Arkansas Real Estate License Agency and Fiduciary Duties 5 — Questions and Answers
Question 1: A buyer's agent who fails to recommend a home inspection for a property with obvious moisture stains has likely breached which duty?
- Confidentiality
- Obedience
- Reasonable care and diligence (Correct answer)
- Accounting
Correct answer: Reasonable care and diligence
Reasonable care requires the agent to recommend appropriate inspections and protect the client from foreseeable risks, including obvious signs of potential defects.
Question 2: Under Arkansas law, a licensee who represents neither the buyer nor seller in a transaction is best described as:
- A dual agent
- A designated agent
- A transaction broker or facilitator (Correct answer)
- A subagent
Correct answer: A transaction broker or facilitator
A transaction broker (facilitator) assists both parties without acting as an agent for either, owing only statutory non-agency duties.
Question 3: Designated agency in Arkansas allows a broker to:
- Represent both the buyer and seller as a dual agent
- Appoint different licensees within the same firm to represent each party separately (Correct answer)
- Work without any agency disclosures
- Avoid all fiduciary duties
Correct answer: Appoint different licensees within the same firm to represent each party separately
Designated agency permits a broker to assign one affiliated licensee to represent the buyer and another to represent the seller, avoiding the conflicts of dual agency.
Question 4: A listing agent who accepts an offer without presenting all competing offers to the seller has violated which core duty?
- Accounting
- Disclosure and obedience (Correct answer)
- Confidentiality
- Reasonable care
Correct answer: Disclosure and obedience
The agent must disclose all offers and follow the seller's lawful instructions; withholding offers violates both the duty of disclosure and obedience.
Question 5: Which situation requires an Arkansas licensee to disclose a potential conflict of interest to their client?
- The agent drives the client to showings
- The agent refers the client to a home inspector and receives a referral fee (Correct answer)
- The agent uses a standard purchase agreement form
- The agent schedules showings through an MLS lockbox
Correct answer: The agent refers the client to a home inspector and receives a referral fee
Receiving a referral fee from a third party is a conflict of interest that must be disclosed to the client to fulfill the duty of loyalty.
Question 6: After a listing agreement expires, an Arkansas listing agent may NOT:
- Contact the seller to renew the listing
- Keep copies of transaction documents for their records
- Continue to market the property as if still listed (Correct answer)
- Provide the seller with a final accounting of expenses
Correct answer: Continue to market the property as if still listed
Once the listing agreement expires, the agency relationship ends and the agent has no authority to continue marketing the property.
Question 7: A buyer tells their agent they will only consider houses in neighborhoods with a specific religious composition. The agent should:
- Follow the buyer's instructions as required by the duty of obedience
- Decline to honor the instruction because it violates fair housing law (Correct answer)
- Report the buyer to the AREC
- Ask the seller to disclose neighborhood demographics
Correct answer: Decline to honor the instruction because it violates fair housing law
Steering based on religion violates the federal Fair Housing Act; the duty of obedience only applies to lawful client instructions.
Arkansas Real Estate License Agency and Fiduciary Duties 5
A buyer's agent who fails to recommend a home inspection for a property with obvious moisture stains has likely breached which duty?