CCS Sales Practices & Ethical Standards 2 — Questions and Answers
Question 1: A condominium sales agent learns that a unit has a history of water intrusion that was repaired. What is the agent's ethical obligation regarding this information?
- Disclose the history only if the buyer directly asks
- Disclose the material fact proactively to all prospective buyers (Correct answer)
- Omit it since the issue was repaired and no longer exists
- Share it only with the buyer's lender, not the buyer
Correct answer: Disclose the material fact proactively to all prospective buyers
Agents must proactively disclose known material facts, including past defects, even if repaired, because they can affect a buyer's decision.
Question 2: Which practice is considered a violation of ethical sales standards when marketing a condominium unit?
- Highlighting proximity to public transportation
- Advertising a lower price than the listed price to attract calls (Correct answer)
- Staging the unit with rented furniture
- Offering a virtual tour to remote buyers
Correct answer: Advertising a lower price than the listed price to attract calls
Advertising a price lower than the listed price to generate leads is bait-and-switch advertising, which is an unethical and often illegal practice.
Question 3: A buyer's agent receives an offer from a client on a condo unit. The listing agent is the agent's personal friend. What should the buyer's agent do?
- Negotiate less aggressively to maintain the friendship
- Disclose the relationship to the buyer and represent them with full loyalty (Correct answer)
- Refer the buyer to another agent without explanation
- Ask the listing agent to handle the negotiations for both parties
Correct answer: Disclose the relationship to the buyer and represent them with full loyalty
The buyer's agent must disclose the personal relationship to the client and continue to represent the buyer's best interests with full fiduciary duty.
Question 4: Under CCS standards, what must an agent do when a seller instructs them NOT to disclose that the condo association is involved in litigation?
- Follow the seller's instruction since the seller controls disclosure
- Comply but document the instruction in the file
- Refuse the instruction and disclose the litigation as a material fact (Correct answer)
- Disclose only if the buyer's lender specifically requests it
Correct answer: Refuse the instruction and disclose the litigation as a material fact
Pending association litigation is a material fact that agents are legally and ethically required to disclose regardless of seller instructions.
Question 5: What is the primary purpose of the RESPA (Real Estate Settlement Procedures Act) as it applies to condominium sales?
- To regulate HOA fee structures and reserves
- To prohibit kickbacks and referral fees in settlement services (Correct answer)
- To set maximum commission rates for real estate agents
- To require sellers to pay all closing costs
Correct answer: To prohibit kickbacks and referral fees in settlement services
RESPA prohibits kickbacks and unearned fees between settlement service providers to protect buyers from inflated closing costs.
Question 6: A CCS-designated agent is representing both the buyer and the seller in a condominium transaction. This arrangement is known as:
- Subagency
- Buyer agency
- Dual agency (Correct answer)
- Transactional brokerage
Correct answer: Dual agency
Dual agency occurs when one agent or brokerage represents both the buyer and seller in the same transaction, requiring disclosure and consent from both parties.
Question 7: Which statement best describes 'puffery' in condominium advertising, and how it differs from misrepresentation?
- Puffery is illegal; misrepresentation is permitted with disclosure
- Puffery is subjective opinion (e.g., 'best views in town'); misrepresentation is a false statement of fact (Correct answer)
- Puffery must be removed from all MLS listings; misrepresentation is allowed in print ads
- Puffery and misrepresentation are legally identical and both prohibited
Correct answer: Puffery is subjective opinion (e.g., 'best views in town'); misrepresentation is a false statement of fact
Puffery consists of non-actionable subjective opinions, while misrepresentation involves false statements of objective facts that can give rise to legal liability.
CCS Sales Practices & Ethical Standards 2
A condominium sales agent learns that a unit has a history of water intrusion that was repaired.
What is the agent's ethical obligation regarding this information?