FREE Arkansas Real Estate License Agency Relationships and Disclosures Questions and Answers

Question 1

An agent with ABC Realty has a listing agreement with a seller. A buyer, who is not represented by any agent, becomes interested in the property. The agent from ABC Realty assists this buyer in preparing an offer. Which of the following statements is TRUE regarding the agent's duties?

Accepted Answer

The agent's primary duty is to the seller, and they must disclose to the buyer that they represent the seller.

Answer

According to Arkansas law, a listing agent's primary duty is to protect and promote the interests of the seller. When assisting an unrepresented buyer, the agent must clearly disclose that they represent the seller. The agent's actions in assisting the buyer do not create an agency relationship with the buyer; their fiduciary duty remains with their client, the seller.

Question 2

A real estate firm practices designated agency. The firm's principal broker designates one affiliated licensee to represent the buyer and another to represent the seller in the same transaction. In this scenario, what is the agency role of the principal broker?

Accepted Answer

The principal broker is considered a dual agent.

Answer

In a designated agency situation within a single firm, while individual agents are appointed to represent the buyer and seller exclusively, the principal broker (and the firm) is considered a dual agent. This is because the firm has agency agreements with both clients. The principal broker must remain neutral.

Question 3

Under what circumstances is dual agency permissible in an Arkansas real estate transaction?

Accepted Answer

It is permissible with prior written consent from both the buyer and the seller.

Answer

Arkansas Real Estate Commission regulations explicitly allow for dual agency, but only when both the seller and the buyer have given their informed, written consent. This consent must be obtained prior to or at the time of executing any contract, such as a listing agreement or an offer and acceptance.

Question 4

A buyer's agent in Arkansas has a duty to keep certain information confidential. Which of the following would the agent be required to disclose to the seller or seller's agent?

Accepted Answer

The fact that the buyer's financing has fallen through.

Answer

While a buyer's agent must keep their client's confidential information private (like their financial limits or motivations), they have a duty of honesty and fair dealing with all parties. The buyer's inability to secure financing is a material fact that directly affects their ability to perform under the contract and must be disclosed.

Question 5

Which of the following events would automatically terminate an agency relationship between a seller and a principal broker by operation of law in Arkansas?

Accepted Answer

The principal broker's license expires.

Answer

An agency relationship is dependent on the broker holding a valid real estate license. If the principal broker's license expires, is suspended, or is revoked, the agency relationship is terminated by operation of law because the broker can no longer legally perform the duties for which they were hired.

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Practice Test

FREE Arkansas Real Estate License Agency Relationships and Disclosures Questions and Answers