section 11 agency

Question 1

A fiduciary relationship between an agent and a principal where respective rights and duties are prescribed by laws of agency and by the agency agreement executed by the two parties.

Answer 1

Agency Relationship:

Question 2

A body of law defining roles, duties and responsibilities of an agent and a principal. Laws also set forth standards of conduct agent and principal owe to a customer.

Answer 2

Law of Agency:

Question 3

The employer in an agency relationship, to whom the agent owes fiduciary duties. (Client)

Answer 3

Principal:

Question 4

The party in an agency relationship who is hired by the principal to perform certain duties. In so doing, the agent must also uphold fiduciary duties owed the principal.

Answer 4

Agent:

Question 5

In agency law, a party outside of the fiduciary relationship of client and agent. If an agent treats a customer as a client, an implied agency may result.

Answer 5

Customer:

Question 6

A fiduciary relationship which empowers an agent to perform any and all actions for a principal that may be legally delegated.

Answer 6

Universal Agency:

Question 7

A fiduciary relationship which authorizes the agent to conduct a broad range of activities for the principal in a particular business enterprise. May or may not include authority to enter into contracts.

Answer 7

General Agency:

Question 8

An agency relationship which restricts the agent’s authorizations to a specific set of duties. The relationship usually terminates on performance of these duties, as in a real estate broker’s listing agreement. (Limited Agency)

Answer 8

Special Agency:

Question 9

An agency relationship that arises by implication from the actions and representations of either agent or principal.

Answer 9

Implied Agency:

Question 10

Duties of an agent to the principal in an agency relationship, including skill, care, diligence, loyalty, obedience, confidentiality, disclosure, and accounting.

Answer 10

Fiduciary Duties:

Question 11

The agent represents one party in a transaction. The client may be either seller or buyer.

Answer 11

Single Agency:

Question 12

An agency relationship between the client of a listing broker and other brokers and salespeople who have agreed to assist the broker in procuring a customer for the client. The assisting brokers are agents of the listing broker and subagents of the listing broker’s client.

Answer 12

Subagency:

Question 13

Representing both principal parties to a transaction.

Answer 13

Dual Agency:

Question 14

A transaction broker who assists principal parties in completing a transaction without acting as a fiduciary agent of either party.

Answer 14

Facilitator:

Question 15

. An agent who intends to represent a seller or owner must disclose the import of the proposed agency relationship in writing before the listing agreement is executed. The agent must inform the seller or landlord in writing that the agent will be representing the client’s interests as a fiduciary, and will not be representing the interests of any potential buyer.

Answer 15

Client disclosure

Question 16

. A listing agent must disclose in writing to a buyer or tenant that the agent represents the owner in the transaction. This disclosure must occur before or at the first “substantive contact” with the customer prospect.

Answer 16

Customer disclosure

Question 17

The agency relationship is defined by
a. the Realtor® Code of Ethics.
b. the laws of agency.
c. the law of real estate contracts.
d. the agreement between a principal and an agent.

Answer 17

b

Question 18

Which of the following is true of the connection between compensation and the agency relationship?
a. An agreement to give and receive compensation creates an agency relationship.
b. If an agency relationship exists, the principal must provide valuable consideration to the agent.
c. The relationship is independent of any compensation arrangement.
d. If an agency relationship exists, the agent is entitled to compensation.

Answer 18

c

Question 19

The defining feature of a special agency is that the agent has authority to perform
a. all actions legally delegated by a power of attorney.
b. all actions necessary to conduct an enterprise on behalf of the principal.
c. all actions necessary to complete a specific transaction on behalf of the principal.
d. specific activities on behalf of the principal, as defined in the agency agreement.

Answer 19

d

Question 20

The agent and principal may terminate the agency relationship by mutual consent
a. at any time.
b. at any time until the agent has begun to perform the obligations of the agreement.
c. only if the written agreement provides for cancellation.
d. only if the principal and agent have a contract.

Answer 20

a

Question 21

If an agency relationship terminates because one of the parties defaulted, which of the following is true?
a. All obligations are extinguished.
b. Both parties must continue to perform all obligations of the agreement.
c. The defaulting party may have a financial liability.
d. The damaged party has no claim against the defaulting party.

Answer 21

c

Question 22

Among the fiduciary duties imposed on a real estate agent is the requirement to
a. refuse offers the agent knows will be unacceptable to the principal.
b. present all offers to the principal.
c. advise the principal against accepting an offer that is below full price.
d. advise a prospect that the principal will not accept the prospect’s offer in order to elicit a better offer.

Answer 22

b

Question 23

One of the agent’s fiduciary duties that continues even after a listing agreement expires is
a. obedience.
b. diligence.
c. confidentiality.
d. disclosure.

Answer 23

c

Question 24

The level of competence that a principal has the right to expect from an agent is generally that which is
a. specified in the agency agreement.
b. necessary to earn the promised compensation.
c. necessary to procure a customer.
d. comparable to that of other practitioners in the area.

Answer 24

d

Question 25

If a potential buyer discloses financial qualifications to a seller’s agent, the agent is required to
a. keep the information in confidence.
b. disclose the information to the buyer’s agent.
c. disclose the information to the seller.
d. verify the buyer’s statements before disclosing them to the client.

Answer 25

c

Question 26

A buyer’s broker owes the full set of fiduciary duties to
a. the buyer.
b. the seller.
c. the party who will pay the commission.
d. the seller’s agent.

Answer 26

a

Question 27

A subagent is technically the agent of
a. the seller.
b. the buyer.
c. a broker who has an agency relationship with a client.
d. the client’s and the customer’s agents.

Answer 27

c

Question 28

Which of the following is a dual agency situation?
a. Two agents share the exclusive right to represent the same client.
b. One agent represents both sides in a transaction.
c. A selling agent from one brokerage works with a listing agent from another brokerage to complete a transaction.
d. One agent represents two sellers at the same time.

Answer 28

b

Question 29

Which of the following situations has the potential for creating an implied dual agency?
a. A listing agent’s subagent learns that a potential buyer has made false claims about his financial qualifications and informs the listing agent.
b. A listing agent’s subagent learns that a potential buyer has made false claims about his financial qualifications and does not inform the listing agent.
c. A buyer’s agent notices a structural problem in a house the buyer is considering and informs the buyer.
d. A buyer’s agent notices a structural problem in an house the buyer is considering and informs the buyer and the seller’s agent.

Answer 29

b

Question 30

Among the duties of a broker who is acting as a transaction broker, or facilitator, is
a. preserving the confidentiality of information received from either party by not telling the other party.
b. helping the two parties to arrive at a deal that is closest to achieving the objectives of each party.
c. disclosing material facts that affect the value of the property to both parties.
d. choosing to obey the instructions of one party and informing the other party of the decision.

Answer 30

c

Question 31

In which of the following contact situations would a seller’s agent be expected to disclose his agency relationships?
a. The agent is showing the client’s property to a prospective buyer.
b. The agent tells an acquaintance at a party about the client’s property.
c. The agent answers questions about the client’s property for a telephone caller responding to a newspaper ad.
d. The agent is showing a potential buyer houses in a certain price range in the multiple listing book.

Answer 31

a

Question 32

A transaction broker should disclose his or her agency relationship to the transaction principals
a. upon first substantive contact.
b. upon completion of the listing agreement.
c. immediately following completion of any offer.
d. upon initial contact of any kind.

Answer 32

a

Question 33

A tenant representative should disclose his or her agency relationship to the owner’s agent
a. immediately prior to the initial contact.
b. upon initial contact.
c. immediately prior to substantive contact.
d. immediately following any offer executed by the landlord.

Answer 33

b

Question 34

Owner agents must disclose their agency relationship to tenants or buyers
a. immediately prior to the initial contact.
b. upon initial contact.
c. whenever substantive contact is made.
d. immediately following any offer executed by the customer.

Answer 34

c

Question 35

The meaning and import of the agency relationship should be disclosed to the client
a. prior to completing a listing agreement.
b. prior to or upon completion of an offer.
c. upon the initial contact with the person.
d. whenever a dual agency relationship is indicated.

Answer 35

a

Question 36

The duties of an agent acting as a facilitator are most similar to those of a
a. subagent.
b. single agent.
c. dual agent.
d. implied agent.

Answer 36

c

Question 37

An agent is operating as a disclosed dual agent on a transaction. In this case, the agent
a. may not represent one party’s interests to the detriment of the other.
b. must withdraw from the relationships.
c. must be obedient and loyal to both parties.
d. must require that the principals share equally in paying the commission.

Answer 37

a

Question 38

Agent Bob, who works for Broker Bill, obtains an owner listing to lease a building. Bill’s other agent, Sue, locates a tenant for Bob’s listing. In the absence of any arrangement to the contrary, Broker Bill in this instance is
a. an implied agent.
b. a dual agent.
c. a single agent.
d. a subagent.

Answer 38

b

Question 39

The essence of the agency relationship between an agent and a principal can best be described as a relationship of
a. mutual consent, consideration, and acceptance.
b. diligence, results, and compensation.
c. service, dignity, and respect.
d. trust, confidence, and good faith.

Answer 39

d. trust, confidence, and good faith.

Question 40

In an agency relationship, the principal is required to
a. promote the agent’s best interests.
b. accept the advice of the agent.
c. provide sufficient information for the agent to complete the agent’s tasks.
d. maintain confidentiality.

Answer 40

c. provide sufficient information for the agent to complete the agent’s tasks.

Question 41

A principal empowers an agent to conduct the ongoing activities of one of her business enterprises. This is an example of
a. limited agency.
b. general agency.
c. universal agency.
d. special agency.

Answer 41

b. general agency.

Question 42

A property seller empowers an agent to market and sell a property on his behalf. This is an example of
a. general agency.
b. special agency.
c. universal agency.
d. no agency.

Answer 42

b. special agency.

Question 43

Implied agency arises when
a. an agent accepts an oral listing.
b. a principal accepts an oral listing.
c. a party creates an agency relationship outside of an express agreement.
d. a principal agrees to all terms of a written listing agreement, whether express or implied.

Answer 43

c. a party creates an agency relationship outside of an express agreement.

Question 44

An agency relationship may be involuntarily terminated for which of the following reasons?
a. Death or incapacity of the agent
b. Mutual consent
c. Full performance
d. Renewal of the agent’s license

Answer 44

a. Death or incapacity of the agent

Question 45

A principal discloses that she would sell a property for $150,000. During the listing period, the house is marketed for $180,000. No offers come in, and the listing expires. Two weeks later, the agent grumbles to a customer that the seller would have sold for less than the listed price. Which of the following is true?
a. The agent has violated the duty of confidentiality.
b. The agent has fulfilled all fiduciary duties, including confidentiality, since the listing had expired.
c. The agent is violating the duties owed this customer.
d. The agent has created a dual agency situation with the customer.

Answer 45

a. The agent has violated the duty of confidentiality.

Question 46

A principal instructs an agent to market a property only to families on the north side of town. The agent refuses to comply. In this case,
a. the agent has violated fiduciary duty.
b. the agent has not violated fiduciary duty.
c. the agent is liable for breaching the listing terms.
d. the agent should obey the instruction to salvage the listing.

Answer 46

b. the agent has not violated fiduciary duty.

Question 47

An owner’s agent is showing a buyer an apartment building. The buyer notices water stains on the ceiling, and informs the agent. The agent’s best course of action is to
a. immediately contract to paint the ceiling.
b. immediately contract to repair the roof.
c. suggest the buyer make a lower-price offer.
d. inform the seller.

Answer 47

d. inform the seller.

Question 48

An agent owes customers several duties. These may be best described as
a. fairness, care, and honesty.
b. obedience, confidentiality, and accounting.
c. diligence, care, and loyalty.
d. honesty, diligence, and skill.

Answer 48

a. fairness, care, and honesty.

Question 49

An agent fails to discover flood marks on the walls in the basement of a property. The agent sells the property, and the buyer later sues the agent for failing to mention the problem. In this case, the agent
a. may be guilty of intentional misrepresentation.
b. has an exposure to a charge of negligent misrepresentation.
c. has little exposure, since the problem was not mentioned on the signed disclosure form.
d. is not vulnerable, since the problem was not discovered.

Answer 49

b. has an exposure to a charge of negligent misrepresentation.

Question 50

An agent informs a buyer that a clause in a contract is standard language. After explaining the clause, the agent assures the buyer that the clause does not mean anything significant. If something goes wrong with the transaction, the agent could be liable for
a. violating duties owed a customer.
b. misinterpreting the clause.
c. intentional misrepresentation.
d. practicing law without a license.

Answer 50

d. practicing law without a license.

Question 51

An outside broker locates a seller for a buyer representative’s client. In this instance, the outside broker is acting as
a. a single agent.
b. a dual agent.
c. a subagent.
d. a secret agent.

Answer 51

c. a subagent

Question 52

agent bob, works for Broker Bill, obtains an owner listing to lease a building. Bill’s other agent, Sue, locates a tenant for Bob’s listing. In the absence of any arrangement to the contrary, Broker Bill in this instance is
a. an implied agent.
b. a transaction broker.
c. a single agent.
d. a subagent

Answer 52

b. a transaction broker.

Question 53

An agent is operating as a transaction broker on a transaction. In this case, the agent
a. may not represent one party’s interests to the detriment of the other.
b. must withdraw from the relationships.
c. must be obedient and loyal to both parties.
d. must require that the principals share equally in paying the commission.

Answer 53

a. may not represent one party’s interests to the detriment of the other.

Question 54

The duties of an agent acting as a facilitator are most similar to those of a
a. subagent.
b. single agent.
c. transaction broker
d. implied agent.

Answer 54

c. transaction broker

Question 55

The meaning and import of the agency relationship should be disclosed to an owner client
a. prior to completing a listing agreement.
b. prior to or upon completion of an offer.
c. upon the initial contact with the person.
d. whenever a dual agency relationship is indicated.

Answer 55

a. prior to completing a listing agreement.

Question 56

Owner agents must disclose their agency relationship to tenants or buyers
a. immediately prior to the initial contact.
b. upon initial contact.
c. whenever substantive contact is made.
d. immediately following any offer executed by the customer.

Answer 56

c. whenever substantive contact is made.

Question 57

A tenant representative should disclose his or her agency relationship to the owner’s agent
a. immediately prior to the initial contact.
b. upon initial contact.
c. immediately prior to substantive contact.
d. immediately following any offer executed by the landlord.

Answer 57

b. upon initial contact.

Question 58

A transaction broker should disclose his or her agency relationship to the transaction principals
a. upon first substantive contact.
b. when transitioning from a single agent to a transaction broker
c. immediately following completion of any offer.
d. upon initial contact of any kind.

Answer 58

b. when transitioning from a single agent to a transaction broker