Arkansas Real Estate License Agency and Fiduciary Duties 3 — Questions and Answers
Question 1: A customer (non-client) is entitled to which of the following from an Arkansas licensee?
- Full fiduciary duties
- Loyalty and confidentiality only
- Honest and fair dealing and disclosure of material facts (Correct answer)
- The same duties as a client
Correct answer: Honest and fair dealing and disclosure of material facts
Customers receive statutory duties of honesty, fair dealing, and material fact disclosure, but not the full fiduciary duties owed to clients.
Question 2: Under the duty of accounting in Arkansas, a buyer's agent must:
- File tax returns for the client
- Safeguard and account for all funds and property entrusted by the client (Correct answer)
- Audit the seller's financial records
- Report all transactions to the AREC
Correct answer: Safeguard and account for all funds and property entrusted by the client
The duty of accounting requires the agent to properly handle and account for money or property received on behalf of the client.
Question 3: A licensee working as a transaction broker in Arkansas owes which level of duty to the parties?
- Full fiduciary duties to both parties
- Fiduciary duties to the seller only
- Limited non-agency duties of fairness and disclosure (Correct answer)
- No duties whatsoever
Correct answer: Limited non-agency duties of fairness and disclosure
A transaction broker (non-agent facilitator) owes limited statutory duties of honesty, fair dealing, and material fact disclosure — not full fiduciary duties.
Question 4: Agent Torres represents the seller. The buyer asks Torres to write up an offer below list price. Torres should:
- Refuse to write the offer to protect the seller
- Write the offer and present it faithfully to the seller (Correct answer)
- Advise the buyer that the offer is too low
- Counter at a higher price without consulting the seller
Correct answer: Write the offer and present it faithfully to the seller
An agent must present all offers to the client promptly regardless of price; the duty of obedience requires following lawful client instructions, not agent preferences.
Question 5: When does an agency relationship in Arkansas typically terminate?
- When the listing period expires, both parties complete the transaction, or by mutual consent (Correct answer)
- Only when the commission is paid
- Only when the AREC revokes the license
- When the agent stops working on the property
Correct answer: When the listing period expires, both parties complete the transaction, or by mutual consent
Agency terminates upon expiration of the agreement, completion of the transaction, mutual consent, death of either party, or other legal events.
Question 6: A buyer's agent who uses confidential information learned from the buyer — such as the maximum price they'll pay — to benefit themselves or a third party has committed:
- A minor ethical lapse
- A breach of the fiduciary duty of loyalty (Correct answer)
- A fair housing violation
- Commingling
Correct answer: A breach of the fiduciary duty of loyalty
Using a client's confidential information for personal gain or to benefit others is a direct breach of the duty of loyalty.
Question 7: In Arkansas, which document most commonly creates an express buyer agency relationship?
- The purchase and sales agreement
- The buyer representation agreement (Correct answer)
- The MLS data sheet
- The agency disclosure form
Correct answer: The buyer representation agreement
A buyer representation agreement is the written contract that expressly creates an agency relationship between the buyer and the licensee.
Arkansas Real Estate License Agency and Fiduciary Duties 3
A customer (non-client) is entitled to which of the following from an Arkansas licensee?