Section 4 Test Questions

Question 1

Which of the following is true of the connection between compensation and the agency relationship?

Answer 1

The relationship is independent of any compensation arrangement

Question 2

Which of the following conditions is necessary for a customer to qualify as “ready, willing, and able” in the context of a commissionable transaction?

Answer 2

The customer must be legally competent to undertake the transaction

Question 3

A property seller empowers an agent to market and sell a property on his behalf. The kind of agency represented is

Answer 3

special

Question 4

An agent informs a buyer that a provision in a contract is very commonplace. After explaining the clause, the agent assures the buyer that the clause does not mean anything significant. If something goes wrong with the transaction, the agent could be liable for

Answer 4

practicing law without a license

Question 5

One of the parties to an agency relationship defaults, and the agreement terminates. Which of the following is true?

Answer 5

The defaulting party may have a financial consequence

Question 6

The meaning and salient characteristics of the agency relationship should be disclosed to the client

Answer 6

prior to completing a listing agreement

Question 7

An agency relationship may be involuntarily terminated for which of the following reasons?

Answer 7

Condemnation of the property

Question 8

A landlord promises to compensate a broker for procuring a tenant, provided the broker is the procuring cause. This is an example of a(n)

Answer 8

open rental listing

Question 9

If an agent has an exclusive listing to sell a property, and the property is then taken by eminent domain, what is the status of the listing?

Answer 9

It may be terminated against the agent’s will

Question 10

What is a multiple listing?

Answer 10

A listing that is entered in a multiple listing service to enable cooperation with member brokers.

Question 11

When a broker enters into a listing agreement, the broker has agreed to accept which of the following?

Answer 11

Fiduciary and contractual obligations with the client.

Question 12

When must a listing agent disclose his or her agency relationship to prospective tenants or buyers?

Answer 12

whenever substantive contact is made beyond causal converstation

Question 13

The duties of a transaction broker or facilitator include

Answer 13

disclosing material facts that affect the value of the property to both parties.

Question 14

Audrey wants to take a vacation. To do so, she authorizes an agent to conduct the operations of one of her business enterprises. The kind of agency she has established is

Answer 14

general

Question 15

Among the fiduciary duties imposed on a real estate agent is the requirement to

Answer 15

present all offers to the principal regardless of their amount.

Question 16

An agent enters into a listing agreement with a homeseller, but then becomes too busy to professionally fulfill the terms of the agreement. To solve the dilemma, the agent assigns the agreement to another licensee in the office. Which of the following is true about this situation?

Answer 16

The agent cannot assign the listing agreement.

Question 17

A property owner agrees to pay a broker an open-ended commission as the difference between the sale price and a net amount, provided the owner receives a minimum amount of proceeds from the sale at closing. This is an example of a(n)

Answer 17

net listing

Question 18

A salesperson, without an oral or written listing agreement, brings potential buyers to the seller. The seller says, “You can bring me buyers if you want, but I’m not paying you a commission.” The salesperson then continues to direct buyers to the property. Which of the following is true about this situation?

Answer 18

An implied agency may have been created, with obligations to perform for both seller and agent.

Question 19

A broker obtains an exclusive listing to sell a house, but after two months, he abandons the listing because the seller is too demanding and hot-tempered. What can the seller do in this situation?

Answer 19

Sue the broker for money damages.

Question 20

The degree of authority granted by a residential brokerage listing agreement generally allows the agent to

Answer 20

market, sell and show the property.

Question 21

A buyer agent or tenant representative should disclose his or her agency relationship to the owner’s agent

Answer 21

upon initial contact.

Question 22

A principal instructs an agent to market a property only to families on the west side of the university campus. The agent refuses to comply. In this case,

Answer 22

the agent has not violated fiduciary duty.

Question 23

Which of the following is a dual agency situation?

Answer 23

One agent represents both sides in a transaction

Question 24

The standard of care and competence that a principal can expect from an agent is generally that which is

Answer 24

comparable to that of other practitioners in the area.

Question 25

Agent Peter has an open listing with Frank. Paul is Peter's broker. Agent Perry's customer buys Frank's house. Patrick has a commission agreement with Frank. Who is most likely to be compensated in this scenario?

Answer 25

Perry, since he found the customer.

Question 26

In which of the following contact situations would a seller's agent be expected to disclose his agency relationships?

Answer 26

The agent is showing the client's property to a prospective buyer.

Question 27

Implied agency arises when

Answer 27

a party creates an agency relationship outside of an express agreement

Question 28

One of the agent's fiduciary duties that continues even after a listing agreement expires is

Answer 28

confidentiality

Question 29

A subagent is the agent of

Answer 29

a broker who has an agency relationship with a client

Question 30

Agent Gerry has executed an exclusive buyer broker agreement with the Andersons. The agent subsequently places an offer with Melinda, the exclusive selling agent for the Lincolns, to buy their lakefront property. The offer contains provisions for the Lincolns to pay the brokerage commission, which the Lincolns agree to. Given this set of circumstances, Gerry owes the full set of fiduciary duties to

Answer 30

the andersons

Question 31

From an agent's point of view, the most desirable form of listing agreement is a(n)

Answer 31

exclusive right to sell

Question 32

In the context of agency law, the legal difference between an owner representation agreement and a buyer representation agreement is

Answer 32

the client

Question 33

An owner's agent is showing a buyer a residential property for sale. The buyer notices water stains on the foundation walls and floor, and informs the agent. The appropriate course of action for the agent is to

Answer 33

inform the seller

Question 34

The essential foundation of the agency relationship consists of

Answer 34

good faith, trust and confidence

Question 35

Agent Michael is showing his new listing to a buyer who informs him that he has just inherited five million dollars. Michael is now bound by fiduciary duty to

Answer 35

disclose the information to the seller.

Question 36

A multiple listing authorization gives a broker what authority?

Answer 36

To list the owner's property in a multiple listing service.

Question 37

An agent is operating as a disclosed dual agent on a transaction. In this case, the agent

Answer 37

may not represent one party's interests to the detriment of the other.

Question 38

A principal discloses that she would sell a property for $500,000. During the listing period, the house is listed and marketed for $530,000. No offers come in, and the listing expires. Three weeks later, the agent confides to a customer that the seller would have sold for less than the listed price. Which of the following is true?

Answer 38

The agent has violated the duty of confidentiality.

Question 39

An owner agrees to pay a broker for procuring a tenant unless it is the owner who finds the tenant. This is an example of a(n)

Answer 39

exclusive agency agreement

Question 40

Although a listing broker may delegate listing tasks to an employed licensee, the broker may not delegate the authority to

Answer 40

obtain and distribute compensation.