Arkansas Real Estate License Agency Relationships and Disclosures 3 — Questions and Answers
Question 1: Under Arkansas agency law, which duty does a seller's agent NOT owe to an unrepresented buyer?
- Honesty and fair dealing
- Disclosing known material defects
- Loyalty and advocacy (Correct answer)
- Providing accurate information about the property
Correct answer: Loyalty and advocacy
Loyalty and advocacy are fiduciary duties owed only to the agent's own client; an unrepresented buyer receives honest and fair treatment but not fiduciary representation.
Question 2: An agent acting as a seller's subagent owes primary fiduciary duties to:
- The buyer who pays the commission
- The listing broker
- The seller (the listing broker's principal) (Correct answer)
- The cooperating broker
Correct answer: The seller (the listing broker's principal)
A subagent works through the cooperating broker but ultimately represents and owes fiduciary duties to the seller, the original principal.
Question 3: In Arkansas, a listing agent discovers the seller has not disclosed a leaking roof. What should the agent do?
- Ignore it since the seller is the client
- Advise the seller to disclose and refuse to continue if they won't (Correct answer)
- Disclose it directly to buyers without telling the seller
- Reduce the asking price to account for the defect
Correct answer: Advise the seller to disclose and refuse to continue if they won't
Arkansas agents must advise their clients to disclose material defects and may withdraw from the transaction if the client refuses to comply with legal requirements.
Question 4: When does an implied agency relationship most commonly arise in Arkansas real estate?
- When a written buyer representation agreement is signed
- When a licensee acts as an agent without a formal agreement and the client reasonably believes representation exists (Correct answer)
- When a broker posts a property on MLS
- When a seller signs a listing agreement
Correct answer: When a licensee acts as an agent without a formal agreement and the client reasonably believes representation exists
Implied agency arises through conduct and circumstances rather than a written agreement, creating agency obligations even without formal documentation.
Question 5: A buyer's agent agrees to receive a lower commission if the buyer purchases a property the agent also owns. This situation requires:
- No special disclosure since the agent is representing the buyer
- Written disclosure of the agent's ownership interest and informed consent from the buyer (Correct answer)
- Immediate termination of the agency relationship
- Approval from the Arkansas Real Estate Commission
Correct answer: Written disclosure of the agent's ownership interest and informed consent from the buyer
When an agent has a personal financial interest in a transaction, they must disclose this conflict in writing and obtain the client's informed consent.
Question 6: Which statement about Arkansas agency disclosure requirements is CORRECT?
- Disclosure is only required for transactions over $100,000
- Disclosure is required in all residential transactions regardless of price (Correct answer)
- Disclosure is optional if both parties waive it verbally
- Only commercial transactions require written agency disclosure
Correct answer: Disclosure is required in all residential transactions regardless of price
Arkansas requires agency disclosure in all residential real estate transactions regardless of the sale price or property type.
Question 7: An Arkansas listing agent receives two offers simultaneously — one from a buyer with their own agent and one from an unrepresented buyer. The listing agent must:
- Automatically present both offers simultaneously to the seller (Correct answer)
- Present the represented buyer's offer first as a professional courtesy
- Present only the highest offer to avoid complicating the seller's decision
- Ask the unrepresented buyer to get an agent before presenting their offer
Correct answer: Automatically present both offers simultaneously to the seller
Arkansas law requires all offers to be presented to the seller promptly, and the agent must not discriminate in how or when offers are presented.
Arkansas Real Estate License Agency Relationships and Disclosures 3
Under Arkansas agency law, which duty does a seller's agent NOT owe to an unrepresented buyer?