Arkansas Real Estate License Agency Relationships and Disclosures 4 — Questions and Answers
Question 1: Under Arkansas law, which of the following would TERMINATE an agency relationship?
- The buyer making an offer below list price
- Expiration of the listing or representation agreement (Correct answer)
- The agent taking a vacation
- The property failing inspection
Correct answer: Expiration of the listing or representation agreement
An agency relationship automatically terminates when the agreed-upon contract period expires, along with other events like completion of the purpose, mutual agreement, or death.
Question 2: A buyer tells their agent they want to buy a home but won't sign a representation agreement. The agent shows them three homes. What type of agency likely exists?
- No agency — without a contract there is no relationship
- Implied buyer's agency created through the agent's conduct (Correct answer)
- Seller's subagency because the agent is working with MLS properties
- Designated agency assigned by the broker
Correct answer: Implied buyer's agency created through the agent's conduct
When an agent provides buyer services without a formal agreement, implied agency can be created through the agent's conduct and the buyer's reasonable belief of representation.
Question 3: In Arkansas, 'informed consent' for dual agency means the parties must:
- Verbally agree to dual agency at the closing table
- Sign a written consent acknowledging the limits of dual agency representation before proceeding (Correct answer)
- Simply receive a copy of the dual agency disclosure after signing the purchase contract
- Agree to use the same attorney for closing
Correct answer: Sign a written consent acknowledging the limits of dual agency representation before proceeding
Arkansas requires written informed consent acknowledging the limitations of dual agency — particularly the agent's inability to fully advocate for either party — before the relationship continues.
Question 4: A seller's agent has a duty of 'reasonable care and diligence.' This means the agent must:
- Guarantee the property will sell within the listing period
- Use professional skill and effort to advance the seller's interests in the transaction (Correct answer)
- Perform a complete home inspection before listing
- Ensure the buyer qualifies for financing before accepting their offer
Correct answer: Use professional skill and effort to advance the seller's interests in the transaction
Reasonable care and diligence requires the agent to apply professional knowledge and effort to serve the client's real estate needs competently.
Question 5: Which of the following is an example of a material fact that must be disclosed in Arkansas?
- The seller's motivation for selling
- A structural defect in the foundation discovered during a prior inspection (Correct answer)
- The seller's religious affiliation
- Neighborhood demographic information
Correct answer: A structural defect in the foundation discovered during a prior inspection
Material facts are those that would affect a reasonable buyer's decision, and structural defects clearly meet this standard and must be disclosed.
Question 6: In Arkansas, if a buyer's agent also earns a referral fee from a lender for sending the buyer to them, what must occur?
- Nothing — referral fees between professionals are standard
- The agent must disclose the referral fee arrangement to the buyer (Correct answer)
- The agent must refund the fee to the buyer at closing
- The lender must absorb the fee and not pass it to the buyer
Correct answer: The agent must disclose the referral fee arrangement to the buyer
Undisclosed referral or kickback arrangements create conflicts of interest; agents must disclose any compensation received from third parties related to the transaction.
Question 7: Under Arkansas agency law, the seller's agent has a duty of 'obedience.' Which instruction from the seller would the agent be JUSTIFIED in refusing?
- Price the home below market value to sell quickly
- Reject all offers under a certain price
- Refuse to show the home to buyers of a specific race (Correct answer)
- Decline to host open houses
Correct answer: Refuse to show the home to buyers of a specific race
Obedience requires following lawful client instructions, but agents must refuse instructions that violate the Fair Housing Act or any other law.
Arkansas Real Estate License Agency Relationships and Disclosures 4
Under Arkansas law, which of the following would TERMINATE an agency relationship?