CRECI Real Estate Law and Ethics 2 — Questions and Answers
Question 1: Under the Americans with Disabilities Act (ADA), which commercial property owners are required to remove architectural barriers when 'readily achievable'?
- Only newly constructed buildings built after 1993
- All places of public accommodation regardless of building age (Correct answer)
- Only government-owned commercial properties
- Properties with more than 50 employees only
Correct answer: All places of public accommodation regardless of building age
The ADA requires all places of public accommodation to remove architectural barriers when doing so is readily achievable, regardless of when the building was constructed.
Question 2: A commercial tenant sublets space without authorization from the landlord. What is the most likely legal consequence?
- The sublease is automatically void and unenforceable
- The landlord can terminate the lease for breach of covenant (Correct answer)
- The subtenant gains full legal tenancy rights
- The original tenant is released from lease obligations
Correct answer: The landlord can terminate the lease for breach of covenant
An unauthorized sublease typically constitutes a material breach of the lease covenant against assignment or subletting, giving the landlord grounds for termination.
Question 3: Which ethical principle in the CRECI Code of Ethics requires members to disclose all known material facts that could affect a transaction?
- Duty of loyalty
- Duty of disclosure (Correct answer)
- Duty of confidentiality
- Duty of obedience
Correct answer: Duty of disclosure
The duty of disclosure obligates CRECI members to reveal all known material facts that a reasonable party would consider important in deciding whether to proceed with a transaction.
Question 4: A commercial broker represents both the buyer and seller in the same transaction without disclosing this arrangement. This is best described as:
- Single agency
- Undisclosed dual agency (Correct answer)
- Designated agency
- Transactional brokerage
Correct answer: Undisclosed dual agency
Undisclosed dual agency occurs when a broker represents both parties in a transaction without their knowledge or consent, which is an illegal and unethical practice.
Question 5: Under the Statute of Frauds, which of the following commercial real estate agreements is ENFORCEABLE without being in writing?
- A two-year commercial lease
- A purchase agreement for a retail building
- An oral lease for less than one year (Correct answer)
- A listing agreement for an office complex
Correct answer: An oral lease for less than one year
The Statute of Frauds generally requires real estate contracts to be in writing, but most states exempt short-term leases of one year or less from this requirement.
Question 6: What is 'estoppel' in the context of commercial real estate law?
- A legal right to use another party's land for a specific purpose
- A principle preventing a party from asserting a claim inconsistent with prior conduct (Correct answer)
- A clause allowing a landlord to pass operating costs to tenants
- The process of resolving boundary disputes between adjoining owners
Correct answer: A principle preventing a party from asserting a claim inconsistent with prior conduct
Estoppel prevents a party from taking a legal position inconsistent with their prior statements or conduct when another party has reasonably relied on that conduct.
Question 7: A real estate professional who steers a prospective buyer away from certain neighborhoods based on the racial composition of those areas is violating:
- The Truth in Lending Act
- The Fair Housing Act (Correct answer)
- The Real Estate Settlement Procedures Act
- The Community Reinvestment Act
Correct answer: The Fair Housing Act
Steering based on race is a prohibited practice under the Fair Housing Act, which bars discrimination in the sale, rental, or financing of housing based on protected classes.
CRECI Real Estate Law and Ethics 2
Under the Americans with Disabilities Act (ADA), which commercial property owners are required to remove architectural barriers when 'readily achievable'?