Practice of Real Estate

Question 1

Civil Rights Act 1866

Answer 1

Prohibits discrimination based on race or ancestry

Question 2

Federal Fair Housing Act of 1968 (FHA)

Answer 2

Prohibits: (1) steering; (2) blockbusting; (3) redlining; (4) less favorable treatment; and (5) discriminatory or restrictive advertising

Question 3

Protected Classes under FHA

Answer 3

1. Familial Status
2. Race
3. Sex
4. Handicap (disability)
5. Color
6. Religion
7. National Origin

Question 4

Familial Status

Answer 4

Protects pregnant women & families with children (DOES NOT apply to retirement communities in which 80% of the units are occupied by residents age 55 or older)

Question 5

Disability Status

Answer 5

Any physical or mental impairment that substantially limits one or more major life activity (includes HIV/AIDS; alcoholics and drug addicts ARE protected if seeking treatment (those convicted of dealing drugs are excluded; landlords are not obligated to rent to someone who has a history of violence); BOTH current AND recovered mental patients are protected; landlords must allow disabled tenants to make changes at the tenant’s expense; the owner may require the tenant to return the property to its original condition upon termination of the lease)

Question 6

NOT protected classes under the FHA

Answer 6

Age, sexual orientation, marital status, occupation (e.g., student)

Question 7

Steering

Answer 7

The channeling of potential buyers to or away from particular areas as a means of discrimination

Question 8

Blockbusting

Answer 8

Including people to sell their homes because of the entry into the neighborhood of members of protected classes (also called panic peddling)

Question 9

Redlining

Answer 9

Refusing to offer or limiting loans in certain areas; MAY NOT refuse to loan based on high crime rates in a neighborhood

Question 10

Exceptions under FHA

Answer 10

Apply to the person NOT the property
1. Rental or sales of a single family home (no broker involvement & no discriminatory advertising);
2. Rental of units (4 unit building or less) where the owner occupies one of the units (no proper involvement and no discriminatory advertising)
3. Nonprofit organizations may restrict to members only
4. Rental or sale of units in buildings with at least 80% of occupants age 55+
** there are NO exceptions in regard to racial discrimination **

Question 11

HUD

Answer 11

HUD will investigate all incidents; complaints can be filed with HUD within one year of the discriminatory act; aggrieved party can file civil suit directly in federal court within 2 years

Question 12

Can a broker file a complaint?

Answer 12

Yes a broker may file a complaint and request the commission as damages if a seller refuses to accept an offer from a protected class

Question 13

HUD considers the following in a complaint

Answer 13

Testing studies done on the company by HUD; the properties shown to the buyer or tenants; if an equal opportunity poster is displayed in the office

Question 14

Does HUD consider the broker’s intentions?

Answer 14

NO; HUD will not consider the broker’s intentions even if the broker felt he was working in the buyers best interest (e.g., showing only neighborhoods with children to a family)

Question 15

Equal Credit Opportunity Act (ECOA)

Answer 15

Prohibits discrimination in all consumer credit transactions based on the following:
1. Race, sex, color, religion, national origin;
2. Prohibits lenders from refusing loans to the following qualified borrowers (age, marital status, public assistance/income = AMP)

DOES NOT protect minors, a person’s sexual orientation, or people with erratic employment histories

Requires the lender to give notice of why credit was refused

Question 16

Americans with Disabilities Act (ADA)

Answer 16

Ensures equal access to PUBLIC accommodations for disabled persons

Question 17

Megan’s Law

Answer 17

Requires the registration of sex offenders

Brokers should inform buyers who may be concerned about registered SOs to contact local law enforcement offices

States vary on the requirements of brokers for disclosure and how to inform buyers of this law

Question 18

Responsibilities of the Brokerage Firm

Answer 18

1. All contracts, listings (employment), and purchase agreements
2. Supervising all licensees under them

Question 19

Who owns the sales contracts?

Answer 19

The brokerage firm ownsALL contracts & has the agency relationship; when salespersons and broker associates leave the firm, they may not take contracts or listings without permission

Question 20

Role of Sales Person or Broker Associate

Answer 20

1. Employed to represent the broker and brokerage firm (owe duties to the client equivalent to the duties owed by the employing broker);
2. Can be an employee or and independent contractor

Question 21

Employees

Answer 21

Brokers must WITHHOLD taxes buy do not have to guarantee vacations, set schedules, or require them to work set hours

Question 22

Independent Contractors

Answer 22

Must have a written signed agreement that states they may set their own work hours and pay their own taxes

Question 23

Expectations of brokers & salespeople

Answer 23

1. Exhibit a higher level of knowledge and competency than a non licensed individual;
2. Protect the interests of clients & treat all parties fairly & honestly;
3. Complete all state-mandated disclosures in a timely fashion
4. Fully explain to the client the obligations of the client & broker in the transaction

Question 24

Competency

Answer 24

All real estate professionals are expected to know when they are not competent to perform a task, including:
1. Practicing outside their area of expertise
2. completing and presenting legal documents that are not fully understood by the broker
3. A salesperson or broker becomes competent by completing education & working with others who are knowledgable in the area of practice

Question 25

Disclosures of a Real Estate Agent:

Answer 25

1. Who they represent in the transaction;
2. Obligations of all parties in regard to disclosure of material defects;
3. Whether she is a principal in the transaction; and
4. Any environmental, material, or other issues requiring disclosure that might impact the property

Question 26

Illegal Practice of Law

Answer 26

1. Real estate professionals must know when they need to recommend that the party they are working with should seek legal advice;
2. Broker associates & salespeople should recommend the use of attorneys, accountants, and other appropriate counsel to both buyers & sellers;
3. A licensee is not allowed to give legal advice on any aspect of the real estate transaction

Question 27

National Do Not Call Registry

Answer 27

1. National list of phone numbers telemarketers cannot call (real estate brokers & salespeople MUST check the list before cold calling);
2. Brokers may contact consumers for 3 months after they have made an inquiry;
3. Brokers may call consumers with whom they have an established business relationship for up to 18 months after the last purchase

Question 28

Brokers Trust Account

Answer 28

Accounts with funds held for others by the brokerage firm (e.g., earnest money, tax and insurance, escrow payment, and unearned commissions)

Question 29

Handling Earnest Money

Answer 29

1. Deposits (licensee must give earnest money checks to listing brokerage firm immediately after the offer is accepted; managing or employing broker of the listing firm must deposit the funds in the trust account; if the broker receives a NSF check, the broker must immediately notify the seller);
2. Commingling is prohibited;
3. Using trust funds for personal reasons or other people is called conversion;
4. Broker must keep accurate records of all money deposited in and disbursed from the trust account