Principles of Real Estate Ch.3 (Quiz 3)

A licensed real estate broker states that a lot is 1/3 of an acre, when in fact the lot is 1/4 of an acre. The agent is guilty of:

1) secret profit

2) false promise

3) misrepresentation

4) divided agency

3) misrepresentation

Most real estate agencies are created by:

1) agreement

2) ratification

3) implication

4) estoppel

1) agreement

An owner lists a property with Broker A. Prospective buyer is found by another Broker B. Broker B is a:

1) cooperating agent

2) power of agent

3) dual agent

4) general agent

1) cooperating agent

The misappropriation and use of a client's funds by an agent is called:

1) commingling

2) conversion

3) secret profit

4) misrepresentation

2) conversion

If a seller insists on selling a home "as is":

1) the prospective buyer is entitled to know all defects known to the seller and real estate agent

2) a buyer beware philosophy prevails in California

3) the seller is not required to reveal known defects to prospective buyers

4) the agent is not required to reveal known defects to prospective buyers

1) the prospective buyer is entitled to know all defects known to the seller and real estate agent

Salesperson Schmidt works for Broker Hassan. On May 1, Schmidt takes a listing on Home X for 90 days. Twenty days later, Salesperson Schmidt transfers her license and becomes a salesperson for Broker Meeks. As of May 21, the listing on Home X belongs to:

1) no one, as this cancels the agency with the seller

2) Broker Meeks

3) Broker Hasan

4) Salesperson Schmidt

3) Broker Hasan

Which of the following is not correct?

1) Real estate salespersons are able to contract directly in their own name as an agent with the seller

2) The recovery fund may be used to reimburse qualified principals and buyers for damages suffered because of certain inappropriate acts by real estate licensees

3) Most real estate agency agreements are between sellers and brokers, not buyers and brokers

4) All real estate salespersons must have written employment contracts with their brokers

1) Real estate salespersons are able to contract directly in their own name as an agent with the seller

Real estate agencies are created by:

1) agreement in writing

2) appointment

3) none of these

4) special agency

1) agreement in writing

A broker receives a deposit from a buyer late Friday night, with instructions to hold the check uncashed pending the seller's acceptance of the offer. The broker decides to put it in a safe in the office for security purposes until the offer can be submitted to the seller. In doing so the broker is:

1) guilty of conversion

2) innocent of any wrongdoing

3) guilty of commingling

4) required to place the deposit into a trust fund

2) innocent of any wrongdoing

The broker of a real estate office wanted to deposit funds from a recently opened transaction. He had his trust account, business account, and personal account all at the same bank. Inadvertently, he made out the deposit slip to deposit the client’s funds into his personal account. 

1) This was an innocent mistake. He can just redeposit the money into his trust account before the close of escrow.

2) The broker should call and immediately transfer the funds into his trust account.

3) The broker doesn’t have to worry unless CalBRE audits his account.

4) The broker is guilty of commingling funds.

4) The broker is guilty of commingling funds.

A real estate broker, in order to influence a person to buy, states that the property will absolutely double in value in six months. The sale takes place and 6 months later the property has declined in value. This broker could be considered guilty of:

1) duress

2) false promise

3) acting in a legal manner

4) ostensible promise

2) false promise

If a real estate agent knowingly makes a substantial misrepresentation of the likely value of real property, it is:

1) unethical, but not illegal

2) an agency violation

3) an accepted practice in the industry

4) an innocent mistake

2) an agency violation

Which of the following best describes the role of a broker in a real estate agency?

1) General agent

2) Special agent

3) Independent contractor

4) Employee

2) Special agent

Per the Real Estate Commissioner's regulations, a broker must:

1) all of the above

2) maintain a trust fund account in a bank

3) maintain a minimum balance in the trust fund

4) keep a formal cash receipts/cash disbursement journal

4) keep a formal cash receipts/cash disbursement journal

According to real estate licensing law, for supervising purposes, the relationship between a salesperson and a broker is:

1) employer-employee

2) fiduciary

3) ostensible

4) independent contractor

1) employer-employee

A California broker wants to sell her brother’s property in Las Vegas. 

1) She can do this with the Real Estate Commissioner’s permission.

2) She can do this with the permission of the state of California.

3) She cannot do this because she does not know Nevada real estate law.

4) She can refer the listing to a Nevada real estate broker and they can agree to share the commission.

4) She can refer the listing to a Nevada real estate broker and they can agree to share the commission.

A broker is authorized in the listing agreement to accept a deposit from the buyer on behalf of the seller and receives same from a buyer. The broker then uses the money received from the buyer to pay for a vacation and refuses to restore the money. The person(s) liable to the buyer for the loss would be the:

1) seller only

2) broker and seller

3) broker only

4) real estate commissioner

2) broker and seller

Receiving a commission from both the buyer and seller without full disclosure and approval is called:

1) implied agency

2) dual agency

3) single agency

4) divided agency

4) divided agency

The Real Estate Commissioner's regulations do notapply to California licensed:

1) mortgage brokers

2) real estate brokers

3) real estate salespersons

4) appraisers

4) appraisers

Real estate commissions are:

1) negotiable

2) limited per the Commissioner’s Code of Ethics

3) determined by local Associations of REALTORS®

4) established by the California Association of REALTORS®

1) negotiable

In a real estate sale, which of the following is notconsidered the agent of the seller?

1) All are agents of the seller

2) The broker of the buyer who is an authorized dual agent

3) A dual agent

4) The listing broker

1) All are agents of the seller

The Disclosure Regarding Real Estate Agency Relationship form must be signed at the time of the:

1) issuance of the closing statements

2) drafting of the loan papers

3) agency appointment

4) appraisal approval

3) agency appointment

Before giving a listing to a broker, the owner informed the broker that the roof was in bad shape. The broker later showed the house and assured the buyer that the house was in excellent condition, without any known problems. After the first rain, the house suffered heavy water damage due to a leaky roof. The buyer is angry and will probably sue the:

1) broker and the seller

2) broker, seller, and escrow company

3) broker

4) title insurance company

1) broker and the seller

A California real estate broker finds a buyer for a property in Reno listed with a Nevada broker. Per California regulations, the:

1) Nevada broker cannot sell to a California buyer in Nevada

2) California broker cannot be paid a commission

3) commission can be divided per agreement between the brokers

4) California broker must first obtain a Nevada real estate license

commission can be divided per agreement between the brokers

A broker took a listing on an 8-unit apartment house and stated that it showed a 14% yield on the investment. In figuring the yield, the broker unknowingly did not allow for maintenance expenses or a vacancy factor. A buyer purchased the property based on the broker's analysis. Which of the following best describes this particular violation of real estate law?

1) Misrepresentation

2) Secret profit

3) False Promise

4) Conversion of numbers

1) Misrepresentation

Real estate agencies can be terminated by:

1) completion, expiration, mutual consent, and estoppel.

2) completion, expiration, mutual consent, and death of the agent.

3) completion, expiration, mutual consent, and secret profit.

4) completion, expiration, mutual consent, and with the Real Estate Commissioner’s permission.

2) completion, expiration, mutual consent, and death of the agent.

At the time of the listing agreement, the seller informed the broker that the floors beneath the wall-to-wall carpets were oak. While showing the property to a buyer, the broker stated, "the floors are oak." After the sale the buyer went to replace the carpet and discovered that the floors were pine. Responsibility for the mistake rests with:

1) seller only

2) broker and seller

3) broker only

4) buyer, as he or she is charged with making reasonable inspection of property

2) broker and seller

Which of the following is not an essential element in creating a real estate agency?

1) Parties must be competent

2) Fiduciary relationship

3) Agreement between principal and agent

4) Amount of the commission

4) Amount of the commission

Conversion is a violation of real estate law and carries with it a heavy penalty. Which example best illustrates conversion?

1) Broker receives offer and check and puts check in a personal account, mixing it with the broker’s own money

2) Broker receives offer, check, and buyer's instructions to hold check until acceptance and puts check in office desk

3) Broker receives offer and a $500 deposit in cash; before the acceptance, broker spends the money for supplies, then replaces the $500 when it is time to close escrow

4) Broker gets signed offer and cash deposit; broker puts cash in a personal account after the offer is accepted and seller instructs broker to keep the money as part of the commission

3) Broker receives offer and a $500 deposit in cash; before the acceptance, broker spends the money for supplies, then replaces the $500 when it is time to close escrow (unsure answer)

The maximum dollar amount for an individual claim against the Real Estate Recovery Fund is:

1) $20,000

2) $10,000

3) $100,000

4) $50,000

4) $50,000