Module 2 Test

Question 1

Real Estate Licensing Laws are constitutional because they represent a valid exercise of the State’s Police Power.
A) True
B) False

Answer 1

A) True

Question 2

The Real Estate Commission may revoke or suspend a license for which of the following?
A) Acting for both the buyer and the seller in a real estate transaction and collecting commissions from both, after obtaining their oral consents to do so.
B) An attempt by a salesperson to represent a real estate broker other than his employer
C) Both of the above
D) None of the above

Answer 2

C) Both of the above

The consents must be in writing and not orally. A salesperson can only work for one broker and all commissions must come through the broker.

Question 3

Under the Licensing Laws, an inactive licensee is not permitted to advertise “For Sale by Owner” (FSBO).
A) True
B) False

Answer 3

A) True

Question 4

If a licensee fails to pay the renewal fee when due, the license is:
 A) Revoked
 B) Rescinded
 C) Forfeited
 D) Suspended

Answer 4

C) Forfeited

A license is forfeited when the renewal fees or any other fees that are assessed to licensees are not paid by the due date.

Question 5

In order to reinstate a license that has been terminated because of payment out of the Recovery Fund, the person must:
A) Make full restitution to the Recovery Fund of all payments made on his behalf
B) Pay interest on the sum expended from the recovery fund
C) Both of the above
D) None of the above

Answer 5

C) Both of the Above

Question 6

Which of the following is required to be licensed as a real estate broker?
A) A residential real estate loan office
B) A commercial escrow officer
C) Both of the above
D) None of the above

Answer 6

D) None of the Above

Question 7

A check for earnest money deposit may be made payable to which of the following?
A) The salesperson who showed the property
B) The broker with whom the property is listed
C) Both of the above
D) None of the above

Answer 7

B) The broker with whom the property is listed

The check can be made payable to the escrow company, the buyer’s broker trust fund or the seller’s broker client trust fund.

Question 8

A licensee is entitled to a hearing when the license is:
 A) Suspended
 B) Terminated
 C) Both of the above
 D) None of the above

Answer 8

C) Both of the Above

Licensees are entitled to a hearing when there is a potential fine, suspension or revocation.

Question 9

In an advertisement, the broker:
A) Does not have to show his MLS number
B) Has to specify whether the property is leasehold
C) Does not have to show his telephone number
D) All of the above

Answer 9

D) All of the Above

Question 10

A salesperson’s automobile expenses and mileage costs expended in the handling of a property for sale are usually paid directly by the:
A) Salesperson’s broker regardless of sale results
B) The listing property owner if a sale results
C) The salesperson regardless of sales results
D) None of the above

Answer 10

C) The salesperson regardless of sales results

Question 11

A real estate license is required:
A) For a person selling a business, a part of which is leasehold, for compensation
B) For a farmer to sell his farm, including the animals, to his son
C) Both of the above
D) None of the above

Answer 11

A) For a person selling a business, a part of which is a leasehold, for compensation

Question 12

A real estate broker has an obligation to:
A) Give copies of all documents to all parties at the time they sign
B) Sign documents pertaining to real estate transactions
C) Both of the above
D) None of the above

Answer 12

A) Give copies of all documents to all parties at the time they sign

The client must be given the contracts that they have signed at the time they signed the contracts.

Question 13

When performed for compensation, which of the following activity requires a real estate license?
A) Appraising real estate
B) Listing real property for sale or rental
C) Both of the above
D) None of the above

Answer 13

B) Listing real property for sale rental

Question 14

Under which of the following conditions may a broker withdraw money for his commission from his client’s trust fund account prior to the closing of a real estate transaction?
A) If he has the consent of the seller
B) If there are sufficient funds in the account to cover the commission and all monies due on the particular transaction
C) Both of the above
D) None of the above

Answer 14

D) None of the above

Client’s trust fund accounts should never be used for commission

Question 15

Which of the following statements is true regarding a principal broker who leaves the state for more than 30 calendar days?
A) He must notify the Real Estate Commission in writing of his absence
B) He must designate an experienced salesperson to be temporarily in charge
C) Both of the above
D) None of the above

Answer 15

A) He must notify the Real Estate Commission in writing of his absence

The Principal Broker should also select a broker to supervise the office during the Principal Broker’s absence.

Question 16

A real estate salesperson who is selling his own personal residence must:
A) List the property for sale with his principal broker
B) Reveal his interest in the property to the prospective buyer in writing prior to accepting an offer
C) Both of the above
D) None of the above

Answer 16

B) Reveal his interest in the property to the prospective buyer in writing prior to accepting an offer

Disclosure must be made by the licensee to buyers.

Question 17

A person may begin practicing real estate when:
A) He receives notice from the Real Estate Commission that he is authorized to do so
B) He receives notice in the mail that he has passed the licensing examination
C) He is certified by an accredited school for completing the salesperson’s course
D) The Real Estate Commission receives notice that he has passed the licensing examination

Answer 17

A) He receives notice from the real Estate Commission that he is authorized to do so

Question 18

The Real Estate Commission may revoke the license of a broker for:
A) Failure to pay a commission she owes to her salesperson
B) Failure to account for funds received that belong to others
C) Both of the above
D) None of the above

Answer 18

B) Failure to account for funds received that belong to others

Question 19

When a sales licensee changes companies, their Errors and Omissions Insurance from their formerly employing broker would cover them with their new broker until the policy expires.
A) True
B) False

Answer 19

B) False

Question 20

What does Chapter 467 cover?
 A) Securities
 B) Time Share
 C) Licensing Laws
 D) Bankruptcy

Answer 20

C) Licensing Laws

HRS 467 is the law that governs real estate licensees

Question 21

An Independent Contractor should not work for a broker who:
A) Makes sure he comes in at 8:30 AM and works until 5:00 PM to call on prospective buyers
B) Makes him pay for Errors and Omissions fees
C) Pays his license fee directly to the Real Estate Commission
D) Pays state withholding tax themselves

Answer 21

A) Makes sure he comes in at 8:30 AM and works until 5:00 PM to call on prospective buyers

An independent contractor cannot be told to work specific hours at the office.

Question 22

A sales agent decides to change real estate firms. The Change Form-Real Estate must be forwarded to the Real Estate Commission for the change to be effective. Who will be required to sign the Change-Form-Real Estate?
A) Sales agent only
B) Sales agent and present broker only
C) Sales agent and future broker only
D) Sales agent and both present and future broker

Answer 22

D) Sales agent and both present and future broker

Question 23

In Hawaii, a salesperson can lose her license for all of the following, EXCEPT:
A) Listing an unlicensed owner/builder’s home 8 months after completion
B) Recommending use of an unlicensed plumber
C) Recommending use of an unlicensed pest control operator
D) Recommending use of an unlicensed handyman to do work worth $900
Sorry, that’s incorrect.

Answer 23

D) Recommending use of an unlicensed handyman to do work worth $900

An unlicensed handyman cannot do more than $1000 worth of work on a specific property in a year.

Question 24

After proper investigation, a payment is made from the Real Estate Recovery Fund due to the improper activities of a licensee. What happens when the payment is made?
A) The licensee’s license is automatically revoked
B) The Hawaii Real Estate Commission takes no further action if the licensee repays the fund within 30 days
C) The licensee’s license is automatically suspended
D) The licensee is subject to a fine of $5,000

Answer 24

A) The licensee’s license is automatically revoked

Question 25

Which of the following is proper conduct under state law and therefore unlikely to lead to the suspension or revocation of a licensee’s license?
A) Failing to disclose whom the real estate licensee represents on the contract between the parties to the real estate transaction
B) Failing to disclose that an occupant has been treated for the HIV infection
C) Commingling others’ money or property with his or her own
D) Failing to provide information to the Regulated Industries Complaints Office (RICO) upon request as part of a complaint or audit procedure

Answer 25

B) Failing to disclose that an occupant has been treated for the HIV infection

Agents are not allowed to disclose that an occupant was treated for HIV.

Question 26

Which of the following actions is legal and not a violation of license law?
A) Encouraging a seller to reject an offer because the prospective buyer is a Methodist
B) Placing a “For Sale” sign in front of a house after receiving the seller’s written permission
C) Advertising that individuals will receive a prize without mentioning that they will also have to attend a 90 minute timeshare presentation in order to receive the prize
D) Standing outside the testing room and offering employment to new licensees as soon as they receive their passing score at the testing center

Answer 26

B) Placing a “For Sale” sign in front of a house after receiving the seller’s written permission.

Question 27

If a broker tells a lender that the sales price on a property is something above its actual sales price in order to help the buyer get a larger loan, the:
A) Broker has done nothing wrong as long as the appraisal substantiates this price
B) Buyer is likely to receive an interest rate break
C) Broker can lose his or her license and be fined
D) Buyer can receive a higher mortgage amount

Answer 27

C) Broker can lose his or her license and be fined

Question 28

Salesperson J-H placed an order with the telephone company listing her name in the directory under the Real Estate heading, stating "J-H Real Estate Salesperson, Residential Property My Specialty." J-H is also required to include:
 A) Her license number
 B) The expiration date of her license
 C) Her street address
 D) The name of her employing broker

Answer 28

D) The name of her employing broker

The employing broker’s name must be included in all advertising.

Question 29

A real estate salesperson decides to sell his or her own property without using a broker. When advertising the property, the salesperson:
A) Must disclose the name, address, and phone number of his employing broker
B) Must disclose the fact that he or she is a real estate licensee
C) Does not need to disclose his or her license status if acting as a private citizen
D) Is prohibited by license law from selling his or her own home in this manner

Answer 29

B) Must disclose the fact that he or she is a real estate licensee

Question 30

A salesperson has developed an Internet web site. What, if anything, must the salesperson include?
A) Name and location of the office that holds the salesperson’s license and a list of states in which the salesperson is licensed
B) Name of the home office of the company that holds the salesperson’s license and list of states in which the company is licensed
C) Names of all of the licensees in the broker’s office and the states in which they are licensed
D) There is no need for any particular disclosures

Answer 30

A) Name and location of the office that holds the salesperson’s license and a list of states in which the salesperson is licensed

The same rules apply to all advertising no matter what medium is used.

Question 31

Commissions earned by a broker in a real estate sales transaction:
A) Are determined by agreement of the broker and his or her principal
B) May be shared with an unlicensed person, provided that such person aided the broker in bringing the buyer and seller together
C) May be deducted from the earnest money deposit and claimed by the broker as soon as the buyer and seller execute the purchase and sale agreement
D) Are based on a schedule of commission rates set by the Hawaii Real Estate Commission

Answer 31

A) Are determined by agreement of the broker and his or her principal

Question 32

A broker has obtained an offer to purchase a residence that is listed with his firm. After the buyers sign a purchase and sale agreement and the broker accepts their earnest money deposit, the broker must:
A) Deposit the earnest money in the broker’s personal checking account for safe keeping until closing
B) Complete a second earnest money agreement form that states an exaggerated selling price and give the second form to the buyers to present to the lender so that they will be certain to obtain sufficient financing for their purchase
C) Immediately provide the buyers with a copy of the agreement as a receipt for their deposit
D) File the agreement in the broker’s records and when two or three other offers have been received for the property, present them all to the sellers who then may choose the best offer

Answer 32

C) Immediately provide the buyers with a copy of the agreement as a receipt for their deposit

Question 33

Several weeks after a closing, an associate broker received a thank-you letter and a nice bonus check from the seller of the house. The associate broker cashed the check because he felt it was earned. In this situation, which of the following is true?
A) The associate broker may accept the bonus because he is licensed as an associate broker
B) Accepting the money is allowed if more than 30 days have elapsed since the closing
C) The associate broker may accept the money if his broker permits him to do so
D) Accepting the money is a violation of commission regulations

Answer 33

D) Accepting the money is a violation of commission regulations

All payments must be paid to the employing broker.

Question 34

When a sole proprietor has his or her license suspended for two years, what effect does this have on the associate brokers and salespeople affiliated with the proprietor?
A) Affiliates’ licenses will be revoked, subject to reinstatement after one year
B) Affiliates’ licenses will be also suspended for a two-year period
C) Suspension has no effect on the affiliates
D) Affiliates’ licenses will be placed on involuntary inactive status

Answer 34

D) Affiliates’ licenses will be placed on involuntary inactive status

Question 35

A broker intends to open a branch office in a neighboring town. The broker applies for a branch office license, giving a name that clearly identifies its relationship with his main office. The broker names a licensed real estate salesperson as the broker in charge. Under these facts, will the broker receive approval for the branch office?
A) Yes, the broker has fully complied with the requirements of the license law
B) No, under the license law, broker cannot have branch offices in more than one municipality
C) Yes, by naming the salesperson as the broker in charge, the broker is in compliance with the requirement that a broker may be in direct operational control of only one office or branch
D) No, the broker in charge of a branch office must be licensed real estate broker

Answer 35

D) No, the broker in charge of a branch office must be licensed real estate broker

Brokers must be appointed for all branches as the Broker in Charge.

Question 36

A salesperson is not satisfied with her present real estate company and has decided to become associated with another. Before the salesperson can begin actively selling for the new company:
A) The first broker must transfer the salesperson’s license to the new office
B) The new broker must notify the commission of the change and send in the proper forms and fees
C) The salesperson must take her license to the new brokerage and notify the commission within three days of the transfer to a new location
D) The change form must be signed by the releasing broker and the hiring broker and turned into the Real Estate Commission within 10 days from the date the releasing broker signs the form.

Answer 36

D) The change form must be signed by the releasing broker and the hiring broker and turned into the Real Estate Commission within 10 days from the date the releasing broker signs the form.

Question 37

In any real estate sales transaction that a broker negotiates, the broker is not required to:
A) Inform the buyer of his of her personal opinion of the condition of the seller’s title to the property
B) Make sure that the written purchase and sales agreement includes all the terms of the parties’ agreement
C) Review the closing statement for accuracy and see that a copy of it is delivered to both the buyer and the seller
D) Keep copies of all documents involved in the transaction in his or her files for three years after the year in which the transaction was closed

Answer 37

A) Inform the buyer of his of her personal opinion of the condition of the seller’s title to the property

Licensees are not to offer advice on subjects that are not within his area of expertise.

Question 38

Every Hawaii real estate office is required to:
A) Maintain escrow account records for five years
B) Keep transaction records for at least three years
C) Display signage at the office location
D) Employ at least one salesperson

Answer 38

B) Keep transaction records for at least three years

Question 39

Under the terms of a sales contract, the seller is required to provide a termite certificate. The seller requests that the broker order one. The broker does so, knowing she will receive a referral fee from the pest control company. Is this a violation of the license law?
A) No, as long as the fee is less than $25
B) No, as long as the fee is disclosed and consent is received from the client
C) Yes, a broker may not receive a referral fee
D) Yes, special fees may be paid to the broker only by the seller

Answer 39

B) No, as long as the fee is disclosed and consent is received from the client

All payments received by licensees from third party vendors must be disclosed to the principals that the licensee represents.

Question 40

All of the following statements regarding the Hawaii Real Estate Commission are true EXCEPT that:
A) The Hawaii Association of REALTORS ® selects members of the commission
B) The commission makes and enforces the rules by which all real estate licensees must abide
C) The examinations that must be taken by all applicants for real estate licensing are administered by an independent testing company
D) There are nine members on the Hawaii Real Estate Commission; at least four from Oahu, at least one each from the neighboring islands, and two public members

Answer 40

A) The Hawaii Association of REALTORS ® selects members of the commission

The governor selects the members of the commission.

Question 41

The real estate commission has the authority to:
A) Make and enforce the rules by which all real estate licensees must abide
B) Compose the examination questions on the state exam
C) Administer the exams given at the testing sites
D) Enact the laws which govern real estate licensees

Answer 41

A) Make and enforce the rules by which all real estate licensees must abide

Question 42

Who conducts an investigation of a licensee in Hawaii?
A) Hawaii Association of REALTORS ®
B) Regulated Industries Complaints Office
C) Hawaii Real Estate Commission
D) A disgruntled customer

Answer 42

B) Regulated Industries Complaints Office

Question 43

The principal broker is taking an extended vacation and is not able to find a temporary broker in charge to supervise his sales associates. What should the broker do?
A) Tell the sales associates to take a vacation
B) Notify the real estate commission that the sales associates will be unsupervised
C) Place one of the senior sales associates in charge
D) Place the brokerage firm’s and sales associates’ licenses on an inactive status until returning from vacation

Answer 43

D) Place the brokerage firm’s and sales associates’ licenses on an inactive status until returning from vacation

Question 44

Of the following, who must obtain a real estate license and therefore is not exempt from the provisions of the Hawaii Real Estate License Act?
A) Property owner who sells or leases his or her own property
B) Individual who receives compensation for procuring prospective buyers or tenants of real estate for others
C) Individual who is employed as a resident manager of a condominium
D) Any person who manages, rents, or operates a hotel

Answer 44

B) Individual who receives compensation for procuring prospective buyers or tenants of real estate for others

Question 45

Which of the following is a requirement to obtain a real estate salesperson’s license in Hawaii?
A) Successful completion of 12 credit hours of real estate law, investments, finance, and appraisal
B) An associate degree or certificate in real estate from an accredited college, university, or proprietary school
C) United States citizenship
D) Successful completion of a commission approved course of 60 class hours

Answer 45

D) Successful completion of a commission approved course of 60 class hours

Question 46

The office manager for a local real estate firm is responsible for the following activities: coordinating the flow of paperwork through the office, preparing forms and advertising copy, and hiring and supervising clerical personnel. The office manager is
A) Violating the license law
B) Required to have a broker’s license
C) Required to have a salesperson’s license
D) Exempt from real estate licensing requirements

Answer 46

D) Exempt from real estate licensing requirements

Question 47

A person successfully passed the Hawaii real estate exam on November 1, 2012. What is the latest date on which he or she may apply for a salesperson's license?
 A) December 31, 2012
 B) February 1, 2012
 C) November 1, 2014
 D) November 30, 2012

Answer 47

C) November 1, 2014

The successful candidate has 2 years to activate his license or put his license on inactive status.

Question 48

An unlicensed individual who engages in activities is subject to which of the following penalties?
A) Fine not to exceed $1,000
B) Fine not to exceed $1,000 and one year imprisonment
C) Fine of not more than $5,000 per violation
D) Civil penalty not to exceed $5,000 and a mandatory prison term not to exceed five years

Answer 48

C) Fine of not more than $5,000 per violation

Question 49

Which of the following situations would satisfy the biennial CE requirement in Hawaii?
A) Taking a twelve-hour course on using spreadsheet programs effectively in a real estate office, offered by a local community college
B) Taking a six-hour course on managing agricultural property, offered by an approved CE sponsor
C) Taking commission approved 2 core courses for 5 hours and 15 hours of commission approved elective courses
D) Teaching a prelicense course several evenings a week

Answer 49

C) Taking commission approved 2 core courses for 5 hours and 15 hours of commission approved elective courses

Question 50

In Hawaii, an unlicensed real estate assistant may perform all of the following activities EXCEPT:
A) Compute commission checks
B) Assemble documents required for a closing
C) Explain legal documents to prospective buyers
D) Prepare flyers and promotional materials

Answer 50

C) Explain legal documents to prospective buyers