FREE Real Estate Sales Agency Law and Fiduciary Duties Questions and Answers Flashcards

A buyer's agent learns that the buyer plans to offer $350,000 for a property but would pay up to $400,000. What is the agent's fiduciary obligation regarding this information?

Answer: Keep it confidential and not reveal it to the seller

A buyer's agent owes the duty of confidentiality and must not disclose the buyer's maximum price or negotiating strategy to the seller or seller's agent.

Which type of agency relationship is created when a real estate agent represents both the buyer and the seller in the same transaction?

Answer: Dual agency

Dual agency occurs when one agent or brokerage represents both the buyer and the seller in the same transaction, requiring informed written consent from both parties.

An agent who owes a fiduciary duty of obedience must do which of the following?

Answer: Follow all lawful instructions from the client

The duty of obedience requires an agent to follow all lawful instructions from the client, but an agent must never follow instructions that would violate the law.

A listing agent discovers that the property has a cracked foundation that the seller has not disclosed. What must the agent do?

Answer: Disclose the defect to prospective buyers

Material defects affecting property value or safety must be disclosed to all parties regardless of confidentiality obligations, as agents cannot conceal known material facts.

In a designated agency arrangement, which statement is TRUE?

Answer: The broker acts as a dual agent while individual agents represent separate clients

In designated agency, the broker assigns separate agents to represent the buyer and seller independently, while the broker typically maintains a supervisory dual agency role.

Which fiduciary duty requires an agent to place the client's interests above the interests of all other parties, including the agent's own interests?

Answer: Duty of loyalty

The duty of loyalty requires an agent to always prioritize the client's interests above those of all other parties, including the agent's own personal or financial interests.