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unit 8 law of agency

Terms in this set (45)

Which of the following is NOT part of a decide, disclose, document, and do policy in real estate brokerage?
The answer is keep written confirmation that you provided your firm's policies to TREC for approval. TREC does not approve brokerage firm policies and procedures. A policy of decide, disclose, document, and do consists of the following: Decide in each particular transaction whether to represent the buyer or the seller, and whether intermediary brokerage is anticipated; disclose to the buyer or seller who they represent once an agency relationship is established; document the disclosure with an adequate and timely written confirmation; and do as they had declared, acting consistently with the disclosed decision. (LO 8.1)
Which of the following limits a broker's ability to act as an intermediary with the possibility of appointments in a commercial transaction?
The answer is the broker has no sponsored sales agents or broker associates in the firm. In order to practice intermediary with the possibility of appointments, there must be at least three license holders at the firm—the broker as intermediary and two other license holders. Intermediary in commercial transactions is no different than residential transactions. (LO 8.1)
The creation of agency requires a delegation of authority by the principal and
The answer is consent by the agent. Agency is a consensual relationship that to expressly create requires a delegation of authority by the principal and consent by the agent. (LO 8.1)
The BEST stage of the transaction to present the Information About Brokerage Services Notice to the buyer would be
before beginning any substantive discussions with the buyer.
Broker Ted receives an e-mail from a prospective buyer who will soon be relocating into Ted's area from overseas. While surfing the web, the buyer became interested in several properties he found listed on Ted's website. Ted responds by e-mail and includes in his response considerable detail requested by the prospect about the seller financing limits of one particular owner. In regard to agency disclosure and the Information About Brokerage Services Notice, Ted
The answer is is not exempt from either disclosure, and he must therefore e-mail both disclosure of agency status and the Information About Brokerage Services Notice. The Information About Brokerage Services Notice is mandatory at first "substantive communication" relating to specific real property. Questions regarding financing options the seller might entertain would fall into the category of substantive. [TRELA § 1101.558(b-1)] Because the form is available at the TREC website in PDF format, it can easily be sent as an attachment to the e-mail response. In addition, Ted would be required to clarify to the buyer that as the listing broker, Ted represents the seller. [TRELA § 1101.558(b)] (LO 8.1)
Which of the following is a TRUE statement regarding provision of the IABS Notice at an open house?
A license holder is required to provide the IABS Notice at an open house if there is substantive dialogue about other property.
During an open house, what behavior would trigger the need to provide a customer with the Information About Brokerage Services notice?
Customer asks in-depth questions about another property
Les Stoker, a broker who practices exclusive seller agency, has a former client who is determined to buy one of Stoker's listings. Stoker explained the situation to the former client, who agreed to go ahead with the transaction as an unrepresented customer. What should Les do if his former client starts talking about personal family issues that impact the former client's negotiating position?
It appears that the buyer-customer does not understand the full implication of the changed relationship; Les should ask the former client to stop talking about his financial problems.
For an intermediary transaction, broker Pete is making appointments for sales agents to represent the buyer and the seller. Which of the following regarding the appointees should Pete disclose to those parties?
Names
Which of the following conditions is MOST important when developing a company policy on disclosure?
Compliance with Texas law
Which of the following terms BEST describes the formation of an agency relationship?
Consensual relationship
Yolanda, a sales associate with Sapporo Realty, is having lunch with a friend. A man sitting at the next table is wearing a nametag indicating he is associated with another real estate firm in town. The man answers his cell phone and begins a conversation with someone he calls Ben. The man suggests to Ben that considering Ben's poor credit rating, he might begin negotiations by asking the seller for a low down payment and a wraparound mortgage. From the conversation, Yolanda might assume that the man is a(an)
agent of the buyer.
Broker Ted manages owner Bob's 20-unit apartment complex. In case he wants to raise the rents, Bob instructs Ted to limit all leases to less than 90 days. In regard to providing the Information About Brokerage Services Notice to prospective tenants, Broker Ted is
exempt because the leases are under the statutory limit of 365 days.
Why should a policy manual include a section on open houses?
Because it is a complex agency situation
Broker Fitzroy lists and sells Roni's house while representing Roni as a seller's agent; however, because of his brokerage policy, Fitzroy had to decline Roni's request to represent her in the purchase of another home. Fitzroy's office policy is that of
exclusive seller agency.
Which of the following is NOT a requirement of a broker's comprehensive plan?
Establish an office religion
According to TRELA, which of the following license holders is NOT required to make a disclosure?
The license holder who represented an unsuccessful bidder the last time the property was sold
Jackie Keller, a broker, is holding an open house on a luxury condominium. Which of the following questions from a customer would trigger the need to provide the Information About Brokerage Services notice?
Do your other condominium listings in this area have lower fees?
Can a newly licensed sales agent engage in property management?
Yes, a new sales agent may engage in property management if her sponsoring broker authorizes her to do so.
Sally is a sales agent who markets her listings primarily on her Facebook page. How does Sally comply with the IABS Notice publication requirements?
Sally can link to the notice from her profile or link to her main business website that has a link to the notice.
Mary, a broker, is considering the practice of exclusive seller agency. She works in a wealthy market and has many long-term relationships with families that are frequently involved in both residential and investment real estate transactions. Which of the following statements accurately describes a disadvantage of exclusive seller agency that Mary should consider?
The answer is losing potential commission by limiting her practice to seller-only. Because the broker practicing exclusive seller agency never acts as an intermediary or buyer agency, the broker will have to withdraw from representing a former buyer-client if the client is interested in a property listed by that broker
Are sales agents required to be notified of the scope of their authorized activities?
Yes, TREC rules require the broker to notify sales agents of the scope of their authorized activities subject to the act.
Which of the following steps should be completed first when creating a company disclosure policy?
Review the various agency options.
When a broker is serving a customer as a subagent of the seller, the broker should NOT
The answer is provide the customer with advice. A broker who is acting as a subagent should not provide advice because this is limited to agency relationships.
Which Information About Brokerage Services (IABS) Notice is a license holder required to provide to a potential party to a real estate transaction?
The answer is the IABS Notice promulgated by TREC. The Texas Legislature amended TRELA in 2015 to require TREC to come up with the Information About Brokerage Services Notice that license holders are required to use. (LO 8.1)
The BEST stage of the transaction to present the Information About Brokerage Services Notice to the buyer would be
The answer is before beginning any substantive discussions with the buyer. This notice must be given at the first meeting at which substantive discussion occurs regarding real property. All other choices would not satisfy the requirement for timely presentation of the notice at first substantive communication. [TRELA § 1101.558(b-1); (c)] (LO 8.1)
Raymond has just received his broker's license and plans to open his own office, Homes Galore Realty. Agency options available for Raymond's new office would NOT include
All of these. buyer agency intermediary and non exclusive single agency
Under TRELA, there are certain exceptions to providing the Information About Brokerage Services Notice. These exceptions include all of the following EXCEPT
The answer is when the buyer or seller is a child, a spouse, or a parent of the license holder. TRELA section 1101.558 (c) includes exceptions to providing this information under the circumstances described in (a), (b), and (d). (LO 8.1)
Which of the following terms BEST describes the formation of an agency relationship?
Consensual relationship
Broker Katy discovers a new MLS property that would be ideal for her buyer-client Liz. Katy follows the MLS showing instructions, leaves a message with the owner's answering service, and promptly arrives at the property for a 3:00 pm showing with buyer Liz, only to discover that the owner has come home early from work. TRELA requires that Katy
The answer is verbally disclose to the owner her agency relationship with buyer Liz. A license holder who represents a party in a proposed real estate transaction shall disclose, orally or in writing, that representation at the time of the license holder's first contact with another party to the transaction. TRELA would exempt Katy from having to provide the Information About Brokerage Services Notice in this case because the seller is already represented by another license holder. [§ 1101.558(c)(2)] (LO 8.1)
Are license holders required to provide the Information About Brokerage Services (IABS) Notice at an open house?
The answer is yes, if there is a substantive discussion about another property. There is no requirement to give an open house visitor the IABS Notice if the discussion concerns that property or if the person is represented by another license holder. (TRELA § 1101.558(c)). (LO 8.1)
Jackie Keller, a broker, is holding an open house on a luxury condominium. Which of the following questions from a customer would trigger the need to provide the Information About Brokerage Services notice?
he answer is do your other condominium listings in this area have lower fees? Open houses have also created situations in which license holders may be unsure of disclosure policies. There is no requirement to give an open-house visitor the Information About Brokerage Services Notice unless the party begins to ask in-depth questions about other properties (TRELA § 1101.558(c)(3)). (LO 8.2)
Chuck, a sales associate with Lakenheath Realty, drops by one of his vacant listings to turn off the hot tub. As he is leaving, buyer Jacob arrives and introduces himself, mentions that he is represented by broker Lowell at Donegal Realty, and asks to view the property. Before showing the listing to Jacob, TRELA would require Chuck to
The answer is verbally disclose Chuck's agency relationship with the owner to Jacob. TRELA would exempt Chuck from having to provide the Information About Brokerage Services Notice in this case, because Jacob indicates he is already represented by Lowell, a license holder from another company. [§ 1101.558(c)(2)] Chuck would, however, be required to at least verbally disclose that, as the listing associate, he represents the seller. [§ 1101.558(b)] (LO 8.1)
According to TRELA, which of the following license holders is NOT required to make a disclosure?
The answer is the license holder who represented an unsuccessful bidder the last time the property was sold. The license holder who is trading on his own account, the license holder who represents the seller, and the license holder who represents the buyer must disclose their relationships. (LO 8.2)
TREC's Information About Brokerage Services Notice must be provided
at the first substantive communication about a specific property.
Exclusive seller agency brokers will
represent buyers/tenants or sellers/landlords, but not in the same transaction.
For an intermediary transaction, broker Pete is making appointments for sales agents to represent the buyer and the seller. Which of the following regarding the appointees should Pete disclose to those parties?
The answer is names. When a broker makes an appointment in an intermediary transaction, the parties must be informed in writing that appointments have been made, and such written notice must give the names of the appointees and identify the parties to whom they have been appointed. (TRELA § 1101.560(b)) (LO 8.1)
When acting as the listing agent for a seller, why is the license holder's prior relationship with a buyer important?
The answer is the license holder may possess information that cannot be disclosed to the seller. Current and previous relationships buyers must be considered for disclosures. (LO 8.1)
Hans, a listing associate with Munchen Realty, is holding an open house at one of his new listings. The next door neighbor, Gretchen, arrives to tour the property along with friends who are relocating from another city. Hans introduces himself and explains that Munchen Realty represents the owner of the property. He does not provide the Information about Brokerage Services Notice; however, he does provide a general fact sheet about the property and mentions that the property is within FHA-insured loan limits for the area and that mortgage interest rates are the lowest they have been in years. In regard to agency disclosure and the statutory written statement, Hans
The answer is has fully complied with TRELA. This is a TRELA exception to providing the written information about brokerage services—if the meeting occurs at an open house and the communication is about that property. [§ 1101.558(c)(3)] (LO 8.1)
Which of the following is a TRUE statement regarding provision of the IABS Notice at an open house?
A license holder is required to provide the IABS Notice at an open house if there is substantive dialogue about other property.
Which of the following items is NOT generally included in a company's agency policies and procedures manual?
The answer is office hours for sales staff. A comprehensive plan should include a basic statement of policy. The plan should describe the procedures for handling common situations from the perspectives of both the listing office and the selling office. Internal operations, such as hours of operation, are not generally included in a manual covering agency policies. (LO 8.2)
Describe the steps for creating a company policy for disclosure. Which of the following is one of the steps in creating a comprehensive brokerage firm policy?
he answer is submit the policy to legal advisers for review. TREC, TAR, and the secretary of state do not review office policies and procedures. The broker should have her attorney review the draft policy. (LO 8.2)
Can a license holder provide the IABS Notice via email?
Yes, but there are strict rules the license holder must follow if it provides the form via email.
Exclusive seller agency brokers will
represent buyers/tenants or sellers/landlords, but not in the same transaction.
Why should a broker's policy manual address sales agent advertising?
Because TREC rules require it
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