CRECI Regulatory Compliance and Ethics 2 — Questions and Answers
Question 1: Under RESPA, which of the following is considered an illegal kickback in a commercial real estate transaction?
- Paying a referral fee to a licensed broker
- Receiving undisclosed compensation from a title company for steering clients (Correct answer)
- Charging a transaction coordination fee disclosed in writing
- Splitting a commission with a co-broker per agreement
Correct answer: Receiving undisclosed compensation from a title company for steering clients
RESPA prohibits undisclosed kickbacks or referral fees from settlement service providers, such as title companies, that are not disclosed to the client.
Question 2: A commercial broker represents both the buyer and seller in the same transaction without disclosing this to either party. This is best described as:
- Dual agency
- Undisclosed dual agency (Correct answer)
- Transaction brokerage
- Sub-agency
Correct answer: Undisclosed dual agency
Undisclosed dual agency occurs when a broker represents both parties without informing them, which is illegal and a serious ethical violation.
Question 3: Which federal law prohibits discrimination in commercial lending based on race, color, religion, national origin, sex, marital status, or age?
- Fair Housing Act
- Equal Credit Opportunity Act (ECOA) (Correct answer)
- Community Reinvestment Act
- Home Mortgage Disclosure Act
Correct answer: Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in credit transactions, including commercial loans, based on protected characteristics.
Question 4: A CRECI member discovers their client intends to use a leased commercial property for an illegal purpose. The ethical obligation is to:
- Continue representing the client and maintain confidentiality
- Immediately report the client to law enforcement
- Withdraw from the representation and refuse to facilitate the illegal activity (Correct answer)
- Disclose the information only to the opposing party
Correct answer: Withdraw from the representation and refuse to facilitate the illegal activity
Ethics codes require professionals to withdraw from representation when a client intends to use their services to facilitate illegal activity.
Question 5: Which of the following best describes the 'duty of loyalty' in commercial real estate agency?
- Providing accurate information to all parties in a transaction
- Placing the client's interests above all others, including the broker's own interests (Correct answer)
- Maintaining confidentiality of all transaction details indefinitely
- Disclosing all material facts to potential buyers
Correct answer: Placing the client's interests above all others, including the broker's own interests
The duty of loyalty requires an agent to prioritize the client's interests above their own and above the interests of third parties.
Question 6: Under the Americans with Disabilities Act (ADA), which commercial properties are generally required to provide accessible accommodations?
- Only properties built after 1993
- Places of public accommodation and commercial facilities (Correct answer)
- Exclusively federally funded buildings
- Only properties with more than 50 employees
Correct answer: Places of public accommodation and commercial facilities
The ADA requires places of public accommodation and commercial facilities to be accessible to individuals with disabilities, regardless of when they were built.
Question 7: An environmental site assessment that identifies potential contamination issues on a commercial property is known as a:
- Phase I ESA (Correct answer)
- Brownfield Survey
- CERCLA Report
- Property Condition Assessment
Correct answer: Phase I ESA
A Phase I Environmental Site Assessment (ESA) is the standard due diligence report used to identify recognized environmental conditions on a property.
CRECI Regulatory Compliance and Ethics 2
Under RESPA, which of the following is considered an illegal kickback in a commercial real estate transaction?