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Real Estate Exam: Law of Agency
Questions and Answers Already Passed
This person hires an agent ✔✔The Principal
The agent works on behalf of this person ✔✔the client (principal)
This type of agency allows for the greatest range of authority ✔✔Universal
This is provided to the agent when there is written documentation that the agency relationship exists. ✔✔Express authority
This is the most limited of all the agency relationships ✔✔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 ✔✔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) ✔✔Ostensible Agency
If a buyer hasn't signed a buyer's rep agreement, then who is representing the buyer? ✔✔No one
This establishes a relationship with a broker ✔✔The Buyer/Tenant Representation agreement
This can be written or oral ✔✔Disclosure of Representation
These are required to place their own selfish interests behind that of their clients. ✔✔Fiduciaries
A licensee isn't required to provide the IABS when... ✔✔the licensee meets with a party that is already represented
A broker is obligated to treat who honestly? ✔✔client, customer, and agents
Broker must have written consent to act as... ✔✔an intermediary
IABS form is the property of... ✔✔TREC
In the above transaction, who is representing the buyer? ✔✔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? ✔✔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? ✔✔cooperative (co-op)
An exemption to using the Information About Brokerage Services form is: ✔✔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: ✔✔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
transaction ✔✔IABS (Information About Brokerage Services)
Jeffrey wants to see property that your company has listed; he does not want to be represented.
The agent must: ✔✔give Jeffrey the IABS form
A licensee must present the Information About Brokerage Services form: ✔✔at the first substantive discussion of a real estate transaction
A licensee has a listing with a seller and has a buyer's representation agreement signed with a
buyer who desires to purchase this agent's listing. How is the agent operating? ✔✔as a non- appointed associate in an Intermediary relationship
TREC was established in: ✔✔ 1949
Confidential information between client and agent should be: ✔✔kept confidential forever
In most states other than Texas, the most common method of dealing with in-house
transactions between client buyers and sellers is: ✔✔dual agency
When handling escrow funds for clients, the License Act requires that funds be deposited in
a "reasonable time". A reasonable time is defined as: ✔✔2 business days
The listing agreement should contain: ✔✔the legal description of the property
Which of the following are elements of a listing? ✔✔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: ✔✔open listing
Data used for a CMA should be no older than: ✔✔6 months
The report used to give a seller or buyer an indication of market value is called: ✔✔Comparative Market Analysis
Listings may be terminated by: ✔✔death, either party - broker or client, or mutual agreement
Listings are the property of the: ✔✔broker
Duties of principal to agent ✔✔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? ✔✔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: ✔✔a volunteer, an agent in a listing agreement that is unenforceable against the seller, and unable to enforce payment of the commission
The Tax Equity and Fiscal Responsibility Act has the following tests for independent
contractor status. ✔✔1. The salesperson must hold a real estate license.
- The salesperson must be paid on a commission basis.
- 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: ✔✔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: ✔✔stigmatized
Which of the following is a statutory defense for a lawsuit brought about by DTPA? ✔✔Written information obtained from a government record
Actual awareness of a falsity, deception, or unfairness of an act under DTPA is known as: ✔✔knowingly
An agent is not liable for a misrepresentation or concealment of material fact by a party if: ✔✔the licensee did not know of the falsity of the misrepresentation
It is always a good idea to have: ✔✔the seller fill out the Seller's Disclosure Notice
