Michigan Salesperson's Exam Prep Questions And Well Defined Answers.

License Fee - correct answers-$88.00 to obtain a three year license Continuing Education - correct answers-must complete no less than 18 hours of continuing education to renew for 3 yr cycle, with minimum requirement each year -no less than 2 hrs of legal updates each yeah and 18 hrs total over 3 year license Brokers License - correct answers-required for purpose of entering into contract w/ consumers -can only be issues to one legal entity or one person at a time -must have no less than 3 yrs experience and 90 hrs of education, and 6 sales/12 month period Associate Brokers License - correct answers-only issued to a person -must meet same requirements as broker -able to start a company Principal Associate Broker - correct answers-an owner, officer, partner, or member of the legal entity ("the broker") -license is non-transferable -PAB can have more than one PAB license at same time Non-Principal Associate Broker - correct answers-employed by broker to carry out sales only -can only be licensed with one broker at a time and the license is transferable Salepersons License - correct answers-must be 18 or older, 40 hrs of education -only issues to a person -everything done in the name and direct supervision of employing broker -can only receive compensation from their employing broker Independent Contractor - correct answers-pays own income tax -files a 1099 tax form, -sets own hours Employee - correct answers-broker withholds tax and pays social security -employee files a W-2 Sole Proprieter - correct answers-sole ownership, only time brokers license is personally liable -issues to one person (could have DBA) -individual name -- legal name -assumed name -- "doing business as" name (DBA) Parternship - correct answers-broker's license issued to legal entity -must have at least one principal associate broker to run and create partnership General Partnership - correct answers-broker is the partnership, and all parties are general partners -liability falls 100% on all parties -all general partners must be licensed as principal associate brokers Limited Partnership - correct answers-one general partner and one limited partner required -partnership in the name of the broker (legal entity) -used for investors -limited partners should have no license w/ this partnership -limited partners liability is only the money the invested Limited Liability Partnership (LLP) - correct answers-legal entity is the broker -partners are called members -liability of members is based upon their level of participation -tax benefits based on participation as well Corporation - correct answers-treated as separate entity by law (files own tax return) -corp. receives the brokerage license -comprised of officers (active officer must be principal associate broker, non-active officers need no license) -provides veil from liability Limited Liability Company (LLC) - correct answers-receives brokers license -owners are called members -able to pay taxes as partnership and provides similar protection for its members Statute of Frauds (State Law) - correct answers-requires that certain contracts be in writing in order to be enforceable in court -contracts that convey an interest in real estate must be in writing -leases for one year or less are not required to be in writing to be enforceable Parol Evidence Rule - correct answers-states that oral testimony cannot be used to add to, subtract from, or alter a written document, unless sits intent is to prove fraud, or clarify the document Statute of Limitation - correct answers-provides timeframe within which one can pursue legal recourse against another (differs state by state) Sherman Anti-Trust Act - correct answers-prohibits interference with free flow of trade and commerce Agency - correct answers-someone empowers another to act in their own best interest Parties to an Agency - correct answers-principal -- person who empowers someone to act in their best interest -agent -- person empowered by principal -sub-agent -- someone empowered by agent of principal Creating an Agency - correct answers-expressed -- verbal or written and states as fact ("I will help you") -implied -- lead someone to believe that you represent them by your actions -ostensible -- implied agency involving a 3rd party Obligations of an Agency (Fiduciary Duties) - correct answers-CLOTDAD -- confidentiality, loyalty, obedience, trust, due diligence, accountability, disclosure Types of Agencies (Range of Authority) - correct answers-universal agency -- agent can do almost anything (not really ever found in real estate) -general agency -- agent empowered to act in a trade or business (being employed by a broker with employment contract -special agency -- agent represents principal in one transaction only (listing contract, buyer-broker contract) Duties to 3rd Parties - correct answers-obliged honesty and fairness to anyone not under contract Customer - correct answers-3rd party -someone you work "with" (owe honesty and fairness) Client - correct answers-someone you work "for" (have a contract with them) Agency Disclosure Law - correct answers-requires disclosure of agency relationships on all residential properties before any confidential information is conveyed Single Agency - correct answers-represents one side of the transaction Dual Agency - correct answers-one agent represents two parties in a transaction (buyer and seller) -both parties must be informed, or two salesmen can represent buyer and seller under same broker -office policy that the broker may have to minimize dual agency conflicts on in-house deals (designated agency) Non-Agency (Transactional Coordinator) - correct answers-no agency exists but can still charge fee Termination of an Agency Relationship - correct answers-BADDMICE -- bankruptcy of either party, abandonment, death of principal or agent, destruction of property, mutual consent (in writing), incompetency completion, expiration date Listing Agreement (Service Provision Agreement) - correct answers-agency relationship btwn broker and property owner -seller promises to pay commission if the broker can bring forth a ready, willing, and able buyer that meets the sellers terms and cnditions Requirements of a Listing Agreement - correct answers1. identity the parties (public records data system (PRDP for history of deeds and records) 2. accurate description of property 3. definite beginning and end date 4. specific terms and conditions 5. non-discrimination clause 6. signatures of all parties Patent and Latent Defects of Listing Agreement - correct answers-patent defects -- defect that is open and obvious, unnecessary for disclosure (caveat emptor -- buyer beware (the represented buyer must take burden of looking out for their best interests)) -latent defects -- hidden defects. if seller tells broker about defect, defect must be disclosed Puffing in Listing Agreement - correct answers-obvious exaggeration that is legal if it doesn't lead to misrentesentation Seller's Disclosure Statement in Listing Agreement - correct answers-applies to all 1-4 family residential properties only