Arkansas Real Estate License Agency and Fiduciary Duties Questions and Answers

Question 1

An Arkansas real estate agent representing a seller learns from the seller that the roof, which appears new, has a significant, actively leaking defect that they have tried to patch unsuccessfully.
A potential buyer, who is a customer and not represented by an agent, does not ask about the roof.
What is the agent's duty in this situation?

Accepted Answer

To disclose the known material defect to the potential buyer, as it impacts the property's value and desirability.

Answer

To maintain confidentiality and not disclose the leak unless directly asked by the buyer.

Answer

To tell the buyer that the roof is new and therefore has no issues.

Answer

To advise the seller to lower the price to account for the leak without disclosing the specific reason.

Question 2

Under Arkansas law, which of the following fiduciary duties owed by a licensee to their client CANNOT be waived, even with the client's written consent?

Accepted Answer

The duty of absolute fidelity to protect and promote the client's interests.

Answer

The duty to show the client alternative properties listed with other firms.

Answer

The duty to perform a market analysis for the client every month.

Answer

The duty to attend the closing in person.

Question 3

A licensee with ABC Realty has a buyer representation agreement. The buyer becomes interested in a property listed by another agent at ABC Realty. To proceed with the transaction, what specific type of agency must be created, and what is required?

Accepted Answer

Dual agency, which requires prior written consent from both the buyer and the seller.

Answer

Designated agency, which requires appointing two separate agents within the firm.

Answer

Implied agency, which is created by the actions of the agents and parties.

Answer

Sub-agency, where both agents work for the seller.

Question 4

Which of the following events would automatically terminate an agency relationship by operation of law in Arkansas?

Accepted Answer

The property is destroyed by a tornado.

Answer

The agent renounces the relationship because the client is difficult to work with.

Answer

The client revokes the agency because they are unhappy with the marketing efforts.

Answer

The listing agreement's expiration date passes without a sale.

Question 5

A buyer's agent in Arkansas owes the full range of fiduciary duties to their client. To a third-party seller (a customer), the buyer's agent owes a primary duty of:

Accepted Answer

Honesty and fair dealing.

Answer

Loyalty and confidentiality.

Answer

Obedience to their instructions.

Answer

Advising on the best negotiation strategy.

Question 6

A seller's agent is holding an open house. A prospective buyer attends without an agent and begins to share confidential financial information and their high motivation to buy quickly. The seller's agent should:

Accepted Answer

Immediately stop the buyer and disclose that the agent represents the seller and must convey this information to them.

Answer

Use this information to the seller's advantage in negotiations.

Answer

Agree to keep the buyer's information confidential to build rapport.

Answer

Advise the buyer to get their own representation without explaining why.