Lesson 2
1.
The principal’s duties to the agent include
I.
compensate the agent according to the terms of the contract.
II.
cooperate with the agent.
III.
Hinder the agent.
a.
b.
c.
d.
2.
III only
II & III only
I & III only
I, II, III
The principal instructs the agent to exclude showing the home to the elderly. The agent must
a.
b.
c.
d.
e.
4.
I only
I & II only
I, II ,III
III only
The agent’s dates to the principle include
I.
loyalty
II.
disclosure
III.
obedience
a.
b.
c.
d.
3.
Chapter 4-5
do as instructed. The agent has a duty to obedience.
quit.
disobey, the duty of loyalty prevents the agent from acting against the
interests of the principal.
call the police.
none of these.
The duty of loyalty obligates the agent to
a.
obey the principal’s instruction.
b.
report the status of all funds received.
c.
exercise skill & knowledge on the principal’s behalf.
d.
all of these.
e.
none of these.
5.
The duty to keep the principal informed of all facts or information related to the
transaction is
a.
disclosure.
b.
accountability.
c.
loyalty.
d.
obedience.
e.
none of these.
6.
A person empowered to represent the principal in a broad but not unlimited range
of issues is a(n)
a.
b.
c.
d.
e.
special agent.
attorney in fact.
general agent.
universal agent.
none of these.
7.
A Special Agent is
a.
a designation used solely by the FBI.
b.
the term used for a person representing the principal in a broad range of
matters related to a specific business or activity.
c.
in a specific act or business transaction.
d.
must pass the bar exam.
e.
b & d only.
8.
If a seller contracts with a broker to market the seller’s property, the broker
becomes a(n) ________ of the seller, and the seller is the __________. The buyer
who contacts the broker to see the property is the broker’s _________.
a.
agent, customer, client
b.
agent, customer, principal
c.
agent, principal, client
d.
agent, principal, customer
e.
principal, agent, customer
9.
Dual agency
a.
is illegal.
b.
permitted if the agent informs all the parties.
c.
permitted if the agent informs all the parties and they consent.
d.
permitted only with designated agency.
e.
none of these.
10.
The primary purpose of the real estate license law is to
a.
raise revenue.
b.
regulate the real estate industry.
c.
Protect the rights of customers and clients.
d.
b & c.
e.
all of these.
11.
A person licensed to perform real estate activities on behalf of a licensed real
estate broker is
a.
real estate assistant.
b.
professional assistant.
c.
real estate salesperson.
d.
a or b.
e.
none of these.
12.
A is a licensed sales person of real estate broker B. B works in an office with
brokers C, D, & E.
I.
II.
III.
a.
b.
c.
d.
A can perform work for B only.
A can perform work for B, C, D & E.
A can accept compensation from any broker in B’s firm.
I only
I & II only
II & III only
none of these
13.
If the broker controls what the salesperson does, then the salesperson is
a.
an independent contractor.
b.
an employee.
c.
not licensed.
d.
a or b.
e.
none of these.
14.
A broker is entitled to a sales commission even if the buyer
a.
had a change of mind.
b.
was unable to deliver possession within a reasonable time.
c.
had a title with defects.
d.
all of these.
e.
none of these.
15.
A broker is entitled to a sales commission even if the seller
a.
had a change of mind.
b.
was unable to deliver possession within a reasonable time.
c.
had a title with defects.
d.
all of these.
e.
none of these.
16.
Real estate commissions are generally
a.
negotiable in every case.
b.
5% of actual selling price.
c.
5% of asking price.
d.
6% of selling price.
e.
6% of asking price.
17.
A broker has and exclusive-right-to-sell listing on a building. The owner is out of
town when the broker gets an offer from a buyer to purchase the building
providing the seller agrees to take a purchase money mortgage. The buyer must
have a commitment from the seller before the seller is scheduled to return to the
city. Under these circumstances the
a.
broker may enter into a binding agreement on behalf of the seller.
b.
c.
d.
broker may collect a commission even if the transaction falls through
because of the seller’s absence from the city.
the buyer is obligated to keep the offer open until the seller returns.
the broker must obtain the signature of the seller to effect the contract.
18.
Which of the following would be considered dual agency?
a.
A broker’s acting for both buyer and seller in the same transaction
b.
Two brokerage companies cooperating with each other
c.
A broker’s representing more than one principal
d.
A broker’s listing and then selling the same property.
19.
The relationship of a broker to his or her client is that of a(n)
a.
trustee.
b.
subagent.
c.
fiduciary.
d.
attorney in fact.
20.
A property manager is hired to manage a property while the owner is overseas for
two years. The property manager is a(n)
a.
general agent.
b.
special agent.
c.
universal agent.
d.
attorney-in-fact.
21
A salesperson that represents the seller is showing a house to a prospective
buyer-customer. The salesperson knows that the house has water problems in its
basement. Which of the following is true?
a.
Withholding the information properly protects the confidence of the seller.
b.
Disclosing the information could create a fiduciary relationship with the
buyer.
c.
Withholding the information prevents the buyer from making an informed
decision.
d.
Disclosing the information violates the salesperson’s fiduciary duty to the
seller.
22.
The National Do-Not-Call Registry provides that
a. licensees may never contact consumers without written authorization’
b.
consumers with whom a licensee has had a business relationship can be
contacted for up to 12 months after a purchase.
c.
licensees may not contact a previous customer if they are in the Registry.
d.
consumers who have made an inquiry to a licensee may be contacted up to
3 months later.
23.
Broker Janna was accused of violating antitrust laws. Of the following, she was
most likely accused of
a.
not having an equal housing opportunity sign in her office window.
b.
c.
d.
undisclosed dual agencies.
price fixing.
dealing in unlicensed exchage services.
24.
A broker lists a property for sale at $100,000 with a 5 percent commission, and he
later obtains an oral offer from a prospective buyer to purchase the property. The
seller indicates to the broker that the offer would be acceptable if it were
submitted in writing. Before it can be put in writing, the buyer backs out and
revokes the oral offer. In this situation, the broker would be entitled to
a.
a commission of $5,000.
b.
only a partial commission.
c.
no commission.
d.
the normal rate of commission.
25.
Real estate broker Todd was responsible for a chain of events that resulted in the
sale of one of his client’s properties. This is referred to as
a.
pro forma.
b.
procuring cause.
c.
private offering.
d.
proffered offer.
26.
A real estate salesperson, classified by the IRS as an independent contractor,
receives
a.
a monthly salary or hourly wage.
b.
company-provided health insurance.
c.
a company-provided automobile.
d.
negotiated commissions on transactions.
27.
What does the phrase “the law of agency is a common-law doctrine” mean?
a.
It is a legal doctrine that is not unusual.
b.
It is one of the rules of society enacted by legislatures and other governing
bodies.
c.
It is part of a body of law established by tradition and court decision.
d.
It may not be superseded by statutory law.
28.
Which of the following events will terminate an agency in a broker-seller
relationship?
a.
The broker discovers that the market value of the property is such that he
or she will not make an adequate commission.
b.
The owner declares personal bankruptcy.
c.
The owner abandons the property.
d.
The Broker appoints other brokers to help sell the property.
29.
Broker Ben tells a prospective buyer, “This property has the most beautiful river
view.” In fact, the view includes the river and the back of a shopping center.
Which of the following statements is true?
a.
b.
c.
d.
Broker Ben has committed fraud.
Broker Ben is guilty of negligent misrepresentation.
Broker Ben is guilty of intentional misrepresentation.
Broker Ben is merely puffing.
30.
A buyer who is a client of the broker wants to purchase a house that the broker
has listed for sale. Which of the following statements is true?
a.
The broker may proceed to write an offer on the property and submit it.
b.
The broker should refer the buyer to another broker to negotiate the sale.
c.
The seller and buyer must be informed of the situation and agree, usually
in writing, to the broker’s representing both of them.
d.
The buyer should not have been shown a house listed by the broker.
31.
A broker helps a buyer and seller with paperwork but does not represent either
party. This is
a.
dual agency.
b.
prohibited in all states as a broker must always represent one party.
c.
transactional brokerage.
d.
designated agency.
32.
A real estate licensee was representing a buyer. At their first meeting, the buyer
explained that he planned to operate a dog grooming business out of any house he
bought. The licensee did not check the local zoning ordinances to determine in
which parts of town such a business could be conducted. Which common-law
duty did the licensee violate?
a.
Care
b.
Obedience
c.
Loyalty
d.
Disclosure
33.
A real estate broker hired by an owner to sell a parcel of real estate must comply
with
a.
the common law of agency, even if a state agency statute exists.
b.
dual agency requirements.
c.
the concept of caveat emptor.
d.
all lawful instructions of the owner.
34.
A broker has established the following office policy. “All listings taken by any
salesperson associated with this real estate brokerage must include compensation
based on a 7 percent commission. No lower commission rate is acceptable.” If the
broker attempts to impose this uniform commission requirement, which of the
following statements is true?
a.
A homeowner may sue the broker for violating the antitrust law’s
prohibition against price-fixing.
b.
The salespersons associated with the brokerage will not be bound by the
requirement and may negotiate any commission rate they choose.
c.
d.
The broker must present the uniform commission policy to the local
professional association for approval’
The broker may, as a matter of office policy, legally set the minimum
commission rate acceptable for the firm.
35.
A state has recently updated its Rules and Regulations for the Real Estate
Profession. Assuming this state is like all other states and provinces, which of the
following is true regarding this publication?
a.
The rules and regulations are state laws enacted by legislature.
b.
The rules and regulations are a set of administrative rules adopted by the
state Real Estate Commission and do not have the same force and effect as
the statutory license law.
c.
The rules and regulations are a set of administrative rules adopted by the
state Real Estate Commission that define the statutory license law and
have the same force and effect as the license law itself.
d.
The rules and regulations create a suggested level of compliance and
behavior but are not enforceable against real estate licensees.
36.
Louise is a skilled salesperson at Alpha Realty. After a particularly challenging
transaction finally closes, the client gives her a check for $500 “for all your extra
work.” Which of the following statements is accurate?
a.
While such compensation is irregular, it is appropriate for Louise to accept
the check.
b.
Louise may receive compensation only from her broker.
c.
Louise should accept the check and deposit it immediately in a special
escrow account.
d.
Louise’s broker is entitled to 80 percent of the check.
37.
Jim and Ruth are both salespersons who work for NMN Realty. One afternoon,
they agree to divide their town into a northern region and a southern region. Jim
will handle listings in the northern region, and Ruth will handle listings in the
southern region. Which of the following statements is true?
a.
The agreement between Jim and Ruth does not violate antitrust laws.
b.
The agreement between Jim and Ruth constitutes illegal price-fixing.
c.
Jim and Ruth have violated the Sherman Antitrust Act and are liable for
triple damages.
d.
Jim and Ruth are guilty of group boycotting with regard to other
salespersons in their office.
38.
Licensees Fred and Rick were found guilty of conspiring with each other to
allocate real estate brokerage markets. Lucy suffered a $90,000 loss because of
their activities. If Lucy brings a civil suit against Fred and Rick, what can she
expect to recover?
a.
Nothing, because a civil suit cannot be brought for damages resulting from
antitrust activities.
b.
Only $90,000, the amount of actual damages Lucy suffered.
c.
d.
Actual damages plus attorney’ fees and costs.
$270,000 plus attorney’s fees and costs
39.
Which of the following statements best explains the meaning of this sentence?
“To recover a commission for brokerage services, a broker must be employed as
an agent of the client.”
a.
The broker must work in a real estate office.
b.
The client must make an express or implied agreement to pay a
commission to the broker.
c.
The broker must express an interest in representing the client.
d.
The broker must have a salesperson employed in the office.
40.
One of the key provisions of the Uniform Electronic Transaction Act (UETA) is
that
a.
forgery issues will probably escalate as a result of electronic transactions.
b.
an electronic record is not a substitute for a written record.
c.
a signature on a faxed offer is valid.
d.
if one party in a transaction uses electronic means to communicate an
offer, then the other party must respond in kind.
Essay questions are for your convenience to prepare for the midterm and final. You do
not have to turn them in for a grade.
1.
Explain how an agency relationship may be formed. Why do real estate brokers
need to be aware of this?
2.
List and explain the 5 duties an agent owes to the principal.
3.
Explain the steps you would take to differentiate an employee from an
independent contractor. From a practical point, does the broker have any more
control over what an employee does when compared to an independent
contractor?
4.
Has new technology made the real estate professional’s job easier or harder? Do
you think this resulted in higher commissions? Do you think this technology
change has helped or hurt buyers? Why?
5.
What steps must be completed before a broker has earned a commission? Under
what circumstances can a broker be paid a commission even if the property is not
sold?