A buyer signs a buyer-broker contract creating an agency relationship with agent Travis. The buyer indicates that she struggles some months to pay the bills but the lender said she was qualified for the loan. She is a first-time buyer and believes that if
CORRECT ANSWER: should advise the buyer to look over the consumer information about responsible financing before she decides how much to borrow
RATIONALE: A salesperson may, on behalf of a broker, create a relationship whereby the broker has a fiduciary d
The rule that says a buyer is expected to reasonably inspect the property, instead of relying on what she was told, is the Doctrine of
CORRECT ANSWER: Caveat Emptor
CORRECT ANSWER: Caveat Emptor
RATIONALE: Caveat emptor literally translates to, "let the buyer beware." The doctrine of estoppel is the law under which we create apparent agency. Stare Decisis is rule that says judges must follow precedent. The doctrine o
Tommy Gee encounters an owner of a property who has no equity in the home because of a sharp decline in market values. The owner asks Tommy to market the property at market value but asks Tommy if he could negotiate with the bank and orchestrate a short s
CORRECT ANSWER: accountant
RATIONALE: The listing broker can give advice only on marketing the property. A property stager would be needed only if the property was not ready for marketing. A potential buyer would not be helpful at this point since the own
Lance's seller client discloses there was a fatal shooting at the house in which a woman and her two children were the victims. Lance is licensed in a state that does not require the disclosure of the deaths. While showing the property, a potential buyer
CORRECT ANSWER: get the seller's written permission to disclose the incident
RATIONALE: Some states require an agent to disclose a death on the property While other states do not require the disclosure. The best course of action is to get the seller's wri
A person discriminated against under the Civil Rights Act of 1866 must file a lawsuit in what court?
CORRECT ANSWER: federal district court
CORRECT ANSWER: federal district court
RATIONALE: The federal district court is the only court with jurisdiction over the Civil Rights Act of 1866.
When a broker received an unexpected bill, he deposited a client's earnest money check into his personal account to cover the expense. This best describes
CORRECT ANSWER: conversion
CORRECT ANSWER: conversion
RATIONALE: Commingling is the broker mixing his funds with other peoples' funds. In this instance, the broker is using someone else's money. This would be conversion, which is a crime.
While walking through a home, a buyer notices a large crack in the wall. The seller does not disclose this item on any property disclosure statement. After the sale is completed, the buyer sues the seller for the necessary repairs of the crack in the wall
CORRECT ANSWER: the buyer has no claim, under the doctrine of caveat emptor
RATIONALE: Under the doctrine of caveat emptor "let the buyer beware", the buyer must examine goods or property and buy at his own risk. Any patent defect does not need to be disc
The listing agent discriminates against a minority buyer. If the seller were to be held responsible for the actions of the agent, it would be an example of
CORRECT ANSWER: vicarious liability
CORRECT ANSWER: vicarious liability
RATIONALE: Vicarious liability occurs when a client is held liable for the actions of her agent. Dual liability would be when more than one party is liable. Misrepresentation is a false or misleading statement. Fraud is
Based on the Civil Rights Act of 1866, what is the maximum amount of punitive damages that can be awarded?
CORRECT ANSWER: no limit
CORRECT ANSWER: no limit
RATIONALE: There is no limit for the amount of punitive damages that can be awarded.
A broker owns a real estate brokerage, a title company, a mortgage company, and an insurance company. The broker advertises one-stop services in his advertising. Which law requires the broker to disclose the material relationships when a client buys the p
CORRECT ANSWER: RESPA
RATIONALE: Material relationships must be disclosed according to the Real Estate Settlement and Procedures Act (RESPA). The Truth-in-Lending Act requires the disclosure of loan costs. Regulation Z is part of the Truth-in-Lending Act.
In a suit brought under the Federal Fair Housing law as amended, punitive damages may be as much as
CORRECT ANSWER: there is no limit on punitive damages
CORRECT ANSWER: there is no limit on punitive damages
RATIONALE: While an individual may be fined $11,000 by HUD for a violation of the Fair Housing Act and $55,000 for a third offense within the past seven years, there is no limit on compensatory or puni
Constructive fraud is also known as
CORRECT ANSWER: negligent misrepresentation
CORRECT ANSWER: negligent misrepresentation
RATIONALE: Constructive fraud is an unintentional concealment or omission of a material fact, also known as negligent misrepresentation. Actual fraud involves an intent to deceive.
What law creates an automatic lien on a commercial property, subject to the listing agreement?
CORRECT ANSWER: broker lien law
CORRECT ANSWER: broker lien law
RATIONALE: In some states, an automatic lien attaches to the commercial property to secure the payment of the broker's commission.
Homeowners with both a first and second mortgage decide to ask their primary lender to accept a short sale offer on their home. The primary lender allows the short sale. The listing agent should warn the seller of the
CORRECT ANSWER: second mortgage holde
CORRECT ANSWER: second mortgage holders rights
RATIONALE: While the first mortgage holder could allow the owner to take a short sale, there is no rule saying the seller gets to walk away with all debt forgiven. A short sale typically takes months to negot
The agency of the federal government that administers fair housing law is
CORRECT ANSWER: HUD
CORRECT ANSWER: HUD
RATIONALE: The office of Equal Housing Opportunity is a division of HUD (Housing and Urban Development). This department is in charge of enforcing and administering fair housing laws.
Complaints based on Title VIII should be filed with the
CORRECT ANSWER: Office of Equal Opportunity
CORRECT ANSWER: Office of Equal Opportunity
RATIONALE: A complaint should be filed with the Office of Equal Opportunity with the Department of Housing and Urban Development.