Real Estate License Practice Test (Brokerage Responsibility & Agency Management) Flashcards

What is the legal status of listing brokers' and sellers' agency relationships?

Answer: Specific agency.

The agency relationship between a listing broker and a seller is classified as a specific agency. This means the broker is authorized to perform a specific act or transaction, which in this case is selling the seller's property. The broker's authority is limited to this particular task, rather than having broad authority over all the seller's affairs.

Irene is the owner of a warehouse and has decided to sell it on the open market. Brokers X, Y, and Z have been contacted to sell it on her behalf. Who gets the commission if Broker Y closes the deal?

Answer: broker Y

In an open listing agreement, the owner retains the right to sell the property themselves or list it with multiple brokers. A commission is only paid to the broker who successfully finds a ready, willing, and able buyer and closes the deal. Therefore, if Broker Y closes the deal, Broker Y is the one who earns the commission.

Susan David is putting her two-bedroom, one-bathroom condo on the market. With a local real estate licensee, she signed exclusive right-to-sell listing agreement. Which of the following statements accurately describes the agency relationship that this sort of listing agreement creates?

Answer: Express agency.

An exclusive right-to-sell listing agreement creates an express agency relationship. This means the agency relationship is formed through a clear, written contract between the principal (seller) and the agent (broker), explicitly outlining the terms, duties, and duration of the agreement. It is not implied but rather formally stated and agreed upon by both parties.

When there is a delegation of authority to perform a single act, a ________ agency is formed.

Answer: special agent

When there is a delegation of authority to perform a single, specific act, a special agency is formed. In real estate, a listing broker acting for a seller is typically a special agent, authorized only to market and sell a particular property. This contrasts with a general agent, who has broader authority over a range of matters for the principal.

In an open listing, who takes the biggest risk?

Answer: the agent

In an open listing, the agent takes the biggest risk because they are only paid if they are the procuring cause of the sale. If another agent or even the owner sells the property, the agent who invested time and resources in marketing the property receives no commission. This contrasts with exclusive listings, where the agent is more assured of compensation.

Except for _____________, all of the following are agency relationships.

Answer: the real estate salesperson-buyer relationship

The relationship between a real estate salesperson and a buyer is not typically an agency relationship in the direct sense. A real estate salesperson is an agent of their employing broker, and the broker, in turn, forms an agency relationship with the buyer (as a buyer's agent) or seller (as a seller's agent). The salesperson acts on behalf of the broker, not directly as an agent of the buyer.

Which of the following is a personal property?

Answer: A deed

Personal property, also known as chattel, refers to items that are movable and not permanently attached to real estate. A deed, while a legal document related to real estate, is itself a movable piece of paper and therefore considered personal property. Physical improvements, growing trees (unless harvested), and land are all examples of real property.

A "company dollar" in the context of a real estate brokerage firm is:

Answer: After paying licensee commissions, the brokerage firm's profit.

The 'company dollar' in a real estate brokerage firm represents the profit remaining after all commissions have been paid to the licensee agents. This amount is what the brokerage uses to cover its operating expenses, such as rent, utilities, staff salaries, and marketing, and ultimately contributes to the firm's net profit.

A wealthy investor who is legally competent is selling a major commercial property. One of the state's busiest and most profitable brokerage businesses represents the 35-year-old investor. The transaction's closing date falls on an important overseas business trip that the investor cannot postpone or cancel. The investor signs a paper permitting a trusted friend to sign all documents pertaining to the sale of the commercial property before leaving on the business trip. The investor's friend owes fiduciary duties to the investor after accepting the appointment. Which of the following is the name of the document signed by the investor?

Answer: Power of Attorney

A Power of Attorney (POA) is a legal document that grants one person (the agent or attorney-in-fact) the authority to act on behalf of another person (the principal) in specified matters. In this scenario, the investor signed a POA to allow a trusted friend to sign documents related to the property sale, enabling the transaction to proceed in the investor's absence.

When a listing agreement is signed, a broker collects a non-refundable fee from the seller to cover the cost of advertising the property for sale. An "advance fee" is a type of fee that is considered trust funds.

Answer: B) TRUE

TRUE. An advance fee collected by a broker from a seller to cover advertising costs, especially if non-refundable, is considered trust funds. These funds must be deposited into a trust account and handled according to specific regulations to ensure they are used only for the agreed-upon purpose and properly accounted for, protecting the client's money.

Patrick's house was foreclosed upon. Patrick was understandably unhappy, and shortly before being asked to depart the house, he removed all of the plumbing fixtures, lighting fixtures, and built-in appliances. The listing agent saw that the fixtures had been removed when Patrick's lender offered the house for sale. What is the name of the procedure for removing the fixtures from the house?

Answer: severance

Severance is the process of detaching an item from real property, thereby changing its status from real property to personal property. When Patrick removed the plumbing, lighting, and built-in appliances, he was severing these fixtures from the house. These items, once considered part of the real estate, became personal property upon removal.

A listing agreement is formed between a seller and a real estate licensee for a valued property in a desirable neighborhood. The listing agreement is a bilateral arrangement with a defined termination date. The licensee acknowledges that if the seller finds a buyer, the licensee will not be paid a commission. What does the listing agreement's name stand for?

Answer: Exclusive agency

This scenario describes an exclusive agency listing. In this type of agreement, the seller grants one broker the exclusive right to sell the property, but the seller reserves the right to sell the property themselves without paying a commission to the broker. If the seller finds the buyer, the licensee will not be paid, distinguishing it from an exclusive right-to-sell agreement.

Many similarities exist between the lessee of an apartment and the owner of a condominium. Which of the following statements applies to both?

Answer: They each own a piece of real estate.

Both a condominium owner and a lessee of an apartment have a recognized legal interest in a piece of real estate. A condominium owner holds a fee simple interest in their unit, which is real property. A lessee holds a leasehold estate, which, while legally classified as personal property (chattel real), grants them a possessory interest and the right to use and occupy a specific piece of real estate.

JCS Realty, MPS Realty, and CDO Realty are among the agencies that have listed Anne's home. Anne has committed to pay a commission to the listing firm only if the firm finds a ready, willing, and able buyer and the sale is completed in each listing agreement. This is a ____________ type of listing.

Answer: an open listing

A property manager's primary responsibilities include maintaining the property, managing tenants, collecting rent, and keeping track of vacancies and local rental pricing. However, informing the building's owner of its market value is typically the role of a real estate appraiser or a broker providing a comparative market analysis, not a standard duty of a property manager.

Troy and Ruth were obligated to accept ownership to a home in the Hillyborugh subdivision under specific covenants, conditions, and restrictions (CC&Rs) when they opted to buy it. Their real estate agent indicated to them that they must adhere to the CC&Rs during the time of their ownership or risk losing it. Their property was a __________.

Answer: Fee simple defeasible

The correct preposition to use when describing reactions to a performance is 'about'. We have 'diverse reactions about Donna's performance' accurately conveys that the reactions concern or pertain to her performance. Other prepositions like 'towards' or 'at' would not fit the context as naturally.

The property manager's responsibilities do not include ________.

Answer: Informing the building's owner of its market value

The correct auxiliary verb to complete the sentence is 'will'. The sentence describes a future action that the subject 'She' intends to perform: 'She will go to the market as soon as it opens in the morning.' 'Will' indicates future tense and intention, making it the most appropriate choice.