Real Estate Practice Exam 1

Question 1

Seller employed Broker to sell his property in Astoria Park. Broker subsequently negotiated a contract whereby Seller and Buyer agreed to sell and buy the property in Astoria Park. The contract was prepared and typed in Broker's office. As there were numerous conditions and terms that had been agreed upon by Seller and Buyer, the contract was quite long and involved. Since the amount of deposit obtained by Broker from Buyer was equal to what his commission was going to be, in the middle of one of the long paragraphs was the phrase "In the event the buyer defaults, the deposit shall be retained by the broker as his compensation." At the time Broker presented the contract to Seller and Buyer for their signatures, he made no mention of the phrase he inserted in the contract, nor did he recommend that they read the contract. However, he did not in any way try to influence them not to read it. Seller and Buyer signed the contract without reading it. In the area, a 50/50 split of defaulted deposits is customary between sellers and brokers. Buyer subsequently defaulted. Seller asked Broker for 50% of the deposit. Broker refused and showed Seller the phrase he had inserted in the contract. What should Broker do?

Accepted Answer

Give Seller 50% of the deposit.

Answer

A real estate broker has a fiduciary duty to act in the best interest of their client, the seller. Inserting a clause that allows the broker to retain the entire deposit upon buyer default, without full disclosure and recommendation for the seller to seek independent legal advice, constitutes a breach of this duty and self-dealing. Given the customary 50/50 split in the area, the broker should adhere to ethical standards and customary practice, sharing the deposit with the seller.

Question 2

Possession of a current and valid license will be considered by a court

Accepted Answer

as sufficient evidence to prove the license status unless stronger evidence to the contrary is introduced.

Answer

Possession of a current and valid real estate license serves as prima facie evidence in court. This means it is considered sufficient proof of the holder's qualification to perform real estate services unless stronger, contrary evidence is presented to dispute its validity or the licensee's conduct. It is not undeniable proof, but a legal presumption that can be challenged.

Question 3

A sales associate gets a signed contract from a buyer and mails it to the seller. The seller has agreed to the terms and the escrow deposit is safely in the broker's escrow account. The sales associate has a disagreement with his broker and quits. The broker refuses to pay a commission because the sales associate was not in his employ when the contract was actually received and signed. The sales associate should

Accepted Answer

sue the broker

Answer

A sales associate earns their commission when they successfully procure a ready, willing, and able buyer and a binding contract is secured, regardless of when the closing occurs or if they are still employed by the broker at that exact moment. The commission is owed by the employing broker, not the seller, as the sales associate works under the broker's license. Therefore, the sales associate should sue the broker for their rightful share of the commission.

Question 4

A licensee who has passed the broker's state examination, but desires to continue to operate under an owner-employer will be registered as a

Accepted Answer

broker associate

Answer

A broker associate is an individual who holds a broker's license but chooses to be employed by another broker or an owner-developer, rather than operating independently as a principal broker. This allows them to perform real estate services under the supervision of their employer, similar to a sales associate, but with the higher qualification of a broker's license.

Question 5

A hardware store owner, who is neither a real estate licensee nor a licensed or certified appraiser, was appointed by the court to appraise another hardware store. The person can

Accepted Answer

be compensated for the appraisal.

Answer

Individuals appointed by a court to perform an appraisal are generally exempt from real estate appraiser licensing requirements. When acting under court order, their authority stems from the judicial appointment, not from a state professional license. Therefore, the hardware store owner can be compensated for the appraisal performed under court appointment without holding a specific appraisal license.

Real Estate License Practice Test

Real Estate License Practice Test

Real Estate Practice Exam 1