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Real Estate Law of Agency: Q&A Exam Prep, Exams of Real Estate Management

The London School of Economics and Political Science (LSE)Real Estate Management

A question and answer format review of the law of agency, focusing on key concepts relevant to real estate transactions. It covers topics such as the roles of principals and agents, types of agency relationships (universal, express, special, agency by estoppel, ostensible agency), and the duties and responsibilities of agents, including disclosure, fiduciary duties, and compliance with trec regulations. The material is designed to help students prepare for real estate exams by testing their knowledge of agency law principles and practices. It also addresses common scenarios and legal requirements in real estate transactions, making it a valuable resource for understanding the legal framework governing agency relationships in real estate.

Typology: Exams

2024/2025

Available from 06/01/2025

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Real Estate Exam: Law of Agency
Question and Answer Latest update
This person hires an agent - Answer-The Principal
The agent works on behalf of this person - Answer-the client (principal)
This type of agency allows for the greatest range of authority - Answer-Universal
This is provided to the agent when there is written documentation that the agency
relationship exists. - Answer-Express authority
This is the most limited of all the agency relationships - Answer-Special agency
This type of agency is created when a 3rd party believes that an agent has authority
that has NOT been granted by a principal - Answer-Agency by Estoppel
This type of agency is created when actions lead another person to assume that one is
an agent (Example- you have a key to neighbors home and show the property) -
Answer-Ostensible Agency
If a buyer hasn't signed a buyer's rep agreement, then who is representing the buyer? -
Answer-No one
This establishes a relationship with a broker - Answer-The Buyer/Tenant
Representation agreement
This can be written or oral - Answer-Disclosure of Representation
These are required to place their own selfish interests behind that of their clients. -
Answer-Fiduciaries
A licensee isn't required to provide the IABS when... - Answer-the licensee meets with
a party that is already represented
A broker is obligated to treat who honestly? - Answer-client, customer, and agents
Broker must have written consent to act as... - Answer-an intermediary
IABS form is the property of... - Answer-TREC
Broker Bob is the broker/owner of ABC Realty. Agent Bill at ABC Realty is a listing
agent. Agent Sue, also at ABC Realty, is working with a buyer who is being represented
by the firm. Agent Sue's buyer wants to purchase Agent Bill's listing
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Real Estate Exam: Law of Agency

Question and Answer Latest update

This person hires an agent - Answer -The Principal The agent works on behalf of this person - Answer -the client (principal) This type of agency allows for the greatest range of authority - Answer -Universal This is provided to the agent when there is written documentation that the agency relationship exists. - Answer -Express authority This is the most limited of all the agency relationships - Answer -Special agency This type of agency is created when a 3rd party believes that an agent has authority that has NOT been granted by a principal - Answer -Agency by Estoppel This type of agency is created when actions lead another person to assume that one is an agent (Example- you have a key to neighbors home and show the property) - Answer -Ostensible Agency If a buyer hasn't signed a buyer's rep agreement, then who is representing the buyer? - Answer -No one This establishes a relationship with a broker - Answer -The Buyer/Tenant Representation agreement This can be written or oral - Answer -Disclosure of Representation These are required to place their own selfish interests behind that of their clients. - Answer -Fiduciaries A licensee isn't required to provide the IABS when... - Answer -the licensee meets with a party that is already represented A broker is obligated to treat who honestly? - Answer -client, customer, and agents Broker must have written consent to act as... - Answer -an intermediary IABS form is the property of... - Answer -TREC Broker Bob is the broker/owner of ABC Realty. Agent Bill at ABC Realty is a listing agent. Agent Sue, also at ABC Realty, is working with a buyer who is being represented by the firm. Agent Sue's buyer wants to purchase Agent Bill's listing

In the above transaction, Broker Bob will: - Answer -Remain neutral and refrain from providing advice and opinion to either party The IABS should contain - Answer -How the broker will be compensated Broker Steve, having no agents, is a solo practitioner. He has a client buyer that wants to purchase one of his listings. The process that Broker Steve must use is: - Answer - Intermediary without appointments A fiduciary relationship is based on - Answer -trust Agent Joe at ABC Realty has a listing. Agent Sean at City Realty has a buyer who wishes to purchase Joe's listing. The buyer that Agent Sean is working with has chosen to not enter into an agency relationship with City Realty. In the above transaction, who is representing the buyer? - Answer -No body because the buyer is a customer. Agent Joe at ABC Realty has a listing. Agent Sean at City Realty has a buyer who wishes to purchase Joe's listing. The buyer that Agent Sean is working with has chosen to not enter into an agency relationship with City Realty. In the above transaction, who is City Realty representing? - Answer -The seller, because City Realty is a subagent of ABC Realty in this transaction Agent Joe at ABC Realty has a listing. Agent Sean at City Realty has a buyer who wishes to purchase Joe's listing. The buyer that Agent Sean is working with has chosen to not enter into an agency relationship with City Realty. What type of transaction is this? - Answer -cooperative (co-op) An exemption to using the Information About Brokerage Services form is: - Answer -a lease for less than 1 year with no sale anticipated A licensee not associated with the client's broker but who is representing the client through a cooperative agreement with the client's broker is known as: - Answer -Subagent This must be in at least 10 point type, must have the exact language prescribed in the License Act and must be provided to a buyer or seller at the first substantive discussion of a real estate

The listing agreement should contain: - Answer -the legal description of the property Which of the following are elements of a listing? - Answer -the terms of sale, such as the sales price and financing terms acceptable to the seller. Sam listed his property with three different real estate brokers. In each agreement he reserved the right to sell the property himself without paying a commission. The type of listing that Sam signed with each broker was an: - Answer -open listing Data used for a CMA should be no older than: - Answer -6 months The report used to give a seller or buyer an indication of market value is called: - Answer -Comparative Market Analysis Listings may be terminated by: - Answer -death, either party - broker or client, or mutual agreement Listings are the property of the: - Answer -broker Duties of principal to agent - Answer -CRIP: Compensation, Reimbursement, Indemnification (protect the agent from suffering a loss due to the agent's reliance in information received from the principal), Performance If a broker dies what happens to the listing with the seller? - Answer -it automatically terminates If a broker sells a property on behalf of a seller without a signed listing agreement, the courts will most likely declare that the broker is: - Answer -a volunteer, an agent in a listing agreement that is unenforceable against the seller, and unable to enforce payment of the commission Commission rates are set by? - Answer -client and broker The TAR® Buyer Representation Agreement in our textbook: - Answer -authorizes Intermediary, is limited to the market area designated in the agreement and authorizes the agent to show properties to competing buyers If a broker's agents are independent contractors, there can be a policies and procedures manual for the agents, however, - Answer -the broker can not require mandatory compliance A real estate agent generally gets paid: - Answer -commission

Your company sends out a memo that there is a mandatory sales meeting this week for the sales agents. - Answer -The IRS rule on independent contractor status could be violated. In Texas, Workman's Compensation must be paid for real estate agents by brokers. TRUE OR FALSE - Answer -FALSE The Tax Equity and Fiscal Responsibility Act has the following tests for independent contractor status. - Answer -1. The salesperson must hold a real estate license.

  1. The salesperson must be paid on a commission basis.
  2. The salesperson must have a written contract with the broker specifying the salesperson is not an employee. Sally, is an unlicensed assistant to Agent Bill at ABC Realty. In her role as a transaction coordinator, Sally recently called a buyer and discussed some minor title issues that turned up in the title search. She also mentioned to the buyer that rates are down, and that, considering the buyer's situation, an FHA loan might be more attractive than a conventional loan. Based on this conversation, we can say that Sally: - Answer -is dealing with issues that should only be discussed by a licensed assistant A property that has been the scene of a murder or an alleged haunting is: - Answer - stigmatized Which of the following is a statutory defense for a lawsuit brought about by DTPA? - Answer -Written information obtained from a government record Actual awareness of a falsity, deception, or unfairness of an act under DTPA is known as: - Answer -knowingly An agent is not liable for a misrepresentation or concealment of material fact by a party if: - Answer -the licensee did not know of the falsity of the misrepresentation It is always a good idea to have: - Answer -the seller fill out the Seller's Disclosure Notice