Part 5 Flashcards
If a sales agent uses the Texas REALTORS® Legal Hotline without telling their broker, what will happen?
A. Their license could be suspended for bypassing their broker
B. The broker will be notified by email that the call was made
C. TXR will charge the agent a one-time fee
D. The hotline will redirect the call to the broker instead
B
What is one cost-effective alternative to hiring a full-time attorney for occasional legal questions?
A. Join an attorney referral group licensed by TREC
B. Hire a law student for document preparation
C. Subscribe to a legal association with monthly access to on-call attorneys
D. Rely on free online legal resources from the SBA
C
What is the biggest risk of handling legal issues yourself instead of consulting an attorney?
A. You may accidentally violate federal tax law
B. You could escalate the issue and end up paying more later
C. You may be disqualified from holding a broker license
D. TREC requires attorney review for all business filings
B/ Trying to handle legal issues without expert help may seem cheaper, but it often leads to bigger problems and higher costs.
What is the main reason to involve both your accountant and attorney when forming your business entity?
A. TREC requires both to approve new broker applications
B. They must sign off on your MLS access and business license
C. To coordinate legal structure and tax planning from the start
D. To avoid being double-taxed by both the state and federal government
C
Why is it beneficial to follow your accountant’s advice on bookkeeping software?
A. It ensures your license remains active with TREC
B. It eliminates the need for a payroll system
C. It simplifies your recordkeeping and tax prep process later
D. It gives agents access to edit your financial records
C
- What kind of advice might an experienced accountant give you if your business isn’t financially viable?
A. How to transfer your business license to another broker
B. Whether it’s time to shut the business down
C. How to lower your commission splits to agents
D. How to refinance your personal home to cover operating costs
B
What is the benefit of having a long-standing relationship with an insurance agent for your real estate business?
A. They will offer free legal consultation on contracts
B. They can help customize the right mix of policies based on your risk
C. They can process TREC license renewals
D. They are required to co-sign your business loan documents
B
What is a key factor besides personal trust you should consider when selecting an insurance provider?
A. Their proximity to your office location
B. Whether they offer cash-back rewards
C. The financial strength and reliability of the insurance company
D. If they allow agents to make changes directly to policies
C
Why is it important to understand the finer points of your insurance policy before making a claim?
A. It’s required to complete your business license application
B. Policy details are negotiable only at the time of claim
C. So you’re not surprised by exclusions, limitations, or large deductibles
D. Most policies are invalid unless reviewed by a CPA and attorney
C
What is the primary risk of choosing an insurance company with a lower rating to save money?
A. They may cancel your policy if your credit score drops
B. You may be overinsured and paying for unnecessary coverage
C. You may face denied claims or unexpected gaps in coverage during a loss
D. TREC will not accept your proof of insurance from a non-A-rated provide
C
What is the recommended frequency for reconciling your general operating account?
A. Weekly
B. Monthly
C. Quarterly
D. Annually
B
What is one likely benefit of keeping your financial records accurate and up to date?
A. It guarantees loan approval from your bank
B. It allows sales agents to monitor business expenses
C. It gives the broker a clearer sense of confidence and control over daily decisions
D. It meets TREC’s monthly licensing review requirement
C
What risk is reduced when a business owner uses a trusted bank payroll system or payroll provider instead of handling payroll manually?
A. Delays in marketing campaign rollouts
B. Overpaying vendors or contractors
C. Errors in employee tax filings and missed deadlines
D. Property depreciation tracking mistakes
C
- Which feature offered by banks can help business owners manage both personal and business finances together?
A. Monthly brokerage fee waivers
B. Cross-account viewing and transfers between all eligible accounts
C. Automatic commission splits for agents
D. Personal property insurance integration
B
Which of the following services might a payroll service provider offer that goes beyond payroll?
A. Property management consulting
B. Contract negotiation for brokers
C. HR tasks like hiring, interviewing, and employee discipline
D. Marketing strategy and brand development
C
What is a key advantage of using your bank’s online payroll service?
A. It allows you to delay tax payments by 60 days
B. It replaces the need for a certified accountant
C. It handles employee payments and all related tax filings with clear pricing
D. It allows you to change employee wages without documentation
C
What is a smart preventive measure after hiring a new administrative staff member, regardless of background?
A. Only give them access to digital files
B. Assign them to payroll processing
C. Lock drawers containing sensitive materials and check access
D. Allow them to manage all agent accounts independently
C
What is a primary reason to start with a small support staff during the early phase of your business?
A. TREC recommends a 2-person max during the first year
B. Small teams are easier to train under state compliance standards
C. To limit overhead until you’re confident the business can sustain the cost
D. Small staff increases your company’s tax deductions
C
Why is it important to ask the same interview questions to every applicant?
A. It speeds up the hiring process and allows same-day decisions
B. It makes background checks easier to file with the IRS
C. It shows consistency, fairness, and helps protect against discrimination claims
D. It is a TREC requirement for all brokerage hiring practices
C
What is a key reason to invest time in properly training a new hire?
A. It is required by state law for all real estate support staff
B. It eliminates the need for ongoing supervision
C. It reduces risk by ensuring they understand their responsibilities clearly
D. It guarantees higher commissions for the broker
C
Which of the following strategic questions is directly tied to identifying your business’s target audience?
A. How many closings do I need this year?
B. What market segments should I focus on?
C. How many hours will I work weekly?
D. What should my office rent be?
B / Market segment focus helps you understand who your ideal client is, guiding targeted marketing and service .
According to the principle of ‘Primum non nocere,’ what is the first ethical obligation of a broker or agent?
A) Maximize profit
B) Promote the brokerage brand
C) Avoid causing harm
D) Follow only state laws
C
hich statement best captures the distinction between legal and ethical standards in real estate?
A) Legal standards are based on trust; ethical standards are based on laws
B) Legal standards are optional, while ethical standards are enforceable
C) Legal standards are the minimum required; ethical standards are the highest ideals
D) Legal standards and ethical standards must always align
C
A real estate agent refuses to show homes to a buyer because of their national origin. Which canon is being violated?
A) Competency
B) Integrity
C) Discriminatory Practices
D) Fidelity
C
An agent advises a client on a complex commercial lease without having experience or proper training. Which canon does this violate?
A) Competency
B) Fidelity
C) Consumer Information
D) Integrity
A
- Which of the following actions would most likely violate the principle of fidelity as defined by Canon 1?
A. Disclosing a material defect in the property to a potential buyer
B. Recommending a lender who offers the best rate for the client
C. Failing to disclose a personal financial interest in the transaction
D. Explaining agency relationships before signing the contract
C
A real estate license holder is representing a seller. A potential buyer asks a direct question about the lowest price the seller would accept. What is the most ethical response under Canon 1?
A. Disclose the lowest price if it helps the deal close faster
B. Suggest the buyer submit a low offer and see what happens
C. Refuse to answer and recommend the buyer get their own agent
D. Say they’ll “see what they can do” and try to find out off the record
C
According to Canon 2, how should a real estate license holder act when unsure about a client’s financial claims?
A. Assume the client is truthful unless proven otherwise.
B. Relay the information without comment and let the seller verify it.
C. Investigate the claim independently before relaying it as fact.
D. Keep the information confidential and refuse to discuss it.
C
A consumer calls TREC to file a complaint about a license holder. What will TREC likely do?
A. Open an investigation immediately
B. Ask the broker to respond within 72 hours
C. Refer the caller to a third-party mediator
D. Tell the caller to submit the complaint in writing
D
Which of the following is an acceptable way to comply with Canon 4 on a license holder’s business website?
A. Posting the notice as a PDF with no visible link on the homepage
B. Linking the notice under “Resources” in 8-point font
C. Providing a homepage link labeled “TREC Consumer Protection Notice” in 12-point font
D. Including a screenshot of the notice on a blog post about real estate ethics
C
- What is the best way for a broker to comply with Canon 4 when serving a multilingual community?
A. Remove the notice and offer verbal explanations instead
B. Provide the Consumer Protection Notice in multiple languages when possible
C. Post the TREC notice only on the company blog
D. Email the notice only after a complaint is made
B
Which of the following actions would most effectively promote consumer protection as described in Canon 4?
A. Displaying the notice only on internal office bulletin boards
B. Encouraging agents to mention TREC only if clients ask
C. Including the TREC notice and complaint process in new client onboarding materials
D. Posting the notice once a year as a social media story
C
Which of the following statements from a license holder would most likely violate Canon 5?
A. “Let’s check the crime stats and school ratings.”
B. “This area is popular with young professionals.”
C. “This unit may not be suitable for someone with a disability.”
D. “You can check neighborhood info on third-party sites.”
C
A broker wants to show commitment to fair housing beyond just legal compliance. Which action aligns best with Canon 5 principles?
A. Hosting a private event for top clients
B. Attending local zoning meetings to limit low-income housing
C. Participating in a multicultural housing fair with community groups
D. Marketing only to past clients for consistency
C
