CHAMPIONS REAL ESTATE EXAM :LAW OF AGENCY
ACTUAL EXAM NEWEST VERSION 2026-2027 EXPECTED
QUESTION AND CORRECT ANSWER FROM VERIFIED
SOURCES RATED A GRADE.
In the above transaction, Broker Bob will:
A) Remain neutral and refrain from providing advice and opinion to
either party.
B) Provide advice and opinions to both parties as long as he is fair to
each.
C) Provide advice and opinions to either party as he may choose.
D) Act as a dual agent.
Correct Answer: A) Remain neutral and refrain from providing advice
and opinion to either party.
Rationale
When a broker acts as an intermediary in a transaction where both the
buyer and seller are represented by agents within the same firm, the
broker must remain neutral and refrain from providing advice or
opinions to either party. This neutrality ensures that the broker does
not favor one party over the other and maintains the integrity of the
intermediary relationship. The broker cannot provide advice to both
parties (B) because that would compromise neutrality. The broker
cannot choose which party to advise (C), and dual agency (D) is not the
correct term for this scenario in Texas; the correct term is intermediary.
The nurse should also be aware that the broker's duty in an
intermediary relationship is to facilitate the transaction without
advocating for either side.
,DIF: Cognitive Level: Apply (Application)
TOP: Real Estate Agency
MSC: NCLEX: Safe and Effective Care Environment
The Information About Brokerage Services (IABS) should contain:
A) How the broker will be compensated.
B) The legal description of the property.
C) The terms of the purchase agreement.
D) The seller's disclosure notice.
Correct Answer: A) How the broker will be compensated.
Rationale
The IABS form is required by the Texas Real Estate Commission (TREC)
to be provided to buyers and sellers at the first substantive discussion of
a real estate transaction. It must include information about how the
broker will be compensated, as well as the types of agency relationships
available. The legal description of the property (B) is in the listing
agreement. The terms of the purchase agreement (C) are in the offer.
The seller's disclosure notice (D) is a separate document. The nurse
should also be aware that the IABS form must be in at least 10-point
type and contain the exact language prescribed by the License Act.
DIF: Cognitive Level: Understand (Comprehension)
TOP: Real Estate Disclosure
MSC: NCLEX: Safe and Effective Care Environment
,Broker Steve, having no agents, is a solo practitioner. He has a client
buyer that wants to purchase one of his listings. The process that Broker
Steve must use is:
A) Intermediary without appointments.
B) Transaction brokerage.
C) Intermediary with appointments.
D) Dual agency.
Correct Answer: A) Intermediary without appointments.
Rationale
When a broker is a solo practitioner and has both the listing and a buyer
client for that property, the broker must act as an intermediary without
appointments. In this scenario, the broker cannot appoint associates
because there are none. The broker must remain neutral and cannot
provide advice to either party. Transaction brokerage (B) is not
recognized in Texas. Intermediary with appointments (C) requires the
broker to have other agents to appoint. Dual agency (D) is not the
correct term in Texas; dual agency is used in other states but is not a
recognized relationship in Texas. The nurse should also be aware that
written consent is required for the broker to act as an intermediary.
DIF: Cognitive Level: Apply (Application)
TOP: Real Estate Agency
MSC: NCLEX: Safe and Effective Care Environment
A fiduciary relationship is based on:
A) Trust.
B) Contract.
, C) Law.
D) Compensation.
Correct Answer: A) Trust.
Rationale
A fiduciary relationship is based on trust, where the fiduciary (agent) is
obligated to act in the best interest of the principal (client). This
relationship is characterized by good faith, loyalty, and full disclosure.
While a contract (B) may formalize the relationship, the foundation is
trust. Law (C) and compensation (D) are not the basis of the fiduciary
relationship. The nurse should also be aware that fiduciaries are held to
the highest degree of good faith and are required to exclude selfish
interests.
DIF: Cognitive Level: Understand (Comprehension)
TOP: Fiduciary Duty
MSC: NCLEX: Safe and Effective Care Environment
Agent Joe at ABC Realty has a listing. Agent Sean at City Realty has a
buyer who wishes to purchase Joe's listing. The buyer that Agent Sean is
working with has chosen to not enter into an agency relationship with
City Realty. In the above transaction, who is representing the buyer?
A) Nobody, because the buyer is a customer.
B) City Realty because the buyer is a client.
C) ABC Realty.
D) Agent Sean because he is working with the buyer.
Correct Answer: A) Nobody, because the buyer is a customer.
ACTUAL EXAM NEWEST VERSION 2026-2027 EXPECTED
QUESTION AND CORRECT ANSWER FROM VERIFIED
SOURCES RATED A GRADE.
In the above transaction, Broker Bob will:
A) Remain neutral and refrain from providing advice and opinion to
either party.
B) Provide advice and opinions to both parties as long as he is fair to
each.
C) Provide advice and opinions to either party as he may choose.
D) Act as a dual agent.
Correct Answer: A) Remain neutral and refrain from providing advice
and opinion to either party.
Rationale
When a broker acts as an intermediary in a transaction where both the
buyer and seller are represented by agents within the same firm, the
broker must remain neutral and refrain from providing advice or
opinions to either party. This neutrality ensures that the broker does
not favor one party over the other and maintains the integrity of the
intermediary relationship. The broker cannot provide advice to both
parties (B) because that would compromise neutrality. The broker
cannot choose which party to advise (C), and dual agency (D) is not the
correct term for this scenario in Texas; the correct term is intermediary.
The nurse should also be aware that the broker's duty in an
intermediary relationship is to facilitate the transaction without
advocating for either side.
,DIF: Cognitive Level: Apply (Application)
TOP: Real Estate Agency
MSC: NCLEX: Safe and Effective Care Environment
The Information About Brokerage Services (IABS) should contain:
A) How the broker will be compensated.
B) The legal description of the property.
C) The terms of the purchase agreement.
D) The seller's disclosure notice.
Correct Answer: A) How the broker will be compensated.
Rationale
The IABS form is required by the Texas Real Estate Commission (TREC)
to be provided to buyers and sellers at the first substantive discussion of
a real estate transaction. It must include information about how the
broker will be compensated, as well as the types of agency relationships
available. The legal description of the property (B) is in the listing
agreement. The terms of the purchase agreement (C) are in the offer.
The seller's disclosure notice (D) is a separate document. The nurse
should also be aware that the IABS form must be in at least 10-point
type and contain the exact language prescribed by the License Act.
DIF: Cognitive Level: Understand (Comprehension)
TOP: Real Estate Disclosure
MSC: NCLEX: Safe and Effective Care Environment
,Broker Steve, having no agents, is a solo practitioner. He has a client
buyer that wants to purchase one of his listings. The process that Broker
Steve must use is:
A) Intermediary without appointments.
B) Transaction brokerage.
C) Intermediary with appointments.
D) Dual agency.
Correct Answer: A) Intermediary without appointments.
Rationale
When a broker is a solo practitioner and has both the listing and a buyer
client for that property, the broker must act as an intermediary without
appointments. In this scenario, the broker cannot appoint associates
because there are none. The broker must remain neutral and cannot
provide advice to either party. Transaction brokerage (B) is not
recognized in Texas. Intermediary with appointments (C) requires the
broker to have other agents to appoint. Dual agency (D) is not the
correct term in Texas; dual agency is used in other states but is not a
recognized relationship in Texas. The nurse should also be aware that
written consent is required for the broker to act as an intermediary.
DIF: Cognitive Level: Apply (Application)
TOP: Real Estate Agency
MSC: NCLEX: Safe and Effective Care Environment
A fiduciary relationship is based on:
A) Trust.
B) Contract.
, C) Law.
D) Compensation.
Correct Answer: A) Trust.
Rationale
A fiduciary relationship is based on trust, where the fiduciary (agent) is
obligated to act in the best interest of the principal (client). This
relationship is characterized by good faith, loyalty, and full disclosure.
While a contract (B) may formalize the relationship, the foundation is
trust. Law (C) and compensation (D) are not the basis of the fiduciary
relationship. The nurse should also be aware that fiduciaries are held to
the highest degree of good faith and are required to exclude selfish
interests.
DIF: Cognitive Level: Understand (Comprehension)
TOP: Fiduciary Duty
MSC: NCLEX: Safe and Effective Care Environment
Agent Joe at ABC Realty has a listing. Agent Sean at City Realty has a
buyer who wishes to purchase Joe's listing. The buyer that Agent Sean is
working with has chosen to not enter into an agency relationship with
City Realty. In the above transaction, who is representing the buyer?
A) Nobody, because the buyer is a customer.
B) City Realty because the buyer is a client.
C) ABC Realty.
D) Agent Sean because he is working with the buyer.
Correct Answer: A) Nobody, because the buyer is a customer.
