Unit 9

Question 1

The fundamentals of general agency law have changed dramatically over the past two hundred years.

Answer 1

False

Question 2

In traditional common law, the relationship in which the agent is held in a position of special trust and confidence by the principal is one of a fiduciary.

Answer 2

True

Question 3

An express agreement occurs when the actions of the parties indicate that they have mutually consented to an agency.

Answer 3

False

Question 4

An express agreement, in which the parties formally express their intention to establish an agency and state its terms and conditions, may be either oral or written.

Answer 4

True

Question 5

A universal agent is a person empowered to do anything the principal could do personally.

Answer 5

True

Question 6

The universal agent’s authority to act on behalf of the principal is significantly limited.

Answer 6

False

Question 7

The real estate professional’s duty to a third party (customer) includes disclosure of all facts that the real estate professional knows or should reasonably be expected to know that materially affect the value or desirability of the property.

Answer 7

True

Question 8

Exaggeration of a property’s benefits is called puffing and is illegal.

Answer 8

False

Question 9

Maria tells her agent in confidence that she must sell fast and may accept less than the list price. The agent tells a buyer the seller will accept up to $10,000 less than the list price. Which is TRUE?

Answer 9

Disclosure was improper and possibly illegal, regardless of the agent’s motive.

Question 10

A broker helps a buyer and a seller with paperwork but does not represent either party. This relationship is

Answer 10

a transactional brokerage.

Question 11

When considering whether or not to reveal information regarding a stigmatized property, a real estate professional should be aware of

Answer 11

any relevant state laws.

Question 12

A seller, anxious to sell, listed a home for $190,000 and signed an agency agreement with a broker who then told a buyer to submit a low offer. The buyer offered $175,000 and the seller accepted. Which of the following statements is TRUE?

Answer 12

The broker has violated the agency relationship with the seller.

Question 13

The seller’s agent is aware that a new landfill has been approved for development on an adjacent property but does not disclose this information to a buyer. This could be an example of

Answer 13

fraudulent misrepresentation.

Question 14

The fiduciary responsibilities of an agent to the principal under the common law of agency include

Answer 14

disclosure of material facts that the agent knows.

Question 16

The agent is held in a position of special trust and confidence by the principal when the agent is considered

Answer 16

a fiduciary.

Question 17

Properties that are considered undesirable because of events that occurred there or because a known sex offender lives in the area are considered

Answer 17

stigmatized properties.

Question 18

Misrepresentation or omission might result in broker liability

Answer 18

even if unintentional.

Question 19

The laws enacted by a legislature make up

Answer 19

statutory law.

Question 20

Buyers hire an agent to help them purchase a home and want seller financing because they filed for bankruptcy two years ago. The agent is

Answer 20

required to disclose the information because it is a material fact important to the seller.

Question 21

An agency relationship between a seller and a broker is usually created by a written employment contract called a

Answer 21

listing agreement.

Question 22

A bankruptcy of the principal to an agency representation agreement will

Answer 22

terminate the agency by operation of law.

Question 23

Which statement is TRUE of a real estate broker acting as the agent of the seller?

Answer 23

The broker is obligated to render loyalty to the seller.

Question 24

Which of the following is TRUE about puffing?

Answer 24

It occurs when a real estate professional exaggerates the features of a property.

Question 25

A broker tells a buyer, “This home has the most beautiful river view.” In fact, the view includes the river and the back of a shopping center. Which is TRUE?

Answer 25

The broker is merely puffing.

Question 26

Which of the following is considered lawful practice in real estate brokerage?

Answer 26

Exaggerated statements about the property

Question 27

An intermediary functions as

Answer 27

a nonagent.

Question 28

An agency relationship continues on the occurrence of

Answer 28

an offer made on the property.