Chapter 8 Quiz PDF

Principles of California Real Estate Instructor Materials Chapter 8 Quiz 1. Agency law is concerned with the duties and 5. Which of the following elements is not neces- rights among: sary for the creation of an agency re...

Principles of California Real Estate Instructor Materials Chapter 8 Quiz 1. Agency law is concerned with the duties and 5. Which of the following elements is not neces- rights among: sary for the creation of an agency relationship? A. agent and principal A. A competent principal B. agent and third party B. Mutual agreement between principal and C. principal and third party agent D. All of the above C. Payment of consideration  ' $¿GXFLDU\UHODWLRQVKLS 2. A broker took a listing which expressly au- thorized him to accept buyers’ deposits. The 6. A broker who accepts a listing to sell real estate broker accepted a deposit from a buyer, but RZHVD¿GXFLDU\GXW\WR WKHQPLVDSSURSULDWHGWKHIXQGVDQGÀHG,QWKLV A. the buyer only situation, the risk of the loss belongs to the: B. the seller only A. seller, since the broker was acting within C. both the buyer and the seller his express authority to accept deposits D. the general public B. buyer, since the broker was acting as his agent in regard to the deposit 7. Which of the following would terminate an C. seller, under the Uniform Vendor and Pur- agency (listing) agreement? chaser Risk Act, since possession had not been transferred  $ $TXDOL¿HGEX\HUVXEPLWVDIXOOSULFHRI- D. buyer, since the seller was not criminally fer culpable B. The death or incapacity of the seller or broker  & 7KHVHOOHUUHMHFWVWKHEX\HU¶VR൵HU   $EURNHUUHFHLYHGWZRR൵HUVRQWKHVDPHSURS-  ' 7KHEX\HUUHMHFWVDVHOOHU¶VFRXQWHUR൵HU HUW\IURPWZRVDOHVSHUVRQVLQKLVR൶FHERWK accompanied by deposits. The broker decided WRKROGWKHVHFRQGR൵HUXQWLOWKHVHOOHUKDGVHHQ 8. If a principal no longer desires an agent’s ser- WKH¿UVWR൵HUZLWKRXWLQIRUPLQJWKHVHOOHURI vices, which of the following is correct? WKHVHFRQGR൵HU7KHEURNHU¶VDFWLRQVZHUH A. The principal may not unilaterally revoke  $ SHUPLVVLEOHLIWKHR൵HUVDUHIRUWKHVDPH an agency price B. The agent may compel the principal to B. permissible if both salespersons will be able complete the contract under the theory of to split the seller’s commission VSHFL¿FSHUIRUPDQFH C. not permissible because the broker owes a C. The principal may revoke the contract, but ¿GXFLDU\GXW\WRERWKEX\HUV may be liable for damages D. not permissible because the broker must D. The principal may revoke the contract GLVFORVHDOOR൵HUV without liability for damages 4. Which of the following phrases describes the nature of a real estate agent’s duty to keep her principal informed? A. Contractual obligation B. Fiduciary duty C. Ethical standards D. Public duty 12  Chapter 8: Real Estate Agency Law 9. Broker Larsen took a listing on a rural property 13. A real estate salesperson is typically regarded from King, who told Larsen that the property as an: was served by sewer service. Larsen checked A. independent contractor, because he’s paid with the county and found that there was no strictly on a commission basis sewer service in that area. When the property B. employee, because he can only represent was sold to Burns, Larsen did not mention the clients as the agent of his broker lack of sewer service, although Burns did not C. independent contractor, because his broker ask about it. Which of the following is correct? closely supervises how he carries out his A. The liability rests entirely with King, since work he misled his broker D. employee, because taxes will be withheld B. Larsen had a duty to disclose all latent from his paycheck defects that he knew about, even though Burns did not ask 14. An agent representing a seller owes the buyer: C. Burns can take no action, since he did not inquire about the sewer system A. the duty of honesty and fair dealing D. The legality of the situation would depend  % WKHGXW\RIFRQ¿GHQWLDOLW\ on whether there was an “as is” clause in  & WKHVDPH¿GXFLDU\GXWLHVWKDWVKHRZHVWKH the deposit receipt seller D. nothing, under the rule of caveat emptor 10. When may a real estate agent represent both principals in one transaction? 15. An agency relationship may be created in all of the following ways, except: A. If he has informed each principal that he will be representing each principal A. appointment by the principal B. If he has obtained the written consent of each  % YROXQWDU\R൵HUE\DQDJHQW principal for a dual agency arrangement C. oral contract C. Both A and C D. agreement without consideration D. None of the above  :KHQPD\DEURNHU¿OORXWWKHVHOOHU¶VSRUWLRQ of the transfer disclosure statement? A. When given express authority to do so by the seller B. When authorized to do so by an escrow agent C. Only when acting as a dual agent D. Never 12. An agency would not terminate in which of the following situations?  $ 7KHSULQFLSDOUHIXVHVDQR൵HUWRSXUFKDVH that is presented by an agent B. The agent unilaterally renounces the agree- ment C. The principal dies D. The subject property is destroyed by a ÀRRG 13  Principles of California Real Estate Instructor Materials Answer Key 1. D. Agency law governs all relationships 8. C. Either party to an agency agreement among agents, principals, and third may unilaterally revoke or renounce parties. the relationship, but may be liable for any damages that the end of the rela- 2. A. Accepting a buyer’s deposit was within tionship causes. the agent’s scope of authority, as autho- rized by the seller. Therefore, the seller 9. B. The duty to disclose latent defects is bears the risk of loss of the deposit. DQD൶UPDWLYHGXW\WKHEURNHUPXVW disclose them even if the buyer does 3. D. A broker working for a seller has a not ask. In addition, the broker must ¿GXFLDU\GXW\WRGLVFORVHDOOR൵HUVWR provide the buyer with a transfer dis- the seller, regardless of the contents of closure statement that discloses all WKHR൵HUV$VHOOHU¶VDJHQWZRXOGKDYH known latent defects. QR¿GXFLDU\GXW\WRWKHEX\HU 10. C. Both parties in a dual agency transac- 4. B. The agent’s duty to keep the principal tion must be informed in writing that LQIRUPHGLVSDUWRIWKH¿GXFLDU\UHOD- they will not receive full representation, WLRQVKLS$¿GXFLDU\LVKHOGWRH[DFWLQJ and they must provide written consent. standards in disclosure and account- ability because she operates in a ' $EURNHUPD\QHYHU¿OORXWWKHVHOOHU¶V SRVLWLRQUHTXLULQJWUXVWDQGFRQ¿GHQFH portion of the transfer disclosure state- ment. This responsibility may not be 5. C. Consideration is not necessary to the delegated. formation of an agency relationship; an agency may be gratuitous. Whether $ 5HMHFWLRQRIDQR൵HUWHUPLQDWHVWKH or not the agent is being paid, though, R൵HUEXWLWGRHVQRWWHUPLQDWHWKH WKHUHODWLRQVKLSLVDOZD\VD¿GXFLDU\ agency relationship between principal relationship. and agent. 6. B. A broker who accepts a listing is a sell- 13. A. A real estate salesperson is typically an HU¶VDJHQWDQGRZHVD¿GXFLDU\GXW\ independent contractor, because he’s to the seller only. The broker will still paid only on a commission basis. Taxes owe certain duties to all parties, such usually aren’t withheld from a sales- as the duties of honesty and good faith, person’s earnings, and a broker doesn’t and of disclosure of latent defects. closely supervise a salesperson’s work. +RZHYHUWKH¿GXFLDU\UHODWLRQVKLSLV between broker and seller. 7. B. If a seller or broker dies, the agency relationship between them is termi- nated by operation of law. 14  Chapter 8: Real Estate Agency Law 14. A. A seller’s agent owes all parties the duty of honesty and fair dealing. There DUHDQXPEHURI¿GXFLDU\GXWLHVWKDW she does not owe the buyer, such as the GXW\RIFRQ¿GHQWLDOLW\ 15. B. An agency relationship cannot be cre- DWHGXQLODWHUDOO\E\RQHSDUW\¶VR൵HU The principal would need to accept the DJHQW¶VR൵HUIRULQVWDQFHWKURXJKDQ H[SUHVVDJUHHPHQWRUUDWL¿FDWLRQ7KH agreement does not require consid- eration, and it is not required to be in writing, although it must be in writing to be enforceable. 15