Practice of Real Estate & Mandated Disclosures

Question 1

Many states have enacted the Canon of Ethics and the National Association or Realtors adapted its Code of Ethics in order to:

A) Keep part-timers out of the business
B) Generate revenue
C) Reduce the number agents entering the profession
D) Ensure professionalism in the practice of real estate

Answer 1

D) Ensure professionalism in the practice of real estate

Question 2

Potential buyers believe they have been discriminated against because of their race. What option is available to the buyers under the Federal Fair Housing Act?

A) File a complaint with the Federal Trade Commission
B) File a lawsuit within two years and complain to the office of Equal Opportunity and Housing HUD within one year only
C) File a lawsuit within two years
D) Complain to the office of Equal Opportunity and Housing HUD within one year

Answer 2

B) File a lawsuit within two years and complain to the office of Equal Opportunity and Housing HUD within one year only

Question 3

Many states have enacted the Canon of Ethics and the Board of Realtors has enacted the Code of Ethics in order to:

A) Generate revenue
B) Keep part-timers out of the business
C) Reduce the number agents entering the profession
D) Ensure professionalism in the practice of real estate

Answer 3

D) Ensure professionalism in the practice of real estate

Question 4

A couple walk into a sale agent’s office looking to buy a new home. The sales agent perceives the couple to be of a certain religious background and shows them property only in those areas of town with a high concentration of the same religion. The sales agent is guilty of:

A) Panic buying
B) Blockbusting
C) Red-Lining
D) Steering

Answer 4

D) Steering

Blockbusting, also known as panic peddling, is an illegal act whereby owners are encouraged to sell their properties because minorities are moving into a neighborhood. Steering is the illegal practice of trying to influence a buyer’s choice of housing based on race, religion, or other protected factors. Red-Lining is the illegal practice of denying loans in certain areas of community based upon race, color, etc.

Question 5

The agency of the federal government which administers fair housing laws is:

A) NARELLO
B) CAIREA
C) H.U.D.
D) OVA

Answer 5

C) H.U.D.

Question 6

A real estate agent owes a professional responsibility to the public to:

A) Record deeds from transactions in which he is involved
B) Disclose a client’s confidentiality
C) Treat all parties to a transaction honestly and fairly
D) File income taxes in a timelv manner

Answer 6

C) Treat all parties to a transaction honestly and fairly

Question 7

A licensee is working with a buyer as a customer. The buyer has the agent write an offer. When must the agent give a copy of the offer to the buyer?

A) Whenever the agent can get to the copy machine and get it to the buyer’s home
B) When the buyer signs the agency disclosure form
C) When the seller signs the offer without any changes because this is notification
D) As soon as the buver signs it

Answer 7

D) As soon as the buver signs it

Question 8

A sales agent is showing a married couple a one-bedroom-flat apartment, but informs them that the unit is not available for them because it is reserved for singles only. Which statute has the agent violated?

A) The Civil Rights Act of 1866
B) The Sherman Anti-Trust Act
C) The Federal Fair Housing Act
D) None of the above

Answer 8

D) None of the above

Marital status is not protected by any of the Fair Housing statutes. Family status, which involves discrimination against people with children, is protected. The Civil Rights Act of 1866 prohibits racial discrimination only.

Question 9

A broker or salesperson’s refusal to cooperate with other brokers because of race is covered by:

A) The 1973 Presidential Fair Housing Act
B) The 1844 Civil Rights Act
C) Executive order 1068
D) The 1968 federal Fair Housing Law

Answer 9

D) The 1968 federal Fair Housing Law

There is no such thing as the 1844 Civil Rights Act; it is the 1866 Civil Rights Act. The 1968 federal Fair Housing Law covers discrimination by sellers and salespersons or brokers, and discrimination based upon race, color, religion, sex, national origin, handicap and familial status.

Question 10

When working with someone other than a client, a licensee legally may:

A) Fill out a blank land installment contract
B) Choose not to disclose a latent defect
C) Disclose information that is public record.
D) Prepare a deed

Answer 10

C) Disclose information that is public record.

A licensee may not prepare a deed or fill out a land installment contract, and a licensee must disclose any latent defect. A licensee is free to disclose information that is public record, since this would not compromise client confidentiality.

Question 11

A salesperson commits racial steering if:

A) He or she directs prospective clients to another licensee of their own national origin or color.
B) He or she directs prospective tenants away from a certain neighborhood because of the racial make-up of that neighborhood.
C) He or she steers clients into a particular neighborhood because of race, religion etc.
D) All of the answers.

Answer 11

D) All of the answers.

Question 12

A potential buyer asks an agent whether a general warranty deed or a quit claim deed is better
Which is the appropriate response from the agent?

A) May not answer this question as it involves the unauthorized practice of law.
B) Ouit claim deed
C) General warranty deed
D) Special warranty deed

Answer 12

A) May not answer this question as it involves the unauthorized practice of law.

Although a general warranty deed is most beneficial to a buyer because it contains the most warranties on title, liens, etc., (a special warranty deed has limited warranties, and a quit claims deed has no warranties) the agent should not remark on the legal ramifications of accepting a particular type of deed because this is the unauthorized practice of law

Question 13

When counseling seller-clients, an agent should do all of the following, except:

A) Prepare a market analysis that shows a high price for the property, because one never can tell what a buyer might pay.
B) Study all factors that will influence the value of the property.
C) Query the sellers as to their motivations and urgency before recommending an asking price.
D) Explain agency concepts that will affect them.

Answer 13

A) Prepare a market analysis that shows a high price for the property, because one never can tell what a buyer might pay.

Agents must be careful to study all factors influencing value. For some sellers time on market is more critical than price. A market analysis should always reflect the most realistic situation.

Question 14

A seller instructs a sales agent not to disclose a defect hidden behind a paneled wall. The sales agent is under the duty to:

A) Not follow the instruction of the principal in this matter and perhaps, to void the listing
B) File a complaint with HUD
C) Turn the seller in to the appropriate real estate licensing authorities
D) Follow all commands of the principal

Answer 14

A) Not follow the instruction of the principal in this matter and perhaps, to void the listing

A real estate sales agent is obligated to follow only the lawful instructions of the principal. Being instructed not to disclose a hidden defect would be an illegal request, which the sales agent should not follow, and he should consider terminating the listing.

Question 15

An advertisement in the local newspaper advertises that a property for rent is only available to senior citizens over the age of 55. A young couple with a child asks to see the property and are denied access. Which law has been violated?

A) No violations have occurred
B) Federal Fair Housing Act
C) Sherman Antitrust Act
D) Truth in Advertising Act

Answer 15

A) No violations have occurred

Even though family status is a protected class under the Federal Fair Housing Act; many courts have ruled that there is an overriding state interest in providing housing for seniors, so long as at least 75% of the units in a complex are set aside for those 55 years or older. The Sherman Antitrust Act applies to price fixing and market fixing. The Truth and Advertising Act applies to misrepresentation being made in advertising and there were no misrepresentations in this ad.

Question 16

In a suit brought under the Federal Fair Housing Law as amended, punitive damages may be as much as:

A) $50,000.00
B) $1,000.00
C) $10,000.00
D) There is no limit on punitive damages

Answer 16

D) There is no limit on punitive damages

While an individual maybe fined $10,000.00 by H.U.D for a violation of the Fair Housing Act, and $50,000.00 for a second offense within the past seven years, there is no limit on compensatory or punitive damages which are allowed by a court of law.

Question 17

Goldberg lists his home with PDQ Realty, allowing them to put a sign in the yard, put it in MLS, and advertise it in the local newspaper. During the listing period, Goldberg sells the home to his brother, and is not obligated to pay PDQ any commission. What type of listing did Goldberg have with PDQ?

A) A net listing.
B) An exclusive agency listing.
C) An open listing.
D) An exclusive right to sell listing.

Answer 17

B) An exclusive agency listing.

Under an exclusive agency agreement, the seller can still sell the property on their own and not owe a commission. Unlike an open listing, only the listing company can put a sign in the yard and advertise it.

Question 18

Which of the following is not a protected class under the 1968 Federal Fair Housing Act?
Sex/gender
Race
Age
*Religion

Answer 18

Age

Question 19

A real estate licensee needs to have:
A broad understanding of law an how it affects real estates
OLegal experience as a practicing lawyer
An in-depth understanding of constitutional law
Little understanding of law because competent attorneys are available

Answer 19

A broad understanding of law an how it affects real estates

Question 20

Two brokers get together at a breakfast meeting and decide they each will take a certain geographical area of the town. Which of the following statutes have been violated:
Equal Credit Opportunity Act
Sherman Anti-Trust Act
Federal Housing Anti-trust Law
* Civil Rights Law

Answer 20

Sherman Anti-Trust Act

Question 21

When a lender refuses to make loans secured by property in a certain neighborhood because of the racial or ethnic composition of the neighborhood.

Answer 21

Redlining

Question 22

Form that states whether an agent is representing the seller or the buyer, or both, in a transaction.

Answer 22

Agency Disclosure Statement

Question 23

Persons are individually held liable for damages along with the group

Answer 23

Joint and several liability

Question 24

When someone is held legally responsible for an injury to another, even though they did not act negligently.

Answer 24

Strict Liability

Question 25

Points or facts that must be revealed.

Answer 25

Disclosures

Question 26

Destruction, damage, or material alteration of property by someone in possession who holds less than a fee estate (such as a life tenant or lessee).

Answer 26

Waste

Question 27

A naturally occurring radioactive gas that emanates from rocks; it is odorless, colorless and tasteless but has been identified as a cancer-causing agent.

Answer 27

Radon Gas

Question 28

A fibrous material that was once very common in many building materials because of its insulating and heat-resistant value. (Now banned in most places for most uses, and subject to strict EPA regulations.)

Answer 28

Asbestos

Question 29

A federal agency established in 1934 to increase home ownership by providing an insurance program to safeguard the lender against the risk of non-payment. Currently part of the Department of Housing and Urban Development (HUD).

Answer 29

Federal Housing Administration (FHA

Question 30

The total cost of financing a loan in percentage terms, as a relationship of the total finance charges to the total amount financed.

Answer 30

Annual Percentage Rate (APR)

Question 31

Treating people unequally because of their race, religion, sex, national origin, age, or some other characteristic of a protected class, in violation of civil rights laws.

Answer 31

Discrimination

Question 32

Channeling prospective buyers or tenants to particular neighborhoods based on their race, religion, national origin, or ancestry.

Answer 32

Steering

Question 33

Part of the Civil Rights Act of 1968; prohibits discrimination based on race, color, religion, sex, national origin, disability or familial status. Also referred to as the Federal Fair Housing Act

Answer 33

Title VIII

Question 34

Federal law prohibiting public and private racial discrimination in any property transaction in the U.S.

Answer 34

Civil Rights Act of 1866

Question 35

An act contained in Title VIII of the Civil Rights Act of 1968 that created protected classes of people and prohibits discrimination when selling or renting residential property when based on race, color, religion, sex, national origin, familial status, or handicap status.

Answer 35

Federal Fair Housing Act

Question 36

A defect that is not visible or apparent; a hidden defect that would not be discovered in a reasonably thorough inspection of property.

Answer 36

Latent Defect

Question 37

A document, required by law, which reveals specific information. For example, federal law requires that lenders give buyers this document detailing the actual cost of borrowing money from the lender.

Answer 37

Disclosure Statement

Question 38

Not fit for occupancy. (Used to describe rental property.)

Answer 38

Untenantable

Question 39

Federal law dealing with real estate closings which sets forth specific procedures and guidelines for disclosure of settlement costs.

Answer 39

Real Estate Settlement Procedures Act (RESPA)

Question 40

A property is undesirable to most people because of a past event (often a crime or environmental hazard).

Answer 40

Stigmatized Property

Question 41

(15 USC §1691 et seq.) A federal law passed in 1974 that ensures that all consumers are given an equal chance to obtain and maintain credit. ECOA is implemented through Regulation B (12 CFR § 1002) and enforced by the Consumer Financial Protection Bureau.

Answer 41

Equal Credit Opportunity Act (ECOA)

Question 42

The government agency that deals with housing issues.

Answer 42

Department of Housing and Urban Development (HUD)

Question 43

The illegal practice of inducing owners to sell their homes (often at a deflated price) by suggesting that the ethnic or racial composition of the neighborhood is changing, with the implication that property values will decline as a result. Also called panic selling.

Answer 43

Blockbusting

Question 44

Federal guidelines under the Truth-in-Lending Act that require full disclosure of all credit terms for consumer loans.

Answer 44

Regulation Z

Question 45

A person working with a fair housing organization, who pretends to be interested in buying or renting property from someone suspected of unlawful discrimination. Also called: Checker

Answer 45

Tester

Question 46

A protected group under the federal Fair Housing Act, making it illegal to discriminate against a person for being the parent or guardian of a child under 18 years of age.

Answer 46

Familial Status