Chapter 8 Quiz Flashcards

Chapter 8 Quiz Flashcards

14. A buyer's agent is most commonly compensated by:A.

the buyer, through payment of a commissionB. the seller, through a commission splitC. the buyer, through payment of a flat feeD. the seller, through payment of a flat fee

• B A buyer's agent is typically compensated through a

commission split, receiving half of the brokerage commission paid by the seller.

9. In California, a dual agent must:A. disclose material facts

to both the buyer and the seller, even if those facts are confidentialB. keep each party's negotiating position confidentialC. avoid giving advice to either partyD. submit conflicts between the buyer and the seller to arbitration

• B A dual agent is obligated to keep each party's

negotiating position confidential. One party's confidential information should not be disclosed to the other party unless there's a legal duty to do so (such as the duty to disclose latent defects).

• If a principal gives approval after the fact to unauthorized

actions, an agency relationship is established by:A.

ratificationB. estoppelC. implicationD. implied actual authority

• A Approval of unauthorized actions after the fact is

referred to as ratification

16. An agency relationship may terminate:A. only if there is

no termination date in the agency agreementB. only if the agent has proven to be incompetent or untrustworthyC.only with the agent's written consentD. with the mutual consent of the parties

• D The principal and agent may terminate their agency

relationship at any time by mutual consent. It may also be terminated unilaterally at any time by either the principal (revocation) or the agent (renunciation).

• A principal entered into an agency agreement that was

to last for a period of three months. Two weeks later, the principal died of natural causes. Which of the following is true?A. The principal's heirs are required to honor the terms of the agency agreementB. The agency continues unless the principal's heirs choose to revoke itC. The agency relationship terminated automatically when the principal diedD. The agency terminated as soon as the agent was informed of the principal's death

• C Agency relationships terminate immediately upon the

death or incapacity of either party.

• The most common method of creating a seller agency

relationship is:A. payment of a commissionB. a written

listing agreementC. submitting a listing to a multiple listing serviceD. words or conduct of the parties indicating an intent to create an agency

• B Seller agency relationships are usually created

through a written listing agreement.

• The owners of an apartment building hire a real estate

broker as the property manager. If the owners later sell the building, their agency relationship with the property

manager:A. is automatically transferred to the new ownerB.

terminates due to extinction of the subject matterC. cannot be terminated by the former owners without liability to the property managerD. continues unless terminated by the property manager

• B When property is sold or destroyed, any agency

related to that property is extinguished.

• It used to be common for listing agreements to contain

a "unilateral offer of subagency" if they were going to be submitted to a multiple listing service. Under the terms of such a listing agreement, a member of the MLS who procured a buyer for the listed property was automatically

considered to be a subagent of the:A. listing brokerB.

selling brokerC. sellerD. buyer

• C The "unilateral offer of subagency" meant that the

cooperating agent was considered to be an agent of the listing broker, and therefore a subagent of the seller.

• A broker who's representing a seller has not been

expressly authorized to accept a deposit. Nevertheless, the broker accepts a deposit check from the buyer. In regard to

the deposit, the broker is acting as:A. an agent for the

seller onlyB. an agent for the buyerC. an agent for the bankD. an escrow agent

• B Since the seller didn't authorize the broker to accept

a deposit, the broker is acting as the buyer's agent in regard to the deposit.

• In order to alleviate confusion among buyers and sellers

regarding agency representation issues, many states,

including California, enacted laws that:A. require agents to

disclose which party or parties they are representing in a transactionB. prohibit agents from representing buyers in residential transactionsC. require brokers to be licensed as either seller's agents or buyer's agentsD. require agents to act as seller's agents if they are members of a multiple listing service

• A Laws such as California's agency disclosure statute

require real estate agents to disclose to the parties in a transaction which party or parties they're representing in that transaction.

• Regardless of which party she's representing, a

licensee owes all of the parties a duty of:A. loyaltyB.

confidentialityC. immediately disclosing all conflicts of interestD. honesty and fair dealing

• D All agents owe all parties a duty of honesty and fair

dealing. Loyalty, confidentiality, and disclosure of conflicts of interest are duties owed only to the agent's principal.

4. A special agent is authorized to:A. do anything that can

be lawfully delegated to a representativeB. conduct a specific transactionC. handle all of the principal's affairs in one or more areasD. enter into contracts on the principal's behalf

• B A special agent's authority is limited to a specific

activity or transaction. Real estate agents typically are special agents.

7. In an in-house sale:A. the listing is not submitted to the

MLSB. the compensation must be paid from the principal directly to the broker's salespeopleC. the buyer and seller are brought together by salespeople working for the same brokerD. All of the above

• C In an in-house transaction, the listing salesperson and

the selling salesperson both work for the same broker.

• Broker Lois listed the Mannings' property. The

Mannings told her that the roof would leak in heavy rain, but Lois didn't pass that on to Ned, the buyer, since he didn't ask about the roof. If Ned purchases the property,

discovers the leak, and then sues for damages:A. he will

have no recourse, since it was his duty to inspect the propertyB. Lois will be liable, but the Mannings will not be liableC. the Mannings will be liable, but they may in turn recover damages from LoisD. the Mannings will be liable,

but Lois will not be liable

• C This situation is an example of vicarious liability. The

principals (the Mannings) are liable for the mistakes and misdeeds of their agent (Lois), but the Mannings may sue Lois for the amount they had to pay the third party (Ned).

• Broker Quincy is representing Rebecca in the sale of her

house, which is listed for $500,000. Rebecca wants a quick sale, and she tells Quincy that she'd probably be willing to sell the property for as little as $450,000. Quincy tells a prospective buyer that Rebecca would be willing to accept

$450,000. The buyer offers $450,000, and Rebecca

accepts the offer. Quincy has:A. not violated his fiduciary

duties, because he obtained an acceptable offerB. not violated his fiduciary duties, because he acted within the scope of his implied authorityC. violated his fiduciary duties by breaching the duty of agency disclosureD. violated his fiduciary duties by breaching the duty of loyalty

• D Quincy's actions violated his duty of loyalty to

Rebecca, since he revealed confidential information to the buyer. That's a violation of his fiduciary duties even if the end result was satisfactory to Rebecca.