Larkin Willis
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Laws and Regulations Governing Brokerage Relationships

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Larkin Willis
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Superior School Chapter 7

Superior School Chapter 7

Question 1 of 28

1

The real estate broker's fiduciary responsibility to keep the principal informed of all facts, including property condition and issues that affect a seller's willingness to sell and a buyer's willingness to buy, is the duty of:

Select one of the following:

  • skill, care and diligence

  • disclosure

  • obedience

  • accounting

Explanation

Question 2 of 28

1

Designated agency in North Carolina is considered: 1. A form of dual agency 2. Mandatory if you practice dual agency

Select one of the following:

  • 1 only

  • 2 only

  • Both 1 and 2

  • Neither 1 nor 2

Explanation

Question 3 of 28

1

Designated agency can be practiced: 1. Between two firms 2. Between a broker-in-charge and a provisional broker licensee in their office

Select one of the following:

  • 1 only

  • 2 only

  • Both 1 and 2

  • Neither 1 nor 2

Explanation

Question 4 of 28

1

An agent must have the buyer sign a written agency agreement by what specific point in time? 1. At the time of first substantial contact 2. Prior to the submission of an offer on the buyer’s behalf 3. At the time the agent attempts to limit the buyer’s ability to work with another agent

Select one of the following:

  • 1 only

  • 1 and 2 only

  • 2 and 3 only

  • 1, 2 and 3

Explanation

Question 5 of 28

1

Under the general principles of agency, when a licensee is acting on behalf of a client and acts improperly who is liable for the acts of the licensee?

Select one of the following:

  • only the client

  • only the licensee and the broker-in-charge

  • only the client and the licensee

  • the client, the licensee, the firm and or the broker-in-charge

Explanation

Question 6 of 28

1

A disclosure of agency status should be made by a buyer’s agent to the seller: 1. With a written confirmation in the offer to purchase and contract 2. At the initial contact with the seller’s agent, orally or in writing

Select one of the following:

  • 1 only

  • 2 only

  • Both 1 and 2

  • Neither 1 nor 2

Explanation

Question 7 of 28

1

Iris, a subagent of the seller who is working with a buyer customer, is told by the buyer customer that he wants to offer a low price on a property. The buyer customer says to Iris, “I want to offer $85,000 initially; however, I’ll go as high as $90,000 to get the property.” Iris wrote the offer and delivered the offer to the listing agent, Lucy. Iris told Listing Agent Lucy that the buyer customer is offering $85,000 initially, but he will go as high as $90,000 to get the property. Listing Agent Lucy did not tell the seller the buyer would be willing to go for a higher price. The seller accepted the buyer's offer of $85,000. Who violated the Law of Agency?

Select one of the following:

  • Iris

  • Lucy

  • Both Iris and Lucy

  • Neither Iris nor Lucy

Explanation

Question 8 of 28

1

The amount of compensation due to a licensee from the brokerage firm is determined by:

Select one of the following:

  • state real estate regulators to ensure the public the most protection from incompetent licensees

  • local real estate board's minimum wage guarantee to agents

  • in-house employment contracts

  • listing agreements

Explanation

Question 9 of 28

1

Which of the following would be dual agency?

Select one of the following:

  • a broker-in-charge assisting a buyer client in the purchase of property that was listed by a provisional broker of another firm

  • a provisional broker and a broker licensee from firms that are cooperating in a transaction

  • a firm that represents buyers and sellers

  • a broker having a buyer client for a property the broker personally listed

Explanation

Question 10 of 28

1

A real estate broker was responsible for a chain of events that resulted in the sale of one of his client's properties. This is referred to as:

Select one of the following:

  • chain of title

  • procuring cause

  • private offering

  • ready, willing and able buyer

Explanation

Question 11 of 28

1

All of the following could legally be considered fraudulent, EXCEPT:

Select one of the following:

  • deceitful or dishonest practices

  • generalized exaggerated opinions about the property

  • omitted statements of material fact

  • misstatements about the property

Explanation

Question 12 of 28

1

A seller has listed a home with a broker for $90,000, and the broker suggests to a prospective buyer-customer that they submit a low offer because of the seller's urgent need to sell. The buyer offers $85,000, and the seller accepts it. In this situation:

Select one of the following:

  • the broker has violated his agency relationship with the seller

  • the broker's action was acceptable since the seller accepted the offer

  • the broker acted properly to obtain a quick offer on the property

  • any broker is encouraged to solicit such bids for the property

Explanation

Question 13 of 28

1

Upon discovering a latent defect in the property, the listing agent should discuss the problem with the seller, and then:

Select one of the following:

  • inform the seller that the defect must be repaired

  • arrange for the repairs himself or herself as required by the terms of a typical listing contract

  • inform any prospective buyers of the defect

  • contact the city building inspector about the defect

Explanation

Question 14 of 28

1

Which of the following BEST describes the common law of agency?

Select one of the following:

  • the disclosure requirement by the agent to third parties no later than first substantial contact

  • case law establishing the responsibilities of a person who acts for another

  • the Code of Ethics prescribed by the local trade association

  • state license laws and statutes

Explanation

Question 15 of 28

1

A buyer-client has instructed the agent to show only properties where the seller is willing to pay the buyer agent's commission. The agent contacts an owner selling a property without the assistance of a real estate agent with the hope that the seller would be willing to pay her commission if the buyer decided to purchase the seller's property. In order to comply with North Carolina Real Estate Commission Rules, the agent must do all of the following, EXCEPT:

Select one of the following:

  • obtain permission from her buyer-client in order to obtain compensation from the seller

  • disclose her agency status to the seller at initial contact

  • convince the seller to list with her and authorize dual agency

  • provide the Working with Real Estate Agents brochure to the seller

Explanation

Question 16 of 28

1

The listing broker tells a prospective buyer that the seller is on the verge of bankruptcy. The broker's actions are:

Select one of the following:

  • acceptable since they may promote an offer from the buyer

  • acceptable as long as the broker does not disclose any additional specific financial information concerning his client's credit history

  • unacceptable unless there are multiple offers on the property

  • unacceptable unless the seller has authorized the broker to share the information with potential buyers

Explanation

Question 17 of 28

1

A listing agent is showing a house to a prospective buyer customer. The seller told the listing agent that during the past 10 winters, they have been unable to rid the house of rodents. The seller has hidden rodent damage by the strategic placement of a large sofa. Which of the following statements is TRUE?

Select one of the following:

  • This information may be withheld since the agent never saw any evidence of infestation or damage.

  • Disclosing the information could create a fiduciary relationship with the buyer and, thereby, create an unauthorized dual agency situation.

  • Withholding the information prevents the disclosure of a material fact.

  • Disclosing the information violates the agency duties with the seller.

Explanation

Question 18 of 28

1

Which of the following BEST describes a designated agency transaction?

Select one of the following:

  • the listing firm appointing an agent to represent the seller

  • the selling firm appointing an agent to represent the buyer

  • some agents in the same firm representing buyers exclusively and other agents in the same firm representing sellers exclusively

  • a broker-in-charge appointing one agent to exclusively represent the seller as the client and appointing a different agent to exclusively represent the buyer as a client while the firm remains in dual agency

Explanation

Question 19 of 28

1

If the broker-in-charge (BIC) is to act as one of the designated agents on a North Carolina in-house transaction, which of the following may be appointed as a designated agent for the other party to the transaction?

Select one of the following:

  • an actively licensed provisional broker within the firm, so long as disclosure is made to both clients

  • a full broker within the firm who has no prior confidential knowledge of the party that the BIC will represent

  • a broker-in-charge cannot be appointed as a designated agent

  • a licensed provisional broker who has no prior confidential knowledge about the party that the BIC will represent

Explanation

Question 20 of 28

1

Which of the following describes designated agency in North Carolina?

Select one of the following:

  • designated agency is optional, not mandatory

  • designated agency does not eliminate dual agency

  • designated agents cannot have prior confidential knowledge of the other party to the transaction

  • all of the above

Explanation

Question 21 of 28

1

The North Carolina Working With Real Estate Agents brochure must be given:

Select one of the following:

  • to property owners upon initial contact

  • to all consumers prior to first substantial contact

  • only to buyers in a real estate transaction

  • to all unrepresented consumers in a sales transaction no later than first substantial contact

Explanation

Question 22 of 28

1

All of the following situations will terminate a listing, EXCEPT:

Select one of the following:

  • mutual agreement by the parties

  • breach by either party

  • death of the individual listing licensee

  • bankruptcy of the firm

Explanation

Question 23 of 28

1

A licensee is an actively licensed real estate broker who has a written contract with his firm that specifies that he will not be treated like an employee. The licensee's entire income is from sales commissions rather than an hourly wage. Based on these facts, the licensee will be treated by the IRS as:

Select one of the following:

  • a real estate assistant

  • an employee

  • a subagent

  • an independent contractor

Explanation

Question 24 of 28

1

All of the following are TRUE regarding the North Carolina Working With Real Estate Agents brochure, EXCEPT:

Select one of the following:

  • the consumer is not required to sign the brochure

  • if the first substantial contact is by phone, the brochure must be provided within 3 calendar days

  • the brochure's use is mandatory in all real estate transactions, including residential sales, commercial transactions and property management

  • the brochure must be given in all sales transactions at first substantial contact

Explanation

Question 25 of 28

1

Jack is a NC real estate licensee. He has decided to sell his own house which he is doing outside of his brokerage as a For Sale by Owner. Jill, a prospective buyer has approached Jack at one of his open houses and has expressed an interest in buying the home. Which of the following is a proper course of action for Jack?

Select one of the following:

  • Exclusively represent Jill, but only after full disclosure of his interest in the property.

  • Enter in a dual agency relationship where Jack represents himself as the seller and also represents Jill as the buyer.

  • Fully disclose his interest in the property and treat Jill as a customer.

  • Represent Jill, but do so only on a non-exclusive basis since he has an interest in the property.

Explanation

Question 26 of 28

1

Rite Stuff Realty is a NC real estate firm that buys and flips homes. All of the homes that Rite Stuff handles are owned by the firm entity. In regard to the listing and sale of these homes, which of the following is a correct statement?

Select one of the following:

  • None of the agents of Rite Stuff may act as representatives of buyers and must treat all buyers as customers since the firm owns the properties

  • Rite Stuff must act as dual agents in the sale of their homes because they are the owners

  • The North Carolina Real Estate Commission is not concerned with whom Rite Stuff represents so long as agency is properly disclosed

  • Rite Stuff may offer exclusive buyer representation, dual agency or designated agency to prospective purchasers of their homes

Explanation

Question 27 of 28

1

All of the following are true of The Residential Property and Owners Association Disclosure Statement, EXCEPT:

Select one of the following:

  • It requires a seller to disclose material defects in their home prior to sale

  • It must be provided to the buyer prior to submission of an offer

  • It is intended for 1-4 unit residential properties

  • Failure to provide the disclosure form creates a 3 day right of rescission for the buyer

Explanation

Question 28 of 28

1

All of the following are exempt from the requirement to provide an RPOADS and MOG, EXCEPT

Select one of the following:

  • Transfers between spouses

  • First sale of a dwelling not yet inhabited

  • Both parties agree not to complete the form

  • A For Sale by Owner

Explanation

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