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Real Estate Exam > Unit 8 &9/Class 8 > Flashcards

Unit 8 &9/Class 8 Flashcards

1
Q

The law of agency defines the ______, ________, _________, and _________ of the parties to a real estate transaction

A

obligations
duties
rights
and responsibilities

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2
Q

In a principal/agent relationship, who is the principal and who is the agent?

A

You are the agent

The principal is your client: buyer, seller, tenant, landlord…

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3
Q

What is an agent?

A

Someone who acts on behalf of or in place of others

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4
Q

In a real estate transaction, the ______ is the agent of the principal/client

A

broker

you are a subagent for your broker

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5
Q

What is a subagent?

A

An agent of a principal’s agent .

I am an agent of my broker

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6
Q

What is a principal?

A

The client that the agent represents

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7
Q

A ___________ is a third party in a transaction that has no representation or is represented by someone other than the principal’s agent.

A

Customer

An agent works for a principal, and with a customer

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8
Q

What kind of relationship does an agent have with their client?

A

A fiduciary relationship

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9
Q

A Fiduciary relationship of trust imposes certain duties upon an agent. These duties include
OLDCAR

A 
Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable Care
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10
Q

What does it to be “loyal” in a fiduciary relationship?

A

To place the client’s interests above all others.

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11
Q

In Kentucky, deposits held by a broker must be placed in the broker’s escrow account within ____ business days from the creation of an executory contract

A

3

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12
Q

Agency relationships that are created by agreement between the parties are called ___________

A

express agencies

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13
Q

What are examples of express agencies?

A

listing contracts
buyer agency contracts
property management contracts

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14
Q

Agency agreements can be oral if they are less than _________ year in length. However, they are not recommended

A

1

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15
Q

NOTE: In Kentucky, a broker cannot force through court action the payment of a commission with an oral listing agreement

A
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16
Q

Explain Implied Agency

A

An agent says something that leads a buyer to believe the agent is representing the buyer.

A buyer calls an agent and asks what he should do about an offer he is going to make to a for-sale by owner. the agent answers the buyers question and the buyer now thinks the agent is his agent. Agency relationships may be created without the payment of a commission

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17
Q

There are 9 methods of terminating an agency relationship. Name them.

8 of the 9 have no liability. Which one does have liability?

A 
Breach of Contract (LIABILITY)
Death of Broker 
Destruction of the property
incapacity
operation of law
mutual agreement
performance 
expiration of the contract
bankruptcy
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18
Q

A _________ agent is one who can legally do anything a principal can do. They have been given a general power of attorney (in writing). The party appointed to use the power of attorney is called an _________. Real estate licensees do not act in this capacity on behalf of their client.

A

Universal agent

attorney-in-fact

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19
Q

A __________ agent is one who acts for another in an ongoing relationship. Continuity of service is a key feature of this type of agency. An example of this agent would be a property manager, or the relationship between a broker and his sales associates

A

general

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20
Q

Most real estate licensees act as _______ agents. This agent is one who acts for another in a one-time transaction, such as marketing a property for sale.

A

Special

21
Q

NOTE: in Kentucky, a broker who designates an associate to represent a buyer or seller in an in-house transaction remains a dual agent

A
22
Q

A _______ agent represents only one side of a transaction.

A

Single

23
Q

we are _______ agents of the broker in the selling of a property.

A

sub-agents

24
Q

Dual agency requires what?

A

SIGNED permission from both sides

25
Q

Duties to a customer: there are three basic things that an agent owes to a customer. What are they?

A

reasonable care
fair and honest dealings
disclosure of property defects

26
Q

Puffing vs. Misrepresentation that leads to fraud

A

Puffing - an exaggerated comment; legal

Misrepresentation - misstatement about a fact; illegal; Fraud occurs when the misrepresentation is intentional and was made with the intent to deceive. Misrepresentation may allow a party to back out of a contract

*The difference is the intent

27
Q

Latent defects vs. patent defects

A

Latent defects - Hidden defects (i.e. painting over mold)

Patent defects - one that can be found by a reasonable inspection of the proeprty

28
Q

When should a stigma be revealed to a buyer?

A

When it is material to the buyer

29
Q

An agent is writing an offer for a buyer client. The buyer client informs the agent that he has had credit problems in the past and he is not sure how that would affect his loan application. After receiving this information from the buyer, the agent would be obligated to…

A

tell the seller about the buyer’s credit history

30
Q

A seller who will be out of the country for six months has appointed his agent as his lawful attorney-in-fact to sell and transfer the title to his property. The seller’s agent is acting as a:

A

Special agent

31
Q

When is subagency most likely to occur?

A

When a broker from one company sells a property listed by another company.

32
Q

A real estate agent who fails to relay information to a buyer client that resulted in a financial loss to the buyer is most likely guilty of

A

negligent misrepresentation

33
Q

One month after listing his home with a broker, a seller decides he does not want to sell his property and he calls the broker to withdraw his listing. In this situation….

A

The broker may sue the seller for his expenses

34
Q

What are the three ways a broker can be compensated

A

commission
hourly fee
flat fee

35
Q

When does a broker earn his commission?

A

When the seller accepts an offer from a ready, willing, and able buyer prepared to buy on the seller’s terms and ready to take positive steps towards consummation of the transaction

36
Q

Sales associates who are paid in a lump sum and who are personally responsible for paying their own taxes are probably treated for tax purposes as…

A

independent contractors

37
Q

Two real estate professionals were found guilty of conspiring with each other to allocate real estate brokerage markets. A seller sufffered an estimated $90,000 loss because of their activities. If the seller brings a civil suit against the two real estate professionals, what can the seller expect to recover?

A

$270,000 plus attorney’s fees and costs

3 x the actual damage

38
Q

Two sales associates who work for the same firm agree to divide their town into a northern region and a southern region; one sales associate will handle listings in the north, the other will handle listings in the south. this SOUNDS like it would violate the Sherman Anti-Trust laws re: allocation of customers, but it does NOT violate it. why?

A

Because the two individuals work in the same firm.

39
Q

NOTE: rules and regulations have the same force and effect as the license law itself

A
40
Q

A REALTOR is best described as an individual who..

A

is a real estate licensee and a member of the National Association of Realtors
(remember you have to be licensed and belong to an association to be a realtor)

41
Q

The federal law that makes contracts originated, negotiated and executed over a combination of computer and cell phone enforceable is

A

UETA

(Uniform Electronic Transactions Act)

42
Q

The amount of commission paid to a sales associate is determined by…

A

mutual agreement with the broker

43
Q

A real estate broker was responsible for a chain of events that resulted in the sale of a client’s property. This is called…

A

procuring cause

44
Q

The rules established by tradition and court decisions….

A

common law

45
Q

The laws enacted by the legislature….

A

statutory law

46
Q

The rules and regulations created by real estate commissions and departments, as authorized by the legislature

A

Administrative laws

47
Q

An agency relationship may be created by an oral or written agreement between the parties, which is ________. An agency relationship may also result from the parties’ behavior, creating an ________-

A

express agency

implied agency

48
Q

A negligent misrepresentation occurs when a real estate professional…..

A

should have known that a statement about a material fact was false and the real estate professional’s misrepresentation was due to culpable (careless) negligence rather than simple (accidental) negligence

49
Q

The relationship between real estate broker and seller is generally what type of agency?

A

Special

because its for a specific task

Real Estate Exam (19 decks)

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