Real Estate Practice: Q 4/Chp 18-23

Question 1

1) Broker fee provisions in a purchase agreement are to be placed:
a. above the buyer’s signature.
b. within the four corners of the contract.
c. Both a and b.
d. Neither a nor b

Answer 1

c. Both a and b (pg 163)

Question 2

2) Brokers become third party beneficiaries when both seller and buyer enter into an agreement with a provision calling for the payment of broker fees.
True
False

Answer 2

True (pg 164)

Question 3

3) When a buyer has orally agreed to pay a broker fee and the seller knowingly interferes by inducing the buyer to breach their promise to pay, the seller owes the broker the promised fee.
True
False

Answer 3

True (pg 170)

Question 4

4) The best protection a broker has against the alteration of broker fee instructions is to dictate that escrow prepare unilateral fee instructions.
True
False

Answer 4

False (pg 173)
The best protection a broker has against cancellation, revocation or alteration of the broker fee instructions is to dictate that escrow prepare mutual instructions for payment of the fee. Here, the agreement for the seller to pay the broker fee is entered into and signed by both the buyer and the seller. With mutual instructions, escrow does not relegate the fee to a separate, unilateral fee instructions signed only by the seller (and possibly the broker)

Question 5

5) A bona fide employee finder of a broker may not be compensated for referrals under the Real Estate Settlement Procedures Act (RESPA).
True
False

Answer 5

False (pg 180)

Finders are also entitled to a fee for referrals under RESPA, depending on the type of finder they are.

Question 6

6) Records of an agent’s activities on behalf of a buyer during the listing period need to be retained by:
a. the agent.
b. the buyer’s broker.
c. the buyer.
d. the seller’s broker.

Answer 6

b. the buyer’s broker (pg 191)

Question 7

7) A seller’s agent does not have a duty to investigate the accuracy of any information provided by the seller before passing it on to a prospective buyer.
True
False

Answer 7

True (pg 198)

Question 8

8) A seller’s agent’s visual inspection of a one-to-four unit residential property needs to include defects:
a. known to the seller’s agent.
b. readily observable by the seller’s agent.
c. Both a and b.
d. Neither a nor b.

Answer 8

c. Both a and b (pg 208)

Question 9

9) A seller’s agent’s opinion given to a buyer becomes a statement of fact due to their fiduciary relationship with the buyer.
True
False

Answer 9

False (pg 213)
The opinion given in response to a buyer will always be speculation, based on the observations, knowledge and beliefs of the agent about the likelihood an event or condition will occur in the future. Thus, statements by the buyer’s agent will be either:
• couched in words such as “anticipation,” “estimation,” “prediction”

Question 10

10) An inexperienced seller can rely on an agent’s opinion as a positive statement of truth when the agent holds themselves out to be specially qualified in the subject matter.
True
False

Answer 10

True (pg 221)