NAR Agency Relationships & Fiduciary Duties 2

Question 1

In real estate, what is the key distinction between a 'client' and a 'customer'?

Accepted Answer

A client has a signed agency agreement and receives fiduciary duties; a customer does not

Answer

A client has an agency relationship with the broker and is owed full fiduciary duties, while a customer receives only honest and fair dealing without fiduciary representation.

Question 2

What document typically establishes an exclusive buyer agency relationship?

Accepted Answer

A buyer representation agreement

Answer

A buyer representation agreement (also called a buyer agency agreement) formally establishes the broker as the buyer's exclusive agent, creating fiduciary duties to the buyer.

Question 3

Designated agency occurs when:

Accepted Answer

A broker assigns specific agents to represent each party in a transaction within the same brokerage

Answer

Designated agency allows a broker to assign one agent to represent the buyer and a different agent to represent the seller within the same brokerage, preserving individual fiduciary duties.

Question 4

Under the fiduciary duty of obedience, an agent must follow client instructions EXCEPT when those instructions:

Accepted Answer

Violate the law or the agent's ethical obligations

Answer

While agents must follow lawful client instructions, they are not obligated — and in fact are prohibited — from following instructions that require illegal actions or ethical violations.

Question 5

When does an agency relationship most commonly terminate?

Accepted Answer

Upon expiration of the agreement, completion of the transaction, or mutual agreement to terminate

Answer

Agency relationships typically end upon contract expiration, successful completion of the transaction, mutual rescission, or other legally recognized events such as death or incapacity.

(NAR) National Association of Realtors Certification Practice Test

(NAR) National Association of Realtors Certification Practice Test

NAR Agency Relationships & Fiduciary Duties 2