PAGE 1
TEST 1
1. Agency is defined as a legal relationship in which one person acts for, and under the control of, another person:
(A) in a trustee capacity (B) as an independent contractor
(C) in dealing with third parties (D) as a disclosed agent
2. An agent is one who acts on behalf of a:
(A) buyer
(B) seller
(C) principal
(D) broker
3. "Fiduciary" most nearly means:
(A) trust
(B) honesty
(C) laborious
(D) facilitator
4. When an agent negotiates a contract on behalf of his principal, the contract generally arises between the:
(A) agent and third party (B) principal and third party
(C) agent and principal (D) principal, agent and third party
5. An agent is to a principal as:
(A) a salesperson is to his customers (B) a cook is to a chef
(C) an attorney is to his client (D) a mortgagor is to a mortgagee
6. An agent's authority is classified as actual, express, implied or apparent. If a seller calls a broker and asks him
to sell his house, this is an example of:
(A) express authority
(B) implied authority
(C) apparent authority
(D) general authority
7. In the above question, if the broker places an ad describing the house in the local newspaper in an attempt to
attract potential buyers, he is exercising his:
(A) express authority
(B) implied authority
(C) apparent authority
(D) special authority
8. At a cocktail party at the Jefferson house, you discover that Jefferson has taken a new job and is relocating to
Baltimore. When you express interest in buying his house, he tells you to see Broker Durham since they are
members of the same country club. Broker Durham has:
(A) express authority
(B) implied authority
(C) apparent authority
(D) no authority
9. A broker accepts a listing, and in an effort to expose the property to as many potential buyers as possible,
delegates his authority to his sales people. This act of the broker would be:
(A)
(B)
(C)
(D)
improper since an agent's authority can not be delegated
improper unless the broker has express authority to do this
proper since personal service contracts may always be assigned
proper since this is customary in the real estate business
10. Holmes is a licensed broker specializing in residential sales. At a football game Holmes introduces Brown, a
business acquaintance, to Christensen who is newly arrived in the city. If Holmes learns several weeks later
that Christensen has bought Brown's house and claims a commission as procuring cause of the sale:
(A)
(B)
(C)
(D)
Holmes is only due a finder's fee
Brown owes no commission since there was no agency
Holmes will collect the full commission from Brown
Holmes will collect half the commission for each party
11. Real estate agents, acting for and on behalf of their principals, usually have the authority to:
(A) sign contracts for their principals (B) sign deeds for their principals
(C) negotiate loans for their principals (D) negotiate offers for their principals
0202
Copyright © 2002 Colorado Real Estate Institute
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TEST 1
12. A general agent usually has authority to:
(A)
(B)
(C)
(D)
conduct a series of transactions on behalf of his principal
conduct a single transaction, but with the same general scope of authority as the principal
do anything the principal himself can do
do only those things authorized by the principal in writing
13. If Grover hires Smith as general manager of the Grover super market, this is an example of a:
(A) special agency
(B) general agency
(C) apparent authority
(D) implied authority
14. All of the following are examples of a principal/special agent relationship, EXCEPT:
(A) a real estate broker to lease your apartments (B) an attorney-in-fact to sell your house
(C) a developer to subdivide and market your property (D) an attorney to represent you in court
15. A special agent usually has authority to:
(A) conduct a series of transactions for his principal (B) do anything the principal himself can do
(C) do a specific, limited thing for his principal (D) hire other employees and independent contractors
16. One appointed as an attorney-in-fact is:
(A) an attorney at law
(B) an agent
(C) an employee
(D) an independent contractor
17. An attorney-in-fact, as to his principal, must act:
(A) as a fiduciary (B) at arms length
(C) the same as a broker acts towards third parties
(D) the same as a trustee
18. The authority of an attorney-in-fact derives from an instrument commonly know as:
(A) a contract of employment (B) an appointment document
(C) a power of attorney (D) a listing
19. Marshall, before leaving on a six month tour of the world, appoints you as his attorney-in-fact, "to do anything
that I have legal capacity to do." Your signature on a deed to Marshall's ranch, as his attorney-in-fact, would
be:
(A) binding on Marshall (B) invalid, since property owners must sign deeds of conveyance personally
(C) invalid since the authority given by Marshall did not specifically authorize the sale of real estate
(D) binding on you
20. Jackson authorizes Barth as his attorney-in-fact to sell his house. If Barth finds an acceptable buyer, he would
sign the contract:
(A) "Jackson" (B) "Jackson, by Barth, his attorney-in-fact"
(C) "Barth, agent of Jackson" (D) "Barth, for Jackson
21. Henshaw hires you to purchase several properties anonymously as his agent so that he can acquire enough land
to build a shopping center. You then enter into contracts with Black and Duval in your name to buy their land,
after which Henshaw decides not to go through with the purchase. If Black and Duval sue you to enforce their
contracts:
(A)
(B)
(C)
(D)
you will be required to complete the contracts
you are free of liability since they can only sue your principal
the contracts are invalid since you were an undisclosed agent
you must complete the contracts, but only if you can force Henshaw to indemnify you
22. In the above question, if Black and Duval find out that Henshaw is your principal and want to either raise the
price or back out of their contracts:
(A)
(B)
(C)
(D)
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you can force them to sell
Henshaw can force them to sell
they cannot be forced to sell because of your nondisclosure
they can only be forced to sell at the higher price
Copyright © 2002 Colorado Real Estate Institute
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TEST 1
23. You hire a secretary to take dictation, type and file. However, she buys paper, pencils and other supplies from
a stationery store and charges them to you. You would not be liable since she is:
(A) your special agent
(B) an independent contractor
(C) your employee
(D) a general agent
24. Adams, who owns a grain storage and distribution company, hires a CPA to do an audit of his business. In an
effort to determine inventory on hand, the CPA hires an engineer for $400 to calculate grain quantities in
various silos. The CPA is:
(A) an agent
(B) a sub-agent
(C) an employee
(D) an independent contractor
25. In the above question, the engineer is:
(A) Adams' agent
(B) Adams' sub-agent
(C) the CPA's employee
(D) an independent contractor
26. In the question above, if the engineer rents equipment necessary to make his estimates and charges the rental to
Adams, Adams is:
(A) not liable for the rental (B) liable to the rental company
(C) liable to the CPA (D) liable to the engineer
27. In the above question, if the engineer charges the rental to the CPA, which of the following is liable to the rental
company?
(A) The engineer
(B) The CPA
(C) Adams
(D) None of the above
28. A salesperson has all of the following duties to her principal, EXCEPT:
(A) to indemnify the principal (B) to use reasonable care in performing the agency
(C) to account for all money and property received (D) to be loyal to the principal
29. If a broker intentionally misinforms his principal as to a zoning change that will affect the value of the
principal's property, the broker has violated his duty to:
(A) be loyal to his principal (B) use reasonable care in performing the agency
(C) be instrumental in all things affecting the property value (D) reimburse his principal
30. When an agent receives money or other property in a normal real estate transaction, he must:
(A)
(B)
(C)
(D)
make them available to the seller
place them in the hands of a neutral third party
place them in his operating account
hold them in trust for the seller until the transaction is closed
31. Judy Myers has listed her house for sale with XYZ Realty. Which of the following is an example of XYZ's
fiduciary responsibilities to Judy?
(A)
(B)
(C)
(D)
Counseling the buyers as to how low Judy will go in her price
Obtaining data to help cooperating brokers with their buyers
Assisting buyers in obtaining title in joint tenancy
Obtaining the financing terms that Judy has requested
32. Baker gives you an exclusive right to sell listing to sell his property for $40,000, including provision for a 10%
commission. Carter goes directly to Baker and offers $38,000. Baker cancels his listing with you and later sells
to Carter in order to net more from the sale. Baker violated which of his duties to his agent?
(A) The duty to perform the agency agreement (B) The duty to reimburse the agent for his expenses
(C) The duty to indemnify his agent (D) The duty to be loyal
33. A real estate salesperson's duties to the principal are:
(A)
(B)
(C)
(D)
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the same as the broker's duties to the principal
identical to his duties to his broker
the same as the principal's duties to the salesperson
the same as the principal's duties to the broker
Copyright © 2002 Colorado Real Estate Institute
PAGE 4
TEST 1
34. You are showing a house you have an agency listing on when the prospect complains that he thinks the price is
too high. You may tell him which of the following without violating the law or the code of ethics?
(A)
(B)
(C)
(D)
"Submit any offer you want"
"I am sure that the seller will take less"
"Why not try $250 less than the listed price"
"The property is worth more than it's listed for, but the seller doesn't know it"
35. John Roberts bought a house and found out after closing that the roof had been damaged by hail and needed
$1,500 in repairs. In which of the following situations would the listing salesperson most likely be free of
liability for the repairs?
(A)
(B)
(C)
(D)
He knew about the damaged roof but did not say anything
He inspected the roof but did not detect any damage
He did not disclose the damage since he was not asked about it
The seller told him not to say anything about the damage
36. Under the law of agency, it is prohibited for an agent to:
(A)
(B)
(C)
(D)
accept expense reimbursement from his principal
act as an agent for a buyer of real estate
gain any advantage over his principal by even the slightest concealment or misrepresentation
act as an undisclosed agent for a buyer without disclosing this fact to a seller of real estate when asked by
the seller
37. A prospective purchaser comes into your real estate office wanting to buy one of your residential listings. He
advises you that he wants to close as soon as possible since he has information that the property across the
street will soon be zoned for high rise residential use. This comes as a surprise to you, and you should:
(A)
(B)
(C)
(D)
advise your client not to accept any offers until a revised evaluation of his property can be made
prepare an offer and submit it to the seller as soon as possible without mentioning what the buyer told you
have the buyer sign a buyer's representation agreement, then submit the offer to the seller
have another salesperson in your office submit the offer to the seller so that you can keep the purchaser's
confidence
38. In which of the following cases would a broker, acting as a seller’s agent, be least likely to violate the law of
agency or code of ethics when showing properties listed with him?
(A)
(B)
(C)
(D)
When he tries to find a potential buyer a "good deal"
When he represents to a buyer that he thinks a seller will accept less for his property than the list price
When he prepares the buyer's offer and "sells" it to the seller
When he tells a buyer he will never regret buying the property he is considering
39. A seller’s salesperson/agent is acting as an attorney-in fact in signing a purchase contract on behalf of the seller
in the seller’s absence. This contract is enforceable between the:
(A) seller and the salesperson (B) salesperson and the buyer
(C) salesperson and her the broker (D) buyer and the seller
40. In entering into a contract to purchase a house for $85,000, the buyer does not disclose to the seller his
knowledge that the whole area has just been rezoned for high-rise units. This is an example, on the part of the
buyer, of:
(A) timing (B) fraud by omission
(C) misrepresentation of a material fact
(D) fraud by virtue of withholding important information
41. Expenses of the real estate agent, in the normal listing contract, are paid for by:
(A) the principal (B) the agent
(C) the agent and principal equally
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(D) the title insurance company
Copyright © 2002 Colorado Real Estate Institute
PAGE 5
TEST 1
42. A salesperson's normal automobile expenses for gas and repairs are usually paid by:
(A)
(B)
(C)
(D)
the seller if the property is sold
the broker if the property is sold
the salesperson, whether or not the property is sold
the broker, whether or not the property is sold
43. You obtain a listing from Jordan on his house at 438 Maple Street. The listing cites that the owner may list
with other agents, that you will receive a commission only if the seller accepts an offer that you present, and
that the owner may sell the property himself without owing a commission to anyone. The listing you have is:
(A) an open listing (B) a net listing
(C) an exclusive right to sell listing (D) an exclusive agency listing
44. A listing which cites that the broker will receive a commission regardless of who sells the property is:
(A) an open listing
(B) a net listing
(C) an exclusive listing
(D) an exclusive agency listing
45. Jenks authorizes you to sell his house for $80,000, with anything over that amount to go to you as commission.
This is an example of:
(A) an open listing (B) a net listing
(C) an exclusive right to sell listing (D) an exclusive agency listing
46. When a seller lists his property, but reserves the right to sell the property himself and not be obligated to pay a
commission, he would be listing with a (an):
(A) exclusive agency listing
(B) net listing
(C) exclusive right to sell listing
(D) multiple listing
47. The disadvantage to a seller of giving an open listing is that:
(A)
(B)
(C)
(D)
the seller never knows who will be showing the property
broker protection is not sufficient to encourage any broker to expend his time and energy
the seller will owe a commission to more than one broker if the property sells
the seller cannot sell the property himself
48. Dangers to a broker in taking a net listing include all of the following, EXCEPT:
(A)
(B)
(C)
(D)
accusation by the seller of fraud if the broker collects an inordinately high commission
no commission to the broker if all he can obtain from a buyer is the net amount required by the seller
an angry buyer, if the latter learns that the seller's price and the broker's price are different
no protection to the broker since a net listing cannot be combined with an exclusive listing
49. A property manager has all of the following duties to his principal, the property owner, EXCEPT the duty to:
(A) preserve the improvements on the property (B) account for security deposits
(C) invest profits from the property (D) see that the property is properly maintained
50. Broker Anthony decides to sell his real estate agency to broker Carlson. He may do this by selling him the
business and its good will, and regarding his listings:
(A)
(B)
(C)
(D)
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assigning them
transferring them by novation
obtaining assignment approval from each of his principals
endorsing each listing in favor of Carlson
Copyright © 2002 Colorado Real Estate Institute