Unit 5

Question 1

Fiduciary Duties

Answer 1

Agents primary responsibility to principal as outlined in listing agreement or buyer agency agreement

Question 2

Licensees owe customers a set of duties

Answer 2

• Treat all customers honestly
• Can’t negligently or knowingly give false information
• Must disclose all material adverse facts about the physical condition of property

Question 3

Sponsored Licensees

Answer 3

After 4/3/12 only 2 types of licensees - brokers and managing brokers
Can’t perform the duties of managing brokers

Question 4

Managing Broker

Answer 4

Taken additional courses
Can be in charge of individual branches
Can also be sponsoring broker of small office
Responsible for all real estate activities by affiliated licensees including record keeping and holding earnest $

Receives renewal application must notify licensee within 7 days or by registered mail within 10 days

Question 5

Sponsoring Broker

Answer 5

Entity holding the company real estate license. Sponsoring broker can delegate duties to managing brokers and company personnel
Entity that holds the licenses of managing brokers and brokers
Maintain holding of licenses of their managing broker or brokers

(if dies ask within 15 days to find new sponsoring broker, maximum granted 60 days)

Change business address must notify state within 24 hours

Question 6

Independent Contractor vs Employee

Answer 6

Must have signed Employment Agreement with each licensee and employee. Signed and dated by both parties
Employees are W2’d and employer has to pay taxes

Question 7

Independent Contractor (3 prong test by IRS)

Answer 7

• Active license
• not employee for federal tax purposes agreed in writing
• 90% of income from sales

(flexible schedule, make their own schedule etc)

Question 8

Statutory Nonemployee

Answer 8

Payment relates to sales

Contracts stating not employee for tax purposes

Question 9

Personal Assistant

Answer 9

Licensed or unlicensed

Licensed personal assistants must be paid by sponsoring broker

Question 10

Advertising

Answer 10

Managing Broker must indicate this on their advertising with their name

Question 11

Supervision by Managing Broker (of office or offices)

Answer 11

• implement sponsoring broker office policies
• train
• assist
• supervise accounting
• supervising advertising
• inform licensees of federal and state laws
• comply with rules for licensees

If licensee terminates, broker signs and dates and sponsoring broker must send license to state within 2 days. Take license to new office and you get temporary 45 day permit before formal sponsor card in accepted

Question 12

Policies and Procedure Manual For Brokerage
Present at every office
Given to every employee
Check for questions

Answer 12

Must address

• agency policy
• fair housing
• confidentiality of client information
• advertising

Question 13

Broker Compensation

Answer 13

Collected only by managing broker or sponsoring broker and shared with licensees

Determined by agreement between broker and client

Question 14

Cooperative Commission

Answer 14

Listing broker pays the selling broker amount advertised in MLS

Question 15

Procuring Clause

Answer 15

Broker must have started or caused chain of events that resulted in sale

Question 16

Real Estate Broker may still be entitled to commission if transaction not consummated as long as:
Licensed broker
procuring clause
employed under valid contract

Answer 16

if seller:

• refused to sell
• had a title with defects
• committed fraud
• unable to delivery possession
• insisted on terms not in listing
• had mutual agreement with buyer to cancel

Question 17

Sponsoring Broker pays commission to:

Answer 17

• licensee under same sponsoring broker OR

- another firms sponsoring broker

Question 18

Anti Trust

Answer 18

Real estate industry is subject to anti-trust laws - most common Sherman Act against price-fixing, group boycotting, allocation of customers or markets and tie-in agreements

Question 19

Price Fixing

Answer 19

DO NOT imply “going rate” for commission or “normal” fee
Companies or individuals set prices together instead of allowing the open market to determine the price. Commissions are negotiable.

Question 20

DN Call Registry - list does not want to be called by Telemarketers

Answer 20

Exception:
licensees are permitted to call up to 18 months after consumers last payment, purchase or delivery

For consumers who made inquiries can contact for up to 3 months after

Question 21

CAN SPAM Act

Answer 21

Deals with email advertising

Question 22

JUNK FAX Act

Answer 22

Deals with Faxing