Real Estate Laws of Agency

Question 1

affiliated business

arrangement

Answer 1

Referral of a client to a financially controlled
business whose earnings are shared with the
broker. [See RPI Form 205 and 519]

Question 2

fiduciary duty

Answer 2

That duty owed by an agent to act in the
highest good faith toward the principal and not
to obtain any advantage over the latter by the
slightest misrepresentation, concealment, duress
or pressure.

Question 3

conflict of interest

Answer 3

When a broker or agent has a positive or negative
bias toward a party in a transaction which is
incompatible with the duties owed to their client.
[See RPI Form 527]

Question 4

trust funds

Answer 4

Items which have or evidence monetary value
held by a broker for a client when acting in a
real estate transaction.

Question 5

dual agency

Answer 5

The agency relationship that arises when a
broker represents both parties in a real estate
transaction. [See RPI Form 117]

Question 6

Equal Credit Opportunity

Act

Answer 6

A federal law enacted in 1974 prohibiting lenders
from discriminating against borrowers from a
protected class.

Question 7

steering

Answer 7

The discriminatory practice of restricting the rental
or ownership of a property to a specific class of
people to perpetuate segregated housing.

Question 8

agency

Answer 8

The relationship between principal and the
principal’s agent which arises out of a contract,
either expressed or implied, written or oral,
wherein the agent is employed by the principal
to do certain acts dealing with a third party. [See
RPI Form 305]

Question 9

protected group

Answer 9

A class of people who receive special protections
by a law due to their distinguishing factors.

Question 10

power of attorney

Answer 10

A temporary authority granted to an individual to
perform activities during a period of the owner’s
incapacity or travel. [See RPI Form 447]

Question 11

double-end

Answer 11

When the seller’s agent receives the entire fee
in the transaction as there is no buyer’s agent to
split the fee with.

Question 12

redlining

Answer 12

In the United States, redlining is a discriminatory practice in which services (financial and otherwise) are withheld from potential customers who reside in neighborhoods classified as ‘hazardous’ to investment;

Question 13

Real Estate Recovery Fund

Answer 13

Funds available to individuals who have obtained
a final-court judgment against a licensee and
are unable to recover the judgment from the
licensee. Also known as the Consumer Recovery
Account.

Question 14

implicit discrimination

Answer 14

Actions which are not openly discriminatory but

yield discriminatory results.

Question 15

licensed activities

Answer 15

Dealing with members of the public to offer,
contract for and render brokerage services for
compensation.

Question 16

ethics

Answer 16

That branch of moral science, idealism, justness,
and fairness, which treats of the duties which
a member of a profession or craft owes to the
public, client or partner, and to professional
brethren or members. Accepted standards of
right and wrong. Moral conduct, behavior or
duty.

Question 17

discriminatory practices

Answer 17

Unequal treatment given to members of a

protected group.

Question 18

Advance Costs

Answer 18

Deposits handed to a broker to cover out-ofpocket
costs incurred on behalf of the depositor
while performing brokerage services.

Question 19

kickback

Answer 19

A fee improperly paid to an agent who renders
no service in exchange for a referral fee beyond
the referral itself when the agent is already
providing another service for a fee.

Question 20

Agency Law Disclosure

Answer 20

Restatement of agency codes and cases which
establish the conduct of real estate licensees. It
is delivered to all parties in targeted transactions.
[See RPI Form 305]

Question 21

Federal Fair Housing Act

Answer 21

A collection of policies designed to prevent the
arbitrary restriction of access to housing based
on an occupant’s inclusion in a protected class.

Question 22

commingling

Answer 22

The mixing of personal funds with client or other

third-party funds required to be held in trust.

Question 23

contingency fee

Answer 23

A contingent fee is a fee that someone must pay if and when a certain event happens. A very common example of this is the fee earned by an agent upon closing a real estate transaction.

Question 24

trust account

Answer 24

An account separate and apart and physically
segregated from broker s own funds, in which
broker is required by law to deposit all funds
collected for clients.

Question 25

Unruh Civil Rights Act

Answer 25

A California law which prohibits discrimination
by a business establishment based on sex, race,
color, religion, ancestry, national origin, disability
or medical condition.

Question 26

referral fee

Answer 26

A fee paid by one service provider to another for
referring a client to them. Controlled by the Real
Estate Settlement Procedures Act when financing
a one-to-four units residential property.

Question 27

general duty

Answer 27

The duty a licensee owes to non-client individuals
to act honestly and in good faith with upfront
disclosures of known conditions which adversely
affect a property’s value. [See RPI Form 305]

Question 28

California Bureau of Real

Estate (CalBRE)

Answer 28

A government entity which oversees, regulates,
administers and enforces California real estate
law as practiced by licensees.