Real Estate License Law and Regulations Flashcards

Under FIRPTA (Foreign Investment in Real Property Tax Act), when a foreign seller sells U.S. real property, the buyer must:

Answer: Withhold a percentage of the sales price and remit it to the IRS

FIRPTA requires buyers to withhold a percentage (typically 15%) of the gross sales price from a foreign seller and remit it to the IRS to cover potential capital gains tax.

Which government power allows a city to take private property for a public use project, provided just compensation is paid?

Answer: Eminent domain

Eminent domain is the government's constitutional authority to acquire private property for public use in exchange for fair (just) compensation.

A real estate licensee who makes a false statement in a license application may face:

Answer: License denial or revocation and possible criminal charges

Providing false information on a license application is grounds for denial or revocation of the license and can constitute fraud, leading to criminal liability.

Which type of listing agreement gives the broker the exclusive right to earn a commission regardless of who sells the property?

Answer: Exclusive right-to-sell listing

An exclusive right-to-sell listing entitles the broker to a commission even if the seller finds the buyer independently, providing the strongest protection for the broker.

The Real Estate Settlement Procedures Act (RESPA) requires lenders to provide borrowers with a Loan Estimate within how many business days of receiving a loan application?

Answer: 3 business days

Under RESPA and TRID rules, lenders must deliver the Loan Estimate to the borrower within three business days of receiving a completed loan application.

When a real estate agent receives an offer on a listed property, the agent's duty is to:

Answer: Present all offers to the seller promptly and honestly

Agents have a fiduciary duty to present all written offers to the seller promptly and in their entirety, regardless of the offer price.