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Unit 4: Real Estate Agency > Fiduciary Duties > Flashcards

Fiduciary Duties Flashcards

1
Q
A
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2
Q

In Illinois, fiduciary duties are called ___ duties.

A

Statutory

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3
Q

What are the 6 fiduciary duties that an agent owes their client?

A

Care
Loyalty
Accounting
Obedience
Disclosure
Confidentiality

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4
Q

The duty of ___ rises above any personal interests of the agent.

A

loyalty

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5
Q

Illinois has replaced common-law duties with ___ duties

A

statutory

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6
Q

Agent is entrusted with confidential information and has ___ responsibilities to the principal

A

Fiduciary

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7
Q

The relationship between a real estate licensee and the parties involved in a transaction is not simple. In addition to the parties’ assumptions and expectations, the licensee is subject to a wide range of legal and ethical requirements designed to protect which 3 things?

A

The seller, the buyer, and the transaction

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8
Q

In Illinois, agency relationships are governed under ___ law.

A

statutory

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9
Q

In Illinois, what defines the rights and duties of the principal and the agent?

A

Law of Agency

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10
Q

In Illinois, what are the 3 types of laws that interpret the relationship between real estate licensees and their clients are…

A

Law of agency

Contract law

Real Estate licensing laws

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11
Q

According to the Real Estate License Act of 2000, confidential information may NEVER be shared even in a situation where a court of law has issued a warrant for the disclosure of this information. True or false?

A

False

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12
Q

In Illinois, the client is the ___ to whom the agent gives advice and counsel

A

principal

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13
Q

In Illinois, the ___ is entitled to the factual information and honest dealings as a consumer

A

customer

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14
Q

In Illinois, the customer is entitled to the factual information and honest dealings as a consumer, but never receives advice and counsel or confidential information about the ___.

A

principal

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15
Q

In Illinois, the customer is entitled to the factual information and honest dealings as a consumer, but never receives advice and counsel or confidential information about the principal. Therefore, the real estate licensee works for the ___

A

client

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16
Q

In Illinois, the customer is entitled to the factual information and honest dealings as a consumer, but never receives advice and counsel or confidential information about the principal. Therefore, the real estate licensee cooperates with the ___.

A

customer

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17
Q

Who’s primary duty is it to comply with the brokerage agreement and cooperate with the agent?

A

The principal

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18
Q

A seller’s agent has the responsibility to provide the seller with accurate CMA. Which fiduciary duty is this an example of?

A

Care

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19
Q

The seller’s agent has the responsibility to advise their client on the best pricing options as they relate to market competition. Which fiduciary duty is this an example of?

A

Care

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20
Q

The seller’s agent has the responsibility to advise their client on preparing the property to be seen on the market. Which fiduciary duty is this an example of?

A

Care

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21
Q

The seller’s agent has the responsibility of showing the property and responding to inquiries promptly. Which fiduciary duty is this an example of?

A

Care

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22
Q

The seller’s agent has the responsibility to suggest options during the negotiation process. Which fiduciary duty is this an example of?

A

Care

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23
Q

The seller’s agent has the responsibility to follow through on all required inspections and appraisals. Which fiduciary duty is this an example of?

A

Care

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24
Q

The seller’s agent has the responsibility of following through on all required paperwork including mandated disclosures. Which fiduciary duty is this an example of?

A

Care

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25
Q

The seller’s agent has the responsibility of bringing any physical defects to the attention of the seller as they become known. Which fiduciary duty is this an example of?

A

Care

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26
Q

Which of the following is not one of the SELLER’s agent’s fiduciary duties of Care as defined in Fiduciary Responsibilities?

A) Following through on all required inspections and appraisals
B) Showing the property and responding to inquiries promptly
C) Showing properties that meet the needs of the buyer
D) Bringing any physical defects to the seller’s attention as they become known

A

Showing properties that meet the needs of the buyer

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27
Q

The buyer’s agent has the responsibility of showing properties that meet the needs of the buyer. Which fiduciary duty is this an example of?

A

Care

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28
Q

The buyer’s agent has the responsibility to suggest other properties that might also fit the needs of the buyer. Which fiduciary duty is this an example of?

A

Care

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29
Q

The buyer’s agent has the responsibility to provide an accurate CMA so that the buyer can make an informed decision. Which fiduciary duty is this an example of?

A

Care

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30
Q

The buyer’s agent has the responsibility to point out potential problems that need to be addressed by inspectors, attorneys, or lenders. Which fiduciary duty is this an example of?

A

Care

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31
Q

The buyer’s agent has the responsibility to bring any physical defects and material facts to the buyer’s attention as they become known. Which fiduciary duty is this an example of?

A

Care

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32
Q

A real estate licensee owes the principal certain ___ duties.

A

fiduciary

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33
Q

Care, obedience, loyalty, disclosure, accounting, and confidentiality are the ___ duties of the real estate licensee.

A

fiduciary

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34
Q

Which of the following is not one of the BUYER’s agent’s fiduciary duties of Care as defined in Fiduciary Responsibilities?

A) Pointing out potential problems that may need to be addressed by inspectors, attorneys, or lenders
B) Following through on all required inspections and appraisals of the seller’s property
C) Bringing any physical defects to the buyer’s attention as they become known
D) Suggesting other properties that might also fit the needs of the buyer

A

Following through on all required inspections and appraisals of the seller’s property

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35
Q

The agent has the fiduciary responsibility to follow all lawful and ethical instructions from their client. Which fiduciary duty is this an example of?

A

Obedience

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36
Q

The agent has the fiduciary responsibility to deny any requests that would break Fair Housing Law or REALTOR Code of Ethics, and discuss any of these requests with their sponsoring broker. Which fiduciary duty is this an example of?

A

Obedience

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37
Q

According to the fiduciary duty of Obedience as defined in fiduciary responsibilities, which agent is responsible for following all lawful and ethical instructions from the client?

A) Buyer’s
B) Seller’s
C) Both

A

Both

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38
Q

According to the fiduciary duty of Obedience as defined in fiduciary responsibilities, which agent is responsible for denying any requests to break Fair Housing Law or REALTOR Code of ethics?

A) Buyer’s
B) Seller’s
C) Both

A

Both

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39
Q

A client requests that their agent does something that might violate Fair Housing Law. According to the fiduciary duty of Obedience as defined in fiduciary responsibilities, who should the agent discuss this request with?

A

Sponsoring broker

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40
Q

Sarah is a real estate agent in Illinois, who is representing her client, Bob. Bob is licensed as an attorney in Florida, who is looking to purchase an investment property in Chicago. Bob asks Sarah if she can do something for him that she knows would be a violation of Illinois state law. Bob is unaware that his request would be a violation of Illinois state law because it would not violate Florida state law. What should Sarah do?

A

Deny Bob’s request and contact her sponsoring brokerage

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41
Q

The agent has the responsibility to always act in the client’s best interest as opposed to the agent’s or anyone else’s best interest. Which fiduciary duty is this an example of?

A

Loyalty

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42
Q

Which agent has the fiduciary duty of loyalty to always act in the client’s best interest as opposed to the agent’s or anyone else’s best interest?

A) Buyer’s

B) Seller’s

C) Both

A

Both

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43
Q

The agent has the responsibility to never disclose confidential information to another agent just to “make the deal happen.” There is no “in between you and me” in the role of fiduciary. Which fiduciary duty is this an example of?

A

Loyalty

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44
Q

Which agent has the responsibility to never disclose confidential information to another agent just to “make the deal happen?”

A) Buyer’s

B) Seller’s

C) Both

A

Both

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45
Q

An agent may disclose a client’s confidential information with another agent in order to make a deal happen without violating any of their Fiduciary responsibilities as an agent, as long as it is agreed upon between both agents that the information will stay “between you and me.” True or false?

A

False

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46
Q

An agent has the fiduciary responsibility to ___ all known latent defects and material facts to the buyer’s or seller’s attention.

A

Disclose

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47
Q

Because of the agent’s fiduciary duty of disclosure, which agent must REQUEST all appropriate state and federal disclosure forms from the opposite agent?

A) Buyer’s

B) Seller’s

C) Both

A

Buyer’s

48
Q

Completing requests of all state and federal forms relating to any defects that have been brought to the client’s attention, would fall under which fiduciary responsibility?

A

Disclosure

49
Q

Because of an agent’s fiduciary duty of disclosure, if any defects become known, who is required to complete state and federal forms relating to the disclosure?

A

The seller

50
Q

Which agent has the fiduciary duty to PROVIDE any state or federal forms rand any other associated material relating to the disclosure of any known defects to the opposite party and the opposite party’s agent?

A

The buyer’s agent

51
Q

Which fiduciary duty requires the agent to be responsible for handling all property entrusted to them by their client?

A

accounting

52
Q

If an agent is acting as the escrow agent, they must make sure the handling of all funds is done in accordance with state law. Which fiduciary duty does this fall under?

A

accounting

53
Q

The ___ agent has the responsibility to make sure that the handling of funds is done in accordance with state law

A

escrow

54
Q

Which fiduciary responsibility states that an agent may never disclose their client’s reason or motive for buying or selling, if it affects their negotiating position?

A

Confidentiality

55
Q

A buyer’s agent may disclose the maximum amount their client can afford or is willing to pay without breaching confidentiality. True or false?

A

false

56
Q

If a seller’s agent discloses the minimum amount their client will accept, which fiduciary responsibility might be violated?

A

Confidentiality

57
Q

An agent should not disclose the minimum or maximum amount their client is willing to accept or pay. Which fiduciary responsibility would this fall under?

A

Confidentiality

58
Q

Which party is obligated to follow fiduciary duties of confidentiality– the buyer’s agent, the seller’s agent, or both agents?

A

Both

59
Q

A buyer’s agent may disclose their client’s reason for wanting to buy the property if it can affect their position in the negotiation process. True or false?

A

False

60
Q

Under the fiduciary duty of ___, the agent should know all facts pertinent to the principal’s affairs. Such as the physical characteristics of the property being transferred and the type of financing that will be used.

A

Care

61
Q

If an agent is representing the ___, care and skill would include helping the client arrive at an appropriate listing price, discovering & disclosing facts that affect the client, and properly presenting the contracts that the client signs.

A

seller

62
Q

If an agent is representing the ___, their duty of care would mean properly marketing the property and helping the client evaluate financing alternatives as well as the terms and conditions of offers to purchase

A

seller

63
Q

Because of their duty of ___, an agent representing the buyer is expected to help the buyer evaluate offers and counteroffers with their buyer’s interest in mind.

A

care

64
Q

Because of their duty of Care, an agent representing the ___ would be responsible for locating suitable property and evaluating property values.

A

buyer

65
Q

An agent representing a buyer is expected to evaluate neighborhoods and property conditions. Which fiduciary duty is this an example of?

A

care

66
Q

The fiduciary duty of ___ obligates the agent to act in good faith at all times by obeying the principal’s instructions in accordance with the contract.

A

obedience

67
Q

Agents may obey instructions from their client even if they are unethical, because of their fiduciary duty to obedience. True or false?

A

false

68
Q

A seller tells the listing agent “I don’t want you to show my house to anyone that is not white.” The Fair Housing Law states that it is illegal to refuse to show a property to someone on the basis of race, however agent also has the fiduciary duty of loyalty to always act in the client’s best interest as opposed to the agent’s or anyone else’s best interest. Can the agent honor their client’s request?

A

No

69
Q

The agent’s fiduciary duty of obedience never extends to illegal actions such as violating the Fair Housing Law. True or false?

A

True

70
Q

A seller tells the listing agent “I don’t want you to show my house to anyone that is not white.” The Fair Housing Law states that it is illegal to refuse to show a property to someone on the basis of race, however agent also has the fiduciary duty of loyalty to always act in the client’s best interest as opposed to the agent’s or anyone else’s best interest. Would it be illegal for the agent to honor their client’s request?

A

Yes

71
Q

A seller tells the listing agent “I don’t want you to show my house to anyone that is not white.” The Fair Housing Law states that it is illegal to refuse to show a property to someone on the basis of race, however agent also has the fiduciary duty of loyalty to always act in the client’s best interest as opposed to the agent’s or anyone else’s best interest. What should the agent do?

A

Withdraw from the agency relationship with this client

72
Q

Who’s interests should always come first according to the duty of loyalty?

A

The client / principal

73
Q

Agents should always consider how the result of negotiations for their client will affect the amount of money they will receive in commissions after closing. True or false?

A

False

74
Q

Agents must perform all services with the goal of promoting who’s interests?

A

The client / principal

75
Q

It is the agent’s duty to keep the ___ informed of all facts or information that could affect a transaction.

A

client / principal

76
Q

The duty of ___ includes informing the client of any relevant information or material facts that the agent either knows or should have known about.

A

Disclosure

77
Q

The agent is obligated to disclose facts that a reasonable person would feel are important in choosing a course of action, unless those facts are unfavorable to the principal’s position. True or false?

A

False

78
Q

Who is responsible for completing disclosure forms either before or at the time of signing a listing agreement?

A

The seller

79
Q

An inspector informs an agent that the seller whom they are representing did not disclose the extent of the reported defects after the disclosure form has already been completed. Is the seller’s agent obligated to disclose this new information to the buyer’s seller?

A

Yes

80
Q

The seller’s agent only needs to disclose any defects to the buyer’s agent if the seller completes a disclosure form. True or false?

A

False

81
Q

The Illinois Association of REALTORS Residential Real Property Disclosure Report requires that ___ of one to four unit residential properties fill out property disclosure forms that reveal any material defects they are made aware of in the real estate for sale.

A

Sellers

82
Q

The Illinois Association of REALTORS Residential Real Property Disclosure Report shifts the responsibility for full disclosure from the ___ to the ___.

A

From the agent to the seller

83
Q

In Illinois, completed disclosure forms are given to ___ before an offer is made

A

Buyers

84
Q

In Illinois, if a disclosure form with any negative disclosures is delivered to a buyer AFTER an offer has been accepted, how long does the buyer have to cancel the contract?

A

Three business days

85
Q

In Illinois, if a seller learns of a new problem after a contract is signed and up until closing, how must they disclose this to the buyer?

A

In writing

86
Q

In Illinois, under which circumstances should a real estate licensee help the seller complete a disclosure form?

A

The real estate licensee should NEVER help the seller complete this form

87
Q

In Illinois, licensees are required to deliver true copies of all executed or initialed documents to the people who signed or initialed them within…

A

24 hours

88
Q

In Illinois, all funds entrusted to a licensee must be deposited in a special escrow account. Unless the terms of the contract specify a different time frame, when must the licensee deposit these funds following the signing of a sales contract or lease?

A

By the next business day

89
Q

Unless contract terms specify a different time frame, Illinois licensees have one business day to deposit all funds entrusted to them into a special ___ account following the signing of a sales contract or lease.

A

Escrow

90
Q

___ is the practice of using escrow funds as the licensee’s own money and is illegal.

A

Conversion

91
Q

In Illinois, it is ___ for a real estate licensee to deposit funds received from a closing into their personal bank account.

A

Illegal

92
Q

How long should records of escrow account transactions and reconciliations be kept on file in Illinois?

A

At least five years

93
Q

Client information obtained during the term of a brokerage agreement must be kept ___.

A

confidential

94
Q

A seller’s agent may only disclose their principal’s urgency to sell or willingness to accept less than the listing price if…

A

The principal has authorized disclosure by word or conduct

95
Q

Although an agent may not disclose personal or confidential information about their principal, what information must ALWAYS be disclosed?

A

Known material facts about the property’s physical condition

96
Q

Any fact that, if known, might reasonably be expected to affect the course of events is a(n)…

A

Material fact

97
Q

Fiduciary/statutory duties are set forth in Article ___ of the Real Estate license Act of 2000

A

15

98
Q

According to Article 15 of the Real Estate License Act of 2000, the agent must perform in terms of the ___ between a sponsoring broker and the client

A

Brokerage agreement

99
Q

According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interest of their client by timely presenting all ___ to and from the client, unless the client has waived this duty.

A

offers

100
Q

According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interest of their client by disclosing all ___ concerning the transaction of which the licensee has actual knowledge, unless that information is confidential information

A

material facts

101
Q

According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interests of their client by timely accounting for all ___ and ___ received in which the client has, may have, or should have had an interest.

A

money and property

102
Q

According to Article 15 of the Real Estate License Act of 2000, the agent must promote the best interest of their client by obeying specific directions of the client as long as they aren’t contrary to applicable ___, ___, or ___

A

Statutes

Ordinances

Rules

103
Q

According to Article 15 of the Real Estate License Act of 2000, the agent must comply with applicable statues and regulations, including ___ and ___

A

Fair Housing

Civil Rights

104
Q

Statements of opinion are only permissible as long as they are offered as opinions and without any intention to ___.

A

deceive

105
Q

Generalized, vague exaggeration of a property’s benefits is called ___.

A

puffing

106
Q

Is “puffing” illegal?

A

no

107
Q

Even though puffing is not illegal, licenses must ensure that none of their statements can be interpreted as ___.

A

fraudulent

108
Q

___ is the intentional misrepresentation of a material fact with the intent of causing harm or taking advantage of another person.

A

fraud

109
Q

Making false statements about a property would be considered as ___

A

fraud

110
Q

Intentionally concealing or failing to disclose important facts about a property would be considered as ___.

A

fraud

111
Q

Misrepresentation or omission may result in licensee liability, even if it was not intentional. True or false?

A

true

112
Q

___ occurs when the licensee should have known that a statement about a material fact was false.

A

Negligent Misrepresentation

113
Q

If a licensee makes a false statement to a consumer, who would be liable for any damages that resulted afterward?

A

The licensee

114
Q

While showing a potential buyer an average looking house, the broker described even the most plain features of the home as “beautiful.” Even though these statements were obviously the broker’s personal opinion, they were said to encourage a positive feeling about the property. What is this an example of?

A

Puffing

115
Q

A broker neglected to inform their buyer that the lot next door was recently sold to a waste disposal company for use as a toxic dump. This might be an example of what?

A

Fraudulent misrepresentation

116
Q

The Illinois Real Estate License Act states that a licensee shall NOT be liable to a client for providing false information if the false information was provided to licensee by a customer, unless the licensee knew or should have known that the information was false. True or false?

A

True

117
Q

The Illinois Real Estate License Act states that licensees shall treat all customers ___, and shall not negligently or knowingly give them ___

A

Honestly

False Information

Unit 4: Real Estate Agency (8 decks)

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