Nancy just hired her sister, real estate licensee Grace, to list her property. Jason schedules a showing for his client, who’s interested in Nancy’s property. What needs to take place?
Grace doesn’t need to do anything special, since she doesn’t own the property.
Grace must terminate her contract with Nancy, since she can’t represent a family member.
Grace needs to disclose in writing to Jason and his client that the property is owned by a family member.
Grace needs to keep the fact that the property is owned by her sister confidential.
According to the NAR Code of Ethics, what must a licensee do when preparing a CMA for a consumer?
Have an appraiser sign off on the price before it’s presented.
Hire a home inspector to physically inspect the property.
Hire an appraiser to value the property.
Make a statement that the opinion isn’t an appraisal.
Susan is a real estate licensee. Her mother is moving to a facility for active seniors and has asked Susan to sell her home. What information does Susan need to disclose to prospective buyers?
She is related to the seller (her mother).
Susan doesn’t need to disclose any of these things.
Susan’s father passed away in the house.
The seller is moving to a senior living facility.
Which of the following actions concerning tenant rights should real estate licensees take?
Advise landlords on their legal rights and responsibilities to tenants under the law.
Advise tenants on their legal rights and responsibilities under the law.
Ignore tenants’ legal rights.
Learn and understand tenants’ legal rights.
Chester is moving on up! He and his wife are ready to sell their condo and purchase a new place. Chester is a real estate licensee and will list the property himself. What must Chester disclose to prospective buyers?
Chester doesn’t need to disclose anything to buyers.
He owns the property.
The sellers are eager to sell.
The sellers will not accept any offers below $300,000.
Although the seller client didn’t approve it, a licensee placed a for-sale sign in the yard of a vacant home. Is this allowed?
No, the client’s written permission is required.
No, the neighborhood’s HOA rules might now allow it.
Yes, listing agent has the right to place a sign on the properties that are listed.
Yes, since the owner has moved, the licensee can make decisions related to the property.
Regarding documentation, which of the following actions can help a licensee avoid being accused of unauthorized practice of law?
Disclosing in writing to all parties in a transaction that the licensee isn’t a licensed attorney, so there’s no licensee liability
Having a designated broker review and notarize all completed contracts
Having a designated broker write all contracts from scratch to make them specific to each transaction
Using approved fill-in-the-blank forms
A client asks about spots on the ceiling during a real estate showing. What should the licensee do?
Climb on the roof and perform an inspection.
Hire a home inspector to physically inspect the property.
Suggest the client contact a roofing expert to make a determination.
Tell the client the spots indicate a roof leak.
Ideally, what guides real estate licensees’ behavior?
Ethics and compensation
Laws and compensation
Laws and ethics
Motives and ethics
Which of these actions is allowed and helps the licensee to avoid illegally practicing law?
Advising a landlord client of his legal rights and responsibilities
Charging a $10 scrivener’s fee for preparing transaction documents
Filling in blanks on an association-approved purchase contract
Striking provisions in a contract that don’t apply to a transaction
A licensee filled in the blanks on a standard form used in their brokerage firm. Is this okay?
No, because they are not an attorney, he shouldn’t prepare contracts.
No, they should have his client complete any forms.
Yes, licensees can use standard forms provided by the brokerage or approved by an attorney.
Yes, real estate licensees may draft contracts and fill in blanks on existing contracts.
Daniel has several properties listed around town. He receives a call from a prospective buyer who is very interested in one of the properties and wants to schedule a showing. What should Daniel do?
Assume the buyer understands that Daniel is the seller’s agent.
Disclose his agency relationship with the seller to the prospective buyer.
Refer any questions about the property to the seller.
Schedule the showing.
When must an agent disclose an agency relationship to an unrepresented transaction party?
At closing
At first substantive contact
Relationships don’t need to be disclosed
When asked about the relationship
Which of the following actions is against the NAR Code of Ethics?
Including the brokerage name and main phone number, in addition to a licensee’s own name and phone number on an advertisement
Making a reasonable effort to ensure all parties to a written agreement have a copy of the agreement
Preparing a written agreement that accurately states a purchase price
Preparing a written agreement that falsely states a purchase price
Your buyer client is preparing an offer on a property. They want to make sure their offer stands out above all others and is accepted, so they discuss waiving the inspection contingency with you. What should you do?
Encourage the buyer to get an inspection, and if they still want to waive it, put it in writing that you advised against waiving the inspection and have them sign.
Follow the buyer’s wishes without question.
Ignore the buyer’s request to waive the inspection.
Personally perform an inspection.
Charles, a real estate professional, has just finished touring a property he’d like to list for sale. When talking with the owner about the property and comparing it to other properties recently sold in the area, he tells the owner he appraises the property at a value of $350,000. What, if anything, did Charles do wrong?
He inspected the property.
He offered an opinion about the value of the property.
He referred to his opinion on the value of the property as an appraisal.
He talked to the owner without having a listing agreement in place.
Jasmine is in the market for a new property for her, her partner, and their young child. Tanner is Jasmine’s agent and has shown her several properties. Even though several properties meet the criteria his client is seeking, Tanner has intentionally weeded out properties close to the local college campus, because he doesn’t think the location would be suitable for a family with young children. What, if anything, has Tanner done wrong?
Tanner has discriminated against Jasmine using familial status as a reason for not showing her properties.
Tanner hasn’t involved Jasmine’s partner in the search process.
Tanner hasn’t received upfront payment for his services.
Tanner is acting within his expertise as Jasmine’s agent.
A property is listed as having four bedrooms and two-and-a-half bathrooms. However, when showing your buyer clients the property, you only count three bedrooms. As their agent, what should you do as part of your due diligence?
Call the police.
Demand the homeowner build another bedroom.
Ignore the discrepancy.
Investigate this discrepancy.
What should a listing agent do when two formal written offers for less than the listing price come through?
Present both offers to the seller.
Present the higher offer to the seller.
Present the lower offer to the seller.
Tell the buyer’s agent to submit new offers closer to the listing price
In which of these situations does the licensee have a disclosable ownership interest in the property?
Carson represents both the buyer and the seller in a transactions.
Kennedy is representing his LLC in the purchase of a commercial building.
Rebecca is listing her neighbor’s vacation home.
Roger is listing a property that he sold to the current owner eight years ago.
A real estate licensee is preparing a sale agreement that will include an unusual circumstance. What’s their best course of action?
Consult an attorney.
Create his own forms.
Use an existing form and write an addendum that covers the unusual circumstance.
Use existing forms but modify the language to address the unusual circumstance.
According to the NAR Code of Ethics, what is a licensee’s responsibility related to written offers on a listing?
A licensee is only required to present formal written offers that are equal to or more than the listing price.
A licensee is only required to present formal written offers within a certain range of the listing price of the property.
All formal written offers the licensee receives must be presented to the owner unless the owner has accepted a previous offer.
All formal written offers the licensee receives must be presented to the owner until closing or execution of a lease unless the client waives this obligation in writing.
What must a licensee do when selling their own property, according to the NAR Code of Ethics?
Disclose the interest to all parties to the transaction.
Offer cooperating broker compensation.
Offer the property for sale within the firm before offering it to the general public.
Reduce the commission by half.
In addition to serving as the listing agent for several clients, you’re also the listing agent for your own house which is for sale. You receive a call from another licensee who wants to show her buyer client your house. What must you immediately disclose to the buyer’s agent and buyer?
The house may have been an orphanage 80 years ago.
You’d sell for far lower than the current asking price.
You own the property.
Your housemate had Covid last month.
While working with a buyer client, the licensee filled in the blanks on the purchase agreement, drafted an early occupancy addendum, and assured his buyer that she was “fully protected” and would get her earnest money back if the sale didn’t close. He encouraged her to hire an attorney to review the contract and addendum, and then invoiced her for a nominal $15 fee to prepare transaction documents. Which of the following tasks was the licensee legally permitted to do?
Charge a fee for preparing legal documents
Draft the early occupancy addendum
Fill in the contract blanks
Interpret the contract provisions regarding the buyer’s full protection and getting her earnest money returned
A licensee and their buyer client are reviewing the client’s offer before they submit it to the seller. Which one of these actions may the licensee take without potentially crossing into the unauthorized practice of law?
Draft their own offer form.
Strike through any paragraphs the buyer client doesn’t like, even the ones required by federal or state law.
Tell the buyer client that hiring an attorney to review the contract would be a waste of money since the licensee is perfectly qualified to explain the legal ramifications of the contract terms.
Use standard, approved language in contingencies, addenda, and additional provision areas.
Bethenney is Jason’s agent. Jason made an offer on a property and wrote an earnest money check, which he gave to Bethenney. What should Bethenney do with the check?
Cash the check and give half to her broker.
Follow brokerage procedure for handling monies entrusted to agents by clients.
Give it back to Jason to deposit in his bank.
Go on a shopping spree.
According to the NAR Code of Ethics, the following characteristics must not be used to discriminate: race, national origin, religion, color, familial status, disability, sex, sexual orientation, color and _________.
Gender identity
Military status
Occupation
Political affiliation
Which of the following is considered unauthorized practice of law?
Explaining a clause in a contract to a client
Interpreting the legal consequences of a client’s actions
Using existing forms an attorney has reviewed
Using standard language for addenda
What is a code of ethics?
Guidelines for conduct
Laws that licensees must abide by
Rules used by law enforcement officers
Something licensees don’t need to worry about unless they join the NAR
Is it ethical for a transaction to offer compensation to cooperating agents if the sale closes in 40 days?
No, it’s never ethical for a licensee to accept compensation from more than one party.
Yes, but only if all of the involved parties have full knowledge and provide consent.
Yes, but only if the client has full knowledge of the compensation arrangement and provides consent.
Yes, licensees can receive compensation from multiple parties in the transaction.
Which of the following actions is representative of an agent’s due diligence and ethical behavior?
A buyer client wants to waive an inspection. The agent follows the request without question.
An agent deposits a buyer client’s earnest money check into her personal bank account.
An agent notices a discrepancy between what the homeowner says and what the property shows, so he ignores it.
An agent notices a discrepancy between what the homeowner says and what the property shows, so he investigates.
What’s an agent’s responsibility related to home inspections?
To encourage buyers to waive an inspection
To hire an inspector for the buyers
To perform them
To recommend a buyer have a professional inspection performed
A licensee is working with a buyer client who wants a special clause added to his purchase contract. How should the licensee handle this?
Ask the client to draft the clause, then insert it into the contract.
Draft the clause and have the client run it by his attorney.
Instruct the client to hire an attorney to draft the clause.
Tell the client that he doesn’t need that particular contract clause.
You’re walking through a property with a new seller client. The seller tells you that the property is serviced by the public sewer system, but when walking up the drive you noticed the access hatch for a septic system. What should you do?
Believe the homeowner when he says the property is on public sewer, because he’d know best.
Hire a private investigator to look into it.
Inquire about the homeowner’s claim to ensure the property really is on public sewer.
Terminate the listing, as the homeowner is obviously not being truthful.
What actions can licensees take related to signs?
They can only place signs on property they own.
They can place signs on an owner’s property with the owner’s written consent.
They can place signs on properties for which they are the listing agent, with or without the owner’s permission.
They can’t place signs anywhere.
Unauthorized practice of law and acting outside the scope of one’s expertise are similar issues. Which of the following circumstances specifically relates to the unauthorized practice of law?
Predicting a specific tax increase or decrease
Predicting the return on investment for a rental property
Recommending specific investments
Writing contract addenda or additional provisions that cover unfamiliar circumstances
What is a licensee’s responsibility related to the paperwork in a real estate transaction?
Make sure all parties have copies of the paperwork and that it’s retained for the statutory period.
Make three copies of all documents.
Secure paperwork in the broker’s vehicle.
Shred documents once the transaction is complete.
According to the NAR Code of Ethics, what responsibility do licensees have related to material facts?
Accept all client statements concerning the property as material fact.
Make a reasonable effort to ascertain all material facts concerning each property for which an agency is accepted.
Make extraordinary efforts to ascertain all material facts concerning each property for which an agency is accepted.
They don’t have any responsibilities related to material facts.
According to Article 7 of the NAR Code of Ethics, which of these statements is most accurate when accepting compensation from parties to a transaction?
A licensee shall not accept compensation directly from more than one party to a transaction.
A licensee shall not accept compensation from anyone regardless of consent.
A licensee shall not accept compensation from more than one party to a transaction without consent from the client.
A licensee shall not accept compensation from more than one party to a transaction without the full knowledge and consent of all parties.
6sect.unit2.CeSh.PreLic.Qonly.txt
Which of the following is an element of positive misrepresentation?
The false statement caused harm to the person who relied upon it.
The false statement was not relied upon.
The person making the false statement didn’t know it was false.
The person relying on the false information believes it to be false.
Which of these describes self-dealing?
A licensee lists her own property and informs all parties that she’s licensed.
A licensee sells a property but forgets some of the paperwork.
A licensee sells a property with the understanding that she will make all pertinent decisions on her client’s behalf.
A licensee sells her own property without informing all parties that she’s licensed.
Lenny is the listing agent for a property built in 1901. Old homes are very desirable in this area, and Lenny is expecting a fair amount of interest and multiple offers at the planned open house. Which action best demonstrates good faith to his seller client in this scenario?
Lenny presents all formal written offers as they come in, discussing the merits and drawbacks of each, but ultimately lets the owner decide what action to take.
Lenny presents only the best offer to the owner.
Lenny reviews the offers that have come in and presents the top candidates to the owner.
Lenny waits a week after the open house before presenting offers to let as many offers come in as possible.
One element of misrepresentation is when ______.
No one relied on the false statement
The false statement caused harm to the person who relied upon it
The false statement did not cause harm to the person who relied upon it
The person relying on the false information knew it to be false
You recently listed an historic home more than 100 years old, which was the site of a suicide many years ago. A spirit is believed to roam the grounds, but the current owner doesn’t want this shared with prospective buyers. Which action best demonstrates good faith?
You follow the owner’s wishes because the suicide and haunting don’t need to be disclosed.
You tell the owner you don’t have to disclose that the property was the site of a suicide, but do need to disclose the ghost.
You tell the owner you don’t have to disclose the ghost, but do need to tell buyers that a suicide occurred on the property.
You tell the owner you must disclose whether a property was the site of a suicide or homicide.
What is the difference between positive misrepresentation and inadvertent misrepresentation?
Positive involves a beneficial outcome; inadvertent results in a negative outcome.
Positive means intentional; inadvertent means it wasn’t intentional.
Positive means made by the seller’s side; inadvertent is misrepresentation by the buyer’s side.
Positive means the parties agreed to the facts; inadvertent means the parties disputed the facts.
Which of the following is an example of self-dealing?
A licensee lists his property with another firm and sells his home without informing buyers of his license status.
A licensee purchases a listing through his cousin but does not inform the seller.
A licensee purchases a property for personal profit.
A licensee sells a property for personal profit.
Which of the following is true of the harm caused to a person relying on false information?
The harm can be physical or monetary.
The harm must be monetary.
The harm must be physical.
The monetary harm must exceed a specific dollar threshold.
Which of the following is NOT a characteristic of intentional misrepresentation?
The fact that the person who falsely represented the material fact was aware of its falsity
The false statement or representation of a material fact
The person who falsely represented the material fact did it innocently
The person who relied on the false information is harmed
Which of the following is true about positive misrepresentation?
A principal was harmed by the misstatement.
The misstatement ended in a positive outcome.
The misstatement wasn’t relied upon.
The person making the misstatement did not know it was false.
Isabelle just took on a new listing, in which the owner is selling because a new freeway is being built right behind the house. The owner is concerned about the noise and other activity the freeway will bring, but doesn’t want prospective buyers to know this. Which action best demonstrates good faith in this scenario?
Isabelle decides not to take the listing, since the property will be impossible to sell.
Isabelle takes the listing and, per her client’s instructions, doesn’t tell prospective buyers about the planned road construction.
Isabelle takes the listing, tells the seller she won’t discuss the new freeway, then discloses this fact to prospective buyers, since it’s material to the property.
Isabelle tells the owner that this is a material fact related to the property that must be disclosed to prospective buyers, or Isabelle will not take the listing.
Which of these is an example of a material fact?
The fact doesn’t influence the value of the property.
The fact would not have resulted in a different outcome.
The seller would have accepted an offer regardless of the fact.
The seller would not have accepted an offer had he or she known the fact.
What is puffery?
A home’s list price is inflated to make it appear more luxurious than it really is
An intentional or inadvertent misstatement of fact
A real estate licensee boasts about the price for which he can sell a home
A statement of opinion or exaggeration that’s generally understood not to be a statement of fact
Monica is acting as a listing agent for her friend, Brian. She and Brian met when they both began attending a support group for those living with HIV. Which of the following best represents an action Monica should take?
Monica cannot tell others about Brian’s HIV status.
Monica should not be the listing agent for her friend.
Monica should purchase Brian’s property.
Monica should tell all prospective buyers that the seller has HIV.
Which of the following statements is true of a material fact?
A material fact is known only to real estate licensees.
A material fact is only related to the condition of a property.
A material fact need not be disclosed to all parties.
A material fact would cause a reasonable person to either act or not act, if that fact were known.
How is misrepresentation different from puffery?
Misrepresentation doesn’t exaggerate
Misrepresentation falsely represents material facts that a reasonable person would rely upon
Puffery doesn’t make wild claims
Puffery is used to help sell a property
What is misrepresentation?
An inadvertent misstatement of fact only
An intentional misstatement of fact only
An intentional or inadvertent misstatement of fact
A statement of opinion or exaggeration that’s generally understood to not be a statement of fact
One element of intentional misrepresentation is that ______.
No one relied on the false statement
The false statement did not cause harm to the person who relied upon it
The person making the false statement knew it was false (or should have known)
The person relying on the false information knew it to be false
Erica describes the condo she’s listed as being “the best unit in the building.” What’s this an example of?
Intentional fraud
Lying
Positive misrepresentation
Puffery
Which of the following isn’t an element of intentional misrepresentation?
When it includes a false action or statement.
When it’s a key piece to the purchase of a property.
When it’s committed against a buyer by an agent.
When it’s witnessed or validated by multiple people.
Which of the following is true about inadvertent misrepresentation?
A false statement was made.
No harm was done to anyone.
The person hearing the false statement did not rely upon it.
The person making the false statement knew it was false.
In order for misrepresentation to occur, what must happen to the person who relied upon it?
He must be harmed.
He must believe the statement to be false.
He must not be harmed.
He must research all claims.
Broker Joseph tells his clients that the property they’re interested in purchasing is zoned as residential, even though he knows it’s zoned as commercial. This violation is an example of ______.
Contractual interference
Failing to disclose an agency relationship
Misrepresenting or omitting
Performing services that qualify as practice of law
You’re the listing agent for a property where an unfortunate series of deaths took place. Which action best demonstrates good faith related to the disclosure of these events?
You lie about the events when prospective buyers ask.
You tell all prospective buyers about the events.
You tell prospective buyers the truth about the events when asked.
You tell the seller the property will be difficult to sell, and suggest drastically reducing the list price.
What types of misrepresentation exist?
Blatant and hidden
Blatant and unintentional
Intentional and accidental
Positive and unintentional
You make a listing presentation to a client, then learn she’s meeting with a few more licensees before deciding which licensee gets her listing. You know these competitors. Which action best demonstrates good faith?
You contact the other licensees to try to convince them not to work with the seller.
You tell the seller all of the dirt you have on the other licensees.
You tell the seller you hope she’ll decide to work with you.
You walk away from the listing.
Kennedy lists Heather’s home. He noticed evidence of termites, and asked Heather about it. She said a pest control company solved the problem. What can Kennedy do to reduce the risk of misrepresentation?
Ask for the pest control company report from Heather.
Defer questions to Heather.
List it the property as free of pests.
She has done everything she needs to do.
A licensee stating that a property is “guaranteed to increase in value over the next five years” is an example of ______.
A fact
An aphorism
Misrepresentation
Puffery
Which of the following is an example of puffery?
“I love this house, and I know it will appreciate better than the average house its size!”
“This apartment will definitely increase in value. You can’t lose!”
“This condo has the best view this side of the river!”
“This home is built to last. You won’t have maintenance issues for a decade, at least!”