Arkansas Real Estate License Agency Relationships and Disclosures 5 — Questions and Answers
Question 1: An Arkansas real estate agent working with a buyer who is also a personal friend. The agent's fiduciary duty requires them to:
- Give the friend better deals than other clients
- Provide the same professional loyalty and care as any other client (Correct answer)
- Disclose the friendship to the seller
- Reduce their commission as a favor
Correct answer: Provide the same professional loyalty and care as any other client
Personal relationships do not change the agent's fiduciary duties — all clients are entitled to the same standard of professional loyalty, care, and representation.
Question 2: In a designated agency transaction in Arkansas, what information must the broker keep confidential between the designated buyer's agent and seller's agent?
- The property's listing price
- The motivations and financial constraints of the respective clients (Correct answer)
- The identity of the other party in the transaction
- The address of the subject property
Correct answer: The motivations and financial constraints of the respective clients
In designated agency, each agent protects their own client's confidential information, including motivations and financial capacity, from the other designated agent.
Question 3: Under Arkansas law, which agency relationship requires the HIGHEST level of fiduciary duty?
- Transaction brokerage
- Subagency
- Buyer or seller agency (full representation) (Correct answer)
- Open listing representation
Correct answer: Buyer or seller agency (full representation)
Full buyer or seller agency carries complete fiduciary duties (loyalty, confidentiality, disclosure, obedience, reasonable care, and accounting), the highest standard in Arkansas real estate law.
Question 4: A seller signs a listing agreement with Broker A but then approaches Broker B to help find a buyer directly. What is Broker B's agency status?
- Broker B automatically becomes a co-listing broker
- Broker B may represent the buyer and becomes the buyer's agent, owing duties to the buyer (Correct answer)
- Broker B must refer the seller back to Broker A
- Broker B cannot work with the seller without Broker A's permission
Correct answer: Broker B may represent the buyer and becomes the buyer's agent, owing duties to the buyer
Broker B can represent the buyer in a transaction where Broker A represents the seller; Broker B owes fiduciary duties to the buyer-client in this scenario.
Question 5: Arkansas requires that agency disclosure forms be:
- Submitted to the Arkansas Real Estate Commission within 30 days
- Retained by the brokerage as part of transaction records (Correct answer)
- Filed with the county assessor's office
- Recorded in the county deed records
Correct answer: Retained by the brokerage as part of transaction records
Arkansas brokerages must retain agency disclosure forms as part of their required transaction records, which the Commission may inspect during audits.
Question 6: A listing agent's seller-client instructs the agent not to tell buyers about a neighborhood noise issue from a nearby highway. The agent should:
- Comply — the seller is the client and the agent must follow instructions
- Disclose the noise issue anyway since it is a material fact affecting value (Correct answer)
- Refuse the listing entirely since any instruction conflict is grounds for withdrawal
- Ask buyers to do their own research without mentioning the noise
Correct answer: Disclose the noise issue anyway since it is a material fact affecting value
A highway noise issue is a material fact that agents must disclose despite client instructions, because agents cannot follow instructions requiring them to deceive buyers.
Question 7: In Arkansas, which of the following statements about buyer representation agreements is TRUE?
- They are always optional and have no legal effect
- They establish the scope, duration, and compensation terms of the buyer's agency relationship (Correct answer)
- They automatically expire after 30 days regardless of terms
- They must be approved by the Arkansas Real Estate Commission before taking effect
Correct answer: They establish the scope, duration, and compensation terms of the buyer's agency relationship
A buyer representation agreement is a legally binding contract that defines the agent's duties, the duration of representation, and how the agent will be compensated.
Arkansas Real Estate License Agency Relationships and Disclosures 5
An Arkansas real estate agent working with a buyer who is also a personal friend.
The agent's fiduciary duty requires them to: