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30 Cards in this Set
- Front
- Back
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Payment of the broker’s commission: does not establish agency establishes an agency relationship determines loyalty implies vicarious liability |
A: does not establish agency 19. A contract establishes an agency, not a commission. |
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When improvements reach the age that the income from the property does not pay a reasonable return on the land value, the property has reached the end of its: amortization highest and best use economic life lease value |
A: economic life Economic life is the period over which buildings may be profitably utilized. |
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If a buyer’s agent approaches a for sale by owner, when must the agent disclose the agency relationship? Orally at the first contact and in writing at the first physical meeting When taking the one-party listing on the property Orally unless the buyer wants to submit an offer, then in writing with the offer Disclosure is unnecessary, because the sellers chose to represent themselves. |
A: Orally at the first contact and in writing at the first physical meeting Orally at the first contact and in writing at the first physical meeting |
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Under the law of agency, a real estate broker owes all of the following duties to the principal except: care obedience disclosure advertising |
A: advertising The law of agency applies to the duties and obligations of the agent and the principal in the real estate transaction. |
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When acting as a buyer’s broker, the broker should disclose to the buyer, if known, that: the seller is near bankruptcy the property is overpriced there are latent defects all of the above |
A: all of the above As a buyer's broker you must disclose all material facts and any information that would affect the transaction. |
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A broker working as a buyer’s agent in a real estate transaction: must be reasonably available to accompany buyers to show properties should never encourage buyers to view properties or open houses on their own should always accompany buyers on their first visit to builders’ homes all of the above |
A: all of the above 21. The correct answer is d all of the above. The reasons follow: A – because a buyer’s agent has a contract with their client and must show performance. This is why in the buyers agency agreement it is important to include your days off in the contract (you will see the contract in the CR series). B is also correct because if they go to see homes or open houses on their own (ie without professional representation) they may agree or sign something they will regret (a particular problem if they have a signed buyer agency agreement with you ensuring you a commission and they agree on their own to purchase a house without paying you a commission). C – Because builders will only pay a commission to an agent if the agent accompanies their clients on the first visit. |
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The law of agency governs: the buyer-seller relationship the FDIC and lenders principal-agent relationship the Real Estate Commission |
A: principal-agent relationship The law of agency governs the relationship between the agent and the principal. |
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Which of the following is not a requirement of the broker when working with a purchaser? Exercising reasonable skill and care Presenting all offers and counter offers in a timely manner Verify seller’s escrow account balance Disclosing to a buyer adverse material facts known to the broker |
A: Verify seller’s escrow account balance All are a must whether dealing with a buyer or seller however the verifying the seller's escrow account balance has nothing to do with the buyer. |
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In Colorado representing two opposing parties as an agent in the same transaction is: dual agency and legal in Colorado illegal in Colorado universal agency special agency |
A: illegal in Colorado The State of Colorado does not allow "dual agency," but "non-agent" transaction brokerage (considered not an agency relationship but a non-agency "working relationship") -- which allows a real estate licensee to work with both buyer and seller in the same transaction. It is the default form of real estate representation in the state in the absence of a written agency agreement such as a Buyer Agency Agreement or a Listing Agreement (creates a Sellers Age |
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A home that was built over a cemetery or where a murder took place, is a example of: environmental hazards latent defects stigmatized properties conditions that must be disclosed |
A: stigmatized properties The Colorado Real Estate Commission's position on psychologically stigmatized properties is events that would cause this are NOT TO BE disclosed and agents are protected from legal actions resulting from nondisclosure. Stigmatized property is a controversial term used in the real estate business for a property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features. These can include events invloving murder or suicide or AIDS in addition to a belief that a house may be haunted. Material facts such as the foundation is bad or the house tested high for Radon ARE required to be disclosed. Nondisclosure of Information Psychologically Impacting Real Property § 38-35.5-101, C.R.S. Circumstances psychologically impacting real property – no duty for broker or salesperson to disclose. (1) Facts or suspicions regarding circumstances occurring on a parcel of property which could psychologically impact or stigmatize such property are not material facts subject to a disclosure requirement in a real estate transaction. Such facts or suspicions include, but are not limited to, the following: (a) That an occupant of real property is, or was at any time suspected to be, infected or has been infected with human immunodeficiency virus (HIV) or diagnosed with acquired immune deficiency syndrome (AIDS), or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted through the occupancy of a dwelling place; or (b) That the property was the site of a homicide or other felony or of a suicide. (2) No cause of action shall arise against a real estate broker or salesperson for failing to disclose such circumstance occurring on the property which might psychologically impact or stigmatize such property. |
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In states where allowed; in dual-agency relationships the broker represents: one party the buyer or seller the buyer and seller the seller |
A: the buyer and seller Dual agency is one broker working with both buyer and seller in the same transaction in an agent relationship. Although permissible in many states, the State of Colorado does not allow "dual agency," but "non-agent" transaction brokerage (considered not an agency relationship but a non-agency "working relationship") -- which allows a real estate licensee to work with both buyer and seller in the same transaction. It is the default form of real estate representation in the state in the absence of a written agency agreement such as a Buyer Agency Agreement or a Listing Agreement (creates a Sellers Age |
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Mary is a broker in Colorado for ABC Real Estate. Mary’s client John wants to purchase a home that Mary has listed. Mary must: terminate the buyer agency agreement and let John become a customer terminate the buyer agency and let John find another agent become a transaction broker to both parties any one of the above is correct |
A: any one of the above is correct In this question, Mary has to resolve a conflict of interest. Since Mary has a property listed, she is either a Sellers Agent or a Transaction broker for the Seller. Since the buyer is a "Client" he has a Buyers Agency agreement with Mary because a buyer can only become a "Client" with a Buyers Agency relationship. Transaction Broker does not create an agency relationship. So, to avoid a conflict of interest, because you cannot have a Agency relationship (Buyers and Seller) with two parties in the same transaction, nor can you be a Transaction Broker (ie Neutral) for one party in a transaction and an agent (ie not Neutral) for the other, Mary's choices are: a) terminate the Buyer Agency Relationship making the Buyer a "Customer" and not a "client", b) Tell the buyer to get another agent c) Become a Transaction Broker (neutral) for both parties. |
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Three-fifths (3/5) the value of a property is $85,000. What is 75% of the value of the property? 51000 106250 141667 63750 |
A: 106250 First convert 3/5 into a percentage. 3 divided by 5 = .60 then $85,000/.60 = $141,666 (total value of property) X .75 = $106,250. $85,000 and 60% are the same value. It’s just that one is expressed as dollars and the other as a percentage. Dividing the percentage into its equivalent dollar amount gives the 100% value of which they are a part. |
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An agency contract can be terminated by: mutual agreement revocation by the principal death of either party any of the above |
A: any of the above 22. An agency contract may be terminated however the party that is terminating the contract may be held liable for doing so. |
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In Colorado a buyer-agency relationship is established in the same way as any other agency relationship. This is established by: a written agreement a verbal agreement a buyer disclosure all of the above |
A: a written agreement A contract is a written agreement and agency contracts must be in writing to be enforceable. |
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When is the broker obligated to advance funds on the buyer’s behalf? When buyer is short of funds When additional inspection tests are done on the property to be purchased Always Never |
A: Never The broker is never obligated to advance funds on the buyer's behalf. |
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According to Colorado law, in the absence of a written agreement to the contrary, a real estate broker working with a seller or buyer: is a buyers or sellers agent is a transaction broker cannot have a relationship of any kind with the buyer or seller is a dual-agent |
A: is a transaction broker Without a written agreement the default relationship is transaction broker. You cannot have an agency relationship (ie Buyers or Sellers Agency) without a written agreemeet. Dual-agency is illegal. |
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A transaction broker has a fiduciary responsibility to: the buyer the seller both the buyer and seller neither the buyer nor seller |
A: neither the buyer nor seller A fiduciary relationship is the highest standard of care at law. A fiduciary is expected to be extremely loyal to the person to whom he/she owes the relationship (the "principal") and must not put personal interests before the relationship, and must not profit from his/her position as a fiduciary, unless the principal consents. In real estate an agency relationship creates a fiduciary relationship. A transaction broker is a non-agent and does not have a fiduciary relationship. |
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A real estate broker Becomes an agent of the vendee on obtaining a valid listing Becomes an agent of the seller only when a buyer is found Must disclose all material facts to the principal Can disclose any true information received from the principal |
A: Must disclose all material facts to the principal All material facts must always be disclosed |
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In representing a buyer in an agency relationship, the broker has a fiduciary responsibility. These duties include: care, obedience accounting, loyalty disclosure all of the above |
A: all of the above This is also known as COALD. A fiduciary relationship is created when a principal signs a listing or buyer's agency agreement with a Listing Agent or Buyers Agent. Note: a Transaction Broker as a neutral party is not a fiduciary relationship. In real estate transactions, only the Sellers or Buyer's agency relationships are fiduciary relationships. This relationship implies a position of trust or confidence, wherein one person is usually entrusted to hold or manage property or money for another. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. |
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Just as an agent owes duties to the principal, a principal owes duties to the agent. They may include which of the following? Perform the agency contract Compensate the agent Reimburse the agent for expenses All of the above |
A: All of the above 25. The law of agency governs the duties and obligations of both the agent and the principal. |
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In a real estate agency relationship, the third party who is entitled to honesty and fair dealing is the: client principal customer all of the above |
A: customer The customer is the third party in the transaction. |
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An oral contract in which the parties state the contract's terms and express their intentions in words is known as: an executory contract an executed contract an express contract unilateral contract |
A: an express contract Think of EXPRESSING yourself with an express contract, in which the contract terms are expressed to one another in words. |
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A real estate agent can do which of the following for free if not involved in the transaction? A land contract A deed A will None of the above |
A: None of the above Doing any of these would be considered the practice of law without a license. |
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The broker’s obligation to use his or her skill and expertise on behalf of the principal arises under which of the common-law duties? Care Obedience Loyalty Disclosure |
A: Care In regards to COALD, C stands for Care, the broker's obligation to use his/her skill and expertise on behalf of the principal. |
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Limitations placed on the transaction broker’s ability to disclose include: motivating factors of either party broker cannot disclose that buyer is willing to pay more for the property broker cannot disclose that seller is willing to accept less all of the above |
A: all of the above The broker may only disclose material facts. |
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A buyer’s interest in real property, acquired at the moment the seller and the buyer enter into a sales contract, is known as: Legal title Fee simple title Equitable title An option to purchase |
A: Equitable title A buyer has equitable title once they have an accepted offer even if the property has not closed. |
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Adverse financial conditions of the buyer: need not be disclosed are considered material facts and must be disclosed are a concern only to the lender are difficult to prove and considered “hearsay” |
A: are considered material facts and must be disclosed Adverse financial conditions of the buyer could make a deal fall, so they must be disclosed. |
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Implied agency (also known as Implication) arises when: an agent accepts an oral listing a principal accepts an oral listing one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent |
A: one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent An agency may be created by implication (implied agency) when one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent. If the other person reasonably believes that there is an agency relationship, and the supposed agent fails to correct that impression, he may owe the other person agency duties. More info: Under general agency law, an agency relationship may be formed in four ways: by express agreement, by ratification, by estoppel, or by implication. Most agencies are created by express agreement: the principal appoints someone to act as her agent, and the agent accepts the appointment. An agency is created by ratification when the principal gives approval after the fact to acts performed by another. Under the legal doctrine of estoppel, a person is not allowed to take a position that contradicts her previous conduct, if someone else has relied on the previous conduct. An agency can be created by estoppel when it would be unfair to a third party to deny the agent’s authority, because the principal has allowed the third party to believe there was an agency relationship. An agency may be created by implicationwhen one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent. If the other person reasonably believes that there is an agency relationship, and the supposed agent fails to correct that impression, he may owe the other person agency duties. |
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A client enters into a fiduciary relationship with his/her real estate broker when they sit down together at the closing. a sales contract is executed by both parties. they enter into a listing agreement. the buyer makes formal loan application. |
A: they enter into a listing agreement. A fiduciary relationship is created when a principal signs a listing or buyer's agency agreement with a Listing Agent or Buyers Agent. Note: a Transaction Broker as a neutral party is not a fiduciary relationship. In real estate transactions, only the Sellers or Buyer's agency relationships are fiduciary relationships. This relationship implies a position of trust or confidence, wherein one person is usually entrusted to hold or manage property or money for another. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. |
