ROCKWELL FUNDAMENTAL TEST PAPER EXAM
QUESTIONS AND ANSWERS RATED A+
✔✔Harrison, who works for Yates Realty, obtains a listing for a property and submits it
to the multiple listing service. Baker, who also works for the Yates firm, finds a buyer for
the property. In this situation: - ✔✔the designated broker for Yates Realty is a dual
agent, because it is an in-house sale
The designated broker for Yates Realty is a dual agent, since both Harrison and Baker
work for the Yates firm. Baker is only acting as a buyer's agent.
✔✔A cooperating agent is: - ✔✔any agent representing a party in the transaction
Cooperating agents are members of the listing firm's MLS (and the members of any
other MLS that is participating in the transaction).
✔✔Dual agency is: - ✔✔not improper if both principals give their informed, written
consent
Dual agency is legal only if both parties receive a dual agency disclosure and consent in
writing.
✔✔Which of the following statements about dual agency is false? - ✔✔Dual agency is
illegal in Washington
Dual agency is not illegal in Washington, although both parties must receive a dual
agency disclosure and consent in writing.
✔✔If a couple asks a broker how they should take title to property they are purchasing,
the broker should tell them: - ✔✔to consult an attorney
A licensee should never give legal advice, and telling someone how to take title is legal
advice.
✔✔In an in-house sale: - ✔✔the buyer and seller are brought together by agents
working for the same brokerage
In an in-house transaction, both the listing agent and selling agent work for the same
brokerage. The designated broker acts as a dual agent.
✔✔A real estate broker is: - ✔✔the agent of his designated broker
A real estate broker is an agent of his designated broker, and is a subagent of his client.
✔✔In a listing agreement, who is the principal? - ✔✔Seller
,A listing agreement creates an agency relationship between a seller (the principal) and
a designated broker (the agent).
✔✔In order to alleviate confusion among buyers and sellers regarding agency
representation issues, many states, including Washington, enacted laws that: -
✔✔require agents to disclose to the parties which party they are representing in the
transaction
Laws such as Washington's real estate agency law require real estate agents to
disclose which party or parties they represent in a transaction.
✔✔A buyer's agent is most commonly compensated by the: - ✔✔seller, through a
commission split
A buyer's agent typically receives half of the seller's commission, through a commission
split.
✔✔A licensee owes to all parties, regardless of whom the licensee represents, the duty
of: - ✔✔reasonable care and skill
All agents owe all parties the duty of reasonable care and skill. The duties of loyalty,
confidentiality, and disclosure of conflicts of interest are owed only to the agent's
principal.
✔✔In a typical real estate transaction, there is an agency relationship between the: -
✔✔seller (principal) and listing brokerage (agent)
Typically, the listing brokerage acts as an agent for the seller, who is the principal.
✔✔A seller's agent may disclose confidential information about her client: - ✔✔under
court order or subpoena
If a court orders disclosure of confidential information, the agent must do it; otherwise,
she would be in contempt of court.
✔✔A licensee has a duty to investigate: - ✔✔only those things that the licensee has
specifically agreed to investigate
A licensee has no duty of independent investigation and verification, other than those
items the agent has specifically agreed to investigate.
✔✔A principal entered into an agency agreement that was to last for a period of three
months. Two weeks later, the principal died of natural causes. Which of the following is
true? - ✔✔The agency relationship terminated automatically when the principal died
,Agency relationships always terminate immediately upon the death, incapacity, or
bankruptcy of either party.
✔✔The pamphlet on agency law: - ✔✔must be given to parties before a written
agreement is signed
Each party must receive the agency law pamphlet before either party signs an agency
agreement, signs an offer, consents to a dual agency, or waives any agency rights,
whichever of these events comes first.
✔✔A buyer's agent asks the listing agent for copies of the water and sewer bills for the
listed property. The listing agent: - ✔✔must obtain copies from the seller and give them
to the buyer's agent
A listing agent is obligated to disclose any material facts regarding the subject property.
Since the utility bills may reveal information that would have a negative effect on the
property's value, the agent should disclose the utility bills.
✔✔The owners of an apartment building hire a real estate brokerage as the property
manager. If the owners later sell the building, their agency relationship with the property
manager: - ✔✔terminates due to extinction of the subject matter
If the property in question is sold or destroyed, any agency related to that property is
extinguished.
✔✔The seller tells the agent to sell his property as is. The agent learns of a major
hidden defect. What should she do? - ✔✔Tell prospective buyers about the defect
If the defect would not be observable on casual inspection of the property, it is called a
latent defect and must be disclosed to any prospective purchaser.
✔✔Under Washington's real estate agency law, the Brokerage Relationships Act, if a
third party provides information to the agent: - ✔✔the principal is deemed to know the
information only if the agent actually discloses it to the principal
Because the imputed knowledge rule does not apply in Washington to real estate
transactions, the principal is not assumed to have knowledge of information known by
the agent unless she is actually told by the agent. An agent does not owe third parties
any duty of confidentiality or loyalty, but does owe those duties to his principal.
✔✔If a principal gives approval after the fact to unauthorized actions, an agency
relationship is established by: - ✔✔Ratification
, Approval of unauthorized actions after the fact is referred to as ratification.
✔✔A real estate broker who has taken a listing discovers that the dining room ceiling is
discolored, possibly because of a leaky roof. What should he do? - ✔✔Disclose the
potential problem to prospective purchasers
An agent must disclose any latent defects to prospective buyers. Evidence of a leaking
roof would be considered a latent defect.
✔✔The most common method for creating a seller agency relationship is: - ✔✔a written
listing agreement
Seller agency relationships are usually created through a written listing agreement.
✔✔A special agent is authorized to: - ✔✔Conduct a specific transaction
✔✔When an agent works as an independent contractor, it means: - ✔✔An independent
contractor sets her own hours, is not directly supervised, and is compensated by
commission instead of salary. While an independent contractor has some freedom in
how she performs her job, she is still accountable to her employer.
✔✔An agency relationship may terminate: - ✔✔with the mutual consent of the parties
The parties may mutually agree at any time to terminate an agency. It may also be
terminated through the revocation of the principal or the renunciation of the agent.
✔✔The most likely evidence of environmental contamination on a property would be: -
✔✔discolored soil and dying plants in the back yard
Discolored soil and dying plants would be a likely indicator of environmental
contamination, such as a leaking underground storage tank.
✔✔If a licensee chooses to act as a non-agent in a transaction, the licensee: - ✔✔still
owes general duties of disclosure, reasonable care, and accounting to both parties
Even when acting as a non-agent, a licensee owes general duties to all parties. These
include honesty and good faith, reasonable care and skill, presenting all written
communications, disclosure of material facts, and accounting.
✔✔A buyer asks the buyer's agent to write an offer on terms that don't match the listing
agreement. The buyer's agent refuses to write the offer and then, in writing, unilaterally
terminates the agency relationship with the buyer. The buyer's agent is: - ✔✔permitted
to unilaterally terminate the agency relationship
QUESTIONS AND ANSWERS RATED A+
✔✔Harrison, who works for Yates Realty, obtains a listing for a property and submits it
to the multiple listing service. Baker, who also works for the Yates firm, finds a buyer for
the property. In this situation: - ✔✔the designated broker for Yates Realty is a dual
agent, because it is an in-house sale
The designated broker for Yates Realty is a dual agent, since both Harrison and Baker
work for the Yates firm. Baker is only acting as a buyer's agent.
✔✔A cooperating agent is: - ✔✔any agent representing a party in the transaction
Cooperating agents are members of the listing firm's MLS (and the members of any
other MLS that is participating in the transaction).
✔✔Dual agency is: - ✔✔not improper if both principals give their informed, written
consent
Dual agency is legal only if both parties receive a dual agency disclosure and consent in
writing.
✔✔Which of the following statements about dual agency is false? - ✔✔Dual agency is
illegal in Washington
Dual agency is not illegal in Washington, although both parties must receive a dual
agency disclosure and consent in writing.
✔✔If a couple asks a broker how they should take title to property they are purchasing,
the broker should tell them: - ✔✔to consult an attorney
A licensee should never give legal advice, and telling someone how to take title is legal
advice.
✔✔In an in-house sale: - ✔✔the buyer and seller are brought together by agents
working for the same brokerage
In an in-house transaction, both the listing agent and selling agent work for the same
brokerage. The designated broker acts as a dual agent.
✔✔A real estate broker is: - ✔✔the agent of his designated broker
A real estate broker is an agent of his designated broker, and is a subagent of his client.
✔✔In a listing agreement, who is the principal? - ✔✔Seller
,A listing agreement creates an agency relationship between a seller (the principal) and
a designated broker (the agent).
✔✔In order to alleviate confusion among buyers and sellers regarding agency
representation issues, many states, including Washington, enacted laws that: -
✔✔require agents to disclose to the parties which party they are representing in the
transaction
Laws such as Washington's real estate agency law require real estate agents to
disclose which party or parties they represent in a transaction.
✔✔A buyer's agent is most commonly compensated by the: - ✔✔seller, through a
commission split
A buyer's agent typically receives half of the seller's commission, through a commission
split.
✔✔A licensee owes to all parties, regardless of whom the licensee represents, the duty
of: - ✔✔reasonable care and skill
All agents owe all parties the duty of reasonable care and skill. The duties of loyalty,
confidentiality, and disclosure of conflicts of interest are owed only to the agent's
principal.
✔✔In a typical real estate transaction, there is an agency relationship between the: -
✔✔seller (principal) and listing brokerage (agent)
Typically, the listing brokerage acts as an agent for the seller, who is the principal.
✔✔A seller's agent may disclose confidential information about her client: - ✔✔under
court order or subpoena
If a court orders disclosure of confidential information, the agent must do it; otherwise,
she would be in contempt of court.
✔✔A licensee has a duty to investigate: - ✔✔only those things that the licensee has
specifically agreed to investigate
A licensee has no duty of independent investigation and verification, other than those
items the agent has specifically agreed to investigate.
✔✔A principal entered into an agency agreement that was to last for a period of three
months. Two weeks later, the principal died of natural causes. Which of the following is
true? - ✔✔The agency relationship terminated automatically when the principal died
,Agency relationships always terminate immediately upon the death, incapacity, or
bankruptcy of either party.
✔✔The pamphlet on agency law: - ✔✔must be given to parties before a written
agreement is signed
Each party must receive the agency law pamphlet before either party signs an agency
agreement, signs an offer, consents to a dual agency, or waives any agency rights,
whichever of these events comes first.
✔✔A buyer's agent asks the listing agent for copies of the water and sewer bills for the
listed property. The listing agent: - ✔✔must obtain copies from the seller and give them
to the buyer's agent
A listing agent is obligated to disclose any material facts regarding the subject property.
Since the utility bills may reveal information that would have a negative effect on the
property's value, the agent should disclose the utility bills.
✔✔The owners of an apartment building hire a real estate brokerage as the property
manager. If the owners later sell the building, their agency relationship with the property
manager: - ✔✔terminates due to extinction of the subject matter
If the property in question is sold or destroyed, any agency related to that property is
extinguished.
✔✔The seller tells the agent to sell his property as is. The agent learns of a major
hidden defect. What should she do? - ✔✔Tell prospective buyers about the defect
If the defect would not be observable on casual inspection of the property, it is called a
latent defect and must be disclosed to any prospective purchaser.
✔✔Under Washington's real estate agency law, the Brokerage Relationships Act, if a
third party provides information to the agent: - ✔✔the principal is deemed to know the
information only if the agent actually discloses it to the principal
Because the imputed knowledge rule does not apply in Washington to real estate
transactions, the principal is not assumed to have knowledge of information known by
the agent unless she is actually told by the agent. An agent does not owe third parties
any duty of confidentiality or loyalty, but does owe those duties to his principal.
✔✔If a principal gives approval after the fact to unauthorized actions, an agency
relationship is established by: - ✔✔Ratification
, Approval of unauthorized actions after the fact is referred to as ratification.
✔✔A real estate broker who has taken a listing discovers that the dining room ceiling is
discolored, possibly because of a leaky roof. What should he do? - ✔✔Disclose the
potential problem to prospective purchasers
An agent must disclose any latent defects to prospective buyers. Evidence of a leaking
roof would be considered a latent defect.
✔✔The most common method for creating a seller agency relationship is: - ✔✔a written
listing agreement
Seller agency relationships are usually created through a written listing agreement.
✔✔A special agent is authorized to: - ✔✔Conduct a specific transaction
✔✔When an agent works as an independent contractor, it means: - ✔✔An independent
contractor sets her own hours, is not directly supervised, and is compensated by
commission instead of salary. While an independent contractor has some freedom in
how she performs her job, she is still accountable to her employer.
✔✔An agency relationship may terminate: - ✔✔with the mutual consent of the parties
The parties may mutually agree at any time to terminate an agency. It may also be
terminated through the revocation of the principal or the renunciation of the agent.
✔✔The most likely evidence of environmental contamination on a property would be: -
✔✔discolored soil and dying plants in the back yard
Discolored soil and dying plants would be a likely indicator of environmental
contamination, such as a leaking underground storage tank.
✔✔If a licensee chooses to act as a non-agent in a transaction, the licensee: - ✔✔still
owes general duties of disclosure, reasonable care, and accounting to both parties
Even when acting as a non-agent, a licensee owes general duties to all parties. These
include honesty and good faith, reasonable care and skill, presenting all written
communications, disclosure of material facts, and accounting.
✔✔A buyer asks the buyer's agent to write an offer on terms that don't match the listing
agreement. The buyer's agent refuses to write the offer and then, in writing, unilaterally
terminates the agency relationship with the buyer. The buyer's agent is: - ✔✔permitted
to unilaterally terminate the agency relationship
