National Practice of Real Estate Flashcards
Most states require which of these to be included on all real estate advertising?
A)
Salesperson’s or broker associate’s name and license number
B)
Salesperson’s phone number
C)
Brokerage firm’s name
D)
Principal broker’s name
Most states require which of these to be included on all real estate advertising?
A)
Salesperson’s or broker associate’s name and license number
Incorrect Answer
B)
Salesperson’s phone number
Incorrect Answer
C)
Brokerage firm’s name
Correct Answer
D)
Principal broker’s name
Incorrect Answer
Explanation
Ads required the brokerage firm name as a minimum requirement so the ad can be traced back to the brokerage if there is an issue.
Reference: Practice of Real Estate > Advertising and Technology
After a particularly challenging transaction finally closes, a client gives the salesperson a check for $500 “for all your extra work.” Which of these statements is TRUE?
A)
The salesperson may accept the check if she deposits it immediately in a special escrow account.
B)
The salesperson may receive compensation only from her broker.
C)
While such compensation is irregular, it is appropriate for the salesperson to accept the check.
D)
The salesperson may accept the check, but the salesperson’s broker is entitled to 80% of the check.
After a particularly challenging transaction finally closes, a client gives the salesperson a check for $500 “for all your extra work.” Which of these statements is TRUE?
A)
The salesperson may accept the check if she deposits it immediately in a special escrow account.
Incorrect Answer
B)
The salesperson may receive compensation only from her broker.
Correct Answer
C)
While such compensation is irregular, it is appropriate for the salesperson to accept the check.
Incorrect Answer
D)
The salesperson may accept the check, but the salesperson’s broker is entitled to 80% of the check.
Incorrect Answer
Explanation
Most state statutes require that compensation for real estate brokerage activities be paid to licensed salespersons only by their own broker for work on any given transaction. The salesperson in this case may not receive a check directly from the client.
Reference: Practice of Real Estate > Supervision Practices
To be classified by the Internal Revenue Service as an independent contractor, a real estate salesperson may receive
A)
company-provided health insurance if negotiated with the broker.
B)
a company-provided automobile if negotiated with the broker.
C)
commissions on transactions as negotiated with the broker.
D)
a monthly salary or hourly wage as negotiated with the broker.
To be classified by the Internal Revenue Service as an independent contractor, a real estate salesperson may receive
A)
company-provided health insurance if negotiated with the broker.
Incorrect Answer
B)
a company-provided automobile if negotiated with the broker.
Incorrect Answer
C)
commissions on transactions as negotiated with the broker.
Correct Answer
D)
a monthly salary or hourly wage as negotiated with the broker.
Incorrect Answer
Explanation
An independent contractor may not receive any employee benefits, such as health insurance or a company-provided automobile. An independent contractor must not be treated as an employee for federal tax purposes by receiving a monthly salary or hourly wage.
Reference: Practice of Real Estate > Supervision Practices
A broker would have the right to dictate which of these to an independent contractor?
A)
Number of hours the person would have to work
B)
Sales meetings the person would need to attend
C)
Compensation the person would receive
D)
Work schedule the person would have to follow
A broker would have the right to dictate which of these to an independent contractor?
A)
Number of hours the person would have to work
Incorrect Answer
B)
Sales meetings the person would need to attend
Incorrect Answer
C)
Compensation the person would receive
Correct Answer
D)
Work schedule the person would have to follow
Incorrect Answer
Explanation
Brokers may dictate the compensation their independent contractors will receive for work not yet done, but they may not dictate working schedules or sales meetings to be attended. The Internal Revenue Service (IRS) would most likely classify persons employed with defined work schedules, including the numbers of hours worked, and required sales meetings as employees rather than independent contractors for income tax purposes.
Reference: Practice of Real Estate > Supervision Practices
A real estate brokerage firm used a third-party email service to send an unsolicited email to announce a reduced price on a listed property. A person who received the email chose to opt-out from receiving additional emails from the licensee. The opt-out request must be honored within
A)
30 days.
B)
5 days.
C)
2 days.
D)
10 days.
A real estate brokerage firm used a third-party email service to send an unsolicited email to announce a reduced price on a listed property. A person who received the email chose to opt-out from receiving additional emails from the licensee. The opt-out request must be honored within
A)
30 days.
Incorrect Answer
B)
5 days.
Incorrect Answer
C)
2 days.
Incorrect Answer
D)
10 days.
Correct Answer
Explanation
The CAN-SPAM Act requires that requests to opt-out of unsolicited emails must be honored within 10 business days. The Act also requires that the method to opt out be prominent within the email, and that the receiver be able to opt out from receiving future emails for at least 30 days after the message is sent.
Reference: Practice of Real Estate > Advertising and Technology
Emily Chan is currently using heroin but has a heartfelt desire to stop using illegal drugs. Jake Brown, a convicted drug dealer, is a recovering heroin addict who has been clean and sober for 10 years. Both apply for an available apartment unit. Under the federal Fair Housing Act’s handicap/disability classification, the landlord
A)
can reject both applications.
B)
can reject Emily Chan’s application.
C)
can reject Jake Brown’s application.
D)
must accept and consider both applications.
Emily Chan is currently using heroin but has a heartfelt desire to stop using illegal drugs. Jake Brown, a convicted drug dealer, is a recovering heroin addict who has been clean and sober for 10 years. Both apply for an available apartment unit. Under the federal Fair Housing Act’s handicap/disability classification, the landlord
A)
can reject both applications.
Correct Answer
B)
can reject Emily Chan’s application.
Incorrect Answer
C)
can reject Jake Brown’s application.
Incorrect Answer
D)
must accept and consider both applications.
Incorrect Answer
Explanation
The landlord can reject both applications. An alcoholic or a drug addict who is in recovery is protected under the federal Fair Housing Act’s handicap/disability classification. However, federal fair housing laws do not protect people who are either current users of illegal substances or have been convicted of distribution (sale) of illegal substances.
Reference: Practice of Real Estate > Federal Fair Housing Laws
Which of these conditions does NOT create a stigmatized property that may or may not be disclosed under the laws of some states?
A)
A murder occurred on the property.
B)
The owner of the property has AIDS.
C)
The property was the site of gang-related activity.
D)
A suicide occurred on the property.
Which of these conditions does NOT create a stigmatized property that may or may not be disclosed under the laws of some states?
A)
A murder occurred on the property.
Incorrect Answer
B)
The owner of the property has AIDS.
Correct Answer
C)
The property was the site of gang-related activity.
Incorrect Answer
D)
A suicide occurred on the property.
Incorrect Answer
Explanation
All the other events may stigmatize a property and may or may not allow disclosure to a prospective buyer under state laws. Under federal fair-housing laws, persons with AIDS are considered handicapped and members of a protected class. The fact that an occupant of a property has AIDS does not require disclosure to a prospective buyer.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
A salesperson finally concluded some extremely difficult negotiations resulting in the sale of a listed parcel of land. For all her extra efforts, she can legally receive a performance bonus directly from
A)
her principal broker.
B)
the seller.
C)
the buyer.
D)
no one.
A salesperson finally concluded some extremely difficult negotiations resulting in the sale of a listed parcel of land. For all her extra efforts, she can legally receive a performance bonus directly from
A)
her principal broker.
Correct Answer
B)
the seller.
Incorrect Answer
C)
the buyer.
Incorrect Answer
D)
no one.
Incorrect Answer
Explanation
Bonuses and commissions are paid directly to the broker, who then pays the salesperson. The salesperson may not receive commissions or bonuses from anyone other than her principal broker.
Reference: Practice of Real Estate > Supervision Practices
People suffering from AIDS and HIV are protected under which of the following classes in the federal Fair Housing Act of 1968, as amended?
A)
Familial status
B)
Handicap/disability
C)
Infectious disease
D)
Sex
People suffering from AIDS and HIV are protected under which of the following classes in the federal Fair Housing Act of 1968, as amended?
A)
Familial status
Incorrect Answer
B)
Handicap/disability
Correct Answer
C)
Infectious disease
Incorrect Answer
D)
Sex
Incorrect Answer
Explanation
People suffering from AIDS or HIV are protected under the handicap/disability classification. Infectious disease is not a protected class under the federal Fair Housing Act. The protected classes are race, religion, color, national origin, sex (added in 1974), familial status (added in 1988), and handicap/disability (added in 1988).
Reference: Practice of Real Estate > Federal Fair Housing Laws
The following ad appeared in the newspaper: “For sale: 4 BR brick home; Redwood School District; excellent Elm Street location; short walk to St. John’s Church and right on the bus line. Move-in condition; priced to sell.” Which statement is TRUE?
A)
The fair housing laws do not apply to newspaper advertising.
B)
The ad should state that the property is available to families with children.
C)
The ad describes the property for sale and is very appropriate.
D)
The ad should not mention St. John’s Church.
The following ad appeared in the newspaper: “For sale: 4 BR brick home; Redwood School District; excellent Elm Street location; short walk to St. John’s Church and right on the bus line. Move-in condition; priced to sell.” Which statement is TRUE?
A)
The fair housing laws do not apply to newspaper advertising.
Incorrect Answer
B)
The ad should state that the property is available to families with children.
Incorrect Answer
C)
The ad describes the property for sale and is very appropriate.
Incorrect Answer
D)
The ad should not mention St. John’s Church.
Correct Answer
Explanation
Reference to a nearby church implies religious preference and violates Department of Housing and Urban Development (HUD) advertising regulations designed to enforce the federal Fair Housing Act. The ad does not have to state that the property is available to families with children or to any protected class as long as the ad does not appear to discriminate against a particular protected class.
Reference: Practice of Real Estate > Advertising and Technology
During a job interview, a principal broker tells a salesperson that she will work for the brokerage firm as an independent contractor. As an independent contractor, what can the salesperson expect from her work with the broker?
A)
She must attend weekly sales meetings.
B)
She may participate in the firm’s health insurance plan.
C)
She will be required to work a minimum of 40 hours per week.
D)
At least 90% of her income will be based on sales production.
During a job interview, a principal broker tells a salesperson that she will work for the brokerage firm as an independent contractor. As an independent contractor, what can the salesperson expect from her work with the broker?
A)
She must attend weekly sales meetings.
Incorrect Answer
B)
She may participate in the firm’s health insurance plan.
Incorrect Answer
C)
She will be required to work a minimum of 40 hours per week.
Incorrect Answer
D)
At least 90% of her income will be based on sales production.
Correct Answer
Explanation
To be considered an independent contractor under Internal Revenue Service (IRS) rules, at least 90% of the salesperson’s income must be based on sales production. A broker may not require a minimum number of weekly hours or mandate sales meetings for independent contractors but may make such requirements for employees of the firm.
Reference: Practice of Real Estate > Supervision Practices
There are no exceptions to fair housing law for
A)
racial discrimination.
B)
retirement communities.
C)
religious organizations.
D)
private clubs.
There are no exceptions to fair housing law for
A)
racial discrimination.
Correct Answer
B)
retirement communities.
Incorrect Answer
C)
religious organizations.
Incorrect Answer
D)
private clubs.
Incorrect Answer
Explanation
The case of Jones v. Mayer in 1968 upheld the Civil Rights Act of 1866 and prohibits racial discrimination without exception. Private clubs, religious organizations, and retirement communities are not exempt from fair housing laws prohibitions against housing discrimination based on race.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
A salesperson has been trying for weeks to list a spectacular house for sale. The homeowners tell the salesperson that a competing company will charge a commission rate that is 2% lower than the commission rate charged by the salesperson’s brokerage firm. In order to get the listing, the salesperson should tell the owner that
A)
the competing firm cannot provide good services because it charges less commission.
B)
salespersons in the area will not show the competing firm’s listings because of its lower commission rates.
C)
his company provides excellent services to market its sellers’ properties.
D)
most brokers in the area charge a standard rate of commission.
A salesperson has been trying for weeks to list a spectacular house for sale. The homeowners tell the salesperson that a competing company will charge a commission rate that is 2% lower than the commission rate charged by the salesperson’s brokerage firm. In order to get the listing, the salesperson should tell the owner that
A)
the competing firm cannot provide good services because it charges less commission.
Incorrect Answer
B)
salespersons in the area will not show the competing firm’s listings because of its lower commission rates.
Incorrect Answer
C)
his company provides excellent services to market its sellers’ properties.
Correct Answer
D)
most brokers in the area charge a standard rate of commission.
Incorrect Answer
Explanation
The other possible statements imply that there is a standard commission rate among competing brokers. Antitrust laws prohibit price-fixing, the practice of setting prices for services rather than letting competition in the open market establish those prices. The salesperson should only focus on what his company can offer. Antitrust laws also forbid brokers from “boycotting” other brokers because of their fees.
Reference: Practice of Real Estate > Risk Management/Supervision
A salesperson’s written contract with her broker specifies that he is not an employee. In the last year, just less than half of the salesperson’s income from real estate activity came from sales commissions. The remainder was based on an hourly wage paid by the broker. Using these facts, it is MOST likely that the Internal Revenue Service (IRS) would classify the salesperson as which of these for federal income tax purposes?
A)
Self-employed
B)
Part-time real estate salesperson
C)
Employee
D)
Independent contractor
A salesperson’s written contract with her broker specifies that he is not an employee. In the last year, just less than half of the salesperson’s income from real estate activity came from sales commissions. The remainder was based on an hourly wage paid by the broker. Using these facts, it is MOST likely that the Internal Revenue Service (IRS) would classify the salesperson as which of these for federal income tax purposes?
A)
Self-employed
Incorrect Answer
B)
Part-time real estate salesperson
Incorrect Answer
C)
Employee
Correct Answer
D)
Independent contractor
Incorrect Answer
Explanation
Because her earnings were more than half in noncommissions, the IRS would not see her as a self-employed independent contractor and could treat her as an employee.
Reference: Practice of Real Estate > Supervision Practices
The mixing of trust funds with a broker’s personal funds is
A)
commingling.
B)
permitted in offices with fewer than three agents.
C)
legal in most states.
D)
conversion.
The mixing of trust funds with a broker’s personal funds is
A)
commingling.
Correct Answer
B)
permitted in offices with fewer than three agents.
Incorrect Answer
C)
legal in most states.
Incorrect Answer
D)
conversion.
Incorrect Answer
Explanation
Commingling, or mixing of funds, is illegal, regardless of the size of an office. Conversion occurs when brokers use escrow funds for their own use.
Reference: Practice of Real Estate > Supervision Practices
A broker has established the following office policy: “All listings taken by any salesperson associated with this real estate brokerage must include compensation based on a 10% commission. No lower commission rate is acceptable.” If the broker attempts to impose this uniform commission requirement, which statement is TRUE?
A)
The salespeople associated with the brokerage will not be bound by the requirement and may negotiate any commission rate they choose.
B)
The broker must present the uniform commission policy to the local professional association for approval.
C)
A homeowner may sue the broker for violating the antitrust law’s prohibition against price-fixing.
D)
The broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm.
A broker has established the following office policy: “All listings taken by any salesperson associated with this real estate brokerage must include compensation based on a 10% commission. No lower commission rate is acceptable.” If the broker attempts to impose this uniform commission requirement, which statement is TRUE?
A)
The salespeople associated with the brokerage will not be bound by the requirement and may negotiate any commission rate they choose.
Incorrect Answer
B)
The broker must present the uniform commission policy to the local professional association for approval.
Incorrect Answer
C)
A homeowner may sue the broker for violating the antitrust law’s prohibition against price-fixing.
Incorrect Answer
D)
The broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm.
Correct Answer
Explanation
Antitrust violations occur only if price-fixing exists among competing firms. Brokers have the right to set commissions within their own firm. The broker’s policy is not an antitrust violation. Salespeople who wish to continue with that broker can be required to comply with the policy.
Reference: Practice of Real Estate > Risk Management/Supervision
Brokerage commissions charged to sellers in listing contracts for the sale of real property are MOST typically set by
A)
negotiation between local brokerage firms.
B)
negotiations between the state commission and the principal broker.
C)
the principal broker and then negotiated with the seller.
D)
the brokerage firm and board of REALTORS®.
Brokerage commissions charged to sellers in listing contracts for the sale of real property are MOST typically set by
A)
negotiation between local brokerage firms.
Incorrect Answer
B)
negotiations between the state commission and the principal broker.
Incorrect Answer
C)
the principal broker and then negotiated with the seller.
Correct Answer
D)
the brokerage firm and board of REALTORS®.
Incorrect Answer
Explanation
The principal broker has the right to set the minimum commission for the firm, and then the broker associates and salespeople can negotiate the level of commission they need to complete the job as created by the listing contract. The commission, local firms, and the board of REALTORS® may not be a party to the firm’s commission decision or negotiations.
Reference: Practice of Real Estate > Supervision Practices
A firm’s broker associate and a salesperson have been found guilty of violating the state real estate license law and have had their real estate licenses revoked. In this case, the principal broker
A)
might have to make a claim against his errors and omissions (E & O) insurance.
B)
should not be concerned because broker associates do not need to be supervised.
C)
may be found guilty of improper supervision.
D)
would most likely have to pay a civil fine in addition to having his license revoked.
A firm’s broker associate and a salesperson have been found guilty of violating the state real estate license law and have had their real estate licenses revoked. In this case, the principal broker
A)
might have to make a claim against his errors and omissions (E & O) insurance.
Incorrect Answer
B)
should not be concerned because broker associates do not need to be supervised.
Incorrect Answer
C)
may be found guilty of improper supervision.
Correct Answer
D)
would most likely have to pay a civil fine in addition to having his license revoked.
Incorrect Answer
Explanation
A principal broker is responsible for supervising all licensees in the firm. E & O insurance would not cover this type of issue. Civil fines are created in civil court not through a hearing at a real estate commission.
Reference: Practice of Real Estate > Risk Management/Supervision
A principal broker hires a salesperson as an employee of the brokerage firm. The employment contract between the broker and the salesperson will most likely include all of these EXCEPT
A)
the broker will withhold federal income taxes and Social Security taxes from the salesperson’s paycheck.
B)
the salesperson is entitled to the firm’s health insurance plan.
C)
the salesperson is responsible for direct payment of all income taxes and Social Security contributions from each paycheck.
D)
the salesperson attends weekly sales meeting.
A principal broker hires a salesperson as an employee of the brokerage firm. The employment contract between the broker and the salesperson will most likely include all of these EXCEPT
A)
the broker will withhold federal income taxes and Social Security taxes from the salesperson’s paycheck.
Incorrect Answer
B)
the salesperson is entitled to the firm’s health insurance plan.
Incorrect Answer
C)
the salesperson is responsible for direct payment of all income taxes and Social Security contributions from each paycheck.
Correct Answer
D)
the salesperson attends weekly sales meeting.
Incorrect Answer
Explanation
A broker is responsible for withholding federal income taxes and Social Security contributions from an employee’s paycheck. The broker may require that the employee attend sales meeting and may include the employee in the firm’s benefits, including a health insurance plan. A salesperson employed as an independent contractor is responsible for direct payment of all federal taxes and any required state taxes.
Reference: Practice of Real Estate > Supervision Practices
Federal fair housing law of 1988 added additional protected classes. Landlords under this law must rent to those who are protected under the law. As of 1988, all of these are protected EXCEPT
A)
a woman diagnosed was having HIV/AIDS.
B)
a user of illegal drugs currently in a rehabilitation program.
C)
a woman convicted of sexual molestation.
D)
a woman who has three children under five and is expecting a fourth wants to rent a two-bedroom unit.
Federal fair housing law of 1988 added additional protected classes. Landlords under this law must rent to those who are protected under the law. As of 1988, all of these are protected EXCEPT
A)
a woman diagnosed was having HIV/AIDS.
Incorrect Answer
B)
a user of illegal drugs currently in a rehabilitation program.
Incorrect Answer
C)
a woman convicted of sexual molestation.
Correct Answer
D)
a woman who has three children under five and is expecting a fourth wants to rent a two-bedroom unit.
Incorrect Answer
Explanation
Sexual molesters are not protected under any federal law. The 1988 law added protections for disability and familial status. Having HIV/AIDS or being an illegal drug user in rehabilitation is covered under disability in the fair housing law. Typically, children under five are not considered as part of occupancy requirements, so the landlord would need to rent to the family because they are protected under familial status.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
The act of directing homeseekers toward or away from particular areas either to maintain or to change the character of the neighborhood is
A)
legal.
B)
blockbusting.
C)
steering.
D)
redlining.
The act of directing homeseekers toward or away from particular areas either to maintain or to change the character of the neighborhood is
A)
legal.
Incorrect Answer
B)
blockbusting.
Incorrect Answer
C)
steering.
Correct Answer
D)
redlining.
Incorrect Answer
Explanation
A person who guides prospects either toward or away from certain neighborhoods based on racial, ethnic, religious, or similar concerns is guilty of steering. This practice is outlawed by the federal Fair Housing Act of 1968 and is not legal. Whether it is done to promote housing segregation or integration is immaterial. Redlining is the illegal practice of refusing to make a mortgage loan or restricting the number of loans in a particular area. Blockbusting is inducing panic selling by claiming that the entry of a protected class will have some sort of negative impact on property values.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
A broker assigns a salesperson to work open houses in a new subdivision for a developer that the firm represents. After two months, the salesperson’s work has resulted in sales above the developer’s expectations, and he offers to pay the salesperson a $1,000 bonus. The salesperson may receive the bonus payment
A)
from the developer if the bonus is placed in the broker’s trust account.
B)
from the developer if permission is granted from the state regulatory agency.
C)
only if paid after the salesperson’s assignment to the subdivision ends.
D)
only if paid from her principal broker.
A broker assigns a salesperson to work open houses in a new subdivision for a developer that the firm represents. After two months, the salesperson’s work has resulted in sales above the developer’s expectations, and he offers to pay the salesperson a $1,000 bonus. The salesperson may receive the bonus payment
A)
from the developer if the bonus is placed in the broker’s trust account.
Incorrect Answer
B)
from the developer if permission is granted from the state regulatory agency.
Incorrect Answer
C)
only if paid after the salesperson’s assignment to the subdivision ends.
Incorrect Answer
D)
only if paid from her principal broker.
Correct Answer
Explanation
Salespersons may not receive commissions or bonus payments from anyone other than their principal broker. The salesperson may receive the bonus payment if the developer pays it directly to the broker, who then gives all or part of the bonus to the salesperson, depending on the salesperson’s employment agreement with the broker. Payments of this type would be deposited into the firm’s operations account, not put into a trust account.
Reference: Practice of Real Estate > Supervision Practices
The Civil Rights Act of 1866 prohibits any limitation of property rights based on
A)
handicap.
B)
race.
C)
sex.
D)
religion.
The Civil Rights Act of 1866 prohibits any limitation of property rights based on
A)
handicap.
Incorrect Answer
B)
race.
Correct Answer
C)
sex.
Incorrect Answer
D)
religion.
Incorrect Answer
Explanation
The federal government’s effort to guarantee equal housing opportunities to all U.S. citizens began with the passage of the Civil Rights Act of 1866. This law prohibits any discrimination based on race. Religion, sex, and handicap are protected classes under federal fair housing laws enacted in 1968 and 1988.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
Why is the Civil Rights Act of 1866 unique?
A)
It adds recipient of public assistance as a protected class.
B)
It contains “choose your neighbor” provisions.
C)
It has been broadened to protect seniors.
D)
It provides no exceptions that would permit racial discrimination.
Why is the Civil Rights Act of 1866 unique?
A)
It adds recipient of public assistance as a protected class.
Incorrect Answer
B)
It contains “choose your neighbor” provisions.
Incorrect Answer
C)
It has been broadened to protect seniors.
Incorrect Answer
D)
It provides no exceptions that would permit racial discrimination.
Correct Answer
Explanation
Unlike other exemptions permitted under the federal Fair Housing Act of 1968, the Civil Rights Act of 1866 allows no exceptions due to race. Recipients of public assistance are not protected classes under any fair housing law but are protected under the Equal Credit Opportunity Act (ECOA). Senior housing protections are in the Fair Housing Act of 1988, not the Civil Right Act of 1866. No fair housing laws contain a “choose your neighbor” provision.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
Two salespersons both work for the same real estate firm. One afternoon they agree to divide their town into a northern region and a southern region. One will handle listings in the northern region, and the other will handle listings in the southern region. Their agreement
A)
violates the Sherman Antitrust Act and makes the salespersons liable for triple damages.
B)
is an illegal boycott of other salespeople in their office.
C)
constitutes illegal price-fixing.
D)
does not violate antitrust laws.
Two salespersons both work for the same real estate firm. One afternoon they agree to divide their town into a northern region and a southern region. One will handle listings in the northern region, and the other will handle listings in the southern region. Their agreement
A)
violates the Sherman Antitrust Act and makes the salespersons liable for triple damages.
Incorrect Answer
B)
is an illegal boycott of other salespeople in their office.
Incorrect Answer
C)
constitutes illegal price-fixing.
Incorrect Answer
D)
does not violate antitrust laws.
Correct Answer
Explanation
Antitrust laws prohibit price-fixing and other antitrust activities between competing firms. Because both salespersons work for the same firm, their agreement is not an agreement between competing companies to divide markets. The salespersons are merely fixing responsibilities within one company. Their agreement is quite proper and not subject to antitrust law.
Reference: Practice of Real Estate > Risk Management/Supervision
After a broker takes a listing of a residence, the owner specifies that he will not sell his home to any family that is not of the same Asian background as the seller. The broker should do which of these?
A)
Advertise the property exclusively in Asian language newspapers.
B)
Require that the owner sign a separate legal document stating the additional instruction as an amendment to the listing agreement.
C)
Abide by the principal’s directions despite the fact that they conflict with the fair housing laws.
D)
Explain to the owner that his instruction violates federal law and that the broker cannot comply with it.
After a broker takes a listing of a residence, the owner specifies that he will not sell his home to any family that is not of the same Asian background as the seller. The broker should do which of these?
A)
Advertise the property exclusively in Asian language newspapers.
Incorrect Answer
B)
Require that the owner sign a separate legal document stating the additional instruction as an amendment to the listing agreement.
Incorrect Answer
C)
Abide by the principal’s directions despite the fact that they conflict with the fair housing laws.
Incorrect Answer
D)
Explain to the owner that his instruction violates federal law and that the broker cannot comply with it.
Correct Answer
Explanation
The situation places the broker in the position of either violating the fiduciary duty of obedience or violating the federal Fair Housing Act. To avoid breaking the law, the broker must end the agency agreement if the owner insists on the discriminatory instruction. The broker may not advertise the property exclusively in foreign-language newspapers, and a legal document signed by the owner does not exempt the broker from following fair housing laws.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
The requirements for being an independent contractor for a salesperson and a principal broker include all of these EXCEPT
A)
most of the salesperson’s income will be based on sales production.
B)
the salesperson has a current real estate license.
C)
the salesperson has signed an independent contractor agreement with the principal broker.
D)
the principal broker will withhold taxes from the salesperson’s compensation.
The requirements for being an independent contractor for a salesperson and a principal broker include all of these EXCEPT
A)
most of the salesperson’s income will be based on sales production.
Incorrect Answer
B)
the salesperson has a current real estate license.
Incorrect Answer
C)
the salesperson has signed an independent contractor agreement with the principal broker.
Incorrect Answer
D)
the principal broker will withhold taxes from the salesperson’s compensation.
Correct Answer
Explanation
A broker does not withhold federal or Social Security taxes from an independent contractor’s commissions. A principal broker is required to make those withholdings for all employees. An independent contractor situation must include the other three requirements to meet the conditions for independent contractor status established by the Internal Revenue Service (IRS).
Reference: Practice of Real Estate > Supervision Practices
A lender’s refusal to lend money to potential homeowners attempting to purchase properties in areas with high crime rates is known as
A)
legal redlining.
B)
illegal redlining.
C)
steering.
D)
blockbusting.
A lender’s refusal to lend money to potential homeowners attempting to purchase properties in areas with high crime rates is known as
A)
legal redlining.
Incorrect Answer
B)
illegal redlining.
Correct Answer
C)
steering.
Incorrect Answer
D)
blockbusting.
Incorrect Answer
Explanation
Failing to lend or to insure in areas with high crime rates is a form of redlining and a violation of the federal Fair Housing Act and is never legal. Such practices tend to discriminate against protected classes who largely populate such areas. Blockbusting is inducing panic selling by claiming that the entry of a protected class will have some sort of negative impact on property values. Steering is the channeling of homebuyers to a particular neighborhood to maintain or change the character of the neighborhood.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
All of these are protected under federal fair housing laws EXCEPT
A)
children.
B)
Muslims.
C)
Baptists.
D)
sexual orientation.
All of these are protected under federal fair housing laws EXCEPT
A)
children.
Incorrect Answer
B)
Muslims.
Incorrect Answer
C)
Baptists.
Incorrect Answer
D)
sexual orientation.
Correct Answer
Explanation
Sexual orientation may be protected under state or local fair housing laws, but sexual orientation is not a protected class under federal law. Protected classes under federal law include race, color, religion, or national origin, sex, disability, and familial status.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
All of these actions are illegal under federal and state fair housing laws EXCEPT
A)
refusing to show certain residential property to non-English-speaking individuals.
B)
refusing to show certain residential property to people who are not financially qualified to purchase it.
C)
offering advantageous loan terms to encourage the integration of a residential area.
D)
channeling members of a certain minority group into an area already predominately occupied by members of that minority.
All of these actions are illegal under federal and state fair housing laws EXCEPT
A)
refusing to show certain residential property to non-English-speaking individuals.
Incorrect Answer
B)
refusing to show certain residential property to people who are not financially qualified to purchase it.
Correct Answer
C)
offering advantageous loan terms to encourage the integration of a residential area.
Incorrect Answer
D)
channeling members of a certain minority group into an area already predominately occupied by members of that minority.
Incorrect Answer
Explanation
People who are not financially qualified to buy are not protected under the federal Fair Housing Act. The Act does prohibit discriminating against persons based on their race or ethnicity or steering persons to a particular area based on their minority status. Lenders may not steer racial or ethnic groups to a particular residential area through loan terms designed to attract those groups.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
A couple makes a written request that a real estate brokerage firm not contact the seller once the sale of their home is completed. Under this circumstance, the broker may
A)
contact the seller for up to 3 months after the transaction.
B)
not contact the seller at any time.
C)
contact the seller to conduct a consumer survey about the transaction.
D)
contact the seller for up to 18 months after the transaction.
A couple makes a written request that a real estate brokerage firm not contact the seller once the sale of their home is completed. Under this circumstance, the broker may
A)
contact the seller for up to 3 months after the transaction.
Incorrect Answer
B)
not contact the seller at any time.
Correct Answer
C)
contact the seller to conduct a consumer survey about the transaction.
Incorrect Answer
D)
contact the seller for up to 18 months after the transaction.
Incorrect Answer
Explanation
If a consumer asks a company not to call, even if the company has an established business relationship with the consumer, the company must abide by the consumer’s request. The request stays in effect for 5 years. If a consumer does not make such a request, a broker may contact the consumer for up to 18 months after the consumer’s last purchase, delivery, or payment. The broker may call a consumer for up to 3 months after the consumer makes an inquiry or submits an application.
Reference: Practice of Real Estate > Advertising and Technology
A prospective tenant suspected that his application to live in a residential apartment complex was denied on the basis of race. The tenant met with an attorney three years following the alleged discrimination. If the attorney declined the case on legal grounds, it is most likely due to all of the following EXCEPT
A)
the complaint could no longer be filed in federal court.
B)
this incident fell under a rare exception to liability for housing discrimination based on race.
C)
the statute of limitations would bar pursuing federal redress for the alleged incident.
D)
the complaint could no longer be filed at the Department of Housing and Urban Development (HUD).
A prospective tenant suspected that his application to live in a residential apartment complex was denied on the basis of race. The tenant met with an attorney three years following the alleged discrimination. If the attorney declined the case on legal grounds, it is most likely due to all of the following EXCEPT
A)
the complaint could no longer be filed in federal court.
Incorrect Answer
B)
this incident fell under a rare exception to liability for housing discrimination based on race.
Correct Answer
C)
the statute of limitations would bar pursuing federal redress for the alleged incident.
Incorrect Answer
D)
the complaint could no longer be filed at the Department of Housing and Urban Development (HUD).
Incorrect Answer
Explanation
There are no exceptions under federal fair housing laws that allow discrimination on the basis of race in housing. The incident of discrimination on the basis of race occurred too far in the past to pursue legal redress under the other options presented. The statute of limitations would bar this complaint. Complaints must be filed in federal court within two years and filed with HUD within one year.
Reference: Practice of Real Estate > Federal Fair Housing Laws
Salespersons working as employees for a principal broker can be required to
A)
work specific hours each day as assigned by the broker.
B)
advertise properties only in their name.
C)
decline to have their federal income tax withheld by the broker.
D)
deposit all earnest money into their personal escrow account.
Salespersons working as employees for a principal broker can be required to
A)
work specific hours each day as assigned by the broker.
Correct Answer
B)
advertise properties only in their name.
Incorrect Answer
C)
decline to have their federal income tax withheld by the broker.
Incorrect Answer
D)
deposit all earnest money into their personal escrow account.
Incorrect Answer
Explanation
The answer is work specific hours each day as assigned by the broker. A broker who hires a salesperson as an employee may expect the salesperson to follow rules governing such activities as working hours, office hours, and attendance at meetings. A broker is required to withhold federal income taxes and Social Security taxes from the payroll of any employee. A salesperson hired as an employee or as an independent contractor must advertise properties in the name of the brokerage firm and deposit earnest money into the broker’s designated escrow account.
Reference: Practice of Real Estate > Supervision Practices
A broker, upon reconciling, realized that his office manager had deposited operation funds into the earnest money account. This could be considered
A)
misappropriation.
B)
conversion.
C)
nothing to worry about.
D)
commingling.
A broker, upon reconciling, realized that his office manager had deposited operation funds into the earnest money account. This could be considered
A)
misappropriation.
Incorrect Answer
B)
conversion.
Incorrect Answer
C)
nothing to worry about.
Incorrect Answer
D)
commingling.
Correct Answer
Explanation
Commingling of funds occurs when funds for one account are mixed with those of another. In this case, the broker would be obligated to remove the funds, note the comingling and retrain the manager. Conversion and misappropriation are knowingly using someone else’s funds.
Reference: Practice of Real Estate > Risk Management/Supervision
A prospective homebuyer who has three children inquires about the availability of a home in an area of predominately single and married couples without children. What should the broker say to this prospect?
A)
“I’d be happy to show you homes in other areas where there are more children.”
B)
“The residents here have expressed a desire to keep the area quiet and without children.”
C)
“I’ll be pleased to show you houses in any area that you’re interested in.”
D)
“You wouldn’t want to live in this area because the neighbors don’t like children and may be disrespectful to your family.”
A prospective homebuyer who has three children inquires about the availability of a home in an area of predominately single and married couples without children. What should the broker say to this prospect?
A)
“I’d be happy to show you homes in other areas where there are more children.”
Incorrect Answer
B)
“The residents here have expressed a desire to keep the area quiet and without children.”
Incorrect Answer
C)
“I’ll be pleased to show you houses in any area that you’re interested in.”
Correct Answer
D)
“You wouldn’t want to live in this area because the neighbors don’t like children and may be disrespectful to your family.”
Incorrect Answer
Explanation
The broker must not channel homeseekers toward or away from particular neighborhoods based on familial status. This practice is called steering.
Reference: Practice of Real Estate > Americans with Disabilities (ADA) Act
According to federal do-not-call legislation, when a consumer makes an inquiry or submits an application, a real estate licensee may call the consumer for up to
A)
4 months.
B)
6 months.
C)
3 months.
D)
18 months.
According to federal do-not-call legislation, when a consumer makes an inquiry or submits an application, a real estate licensee may call the consumer for up to
A)
4 months.
Incorrect Answer
B)
6 months.
Incorrect Answer
C)
3 months.
Correct Answer
D)
18 months.
Incorrect Answer
Explanation
A real estate licensee may call a consumer for up to 3 months after the consumer makes an inquiry or submits an application. A licensee may call consumers with whom they have an established business relationship for up to 18 months after the consumer’s last purchase, delivery, or payment.
Reference: Practice of Real Estate > Advertising and Technology
