Real Estate Sales Exam Agency Law and Fiduciary Duties 5 — Questions and Answers
Question 1: A real estate agent who represents a landlord and helps rent a property owes fiduciary duties to:
- The tenant, as the end consumer
- The landlord, as the principal (Correct answer)
- Both the landlord and tenant equally
- Neither party in a lease transaction
Correct answer: The landlord, as the principal
When hired by a landlord, the agent represents the landlord's interests and owes fiduciary duties exclusively to the landlord.
Question 2: Agency coupled with an interest means the agent:
- Is paid a commission based on the sale price
- Has a personal financial interest in the subject matter of the agency (Correct answer)
- Represents both buyer and seller
- Works under a supervising broker
Correct answer: Has a personal financial interest in the subject matter of the agency
Agency coupled with an interest exists when the agent has a personal stake in the property or transaction, making the agency irrevocable by the principal.
Question 3: Which statement about material facts is CORRECT?
- Only physical defects are material facts
- Material facts are limited to items found during inspection
- Any fact that would affect a reasonable person's decision to buy is material (Correct answer)
- Material facts are defined solely by the seller
Correct answer: Any fact that would affect a reasonable person's decision to buy is material
A material fact is any information that could reasonably affect a buyer's decision to purchase or the price they would pay, including physical, legal, and environmental conditions.
Question 4: When a listing agreement is signed, agency is created between the:
- Seller and buyer
- Broker and seller (Correct answer)
- Salesperson and seller
- MLS and seller
Correct answer: Broker and seller
A listing agreement is a contract between the seller and the broker (not the individual salesperson), establishing the agency relationship.
Question 5: A dual agent's duty of loyalty to each party is:
- The same as in exclusive representation
- Reduced because they represent both parties simultaneously (Correct answer)
- Completely eliminated in legal dual agency
- Transferred entirely to the broker
Correct answer: Reduced because they represent both parties simultaneously
In disclosed dual agency, the agent cannot advocate fully for either party's interests, so loyalty duties are necessarily limited for both clients.
Question 6: An agent who learns during a listing that the neighborhood is being rezoned to commercial must:
- Keep it confidential since it helps the seller
- Disclose it to potential buyers as a material fact (Correct answer)
- Wait until the rezoning is finalized before disclosing
- Only disclose if asked by the buyer directly
Correct answer: Disclose it to potential buyers as a material fact
A pending zoning change materially affects the property's use and value, requiring disclosure to prospective buyers regardless of whose interests it serves.
Question 7: In most states, an agency disclosure must be provided to clients:
- Only at closing
- At the first substantive contact, before any confidential information is exchanged (Correct answer)
- When the buyer makes an offer
- Only if the client requests it in writing
Correct answer: At the first substantive contact, before any confidential information is exchanged
Agency disclosure must occur at the earliest practical opportunity — typically at first meaningful contact — so clients understand who the agent represents before sharing sensitive information.
Real Estate Sales Exam Agency Law and Fiduciary Duties 5
A real estate agent who represents a landlord and helps rent a property owes fiduciary duties to: