Real Estate License Law and Regulations Flashcards

Under the Sherman Antitrust Act, which practice among competing real estate brokers is illegal?

Answer: Price-fixing commission rates

Price-fixing — brokers agreeing to charge the same commission rates — violates the Sherman Antitrust Act and is a federal crime.

RESPA (Real Estate Settlement Procedures Act) primarily regulates:

Answer: Settlement costs and kickback prohibitions on federally related mortgage loans

RESPA governs settlement procedures for federally related mortgage loans and prohibits unearned fee kickbacks between settlement service providers.

What is the primary purpose of an earnest money deposit in a real estate transaction?

Answer: To demonstrate the buyer's good faith and bind the contract

Earnest money is a good-faith deposit made by the buyer to demonstrate serious intent and bind the purchase contract.

A licensee who practices real estate without a valid, active license is subject to:

Answer: Civil and criminal penalties, and loss of any earned commission

Practicing real estate without a valid license can result in civil fines, criminal charges, and forfeiture of any commissions earned.

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

Answer: Dual agency

Dual agency exists when one broker (or brokerage) represents both the buyer and seller in the same transaction, requiring informed written consent from both parties.

The National Association of REALTORS® Code of Ethics requires REALTORS® to place whose interests above their own?

Answer: The client's

The NAR Code of Ethics requires REALTORS® to protect and promote the interests of their client above their own personal interests.