LAW OF AGENCY COMPREHENSIVE
REVIEW SHEET QUESTIONS AND DETAILED
SOLUTIONS
●● An inactive licensee can conduct business but must be affiliated with
a broker to do so.
Answer: false, An inactive licensee can never conduct business. To
conduct business, licensees must affiliate with a broker and place their
license on active status.
●● The Real Estate License Act (TRELA) is
Answer: establishes the duties of real estate licensees with the public; it
provides the legal framework within which each licensee operates.
Each Texas licensee should be familiar with the act and behave in
accordance with the act.
●● A real estate licensee who is friendly, helpful, and service-oriented
can depend on the consumer understanding whom the licensee
represents.
Answer: false, A licensee who is solicitous, friendly, and service-driven
may unintentionally imply that an agency relationship exists, when in
fact it does not. Meanwhile, the customer presumes that the licensee
represents his interests as well and fails to ask for clarification.
,●● The licensee may assist a *customer* in negotiations by offering
advice and price opinions and by generally acting as an advocate for the
customer.
Answer: false, The licensee does not assist the customer in negotiations
and does not offer advice, judgment, or counsel.
*Only clients* are entitled to advice, opinion, and negotiating strategy.
●● A real estate licensee does NOT have to spend selling time trying to
help a consumer understand agency rules.
Answer: false. A key explanation for increased interest in agency is the
increasing litigation in the real estate field.
If a consumer is not adequately informed of the agency choices,
licensees can find themselves charged with an undisclosed, unintended
agency relationship.
●● Agency occurs when
Answer: one person authorizes another to act on the individual's behalf.
●● A sponsoring broker is responsible for
Answer: A sponsoring broker is responsible for all licensees, both
brokers (broker associates) and salespersons.
,●● Consumers can safely assume that the agent with whom they are
working actually represents them.
Answer: false. Although it may seem like a natural division of labor that
the seller is represented by one broker and that the cooperating broker
represents the buyer, in fact, this is not always the case. Sometimes, the
cooperating broker is a subagent of the seller through the listing broker
and thus represents the seller.
●● The Texas Real Estate Commission (TREC) oversees the licensing
process but does NOT have any power over how licensees obey The
Real Estate License Act (TRELA).
Answer: The Texas Real Estate Commission (TREC), among other
duties, is charged with enforcing TRELA in a manner that protects the
public, overseeing the licensing process, and monitoring and controlling
the educational activities of approved real estate education providers.
TREC is actually tasked with investigating written complaints against
licensees. For violations of TRELA or TREC Rules, TREC may suspend
or revoke licenses or impose appropriate administrative penalties or
injunctions.
●● Licensees, acting as fiduciaries, may place their own interests before
the client's interest, only if the client gives written permission.
, Answer: false. The Texas Real Estate Commission specifies that, among
other duties of a fiduciary, the agent represent the client and that the
"agent place no personal interest above that of the agent's client."
●● A licensee not associated with the listing broker who represents the
seller through the listing broker is known as a
Answer: "subagent"
"a license holder who represents a principal through cooperation with
and the consent of" another broker.
A subagent is not sponsored by or associated with the principal's
(client's) broker. Subagency involves two separate brokerage firms, both
representing the interest of the same client. The other consumer in the
transaction is treated as a customer by all licensees in both brokerage
offices.
●● Agents must
Answer: act in the best interest of the parties they represent.
Agents legally act on behalf of the persons they represent and must
disclose the agency relationship.
●● One person acting on behalf of another is
REVIEW SHEET QUESTIONS AND DETAILED
SOLUTIONS
●● An inactive licensee can conduct business but must be affiliated with
a broker to do so.
Answer: false, An inactive licensee can never conduct business. To
conduct business, licensees must affiliate with a broker and place their
license on active status.
●● The Real Estate License Act (TRELA) is
Answer: establishes the duties of real estate licensees with the public; it
provides the legal framework within which each licensee operates.
Each Texas licensee should be familiar with the act and behave in
accordance with the act.
●● A real estate licensee who is friendly, helpful, and service-oriented
can depend on the consumer understanding whom the licensee
represents.
Answer: false, A licensee who is solicitous, friendly, and service-driven
may unintentionally imply that an agency relationship exists, when in
fact it does not. Meanwhile, the customer presumes that the licensee
represents his interests as well and fails to ask for clarification.
,●● The licensee may assist a *customer* in negotiations by offering
advice and price opinions and by generally acting as an advocate for the
customer.
Answer: false, The licensee does not assist the customer in negotiations
and does not offer advice, judgment, or counsel.
*Only clients* are entitled to advice, opinion, and negotiating strategy.
●● A real estate licensee does NOT have to spend selling time trying to
help a consumer understand agency rules.
Answer: false. A key explanation for increased interest in agency is the
increasing litigation in the real estate field.
If a consumer is not adequately informed of the agency choices,
licensees can find themselves charged with an undisclosed, unintended
agency relationship.
●● Agency occurs when
Answer: one person authorizes another to act on the individual's behalf.
●● A sponsoring broker is responsible for
Answer: A sponsoring broker is responsible for all licensees, both
brokers (broker associates) and salespersons.
,●● Consumers can safely assume that the agent with whom they are
working actually represents them.
Answer: false. Although it may seem like a natural division of labor that
the seller is represented by one broker and that the cooperating broker
represents the buyer, in fact, this is not always the case. Sometimes, the
cooperating broker is a subagent of the seller through the listing broker
and thus represents the seller.
●● The Texas Real Estate Commission (TREC) oversees the licensing
process but does NOT have any power over how licensees obey The
Real Estate License Act (TRELA).
Answer: The Texas Real Estate Commission (TREC), among other
duties, is charged with enforcing TRELA in a manner that protects the
public, overseeing the licensing process, and monitoring and controlling
the educational activities of approved real estate education providers.
TREC is actually tasked with investigating written complaints against
licensees. For violations of TRELA or TREC Rules, TREC may suspend
or revoke licenses or impose appropriate administrative penalties or
injunctions.
●● Licensees, acting as fiduciaries, may place their own interests before
the client's interest, only if the client gives written permission.
, Answer: false. The Texas Real Estate Commission specifies that, among
other duties of a fiduciary, the agent represent the client and that the
"agent place no personal interest above that of the agent's client."
●● A licensee not associated with the listing broker who represents the
seller through the listing broker is known as a
Answer: "subagent"
"a license holder who represents a principal through cooperation with
and the consent of" another broker.
A subagent is not sponsored by or associated with the principal's
(client's) broker. Subagency involves two separate brokerage firms, both
representing the interest of the same client. The other consumer in the
transaction is treated as a customer by all licensees in both brokerage
offices.
●● Agents must
Answer: act in the best interest of the parties they represent.
Agents legally act on behalf of the persons they represent and must
disclose the agency relationship.
●● One person acting on behalf of another is
