CRECI Regulatory Compliance and Ethics 3

Question 1

The Foreign Investment in Real Property Tax Act (FIRPTA) primarily requires:

Accepted Answer

Withholding of a percentage of the sale price when a foreign person sells US real property

Answer

FIRPTA requires buyers to withhold a percentage of the sale price (typically 15%) when a foreign person disposes of US real property interests.

Question 2

Which ethical principle requires a commercial real estate professional to provide competent service and not take on assignments beyond their expertise without disclosure?

Accepted Answer

Duty of competence

Answer

The duty of competence obligates professionals to only undertake assignments for which they have the necessary knowledge and skill, or to disclose limitations.

Question 3

Anti-money laundering (AML) regulations in commercial real estate are primarily enforced under which framework?

Accepted Answer

Bank Secrecy Act (BSA) and FinCEN rules

Answer

The Bank Secrecy Act and FinCEN (Financial Crimes Enforcement Network) rules form the primary AML compliance framework applicable to real estate transactions.

Question 4

A broker who inflates a property's estimated value to secure a listing agreement is guilty of:

Accepted Answer

Fraudulent misrepresentation

Answer

Intentionally misrepresenting a property's value to secure a listing constitutes fraudulent misrepresentation, which involves knowingly false statements made to induce a party to act.

Question 5

Under commercial real estate ethics standards, when must a broker disclose a potential conflict of interest?

Accepted Answer

At the earliest possible opportunity before the conflict can affect the transaction

Answer

Ethics standards require disclosure of conflicts of interest as early as possible so clients can make informed decisions about their representation.

(CRECI) Commercial Real Estate Certification Institute Practice Test

(CRECI) Commercial Real Estate Certification Institute Practice Test

CRECI Regulatory Compliance and Ethics 3