally misrepresenting facts for the purpose of gaining an advantage over another person. In the license law, it is defined as making a material misrepresentation that is known to be false, or made recklessly; made to induce an act; the act is committed because of the misrepresented information, and the act causes damage.
12
Q
D: Gross Negligence
A
The term used most often in criminal cases, personal injury cases, and accident cases to indicate that someone acted recklessly and with indifference to the safety of others.
Although it has not been defined in Kentucky case law relative to real estate licensees, a reading of the cases involving licensees, indicate an agent who fails to use common sense and reasonable skill that other licensees would use in similar situations is grossly negligent.
13
Q
D: Guaranteed Sales Plan
A
An agreement between the broker and seller in which the broker guarantees the seller that either the broker will sell the property during the listing period or purchase it at the end of the listing.
The license law regulates these plans.
14
Q
D: Improper Conduct
A
Actions by licensees that the Kentucky Real Estate Commission considers inappropriate and that can lead to discipline against the licensee by the KREC.
15
Q
D: Material Fact
A
An important fact that would influence a person’s opinion and actions relative to entering into a contract and purchasing or selling real property.
16
Q
D: Net Listing
A
The illegal practice of agreeing that the real estate commission will be based not on a set amount or percentage, but will be all money received for the sale after the seller receives a set amount.
For example, if the seller wants $100,000 and the property sells for $125,000, the commission would be $25,000. If it sells for $150,000, the commission would be $50,000.
17
Q
D: Real Estate Settlement Procedures Act (RESPA)
A
A federal law that became effective in 1974 after Congress found that significant reforms were needed in the real estate settlement process. RESPA applies to federally-related one to four-family residential transactions. The purpose of the act is to:
(1) require more effective advance disclosure to buyers and sellers of settlement costs;
(2) eliminate kickbacks or referral fees in the delivery of settlement services;
(3) reduce the amount of money home buyers are required to place in escrow accounts for real estate taxes and property insurance;
(4) reform and modernize local record keeping of land title information.
18
Q
D: Reasonable
A
Used in legal theory to mean what is fair, proper, appropriate, and suitable under the circumstances.
Juries, judges or arbitrators hear the facts of a case, then determine what was reasonable in a particular situation.
19
Q
D: Seller Concessions
A
Money paid by the seller at the time of closing either to the buyer directly or paid on behalf of the buyer.
Closing costs, prepaid items, and repairs are typical concessions.
Under RESPA, concessions must be shown on the settlement statement.
20
Q
D: Seller’s Net
A
The amount of money the seller will receive from the sale of the property after all expenses have been paid.
21
Q
D: Settlement
A
The point in time when the real estate transaction is consummated, and title to the real estate passes from the seller to the buyer.
This is also referred to as the closing.
22
Q
D: Settlement Statement
A
The document prepared for a real estate closing that includes all of the dollar amounts related to the closing.
Amounts on the statement include the purchase price, earnest money deposit, mortgage costs to be paid by the buyer, prorations for taxes and other assessments, the seller’s current mortgage balance, the amount owed by the buyer at closing, and the net amount to be received by the seller.
This statement may also be referred to as the closing statement, closing disclosure, TRID or HUD-1. Real estate brokers are required to furnish a debit and credit type closing statement if the closing agent does not furnish one to the buyer and seller.
23
Q
D: Standard of Care
A
The degree of care that a reasonably prudent real estate licensee in the same or similar circumstances would follow.
For example, if a reasonably prudent real estate licensee would recommend a home inspection for a buyer, the standard of care is to recommend a home inspection.
A licensee failing to meet the standard of care would be considered negligent.
24
Q
D: Standard of Practice
A
This phrase may be used to describe the acceptable way to do business in any profession, and it may be used to refer to the National Association of REALTORS® Code of Ethics. Each industry has acceptable methods for doing business that may not be written, but are acceptable because the practices are reasonable.
The Standards of Practice in the Code of Ethics are interpretations of the Articles of the Code that NAR has determined to be acceptable behavior for REALTORS®.
25
D: Steering
The illegal practice of directing buyers to a certain neighborhood or area, because the agent thinks that is where they should live.
For example, showing buyers a house near a catholic church, because the buyers are Catholic, or showing buyers a house near a school because they have children.
26
D: Substantial Misrepresentation
A false statement that leads a person to a mistaken belief or understanding of an important fact.
The seller, representing to a buyer that the basement does not leak, when, in fact, it leaks every time it rains, would be making a substantial misrepresentation.
A buyer that represents to the seller that he can pay cash for the property, when, in fact, he has no money, would be making a substantial misrepresentation.
27
D: Zero Call Law
There is a federal and state law that prohibits unsolicited calls by telemarketers to numbers that are registered on the “zero call” or “no call” list.
Licensees are required to check the list before making a telephone call to those numbers.
28
What does Section 2 of 201 KAR 11 states
That it is improper for a licensee to accept or agree to accept a referral fee from any person in return for directing a client or customer to that person for goods, services, insurance, or financing unless written notice is given by the seller and buyer or lessor or lessee on the purchase or lease contract.
This provision does not affect the common practice of paying referral fees between licensed brokers that we have already discussed.
29
What are the Fiduciary duties?
1. loyalty
2. Obedience to follow instructions
3. Disclosure
4. Confidentiality
5. Reasonable care and diligence
6. Accounting
30
What does the acronym OLD CAR mean?
1. Obedience to follow lawful instruction
2. Loyalty
3. Disclosure
4. Confidentiality
5. Accounting
6. Reasonable care and diligence
31
D: Confidential Information
Information that would materially compromise the negotiating position of a party or prospective party to a real estate transaction if disclosed to the other party.
32
True or False
The age of the hot water heater is material information.
True
Material information is important information that may make a difference in a client's decision relating to a transaction.
33
True or False
A seller may never tell the listing agent to keep certain prospective buyers from looking at the property.
False
Sellers have the right to limit who enters their property so long as they are not violating the fair housing laws.
When a licensee received and instruction to keep someone off the property, the licensee has a duty to examine the instruction to make sure the instruction is not given in order to discriminate.
34
True or False
RESPA permits referral fees in the mortgage service process.
False
It is a violation of RESPA to pay referral fees for anyone for service in the mortgage process.
35
True or False
Representing the client's interest above all others is known as the duty of accounting.
False
It is the duty of loyalty.
36
True or False
Because of the variety of types of real estate, there is no standard of care in the real estate industry.
False
There is a standard of care in the industry that must be followed.
37
True or False
The fiduciary duty of confidentiality ends when the listing expires.
False
The duty of confidentiality never ends. Once a licensee has client confidential information, he/she must keep it confidential forever.
38
True or False
One way to keep other licensees from showing listed property is to join the MLS.
False
The reason to join the MLS is to share listings.
39
True or False
Principal brokers and sales associates may advertise their fees.
True
There is no prohibition on advertising fees charged by brokerages.
Because of the anti-trust laws, principal brokers set their own fees without regulation by either the KREC or any other entity.
40
True or False
A licensee may pay his neighbor who gives him the name of a new employee at work who is now looking for a home.
False
That would be a referral fee and principal brokers may only pay referral fees to licensees.
41
True or False
To satisfy the duty of accounting the licensee should keep an accurate paper trail.
True
Licensees should keep all documents relating to money received and paid on behalf of a client.
42
True or False
Loan originators are regulated by the KREC.
False
Loan originators are regulated by the Kentucky Department of Financial Institutions.
43
True or False
The advertising in a guaranteed sales plan must inform the seller how the purchase price for his/her property will be determined.
True
44
True or False
Guaranteed sales plans have very specific advertising requirements.
True
The license law sets out very specific and stringent details relating to advertising guaranteed sales plans.
45
True or False
The seller in a guaranteed sales plan may or may not be required to purchase another property through the listing broker.
True
46
True or False
It is illegal for a real estate licensee to be a loan originator.
False
47
When you reviewed the HUD fair housing website, what year was the Fair Housing Act was signed into law?
1968
48
Offering to buy someone's property at a low price because "certain" people are moving into the neighborhood is known as:
Blockbusting
49
A principal broker:
A. may be liable for the fair housing violations of his/her affiliates.
B. can only be liable for a discriminatory ad if he/she wrote it.
C. cannot hold fair housing training for his/her affiliates because they are independent contractors.
D. is not responsible for fair housing violations by his/her affiliates
A. may be liable for the fair housing violations of his/her affiliates.
The principal broker must adequately supervise his/her affiliates.
Part of this supervision includes making sure they understand and follow the fair housing laws.
A principal broker may be liable for the fair housing violations of his/her affiliates and employees.
50
Which one of the following is not a protected class in all of Kentucky, but is a protected class in certain areas?
A. sexual orientation
B. age
C. religion
D. national origin
A. sexual orientation
Sexual orientation is a protected class in some of these counties: Jefferson County, Fayette County, and the cities of Danville, Frankfort, Morehead, Vicco, Midway, and Covington.
Adopting sexual orientation as a protected class is a discussion being held in many communities.
51
To tell a prospective buyer that a family from India lives down the street would be:
A. material information
B. a violation of the fair housing laws
C. a violation of the duty of loyalty
D. full disclosure
B. a violation of the fair housing laws
Not only is it illegal to make the statement to a prospective buyer, but a licensee should refuse to answer any questions posed by a prospective buyer about the ethnic makeup of a neighborhood.
52
The purpose of the fair housing laws is to:
A. ensure that all neighborhoods are integrated and that the schools are diverse.
B. give everyone the opportunity to live where they choose within their economic means.
C. educate the general population on different races, cultures, and religions.
D. force everyone to get along.
B. give everyone the opportunity to live where they choose within their economic means.
Every person has a right to live where he/she chooses within their economic means.
Licensees should not try to restrict someone's right to live where he/she chooses just because the licensee wants to direct the buyer to a different location.
53
Use of the fair housing logo by real estate brokerages:
A. must be authorized by HUD.
B. shows the principal broker and affiliates support fair housing.
C. is required under the federal law
D. is required on all advertising and on all contracts.
B. shows the principal broker and affiliates support fair housing
Use of the fair housing logo is not required, but it should be used to show that the principal broker and all affiliates support fair housing.
54
To avoid allegations of fair housing violations, brokerage advertisements should:
A. make it clear who might want to live in the area.
B. include a list of all amenities
C. not include pictures of people
D. advertise the property, not the people who may want to live there.
D. advertise the property, not the people who may want to live there.
Advertisements should advertise the property and it's amenities.
They should not advertise the type of person who may want to live there.
55
The protected classes under fair housing include all the following EXCEPT:
A. color
B. familial status
C. marital status
D. race
C. marital status
Marital status is not protected under fair housing.
Age is also not protected under the fair housing laws.
56
Marcy listed property and the seller said she could not show the property on Sunday afternoon. Must Marcy follow this instruction?
A. Yes, it is a legal instruction.
B. No, it violates the fair housing laws based on religion.
C. Yes, because it is illegal to show properties in certain areas on Sunday.
D. No, because it will limit her ability to sell the property.
A. Yes, it is a legal instruction.
It is a legal instruction.
Limiting access on Sunday afternoon does not violate fair housing.
57
What are the reasons for sanctions charged by the KREC
1. Obtaining a license through false or fraudulent representation.
2. Making any substantial misrepresentation or failing to disclose known defects which substantially affect the value of the property
3. Making any false promises of a character likely to influence, persuade, or induce.
4. Pursuing a continued and flagrant course of misrepresentation or making false promises through agents or advertising, or otherwise
5. Acting for more than one (1) party in a transaction without the knowledge of all parties for whom the licensee acts
58
What are the rules for licensees who purchase real estate.
1. “[A] real estate licensee shall not directly or indirectly buy property listed with him or her or with the broker with whom the licensee is affiliated, nor acquire an interest therein, without first indicating in writing on the offer to purchase his or her status as a licensee”. When the listing principal broker or his/her agent is buying property that is listed with the brokerage, it must be disclosed in writing on the contract that the buyer is a licensed real estate agent.
2. “[B]efore a licensee becomes a party to a contract to purchase real property, the licensee shall disclose his or her status as a licensee to all parties to the transaction, in writing, on the sales contract or on the offer to purchase”. This section applies not to property that is listed by the licensee, but to any property that is being purchased by the licensee. Disclosure on the sales contract is appropriate, because that is the form everyone in the transaction sees.
3. “[B]efore a licensee sells, or receives compensation for property in which the licensee owns an interest, the licensee shall disclose, in writing, any interest in the property to all parties to the transaction”. This subsection deals with property that a licensee owns. If the licensee is the seller, that fact must be disclosed in writing. The language here does not require disclosure in writing on the contract. The contract is always the best place to disclose the information.
4. “[A]ccepting valuable consideration for the performance of any of the acts specified in this chapter, from any person, except from his or her principal broker in accordance with a compensation agreement between them. When acting as an agent in the management of property, a real estate licensee shall not accept any commission, rebate, or profit on expenditures made for a client without the full knowledge and consent of the client”.
5. “[R]epresenting or attempting to represent a broker other than a principal broker, without the express knowledge and consent of the principal broker with whom the licensee is affiliated”. Each licensee may have only one principal broker. When an affiliate’s license is with one principal broker, the affiliate may not perform real estate brokerage service for another principal broker.
6. “[F]ailing to account for or remit, within a reasonable time, any money belonging to others that comes into the licensee’s possession. When acting as a property manager, the licensee shall render an accounting and remit all moneys to his or her client strictly in accordance with the contract of employment”.
7. “[P]aying valuable consideration to any person for services performed in violation of this chapter”. The license law is clear that, in order to receive compensation, or other valuable consideration, for performing real estate services, a person must have a broker or sales associate’s license. If the licensee pays the unlicensed person, he/she is in violation of the license law. If the unlicensed person accepts the fees, he/she is also in violation of the license law and may even be prosecuted criminally.
8. “[E]ntering a plea of guilty or an ‘Alford’ plea to, or having been found guilty of, or having been convicted of, a felony or of a misdemeanor involving sexual misconduct and the time for appeal has lapsed or the judgment or conviction has been affirmed on appeal, irrespective of an order granting probation following the conviction suspending the imposition of sentence”
9. “Failing to report a conviction, plea of guilty, or an ‘Alford’ plea to a felony or a misdemeanor involving sexual misconduct to the commission”.
10. Soliciting, selling, or offering for sale real property under a scheme or program that constitutes a lottery, contest or deceptive practice”
11. Acting in the dual capacity of the licensee and undisclosed principal in any real estate transaction”.
12. “[G]uaranteeing, authorizing, or permitting a person to guarantee that future profits shall result from a resale of real property”.
13. “[N]egotiating or attempting to negotiate the sale, exchange, lease, or rental of real property, or attempting to obtain a brokerage agreement with a consumer knowing that the consumer had a written outstanding contract granting exclusive agency with another real estate broker”.
14. “Publishing or circulating an unjustified or unwarranted threat of legal proceedings or other action”.
15. “[F]ailing or refusing on demand to furnish copies of a document pertaining to a transaction dealing with real estate to a person whose signature is affixed to the document”.
16. [F]ailing, within a reasonable time, to provide the information requested by the commission as a result of a formal or informal complaint to the commission which may indicate a violation of this chapter”.
17. “[P]aying valuable consideration to any person for the name of potential sellers or buyers, except as otherwise provided in KRS 324.020(4)”.
18. [V]iolating any of the provisions in this chapter or any lawful order, rule, or administrative regulation made or issued under the provisions of this chapter”.
19. “Any other conduct that constitutes improper, fraudulent, or dishonest dealing”.
20. “[G]ross negligence”.
59
True or False
If an applicant gives false information on his/her license application, it is up to the KREC to catch the discrepancy before the license is issued.
False
If the licensee gives false or fraudulent information on the license application, the KREC can sanction the licensee, including criminal action.
60
True or False
Fraud and misrepresentation are the same thing.
False
61
True or False
The license examination fee for a sales associate is $50.
False
The fee is $100
62
True or False
It is a violation of the license law to make a substantial misrepresentation in a real estate transaction.
True
The questions become what is substantial and was the client damaged.
63
True or False
A licensee may be punished for making the same damaging mistake twice.
True
Not only can the licensee be disciplined for making the mistake twice, they may also be charged, depending on the situation, with continuing a “flagrant course of misrepresentation,” which can increase the penalty.
64
what is the exception to this statement?
“[N]egotiating or attempting to negotiate the sale, exchange, lease, or rental of real property, or attempting to obtain a brokerage agreement with a consumer knowing that the consumer had a written outstanding contract granting exclusive agency with another real estate broker”.
There has been a change in the license law interpretation.
That change states that if the seller with a listed property calls another licensee, the licensee may talk to the seller.
The first requirement is that the seller call the licensee.
When the licensee talks to the seller, the second requirement is for the licensee to get the seller to sign a form stating that the seller called the licensee.
After these two steps are followed, the agent receiving the call cannot give the seller information on how they can get out of the current listing.
All the agent can do is to have the new listing begin when the current listing expires.
To discuss terminating the current listing contract would be a breach of this sub-section – interfering with another principal broker’s contract.
65
True or False
Marilyn, a licensee, wanted to buy several foreclosed properties, but didn’t want her husband to know. She formed a limited liability company and took title to the property in that company name. This was a good way to handle the purchase to keep her husband and principal broker from knowing about the purchases.
False
Marilyn was wrong in a number of ways.
Under the license law she is required to disclose in writing that she is the purchaser.
Starting a limited liability company to take title and hide her identity does not remove the disclosure requirement.
She is acting in a dual capacity of licensee and undisclosed principal, which violates the license law.
And, she is breaching her fiduciary duty to her principal broker by hiding these transactions.
66
True or False
LaRose was tired after she finished negotiating a contract and had everyone’s signatures. She told them she would take the original documents to the office, make copies, and drop them in the mail. That was a good way to handle distributing copies to everyone.
False
The license law requires that each person receive a copy immediately upon signing it. It is possible that the KREC would not think mailing the copies would be immediate.
67
True or False
Harold had a listing that had been on the market for 6 months. He decided to sell lottery tickets at $500 each. In his opinion that would be better than selling the property at an absolute auction. This was a great idea!
False
Under Kentucky licensing laws, as well as the gaming laws, you cannot hold a lottery to sell real estate.
68
True or False
If a licensee is convicted of a crime, he/she will have his/her license canceled.
False
69
True or False
Randy had a buyer who couldn’t make up her mind to buy a condo. Randy guaranteed her an appreciation rate of 10% per year and she decided to buy the condo. Guaranteeing her an appreciation rate was a good tactic.
False
Guaranteeing the appreciation violated the license law.
70
True or False
Failure to notify the KREC about a criminal sanction is a violation of the license law.
True
A licensee’s competitors will usually make a report with the KREC which will lead to an investigation and hearing.
71
True or False
The KREC requested copies of certain files from Aaron. Aaron was going out of town for a couple of weeks and told the KREC he would get the files to them within a month or so. That was a good way for Aaron to handle the request.
False
The KREC could think Aaron was delaying in providing the information which would be a violation of the license law.
72
True or False
Gail listed a property on Sunday night and left for an extended vacation on Monday morning. She left her secretary a note to add the listing to the MLS and start advertising. Her secretary did not see her note and nothing was done on the listing until she returned from her vacation. Under the license law, Gail would likely be liable for gross negligence.
True
73
True or False
Rob is really upset. He has been working on a listing for two months and has learned that they listed it with Bill at another office. Rob believes Bill stole his listing and threatened to sue Bill. Rob has violated the license law.
True
The license law prohibits threatening unwarranted legal action. If Rob did not have a contract with the sellers, Bill could not have interfered with it. Rob’s threat is likely an unjustified or unwarranted threat.
74
True or False
Ralph’s neighbor’s house has been on the market for almost a year. One day while they were working in their yards, Ralph started talking to the neighbor and asked him why he kept the listing with a company who couldn’t sell it. Ralph bragged about how fast he sold houses in the neighborhood that were listed with him. This was a good marketing strategy by Ralph.
False
75
What are the exemptions to the no-call list?
1. they have requested a call;
2. they owe the caller money or are in a contract with the person calling;
3. they have had a prior or existing business relationship with the caller
4. the caller is soliciting a charitable donation or political contribution or taking a survey.
76
An out-of-state principal broker may engage in real estate brokerage, without a Kentucky license, if ?
1. out-of-state licensee is licensed in a state and works under the direct supervision of a broker in that state
2. out-of-state principal broker enters into a written cooperation agreement with a Kentucky cooperating principal broker, outlines the terms of their agreement, a description of the parties, the commercial real estate involved, or information sufficient to identify the transactions that will be involved in the agreement
3. effective date and a definite termination date of the agreement are stated.
Additionally, the out-of-state principal broker must?
1. work in cooperation with the Kentucky cooperating broker
2. furnish the Kentucky cooperating broker a copy of the out-of-state licenses for the principal broker and sales associates working under the agreement;
3, limit brokerage acts to the commercial real estate transactions contained in the agreement
4. co-list property with the Kentucky broker
5. not hold escrow funds, security deposits and other money in an out of state bank
6. promptly provide the Kentucky broker with documentation relating to the specific transaction(s)
7. keep the Kentucky broker fully informed of all activities
8. perform all activities under the direct supervision and control of the Kentucky broker
9. include his/her individual name, firm name, or both, in advertising only if the advertising includes the Kentucky broker’s name
10. comply with and be bound by Kentucky license law
11. not engage in improper conduct
12. file with the Kentucky broker a true complete notice of affiliation.
77
The notice of the affiliation requires?
1. name, firm name, address, telephone number, and license number of the Kentucky cooperating broker
2. name, firm name, address, telephone number, address for service of process, license number, and jurisdiction for the principal broker and out-of-state licensee
3. effective date and termination date of the cooperation agreement
4. agreement that out-of-state principal broker and licensee will comply with Kentucky licensing law, including required documentation, and will not engage in improper conduct
5. irrevocable consent that legal actions may be commenced and conducted in Kentucky
6. statement that out-of-state principal broker and licensees are trustworthy and competent, and that for a period of five (5) years prior to filing the notice their licenses have not been revoked and they have not been convicted of a felony in any jurisdiction
7. they consent to a criminal records background check.
78
Should the out-of-state principal broker or licensee fail to substantially comply with Kentucky licensing statutes, the KREC may impose the following sanctions:
1. levy fines not to exceed $1,000
2. issue a formal or informal reprimand
3. report misconduct to the licensing authority of any state
4. revoke or suspend the authority of the out-of-state principal broker and licensee
5. publish and maintain a public registry of any sanctions or penalties imposed
6. report suspected violations to the applicable county’s Commonwealth attorney
79
True or False
Mary has a license in Ohio and she wants to sell her friend’s daughter a house in Lexington, because she is going to college there. Mary sees an agent's sign in the yard, calls the owner instead, and her friend makes an offer. After the offer is accepted, she later calls the listing agent. Mary’s actions were proper.
False
Mary’s actions were improper in a number of ways. First, she does not have a Kentucky license and cannot market property in Kentucky. Second, she cannot call the owner of a listed property, show it, and negotiate an offer with the listing agent.
80
True or False
A licensee sees a “For Sale By Owner” sign in the front yard. Because the seller has his phone number on the sign, it is OK for the licensee to call even if the seller is on the no-call list.
False
81
True or False
Before a licensee should make an unsolicited telephone call, he/she should check the no-call list.
True
Licensees are considered telemarketers for the purpose of the no-call laws.
82
True or False
Stewart, a commercial broker from Colorado, wants to represent a buyer in Kentucky who is buying a nursing home. There is a provision in the license law for Stewart to represent the buyer without a Kentucky license.
True
There is an exception for out-of-state commercial brokers to market property in Kentucky without a Kentucky license. The out-of-state commercial broker must have an agreement with a Kentucky principal broker.
83
True or False
If a licensee has a listing that expires, he/she may call the seller that added his name to the no-call list after the listing expired.
True
The licensee has a pre-existing business relationship.
84
True or False
Practicing real estate in Kentucky without a Kentucky license may result in criminal penalties.
True
The KREC can seek criminal penalties against people practicing real estate in Kentucky without a real estate license.
85
True or False
Advertising for a guaranteed sales plan must include how the price the licensee will pay the seller is determined.
True
Guaranteed sales plans are strictly regulated by the KREC, because it would be easy for a consumer to mislead by the licensee.
86
True or False
Licensees may call For Sale By Owners on the no-call list, because they have placed their phone numbers on the for sale signs.
False
The For Sale By Owners have their phone numbers on the signs for prospective buyers to call, not real estate agents. If a licensee has a bona fide buyer, he/she may call the owner to schedule an appointment even if the owner is on the no-call list.
87
True or False
Principal brokers share listings through multiple listing services.
True
Principal brokers use the MLS to share listings. Principal brokers may also
advertise each other’s listings with permission from the listing principal broker.
88
True or False
The fair housing logo is required in all advertising.
False
Use of the fair housing logo is encouraged to show the principal broker and all affiliates support fair housing, but it is not required.
89
True or False
The fiduciary duty of reasonable care means that the agent protects his/her client’s interest above all others, including his/her own interest.
False
90
True or False
In order to sell a house quickly, a licensee may hold a raffle.
False
The raffle would not only be a violation of the licensing laws and regulations, but also the Kentucky gaming laws.
91
True or False
If a licensee promises the buyer that the property will appreciate, he/she may likely be making a false promise because there is no guarantee that a property will appreciate.
True
If a licensee makes a false promise, he/she is in violation of the license law. To promise something out of the agent’s control may well turn out to be a false promise.
92
True or False
RESPA is a state law prohibiting kickbacks in the delivery of settlement services.
False
RESPA is the federal Real Estate Settlement Procedures Act.
93
True or False
If a licensee knows a listing will expire within two weeks, he may contact the seller and try to get the property listed.
False
94
True or False
Licensees can be disciplined for making substantial misrepresentations to clients and customers.
True
A substantial misrepresentation is one that would make a difference in the person entering into the real estate transaction.
95
True or False
A licensee lists a house and states it has 1,756 square feet when it actually has 1,576 square feet. The square footage information was given to the licensee by the seller. This is a misrepresentation.
True
When passing along information about property, the licensee should take all steps possible to assure its accuracy.
96
True or False
A licensee convicted of a misdemeanor must report himself to the KREC.
False
97
True or False
If a licensee lists property, and completely forgets about it, that would be considered gross negligence.
True
Gross negligence is when someone acts recklessly and fails to use common sense.
98
True or False
A licensee may be sanctioned for acting as a dual agent without informing all parties.
True
Licensees must get their clients permission to become a dual agent which would require them to inform their clients.
99
True or False
Out-of-state commercial brokers may market real estate in Kentucky without a Kentucky license through license reciprocity.
False
100
True or False
A licensee may also act as a loan originator if he/she is registered with the Mortgage Bankers Association.
False
101
True or False
Harry wanted to buy property that he had listed for a fairly low price. He asked his brother to purchase it and then transfer it to him. This was a good way to handle the situation and not upset the seller.
False
Harry’s action was wrong in a number of ways. Licensees cannot act as undisclosed principals. Harry was actually the buyer and that fact needed to be disclosed. There are also agency violations which will be discussed in a later module.
102
True or False
Principal brokers must adequately supervise all affiliates, unless the affiliate has a broker’s license.
False
Principal brokers must adequately supervise all affiliates regardless of the license they hold.
103
True or False
The seller was so happy that his listing agent sold his property so fast, that he told the agent he could use his condo in Florida for a week for free. It is OK for the agent to accept the gift without mentioning it to his principal broker.
False
A licensee cannot accept anything of value for real estate services that do not go though the principal broker.
104
True or False
It would be a license law violation not to give a person a copy of the document they have signed.
True
At the time a document is signed, a copy must be given to the signer.
105
True or False
One of the easiest ways to violate the fair housing laws is through advertising.
True
106
True or False
Protected classes include race, color, religion, national origin, sex, familial status, and handicap/disability.
True
And, in some areas of Kentucky sexual orientation is also included.
107
Willie is managing a 4-plex for an out-of-town owner. Willie owns a 4-plex next door. When the lawn company mows the lawn, because they adjoin, there is no charge for Willie’s lawn being mowed. Willie has never thought about mentioning this to the owner, although he’s sure the owner would be OK with it. This is
A. fine as long as Willie pays for the snow removal in the winter.
B. a great deal for Willie.
C. not a violation of the license law because the owner is not being charged extra for Willie’s yard.
D. is likely a violation of the license law because the owner does not know and has not agreed.
D. is likely a violation of the license law because the owner does not know and has not agreed.
108
Earnest money deposits must be deposited into the principal broker’s escrow account within how many days the brokers receipt of the funds.
3 days
109
A broker with an out-of-state license can market Kentucky property if he/she
A. is listing and selling farm property that is listed by a Kentucky broker and has an agreement to cooperate with that broker.
B. enters into a cooperation agreement with a Kentucky broker to market commercial property.
C. enters into a cooperative agreement with a Kentucky broker to market all types of property.
D. limits the sales to single family residential dwellings with a warranty.
B. enters into a cooperation agreement with a Kentucky broker to market commercial property.
110
The element of fraud that is different from misrepresentation is
A. damage.
B. false statement.
C. intent.
D. material fact.
C. intent
111
When a licensee buys property he/she must notify the seller that he /she is a licensee
A. at first contact.
B. on the agency disclosure form.
C. by telephone when making the appointment to present the offer to purchase.
D. in writing on the offer to purchase.
D. in writing on the offer to purchase.
112
The primary statutory duty of the KREC is
Protect the public
113
Allison, a licensee, was arrested and convicted of theft. She must
A. notify the KREC and ask for a hearing.
B. notify her broker and transfer all clients to him.
C. return her license to the KREC immediately.
D. terminate all of her listings.
A. notify the KREC and ask for a hearing.
114
At a dinner last night, Sara was introduced to Sandy who currently has her house listed. Sandy was telling Sara about how upset she was with her current agent and asked Sara to take over her listing. Sara said she would be happy to do it, but Sandy would have to terminate her current listing contract. Sara encouraged her to tell her current agent and terminate the contract tomorrow. Sara’s actions were
A. inappropriate, because Sara was interfering with Sandy’s contract with the other agent.
B. inappropriate, because Sara should have talked to Sandy’s agent directly.
C. appropriate, because Sandy has the right to have the agent of her choice.
D. appropriate, because obviously the current agent was not protecting the public.
A. inappropriate, because Sara was interfering with Sandy’s contract with the other agent.
115
If the listing agent tells a prospective buyer that the seller is getting a divorce, this is MOST LIKE a breach of the
A. duty of reasonable care and skill.
B. duty of confidentiality.
C. duty of full disclosure.
D. duty of accounting.
B. duty of confidentiality.
116
Fifteen (15) years ago when Adrian applied for his license he stated that he had a high school diploma and furnished proof of the diploma. Actually, it was not his diploma, but the diploma of his cousin with the same name. It has not come to the attention of the KREC that he does not have a high school diploma.
A. The KREC can sanction him and possibly revoke his license after an investigation and hearing.
B. The KREC can require him to get a high school diploma or its equivalent.
C. The KREC can hold an emergency hearing.
D. The KREC can do nothing because he has had a license longer than one (1) year.
A. The KREC can sanction him and possibly revoke his license after an investigation and hearing.
117
Refusing to show listed property to the seller’s nosy sister is
A. improper conduct, unless the seller has given the agent a written specific directive.
B. not a good idea, because they may file a complaint with the local Board.
C. good practice until the purchaser shows proof of funds.
D. a fair housing violation.
A. improper conduct, unless the seller has given the agent a written specific directive.
118
Licensee Martha ran into Sue, an old friend, at the grocery store. Sue told Martha she had her house listed but wasn’t happy with her agent. Martha gave Sue a card and suggested Sue tell her current agent she wanted to terminate her listing. Martha’s actions were
A. inappropriate, because Sue will tell the other agent that it is all Martha’s idea and get Martha in trouble with the other agent.
B. appropriate, because she and Sue have been friends for a long time.
C. inappropriate, because Martha made the suggestion to Sue to terminate the contract.
D. appropriate, because Sue brought up the fact that she was unhappy with her current agent.
C. inappropriate, because Martha made the suggestion to Sue to terminate the contract.
119
How many Commissioners are licensees?
6
120
If the buyer’s agent discloses to the selling agent that the buyer wants to buy the house so his son can play football at the high school in the district, the agent has MOST LIKELY breached his fiduciary duty of
confidentiality.
121
The license law requires that a broker offering a guaranteed sales plan must do all the following EXCEPT
A. state in the ad whether or not the property has to meet certain qualifications for participation.
B. state whether or not the seller must purchase other real estate through the broker or his company.
C. state in the ads whether or not there is a fee charged to the consumer for participating in the plan.
D. state that the broker will have an appraisal and pay the fair market value minus the commission.
D. state that the broker will have an appraisal and pay the fair market value minus the commission.
122
Melissa is changing offices in two weeks and one of her regular clients called asking Melissa to list her property. Melissa should
A. ask the client to wait two weeks.
B. list the property.
C. ask her new broker to list the property.
D. leave her current broker now and not wait two weeks.
B. list the property.
