Module 3

Question 1

Mr. Juarez, a Spanish-American man, went to a real estate agency to rent a home. They placed him with a Spanish-speaking salesperson, who showed Mr. Juarez properties in Spanish-speaking areas only. Mr. Juarez asked about a house he had seen in a Caucasian neighborhood. The salesperson lied in telling Mr. Juarez that the property had already been rented. This is:

A) Illegal discrimination based upon the company policy of placing individuals with salespersons of the same ethnic background
B) Not illegal, because the property was already rented
C) An illegal practice under the Federal Fair Housing Act, because of blockbusting
D) An illegal practice under the Federal Fair Housing Act, because of steering

Answer 1

D) An illegal practice under the Federal Fair Housing Act, because of steering

Steering is a violation of the Fair Housing Law.

Question 2

Two brokers know that a house, which sold, is now a commune. The brokers, seeking quick gain, call the owners in the neighborhood to get them to sell, saying, “It’s becoming a communal neighborhood and everyone knows hippies can’t take care of property.” This is:

A) A lawful practice
B) Unlawful panic-peddling
C) Unlawful discrimination
D) Unlawful intimidation

Answer 2

A) A lawful practice

Hippies are not a protected class.

Question 3

Mrs. Santos lives in a 4-unit building near a college. She rents 3 units to students, giving first choice to foreign students, since she feels they deserve assistance. She lists the rentals with a brokerage firm. Which of the following statements is true under the federal law?

A) It is lawful for the owner to do this, since she lives in one of the units
B) College housing does not come under the Federal Fair Housing Act because it is an affirmative act
C) The broker is required to give preference to foreign students, since it is the will of the owner
D) This is a special rental arrangement for students needing assistance, and as such does not come under the normal provisions of Fair Housing

Answer 3

A) It is lawful for the owner to do this, since she lives in one of the units

Under the federal law, an owner living in one unit and renting 3 or less units on the same property can discriminate on who lives next to the owner. In Hawaii, the owner can discriminate if the owner lives in one unit and rents 1 other unit on the property

Question 4

A developer is nearing completion of a cluster of vacation homes in a resort area. Its television advertisements use only white actors. No use is made of HUD Fair Housing logo because the developer is apprehensive that sales to black families will adversely affect its target market of white buyers. The developer’s sales personnel are instructed to quote higher prices to minority prospects and to claim untruthfully that the property has been sold to avoid minority transactions. Which statement about the developer’s policy is correct?

A) Ad using only white actors subjects the developer to criminal penalties under the Federal Fair Housing Act
B) Preferring white prospects is lawful because the Federal Fair Housing Act does not cover vacation homes
C) Failing to use HUD Fair Housing logo will result in the developer’s losing FHA loans in connection with the sale of his units
D) Quoting different prices to minority prospects violates the FFHA

Answer 4

D) Quoting different prices to minority prospects violates the FFHA

The same price must be quoted to all potential tenants or buyers

Question 5

Under the Federal Fair Housing Laws, which of the following is exempt?

A) Private clubs operating a non-commercial boarding house
B) Single-family houses sold through the services of a real estate broker
C) Both of the above
D) None of the above

Answer 5

A) Private clubs operating a non-commercial boarding house

The federal law allows private clubs to discriminate. The Hawaii law does not allow this practice.

Question 6

Which of the following is an example of “blockbusting” as defined by the Federal Fair Housing Act?

A) The purchase of a home by persons of the same religion as those already in the neighborhood
B) The attempt for profit, to persuade a person to sell his property by informing him that the minority group members are about to move into his neighborhood
C) Both of the above
D) None of the above

Answer 6

B) The attempt for profit, to persuade a person to sell his property by informing him that the minority group members are about to move into his neighborhood

Question 7

A religious institution that restricts its membership to a certain race operates a non-profit program to sell individual retirement homes to its members. According to the Federal Fair Housing Act, the use of which of the following would be prohibited in the transfer of title?

A) Title companies
B) Escrow agents
C) Both of the above
D) None of the above

Answer 7

C) Both of the above

If the religious organization does not discriminate in its’ membership to that religion, the religious organization can discriminate on who they rent or sell to

Question 8

In an allegation of discriminatory practices under the Federal Fair Housing Act, the burden of proof is on the:

A) Court
B) Defendant
C) Complainant
D) Department of Housing and Urban Development

Answer 8

C) Complainant

If the real estate firm displays a fair housing logo in the office, the burden of proof is on the complainant. If there is no fair housing logo, the burden of proof is on the real estate firm.

Question 9

Which of the following is a permissible practice under the Federal Fair Housing Law?

A) Taking into account the race of an applicant in fixing the terms of a bank loan to be used for the maintenance or repair of a dwelling
B) Inquiring into the financial condition of prospective purchaser of a dwelling who is a member of a racial or religious minority
C) Both of the above
D) None of the above

Answer 9

B) Inquiring into the financial condition of prospective purchaser of a dwelling who is a member of a racial or religious minority

As long as the lender does not discriminate based on the protected classes, inquires can be made

Question 10

Sally lives in Shady Oaks rental apartment, which is geared for singles only. Sally’s friend, Sue, divorced with 2 children, applied for and was denied a rental unit. Sally felt that this violated Fair Housing Laws concerning rentals and contacted the appropriate agencies. The owners of Shady Oaks then evicted Sally. These acts were:

A) Lawful, because renting laws do not cover monthly renting
B) Lawful, because laws do not cover singles
C) Unlawful, because they violated fair rental laws
D) Unlawful, because this was intimidation

Answer 10

D) Unlawful, because this was intimidation

Question 11

A developer has a project that he will legally sell or rent to a particular age group 80% of the units. What is the minimum age?

A) 42
B) 52
C) 55
D) 65

Answer 11

C) 55

Question 12

The State Law against discrimination in real property transactions specifies that it is a discriminatory practice on the part of the licensees to refuse any broker membership in a multiple listing association.

A) True
B) False

Answer 12

A) True

Question 13

Under the State Anti-Discrimination Act, the complaint must be filed within 180 days after the alleged discriminatory practice occurs.

A) True
B) False

Answer 13

A) True

Question 14

Under Hawaii’s Anti-Discrimination Laws, a respondent who is adjudged guilty:

A) Can appeal to the Real Estate Commission
B) Can obtain judicial review by filing a petition with the Circuit Court
C) Both of the above
D) None of the above

Answer 14

B) Can obtain judicial review by filing a petition with the Circuit Court

Question 15

At the hearing of a State of Hawaii discrimination case:

A) Evidence of the efforts to eliminate the discriminatory practice by conciliation is admissible
B) The testimony shall be taken under oath and transcribed
C) Both of the above
D) None of the above

Answer 15

B) The testimony shall be taken under oath and transcribed

Question 16

Civil actions in Hawaii can be commenced only within the periods prescribed by the statute of limitations. Which of the following is incorrect?

A) Civil actions must be commenced within 2 years for an action for libel, slander, forfeitures, or damages to persons and property
B) Civil actions must be commenced within 4 years for an action based on the grounds of fraud or mistake
C) Civil actions must be commenced within 6 years for an action for recovery of debt founded on a contract
D) Civil actions must be commenced within 20 years for an adverse possession claim or prescriptive easement

Answer 16

D) Civil actions must be commenced within 20 years for an adverse possession claim or prescriptive easement

Question 17

All of the following are true about Hawaii Discrimination Law EXCEPT that:

A) It broadly covers all real estate transactions, including residential, industrial, and commercial.
B) There is an exemption allowing discriminatory practice in the sale of a single family house when the owner does not use a real estate agent and does not use discriminatory advertising
C) A written complaint must be filed with the Hawaii Civil Rights Commission within 180 days
D) There is a rental exemption for an owner-occupant of two -unit dwelling

Answer 17

B) There is an exemption allowing discriminatory practice in the sale of a single family house when the owner does not use a real estate agent and does not use discriminatory advertising

There is no exemption under Hawaii law.

Question 18

By which of the following may the agency between a principal and the broker, who has an exclusive right-to-sell, be terminated?

A) By verbal request of the principal during the term
B) By mutual consent of the parties
C) Both of the above
D) None of the above

Answer 18

B) By mutual consent of the parties

Question 19

A broker obtains a listing each from Andy and Bea. One is an open listing, the other an exclusive listing. One week after the listings expire, Andy and Bea exchange properties without previously inspecting the properties. The salesperson is entitled to:

A) Commission from the open listing
B) Commission from the exclusive listing
C) Two commissions
D) No commissions

Answer 19

D) No commissions

Question 20

A broker can take the following for a deposit without the full disclosure to his principal:

A) A promissory note
B) A post-dated check
C) Both of the above
D) None of the above

Answer 20

D) None of the above

Question 21

The phrase “Principals Only” excludes:

A) Disinterested buyers
B) Real estate broker
C) Prospective buyers
D) Financially weak buyers

Answer 21

B) Real estate broker

The real estate broker could be a principal and would be allowed to negotiate with the seller.

Question 22

When listing his house with a broker, the seller says his house is structurally sound. Later, the broker finds that the dining floor has serious damage. The broker is obligated to:

A) Protect the seller by remaining silent
B) Warn the prospective buyer of the damage
C) Cancel the listing
D) Pay for damage repair

Answer 22

B) Warn the prospective buyer of the damage

The brokers for both buyer and seller and the seller are responsible for disclosing any defects that they may see.

Question 23

The relationship between a real estate licensee and principal is governed by the:

A) Statute of frauds
B) Law of representation
C) Law of agency
D) Statute of subordination

Answer 23

C) Law of agency

The agency fiduciary responsibility is from the agent to the principal.

Question 24

Salesperson Murakami of ABC Realty takes a listing at $85,000. He makes a note of the listing that sellers are willing to take $77,000, as they are in a hurry to sell. Salesperson Tanaka, also of ABC Realty, sees the listing with the note and makes a personal offer of $77,000 to Murakami. Murakami should:

A) Ignore the offer because Tanaka also works for ABC Realty
B) Tell the sellers to get another agent, so that he can represent Tanaka
C) Forward the offer to the sellers and inform them that Tanaka works for ABC Realty and is aware of the note
D) Wait until an $85,000 offer comes in

Answer 24

C) Forward the offer to the sellers and inform them that Tanaka works for ABC Realty and is aware of the note

Murakami needs to make sure that the seller has authorized Murakami to disclose that he will accept $77,000 in writing before sharing the information with other agents in and out of the office.

Question 25

At the request of the seller, a sales agent listed property for $75,000 and later learned that the real value of the property was $100,000. The sales agent bought the property himself for $75,000. The sales agent was in violation of his responsibilities to the seller in terms of:

A) Care
B) Loyalty
C) Responsibility
D) Accounting

Answer 25

B) Loyalty

Loyalty means that the agent will never take advantage of their client by using privileged information or giving wrong information to their client.

Question 26

Informal meetings among brokers to set commission rates is not against antitrust laws.
A) True
B) False

Answer 26

B) False

False. Collusion among brokers to set the commission rate is a violation of the antitrust law

Question 27

Most times, real estate commissions are set by company policy, but also could be further negotiated by the principal broker and the seller.

A) True
B) False

Answer 27

A) True

True. Commissions are always set between the Principal Broker and the client.

Question 28

A prospective buyer tells the seller’s listing agent that the zoning laws will be changing and that the property will be worth more money. The agent should:
A) Tell his seller as per his fiduciary responsibility
B) Keep it confidential
C) Buy the property himself and make a profit
D) None of the above

Answer 28

A) Tell his seller as per his fiduciary responsibility

Even if the rumor is unfounded, the agent should inform the client of the unfounded rumor and the agent should try to verify the information.

Question 29

You are a listing salesperson. Your relationship with the buyer is best described as:
 A) A client
 B) A principal
 C) A customer
 D) An agent

Answer 29

C) A customer

If there is no dual agency agreement, the listing office owes its fiduciary duties to the seller and the buyer would be a customer

Question 30

Bea, a licensed real estate salesperson, sees Ron’s advertisement “For Sale By Owner.” Bea calls Ron and asks if she can show the house. Ron says yes and leaves a key for Bea. Which of the following is true?

A) Ron is Bea’s principal
B) Bea is Ron’s agent
C) Bea’s broker is Ron’s agent for a reasonable period of time
D) No agency situation is created

Answer 30

D) No agency situation is created

Agency must be created in writing and clearly define who represents who in the transaction.

Question 31

The salesperson obtains an agreement from an owner to manage the owner's rental property. The salesperson can:
 A) Advertise property for rent
 B) Collect directly from the owner
 C) Both of the above
 D) None of the above

Answer 31

D) None of the above

The agency relationship is between the broker and the owner. All contracts and checks must be made to the broker.

Question 32

A salesperson accepts cash for a rental payment. The salesperson deposits the cash into his bank account and writes a personal check to his broker with a note stating that the amount represents rent payment. The scenario is best described:

A) Commingling of funds
B) Not commingling, since the check was not deposited by the salesperson
C) Salesperson should have kept the cash
D) None of the above

Answer 32

A) Commingling of funds

The intent was good, the action was a violation of the law. The funds should go directly to the client trust fund account.

Question 33

Sue wants to buy a piece of property. She calls her broker for advice and asks him to read the appraisal given to her by the seller, and then offer his opinion. The broker, anxious to make a commission, does not read the appraisal thoroughly and advised her to buy. After the purchase, Sue finds that she grossly overpaid for the property. The broker is:

A) Not responsible
B) Negligent and can be sued
C) Not qualified to give an opinion of the appraisal
D) Going to miss his next birthday

Answer 33

B) Negligent and can be sued

The broker was negligent by not reading the appraisal carefully and was out of his realm of expertise by attempting to give a value to the property as an unlicensed appraiser.

Question 34

A salesperson that is an Independent Contractor (IC) is responsible for which of the following?
A) G.E.T and estimated taxes
B) G.E.T and license fees
C) License fees
D) G.E.T, estimated taxes, and license fees

Answer 34

D) G.E.T, estimated taxes, and license fees

The licensee is an independent contractor and is responsible for all taxes.

Question 35

Where does a salesperson's primary loyalty lie?
 A) With his broker
 B) With his seller
 C) With his client
 D) With his mommy

Answer 35

A) With his broker

The broker and the salesperson have a subagency relationship.

Question 36

In the listing and marketing of leasehold property, which should be verified?
 A) Location of survey stakes
 B) Rights of parties in possession
 C) Both of the above
 D) None of the above

Answer 36

C) Both of the above

It is recommended that the agent attempt to locate the property pins if they are visible and verify who owns the property and who is the legal lessee.

Question 37

In an exclusive right to sell, an exclusion of parties would benefit the seller in what way?

A) Only the owner is allowed to show or sell the property
B) It would allow the seller to exclude certain people
C) It pays no commission
D) It provides that if the owner sells the property

Answer 37

B) It would allow the seller to exclude certain people

The seller has the right to exclude certain people that he does not want to sell to as long as the exclusion is not a violation of the fair housing laws

Question 38

Broker Ann has a three-month listing which expires on April 1st. On April 2nd, the seller gives the listing to broker Bea. On April 5th, broker Carl calls Ann and wants to show the house to a prospect. Broker Ann should:

A) Go with Carl and show the house
B) Tell Carl that the key is in the mailbox
C) Have Carl deal directly with Bea
D) Take the phone off the hook and forget to return the call

Answer 38

C) Have Carl deal directly with Bea

Once the listing is over and a new agent takes the listing, the new agent is the contact person for all future inquiries except for those persons who are on the protected list.

Question 39

An exclusive listing agreement is terminated only by:

A) A sale by the listing broker
B) Mutual consent when there is a default
C) Both of the above
D) None of the above
Sorry, that’s incorrect. The correct answer is D.
The key word is “only” and although conditions A and B could terminate the listing, that is not the only way the listing could be terminated.

Answer 39

D) None of the above

The key word is “only” and although conditions A and B could terminate the listing, that is not the only way the listing could be terminated.

Question 40

A client of Ben is interested in a property listed by Ben’s firm. What is true?

A) A Dual Agency is created
B) Ben should send his client elsewhere
C) Ben can represent the client because it is not his listing
D) Ben should have the seller list with another firm

Answer 40

A) A Dual Agency is created

Dual agencies can be created in many ways. Extreme care is needed when a dual agency situation is created and the agents must be neutral and protect the interests of both buyer and seller

Question 41

In completing a listing, a broker would obtain reliable information from:

A) Bureau of Conveyances
B) Owner of the Property
C) Real Estate Commission
D) Tax Office

Answer 41

A) Bureau of Conveyances

All of the recorded documents are available at the Bureau of Conveyances.

Question 42

In Hawaii, a real estate broker may not:

A) Charge a commission rate higher than other brokers in the community
B) Give written authorization to sales agents to deposit money into the client trust account
C) Advertise properties without placing the listing price in the ad
D) Allow sales agents to disburse funds from the client trust account

Answer 42

D) Allow sales agents to disburse funds from the client trust account

Only the trustees of the trust fund account are allowed to disburse funds. Trustees must be brokers and named in the trust document.

Question 43

All of the following must appear in a written listing agreement EXCEPT a:

A) Statement that the property must be shown to all prospective buyers regardless of race
B) Complete legal description of the property being sold
C) Time duration of the listing
D) Listing price of the property

Answer 43

B) Complete legal description of the property being sold

Legal descriptions are on the deed but not on the listing contract or the Purchase.

Question 44

Upon obtaining a listing, a broker or licensed salesperson is obligated to:
A) Set up a listing file and issue it a number in compliance with Hawaii Real Estate License Laws
B) Place advertisements in the local newspapers
C) Cooperate with every real estate office wishing to participate in the marketing of the listed property
D) Give the seller signing the listing a legible, signed, true, and correct copy

Answer 44

D) Give the seller signing the listing a legible, signed, true, and correct copy

The copy should be given immediately upon signing of the contract.

Question 45

A seller listed his house for sale with a broker on February 1. The listing agreement was to last five months. In April, the seller decided that the house was no longer for sale. Which of the following statements is true?

A) The seller has canceled the agreement and there are no penalties
B) The seller has withdrawn the broker’s authority to sell the property and may be subject to a penalty
C) The seller is required by law to leave his house on the market until June
D) The Hawaii Real Estate Commission will decide if the seller’s action is justifiable

Answer 45

B) The seller has withdrawn the broker’s authority to sell the property and may be subject to a penalty

The listing contract should be the source of the dates when the listing contract can be terminated.

Question 46

A licensed broker procures a ready, willing, and able buyer for his or her seller-principal. The seller first accepts the buyer’s offer in writing, then experiences a change of heart and withdraws the original acceptance. In this situation, the broker

A) Is entitled to collect a commission
B) Is out of luck because the transaction was never completed
C) May sue the buyer
D) May retain the deposit as commission

Answer 46

A) Is entitled to collect a commission

The listing contract states that commissions will be paid when the agent produces a ready, willing and able buyer at the terms and conditions that are acceptable to the seller.

Question 47

The listing agreement with a seller has expired, and the seller lists with a different brokerage firm. The original listing agent now has a buyer interested in the seller’s property. The original listing agent

A) Is a dual agent
B) Cannot disclose to the buyer offers received on the seller’s property while it was listed with him
C) Cannot disclose to the buyer information about the physical condition of the property
D) Cannot represent the buyer
CORRECT!
Even after the listing period has expired, the former listing agent has a fiduciary duty to not use any information that may be detrimental to the seller.

Answer 47

B) Cannot disclose to the buyer offers received on the seller’s property while it was listed with him

Even after the listing period has expired, the former listing agent has a fiduciary duty to not use any information that may be detrimental to the seller.

Question 48

A seller is required to give a buyer a Seller’s Real Property Disclosure Statement within 10 days of acceptance of the offer in all of the following transactions EXCEPT:

A) When the seller is not assisted by a licensed real estate agent
B) If the seller has resided on the property for the last year
C) A sale of commercial property
D) If the buyer plans on living on the property

Answer 48

C) A sale of commercial property

Only residential properties require the disclosure statement. Commercial properties are exempt.

Question 49

A broker took a listing for a small office building. Because the property is in excellent condition and produces a good, steady income, the broker’s salesperson has decided to purchase it as and investment. If the broker’s salesperson wishes to buy this property, the salesperson must:

A) Resign as the broker’s agent and make an offer after the owner has retained another broker
B) Have some third party purchase the property on the salesperson’s behalf so that the owner does not learn the true identity of the purchaser
C) Obtain permission from the Hawaii Real Estate Commission
D) Inform the owner in writing that the salesperson is a licensee when making an offer

Answer 49

D) Inform the owner in writing that the salesperson is a licensee when making an offer

Disclosure of the licensing status of the agent is required when making an offer as the buyer.

Question 50

Six months after the buyer bought a house, the roof leaked during a rainstorm. When the house was listed, the seller told the broker that the roof leaked, but they agreed not to tell any prospective buyers. The broker claims that the buyer did not ask about the roof. Under these facts the buyer

A) Can sue the broker for nondisclosure required by license law
B) Cannot sue the broker under the license law
C) Can sue the roofing contractor
D) Cannot do anything because the leaking roof could have been discovered by the inspection

Answer 50

A) Can sue the broker for nondisclosure required by license law

Concealing material information is a violation of the disclosure law