CCS Sales Practices & Ethical Standards 3 — Questions and Answers
Question 1: A prospective buyer asks a CCS agent whether the condominium building is 'safe.' The agent knows the building failed its most recent fire inspection. What must the agent do?
- Answer generically that all buildings meet local codes
- Disclose the failed fire inspection as a material fact (Correct answer)
- Decline to answer and suggest the buyer consult a building inspector
- Only disclose if the buyer signs a liability waiver first
Correct answer: Disclose the failed fire inspection as a material fact
A failed fire inspection is a known material fact that directly relates to safety and must be disclosed proactively by the agent.
Question 2: What does 'steering' mean in the context of condominium sales ethics?
- Directing buyers toward higher-priced units to increase commission
- Guiding buyers toward or away from neighborhoods based on protected characteristics (Correct answer)
- Recommending a specific lender to a buyer
- Advising a seller to price their unit above market value
Correct answer: Guiding buyers toward or away from neighborhoods based on protected characteristics
Steering is the illegal practice of directing buyers toward or away from properties based on race, religion, national origin, or other protected class characteristics.
Question 3: An agent discovers after closing that they failed to disclose a known roof assessment that will be levied against all unit owners. The most likely consequence is:
- No consequence since the transaction is already closed
- Potential rescission of the contract and/or liability for damages (Correct answer)
- A warning letter from the state real estate commission only
- The buyer assumes all risk once closing documents are signed
Correct answer: Potential rescission of the contract and/or liability for damages
Failure to disclose a known material fact like a pending assessment can expose the agent to liability for damages and potentially allow the buyer to seek rescission.
Question 4: Under the Fair Housing Act, which of the following is a protected class in the sale of condominium units?
- Occupation
- Credit score
- National origin (Correct answer)
- Income level
Correct answer: National origin
National origin is one of the seven protected classes under the Federal Fair Housing Act, along with race, color, religion, sex, disability, and familial status.
Question 5: A seller wants to accept only offers from buyers without children. A CCS agent should:
- Comply since the seller controls acceptance criteria
- Comply only if the condo is an age-restricted community
- Refuse, as this violates the Fair Housing Act's familial status protection (Correct answer)
- Accept only if the condo bylaws support the restriction
Correct answer: Refuse, as this violates the Fair Housing Act's familial status protection
Discriminating against buyers with children violates the familial status provision of the Fair Housing Act unless the property qualifies as housing for older persons.
Question 6: Which document must be provided to a buyer purchasing a condominium unit under the Interstate Land Sales Full Disclosure Act (ILSA) if applicable?
- Seller's financial statement
- Property Report (Correct answer)
- Certificate of Occupancy
- Title commitment
Correct answer: Property Report
ILSA requires developers to provide buyers with a Property Report disclosing material information about the development before signing a purchase contract.
Question 7: A condominium sales agent accepts a gift card from a title company after referring several closings to them. Under RESPA, this is:
- Permissible if the gift is under $25 in value
- Permissible as a standard business courtesy
- Prohibited as an illegal kickback for referrals (Correct answer)
- Allowed only if disclosed to the buyer in writing
Correct answer: Prohibited as an illegal kickback for referrals
RESPA prohibits any thing of value exchanged for the referral of settlement service business, regardless of the dollar amount.
CCS Sales Practices & Ethical Standards 3
A prospective buyer asks a CCS agent whether the condominium building is 'safe.' The agent knows the building failed its most recent fire inspection.
What must the agent do?