Practice Flashcards
___ is the continuing negative association with or feeling about a property
stigma
Illinois presumes that a broker or managing broker working with a client is ___ them.
representing
Before a customer discloses confidential information, the licensee should provide them with a written ___.
Disclosure of “No Agency”
Before a licensee can act as a designated agency, the customer will receive a(n) ___ of designated agency
Written disclosure
In order for a dual agency to be legal Illinois, what is required prior to acting as a dual agent?
Consent and confirmation in writing
If one licensee is designated to represent the seller, while another is designated to represent the buyer, and both licensees are working under the same sponsoring brokerage, does this always constitute a dual agency?
no
Designated agency relationship disclosures require written notice to the consumer of which 4 things?
1) The name(s) of designated agent(s)
2) That a designated agency relationship exists
3) Sponsoring broker’s compensation
4) Sponsoring broker’s policy regarding compensation and cooperation with other sponsoring brokers
Unless a disclosed dual agency is agreed to in writing, additional ___ agents may need to be made so that two different licensees are involved when a sponsoring brokerage is representing two opposite sides of a transaction
designated
A ___ is a person or entity who is not being represented by the licensee.
Customer
An agent only owes a customer the duty of disclosure of known facts. True or false?
False
An agency relationship may be terminated by mutual agreement by…
all parties
The source of compensation is what determines agency. True or false?
False
In real estate, ___ refers to the relationship that a broker, managing broker, or residential leasing agent may have with buyers, sellers, landlords, or tenants.
agency
In Illinois, a licensee is presumed to have a(n) ___ relationship with the principal unless there is a statement in writing articulating a different relationship.
agency
A licensee who has contracted with an apartment building owner to manage a highrise apartment is probably a ___ agent.
General
A buyer who is a client of the broker wants to purchase a house that the broker has listed for sale. In order for the broker to represent both the buyer and the seller, what must be given first?
Written consent and confirmation from the buyer and seller
A real estate licensee was representing a buyer. At their first meeting, the buyer explained that he planned to operate a dog grooming business out of any house he bought. The licensee did not verify that the properties he showed his client were zoned for that specific use. Which agency duty did the licensee violate?
Care
A buyer comes into a real estate broker’s office and asks the broker to represent her while searching for a home in the $190,000-200,000 price range. The broker recalls a house for sale by an owner listed at $198,000. The broker calls the owner of the house, asking for permission for his client to see the bouse. Based on these facts who is the broker’s customer?
The seller
A buyer comes into a real estate broker’s office and asks the broker to represent her while searching for a home in the $190,000-200,000 price range. The broker recalls a house for sale by an owner listed at $198,000. The broker calls the owner of the house, asking for permission for his client to see the house. Based on these facts who is the client?
The buyer
In real estate transactions, the term ___ typically refers to the agent’s relationship to the principal
fiduciary
In Illinois, a real estate broker hired by an owner to sell a parcel of real estate property must comply with the…
Real Estate License Act of 2000
A licensee acting for both the buyer and seller in the same transaction is considered…
dual agency
A seller listed his property with a brokerage company. The agency relationship between the seller and sponsoring broker is what type of agency?
special
In a dual agency situation, a licensee may represent both the seller and buyer if…
Both parties give their informed consent, in writing to the dual agency
Under Illinois agency law, who designates which sponsored licensee will be representing the client?
Sponsoring broker
A seller lists his home with a real estate broker for $289,500 and has given written permission for dual agency. Later the same day, a potential buyer comes into the broker’s office and asks for general information about homes for sale in the $250,000-$300,000 price range. Because the seller is the broker’s client, what must the broker obtain if they intend to show their own listing?
Written consent for dual agency from the buyer
A seller lists his home with a real estate broker for $289,500 and has given written permission for dual agency. Later the same day, a potential buyer comes into the broker’s office and asks for general information about homes for sale in the $250,000-$300,000 price range. If the broker intends to show his own listing to the buyer, written consent for __ must be obtained in writing.
Dual agency
A seller lists his home with a real estate broker for $289,500 and has given written permission for dual agency. Later the same day, a potential buyer comes into the broker’s office and asks for general information about homes for sale in the $250,000-$300,000 price range. Because the ___ is the broker’s client, in order to show this listing to the buyer written consent for dual agency would be needed.
Seller
A sponsoring broker listed and sold a home. The seller had told the sponsoring broker that the home was structurally sound. This information was passed on to a prospective buyer by one of the licensees sponsored by the broker. If the sponsoring broker has no way of knowing that this information is false, who will likely be held liable if a latent defect is later discovered?
The seller
A(n) ___ is a person who is placed in a position of trust and confidence
Agent
Jason is a broker who tells a prospective buyer, “This property has the most beautiful view.” In fact, the view includes the back of a shopping center. What is Jason doing?
Puffing
Joe is a broker who fails to mention to some enthusiastic potential buyers that a six-lane highway is planned for construction within 10 feet of a house that the buyers think is perfect. What is Joe doing?
Misrepresenting the property
A broker lists a residence. The owner of the residence must sell the house quickly. To expedite the sale, the broker tells a prospective purchaser that the seller will accept at least $5,000 less than the asking price for the property. Regardless of the broker’s motive, what was needed in order to for him to disclose this information?
Written permission from the seller
A broker lists a residence. The owner of the residence must sell the house quickly. To expedite the sale, the broker tells a prospective purchaser that the seller will accept at least $5,000 less than the asking price for the property. If the broker did NOT receive written permission from the seller to disclose this information, was it proper for him to disclose this information?
No
When a designated agency relationship exists, Illinois license law requires the licensee to ___ this information in writing.
Disclose
The six common law fiduciary duties are…
Care
Obedience
Loyalty
Disclosure
Accounting
Confidentiality
A real estate licensee’s responsibility to keep the principal informed of all the facts that could affect a transaction is the duty of ___.
disclosure
When a real estate broker is acting as the agent of a seller, their fiduciary duty of ___ obligates them to render faithful service to the seller.
Loyalty
If an owner declares personal bankruptcy, a(n) ___ is terminated in a broker-seller relationship
Agency
the special relationship between a real estate licensee and the parties involved in a real estate transaction.
Agency
Agency relationship where the agent is given an estate or interest in the subject of the agency (the property).
Agency coupled with an interest
The individual who is authorized and consents to represent the interests of another person
Agent
An agreement, written or oral, between a sponsoring broker and a consumer for licensed activities to be provided to a consumer in return for compensation or the right to receive compensation from another.
Brokerage agreement
Principal agent relationship in which the sponsoring broker is the agent for the buyer, with fiduciary responsibilities to the buyer
Buyer agency agreement
The principal in a real estate agency relationship, who is being represented by a licensee
Client
The illegal act by a real estate licensee of mingling client or customer funds with the licensee’s personal funds
Commingling
the valuable consideration given by one person or entity to another person or entity in exchange for the performance of some activity or service.
Compensation
Information given by a client to a licensee during the term of a brokerage agreement that the client requests (written or verbally) the licensee keep private, that deals with the negotiating position of the client, or information that disclosure could harm the negotiating position of the client
Confidential information
The wrongful appropriation of property belonging to another (earnest money)
Conversion
a person or entity seeking or receiving licensed activities
Consumer
an arrangement where both the buyer’s and the seller’s real estate agents are paid by the seller
Cooperative commission
In a real estate agency relationship, the third party or non-represented consumer who receives some level of service and who is entitled to honesty and fair dealing
Customer
A person who is authorized by the broker to act as an agent of a specific principal in a sale by two agents.
Designated agent
An agency relationship in which the agent represents two principals simultaneously with their knowledge and consent.
Dual agency
An agency relationship based on a formal agreement between the parties.
Express agency
A contract in which the parties formally state their intention to establish an agency relationship
Express contract / Express agreement
The responsibilities of care, obedience, accounting, loyalty, and disclosure
Fiduciary duties
Intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person
Fraud
The relationship of a broker, managing broker, or residential leasing agent with a sponsoring broker
General agency
an agent authorized to represent the principal in a broad range of manners related to a specific business or activity
General agent
An agency that exists even if no fee is involved
Gratuitous agency
The establishment of an agency relationship as the result of the actions of the parties that indicate mutual consent
Implied agency
A contract under which the agreement of the parties is demonstrated by their acts and conduct
Implied contract
A structural problem that would not be discovered by ordinary inspection
Latent defect
The written employment contract that establishes the agency relationship between a seller and a broker
Listing agreement
Any fact that, if knwon, might reasonably be expected to affect the course of events
Material fact
Occurs when the broker should have known that a statement about a material fact was false
Negligent misrepresentation
The individual who hires and delegates to the agent the responsibility of representing the individual’s interests
Principal
Non-fraudulent exaggeration of a property’s benefits or features
Puffing
The representation of a single principal
Single agency
An agent who is authorized to represent the principal in one specific act or business transaction, under detailed instructions
Special agent
Dialogue between a licensee and a consumer that moves to a consumer’s motives, objectives, and other confidential information that if disclosed could harm the consumer’s bargaining position
Substantive contract
A person empowered to do anything the principal could do personally, and who has unlimited authority
Universal agent
An agent works for the ___ and with the ___.
An agent works for the CLIENT and with the CUSTOMER.
A seller tells the listing agent “I don’t want you to show this house to any minorities.” Even though refusing to show a property to someone on the basis of race is a violation of fair housing laws, the agent still owes their client the fiduciary duty of obedience. What should the agent do?
Refuse the request, withdraw from the agency relationship, and contact their sponsoring broker
While showing a buyer an average looking house, the broker described even its plainest features as “charming” and “beautiful.” What is the broker doing?
Puffing
A broker fails to inform a buyer that the lot next to a house had been sold to a waste disposal company to be used as a toxic waste dump. What most likely occurred?
Fraudulent misrepresentation
John is a listing broker who knew that a house was built on a landfill. A few days after the house was listed, another broker from the same office named Tom noticed that the living room floor was uneven and sagging in places. Who is obligated to disclose this problem?
The seller
John is a listing broker who knew that a house was built on a landfill. A few days after the house was listed, another broker from the same office named Tom noticed that the living room floor was uneven and sagging in places. They decide to conceal the problem with throw rugs in hopes that buyers wouldn’t look underneath. What should they have done differently?
Disclosed the problem to potential buyers
An agent owes a customer which 3 duties?
Reasonable care and skill
Honest and fair dealing
Disclosure of known facts
A buyer enters a real estate office asking to see a property listed with another brokerage. A real estate licensee immediately calls the sellers’ agent and makes an appointment to show the property. Without discussing the available agency options or having the customers sign a written agency agreement, the licensee drives the buyer to the house. Through the actions of the licensee, what type of agency is this?
Implied agency
A broker agrees to provide the financing for a condominium building being constructed by a developer in exchange for the exclusive right to sell the units once the building is completed. The developer may not revoke the listing agreement once the broker has provided the financing because this is…
an agency coupled with an interest
A ___ agent represents a principal only for a specific act, such as the sale of a house.
Special
Bob is an agent for the owner of a large mansion. A prospective buyer comes into his office and asks him to represent her in search for a modest home. After several weeks of activity, including low offers unsuccessfully negotiated, she spots the “for sale” sign in front of the mansion. She tells Bob that she would like to make an offer and asks for advice on a likely price range. Bob is now in the difficult position of being a ___ agent.
Dual
The basic framework that governs the legal responsibilities of an agent to a principal
Law of agency
An affiliation of trust and confidence as between a principal and an agent
Fiduciary relationship
An intermediary between a buyer and seller who assists both parties with a transaction but represents neither party
Non agent
An agency relationship in which the agent represents two principals simultaneously, without their knowledge or permission
Undisclosed dual agency
This law created a registry of sex offenders
Megan’s Law
Type of insurance that covers liability for mistakes and negligence in the usual activities of a real estate office
Errors and Omissions Insurance
Property that has been branded as undesirable because of events that occurred in or near it
Stigmatized property
The requirement that brokers properly deposit funds entrusted to a broker into an escrow account is an example of how brokers fulfill this duty
Accounting
Even when a property is sold as is or with seller disclaimer, the ___ must still disclose known problems with the property if they will affect the health and well being of the new occupants.
Seller
Discovery of a meth lab built on a property can result in the property being regarded as a(n) ___.
Stigmatized property
Bob tells a real estate broker that he is thinking about selling his condominium unit. The broker contacts several buyers that she knows are looking for a condominium and one makes an offer for the unit. The broker presents the offer to Bob who accepts it. Although no documents were signed by Bob, an agency may have been created by…
implied agreement
A buyer’s agent reveals to the seller that the buyer must move within a month. Which fiduciary duty did the agent violate?
Confidentiality
The source of ___ does not determine agency
Compensation
Bankruptcy can terminate an agency relationship. True or false?
True
A broker is representing Gina but is currently working with Kate to find a home. Assuming that no statute has replaced the traditional common law, who is the broker acting as an agent for?
Gina
A broker is representing Gina but is currently working with Kate to find a home. Assuming that no statute has replaced the traditional common law, who is the brokers customer?
Kate
An agent’s obligation to use skill and expertise on behalf of the principal arises under which fiduciary duty?
Care
Which of the following does an agent representing a seller have the fiduciary duty to disclose to the principal?
A) the offers that are ridiculously low
B) The buyer’s religion
C) the agent’s advertising budget
D) The number of people in the buyers family
The offers that are riduclously low
A broker has an agency agreement to represent a seller in the sale of a house. The agreement’s expiration date is on June 10. On May 5, the house is stuck by lightning and burns to the ground. The seller, overwhelmed by grief, dies. Why was the agency agreement terminated?
Because of the fire
A broker signed an agency agreement with a seller. The asking price for the seller’s house was $499,000. A few days later, the broker met a prospective buyer who was interested in purchasing a house in the $480,000-$510,000 price range. The broker agreed to help the buyer locate such a property and to represent the buyer in negotiating a favorable purchase price. The broker has created a potential…
Undisclosed dual agency
A broker signed an agency agreement with a seller. The asking price for the seller’s house was $499,000. A few days later, the broker met a prospective buyer who was interested in purchasing a house in the $480,000-$510,000 price range. The broker agreed to help the buyer locate such a property and to represent the buyer in negotiating a favorable purchase price. In order for the broker to show the seller’s property to the buyer, what should he do?
Disclose the relationships to both parties before showing the home
A broker is showing a home to a prospective buyer. The broker points out the “rustic charm” of the sagging front porch and refers to a weed choked backyard as a “beautiful garden.” The broker is ___.
Puffing
A house built years ago over a ditch covered with decaying timber or a house with cielings that were improperly attached to the support beams are examples of ___.
Latent defects
The seller’s agent has certain duties to the client-principal. The seller’s agent is not expecting the seller to…
A) Cooperate with the agent
B) Compensate the agent
C) Suggest marketing strategies to the agent
D) Deal with the agent in good faith
Suggest marketing strategies to the agent
Every state has mandatory ___ laws that stipulate when, how, and to whom agents must reveal for whom they provide client-based services
Agency disclosure laws
Whoever hired the agent is the agent’s ___.
Principal
A broker was hired to represent the seller, to market the seller’s property, and to solicit offers to purchase. The broker is a(n) ___ agent
Special
A house was the scene of a drug arrest and a violent murder last year. When it was listed on the market, many people considered it to be…
A stigmatized property
An agency relationship continues on the occurrence of…
A) the death of either party
B) the destruction of the property
C) an offer made on the property
D) an expiration of the agreement
an offer made on the property
What is a seller’s agent required to disclose to prospective buyers about material defects in the property?
All information about material defects that the agent knows or should know
A broker tells a buyer that “the uneven floors just mean that the building dates to colonial times.” This could be an example of…
negligent misrepresentation
A seller’s agent is aware that a new landfill has been approved for development on adjacent property but does not disclose this to a buyer. This is an example of…
fraudulent misrepresentation
A key element of an agent’s fiduciary responsibility of ___ is to avoid conflicts of interest.
Loyalty
When a broker places trust funds of others into the company’s operating account and then withdraws funds for the firm’s use, what illegal practice takes place?
Commingling and conversion
The fiduciary is the individual who hires and delegates the agent the responsibility of representing their other interests. True or false?
False
The ___ is the individual who hires and delegates the agent the responsibility of representing their other interests.
Principal
Facilitators, transactional brokers, transactional coordinators, and contract brokers are examples of ___.
Non agents
An agent works with a client and for the customer. True or false?
False
Which law includes fiduciary duties?
Common law of agency
The fiduciary duty requires an agent to obey ALL of the principal’s requests. True or false?
False
What is a limitation to the duty of obedience?
Requests need to be lawful and ethical
The common law duty of ___ requires that an agent places the principal’s interests above all others.
Loyalty
A real estate broker is normally considered as a ___ agent for a buyer or seller.
Special
A real estate professional can sell a property in which they have personal interest, but only if…
They disclose their personal interest to the buyer
What is needed for a dual agency to be legal in Illinois?
consent and confirmation from both parties in writing
An agent owes a ___ the duties of reasonable care and skill, honest and fair dealing, and disclosure of known facts.
Customer
A broker says to a prospective buyer “This is the prettiest house I have ever seen.” What is the broker doing?
Puffing
When a property has a hidden structural defect that could not be discovered by ordinary inspection, it is called a(n) ___.
Latent defect
a relationship in which a real estate broker or licensee, whether directly or through an affiliated licensee, represents a consumer by the consumer’s consent, whether express or implied, in a real property transaction
agency
the individual who is authorized and consents to represent the interests of another person.
agent
In the real estate business, a firm’s sponsoring broker is the ___ and shares this responsibility with the licensees who work for them.
agent
In Illinois, all exclusive brokerage agreements must be…
in writing
an agreement, written or oral, between a sponsoring broker and a consumer for licensed activities to be provided to a consumer in return for compensation or the right to receive compensation from another.
brokerage agreement
a person who is being represented by a licensee
client
___ includes commissions, referral fees, bonuses, prizes, merchandise, finder fees, performance of services, coupons or gift certificates, discounts, rebates, a chance to win a raffle or like game of chance, retainer fee, or salary.
compensation
The Real Estate License Act of 2000 states that confidential information must not be shared unless…
the client gives authorization to disclose it
the disclosure is required by law
or the information becomes public from a source other than the licensee.
a person or entity seeking or receiving licensed activities
consumer
a consumer who is not being represented by the licensee
customer
One in whom trust and confidence is placed, such as a broker employed under the terms of a listing contract or buyer agreement
fiduciary
A real estate licensee owes ___ duties to a principal
fiduciary
Fiduciary responsibilities are called ___ responsibilities in Illinois
statutory
Deception intended to cause a person to give up property or a lawful right
fraud
The relationship of a broker, managing broker, or residential leasing agent with a sponsoring broker
general agency
Illinois law that defines the rights and duties of the principal and the agent
law of agency
In Illinois, the ___ is the principal to whom the agent gives advice and counsel.
client
In Illinois, agency relationships are governed under…
Statutory law
In Illinois, what are the 3 types of laws that interpret the relationship between real estate licensees and their clients are…
Law of agency
Contract law
Real Estate licensing laws
What is the given precedence in defining legal real estate agency concepts in Illinois?
Real Estate License Act of 2000
What is the difference between a customer and a client?
A customer is NOT represented by the licensee
Who’s primary duty is it to comply with the brokerage agreement and cooperate with the agent?
The principal’s
___ refers to a relationship that a broker, managing broker, or residential leasing agency (representing the sponsoring broker) may have with buyers, sellers, landlords, or tenants
agency
A(n) ___ refers to those who hire are clients, or principals
agency
Those hired by agencies are called ___
agents
How does a real estate licensee become an agent?
Through a contractual agreement
