(Ch. 10) Agency

Question 1

All but one of the following owes a fiduciary obligation:

A) executor
B) guardian
C) attorney
D) mortgagor

Answer 1

(D)

A,B and C are fiduciary. A mortgagor is a debtor

Question 2

2. One who has the right to sign the name of his principal to a contract of sale is:

(A) a real estate broker.
(B) a special agent.
(C) an attorney-in-fact.
(D) an attorney-at-law.

Answer 2

(C)

Only an attorney-in-fact has such authority

Question 3

3. A real estate salesperson might lawfully accept an extra commission in a difficult sale from:

(A) an appreciative seller.
(B) a thankful buyer.
(C) a broker-employer.
(D) the mortgage lender.

Answer 3

(C)

Salesperson can only accept
compensation from broker.

Question 4

4. Any person, partnership, association or corporation who authorizes or employs another, called the agent, to perform certain acts on his behalf is the

(A) agent.
(B) broker.
(C) principal.
(D) assignor.

Answer 4

(C)

Not spelled “principle.”

Question 5

5. An agent is considered to have earned his commission:

(A) only if title is transferred if he secures an offer from a prospective
(B) buyer.
(C) if he produces a ready, willing and able buyer on the principal’s terms of
(D) the principal signs a contract when sale.

Answer 5

(C)

If the seller defaults, the agent may sue the seller for the commission. If the buyer defaults, the agent may take a direct action against the buyer

Question 6

6. A broker is:

(A) a principal to the salesperson (B) the agent of a seller under a listing contract.
(C) the agent of a buyer in a buyer-agency agreement.
(D) All of the above.

Answer 6

(D)

All statements are true

Question 7

7. Salespersons may accept compensation of their predetermined share:

(A) as indicated and given by the multiple listing service.
(B) from the owner of the property.
(C) from their employing broker.
(D) from the cooperating broker.

Answer 7

(C)

A salesperson may not accept compensation from anyone other then his or her employing broker.

Question 8

8. The commission rate for the sale of real estate is determined by:

(A) seller.
(B) fixed schedules approved by the Real Estate Commission.
(C) scarcity of real estate for sale.
(D) negotiation.

Answer 8

(D)

Compensation is arrived at by agreement between the broker and owner.

Question 9

9. Which of the following persons would NOT have fiduciary duties to a principal?

(A) Trustees.
(B) Administrators.
(C) Employees
(D) Receivers

Answer 9

(C)

Employees do not owe fiduciary obligations to an employers

Question 10

10. The position of trust assumed by the broker as an agent for the principal is described most accurately as:

(A) trustee relationship.
(B) stor relationship.
(C) confidential relationship.
(D) fiduciary relationship

Answer 10

(D)

A position of trust

Question 11

11. Known hidden defects in a property must be disclosed by:

(A) seller only.
(B) broker only.
(C) salesperson only.
(D) seller, broker and salesperson.

Answer 11

(D)

Broker and salesperson have fiduciary obligations; seller must disclose defects under case law

Question 12

12. An owner requests a broker to list his property for sale at $70,000. Upon inspec- tion, the broker believes the property is worth $80,000. The broker should:

(A) get a net listing for the property at $70,000 (B) buy the property himself for $70,000.
(C) inform the seller that his property is worth $80,000
(D) suggest that the owner list the property for $75,000 so that he will have room for bargaining

Answer 12

(C)

The agent must disclose material facts to the client

Question 13

13. A principal-agent relationship exists between the

(A) broker and his salespersons
(B) salesperson and customer.
(C) broker and cooperating broker.
(D) broker and customer.

Answer 13

(A)

A principal agent relationship exists between the broker and his or her salespersons. No fiduciary duty to customer.

Question 14

14. A person who is given authority to perform a specific legal duty by another is:

(A) a power of attorney.
(B) an attorney-in-fact.
(C) an attorney-at-law.
(D) an executor.

Answer 14

(B)

The power of attorney is the instrument creating the authority. The attorney-in-fact is the person to whom the authority was given

Question 15

15. A salesperson engaged by a real estate broker to show and sell properties:

(A) is an agent for the broker, who is an agent for the principal
(B) is himself the primary agent for the principal
(C) is a principal party to the transaction.
(D) is a general agent.

Answer 15

(A)

The broker is the agent and the salesperson is a sub-agent.

Question 16

16. All BUT which of the following are fiduciaries?

(A) Principal
(B) Trustee.
(C) Guardian.
(D) Receiver.

Answer 16

(A)

An agent is a fiduciary for a principal, not vice-versa

Question 17

17. The best description of a special agent would be a person who

(A) is an attorney.
(B) is a broker.
(C) has limited authority.
(D) has contractual authority

Answer 17

(C)

The authority of the broker is limited to finding a buyer or tenant.

Question 18

18. It would NOT be the responsibility of the broker to inform the purchaser of which of the following?

(A) The basement floods
(B) The property, according to a map 100 years old, is located in a flood area.
(C) The price paid by the seller.
(D) The house is infested with termites

Answer 18

(C)

The purchaser can ascertain this himself. The broker must disclose information about A, B or D

Question 19

19. In a typical real estate listing contract, the broker would best be described as:

(A) a general agent
(B) a special agent.
(C) the principal for the agent.
(D) the principal for the sub-agent

Answer 19

(B)

The authority of the broker is limited to finding a buyer or tenant. A real estate property manager is usually a general agent.

Question 20

20. A Power of Attorney is NOT necessarily revoked if:

(A) the principal dies.
(B) the attorney-in-fact fails to use it for 90 days.
(C) the principal records a declaration revoking it.
(D) the attorney-in-fact dies.

Answer 20

(B)

Non-use will not revoke a power of attorney.

Question 21

21. A declaration made by a person to an official that he freely and voluntarily executed a deed is called an:

(A) acknowledgment.
(B) authorization.
(C) authentication.
(D) execution.

Answer 21

(A)

Necessary for recording

Question 22

22. Death of either the principal or agent terminates the

(A) listing contract.
(B) contract for sale.
(C) deed
(D) mortgage.

Answer 22

(A)

B, C, and D are not agency agreements as is the listing

Question 23

23. An agency agreement will be terminated by

(A) the death of the agent.
(B) the bankruptcy of the principal.
(C) the death of the principal.
(D) all of the above.

Answer 23

Also by mutual agreement, accomplishment of objective and expiration of agreed period of time.

Question 24

24. Which of the following will NOT terminate an agency relationship?

(A) Revocation by the principal
(B) Mutual consent.
(C) Reciprocity.
(D) Renunciation by the agent

Answer 24

(C)

Reciprocity deals with a mutual agreement by certain states to extend licensing privileges to licensees in each state

Question 25

25. Responsibilities of an agent in an agency relationship include all of the following EXCEPT: (A) exercise of due care. (B) accountability. (C) obedience. (D) patience

Answer 25

(D) Patience is not a fiduciary obligation

Question 26

26. To enforce his right to a commission a bro- ker must: (A) act under written authorization. (B) have an exclusive listing. (C) belong to the MLS (D) be a Realtor.

Answer 26

(A) An oral authorization to sell real estate is unenforceable

Question 27

27. Apollo Creed lists his house with the XYZ Realty Corp., for which Justin Case is the authorized broker. Which of the following statements is true? (A) Mr. Creed's death will terminate the listing agreement. (B) Mr. Case's death will terminate the listing agreement. (C) The XYZ Realty Corp. is a general agent. (D) The listing is automatically renewable if it is an exclusive.

Answer 27

(A) The death of the agent will terminate the listing. In this question, the agent is XYZ Realty Corporation, not Mr. Case.

Question 28

28. Which of the following is/are required to create an agency relationship? (A) Written agreement. (B) Compensation by principal (C) Consent of principal and agent. (D) All of the above

Answer 28

(C) Written agreement and compensation are not requisites to create an agency relationship

Question 29

29. A customer may best be described as: (A) always the buyer. (B) someone you work "with." (C) someone you work "for." (D) the person to whom a fiduciary duty is owed

Answer 29

(B) Real estate agents work "for" clients and "with" customers. Fiduciary obligations are owed to the client, not the customer.

Question 30

30. If a broker acts as a dual agent without disclosure, which of the following may occur? (A) Loss of license. (B) Rescission of contract. (C) Forfeiture of commission. (D) All of the above.

Answer 30

(D) Undisclosed dual agency is an act of fraud