Real Estate Sales Exam Agency Law and Fiduciary Duties 4

Question 1

A real estate agent who is also the owner of a property they are selling must disclose their:

Accepted Answer

Personal interest in the property to potential buyers

Answer

Agents who have a personal ownership interest in a property must disclose this fact to all potential buyers to avoid a conflict of interest.

Question 2

Which type of agency is created when a principal acts as though an agency exists, even though no formal agreement was made?

Accepted Answer

Apparent agency

Answer

Apparent agency (also called ostensible agency) arises when a principal's conduct leads a third party to reasonably believe an agency relationship exists.

Question 3

A seller's agent who steers buyers toward or away from neighborhoods based on racial composition violates:

Accepted Answer

The Fair Housing Act and fiduciary duties

Answer

Steering violates both the Fair Housing Act's anti-discrimination provisions and the agent's fiduciary duty of loyalty and care to clients.

Question 4

The principal in a real estate agency relationship is:

Accepted Answer

The client who hires and authorizes the agent to act on their behalf

Answer

The principal is the party who engages the agent and grants them authority to act on their behalf, which could be the seller, buyer, or landlord.

Question 5

An agent's fiduciary duty of obedience requires them to follow all lawful client instructions. Which instruction would the agent be RIGHT to refuse?

Accepted Answer

Do not disclose that the property is located in a flood zone

Answer

Failing to disclose a known material fact such as flood zone location violates state disclosure laws and the agent must refuse such instructions.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Agency Law and Fiduciary Duties 4