Real Estate Law and Ethics Flashcards

Which of the following best describes 'constructive eviction' in a commercial lease context?

Answer: A landlord's actions that substantially interfere with a tenant's use of the property

Constructive eviction occurs when a landlord's actions or failures render the premises substantially unusable, allowing the tenant to vacate and terminate the lease without liability.

Under antitrust law, competing commercial brokers who agree to fix commission rates at a standard percentage are engaged in:

Answer: Horizontal price-fixing, which is per se illegal

Horizontal price-fixing among competitors—including commission rate agreements among brokers—is per se illegal under the Sherman Antitrust Act, with no need to prove actual market harm.

A CRECI member discovers that a property they are listing has an unresolved environmental contamination issue. Their ethical obligation is to:

Answer: Disclose the contamination to prospective buyers as a material fact

Known environmental contamination is a material fact that must be disclosed to prospective buyers, as it significantly affects the property's value and usability.

What is the legal effect of a 'time is of the essence' clause in a commercial purchase contract?

Answer: It makes contractual deadlines strictly enforceable, allowing termination for missing them

A 'time is of the essence' clause makes all specified deadlines absolute and material, so that failing to meet any deadline can constitute a breach justifying contract termination.

Under the doctrine of 'caveat emptor' as applied in modern commercial real estate transactions, sellers are generally:

Answer: Still required to disclose known material defects they actively conceal

While caveat emptor historically placed the burden on buyers, modern law requires sellers to disclose known material defects they actively conceal, preventing fraudulent concealment.

A commercial landlord who refuses to rent to a qualified tenant because of the tenant's national origin is violating which federal law?

Answer: The Fair Housing Act of 1968

The Fair Housing Act of 1968 prohibits discrimination in the rental of commercial and residential real estate based on national origin, among other protected classes.

Which type of easement is created when a landowner's conduct leads another party to believe an easement exists, and that party relies on that belief to their detriment?

Answer: Easement by estoppel

An easement by estoppel arises when a landowner's representation or conduct causes another to reasonably rely on the existence of an easement, and equity prevents denial of that easement.