Law of Agency Actual Questions and Correct Answers
Q1
Most lawsuits involve issues of who did or did not represent whom. The number of lawsuits is:
Increasing Decreasing Stabilizing over the last several years Broker lawsuits are not allowed.
Answer: A. Increasing The correct answer is A. A broker is more likely to be sued
because he failed to make it clear to all parties who he represented as a client.
Q2
The broker working with a buyer customer and representing the seller through the seller's
broker is a: A. Buyer B. Seller C. Subagent D. Intermediary
Answer: C. Subagent For subagency to exist there must be two sponsoring brokers.
One of the brokers has a seller client and the other broker must have a buyer
customer.
Q3
All parties to the transaction must be treated honestly and fairly, but a fiduciary relationship is
owed to the: A. Customer B. Client C. Everyone D. No one
Answer: B. Client A fiduciary relationship is a relationship of trust. The broker must
always put the client's interest above the broker's interest.
Q4
The TRELA does not require disclosure if a death occurred on a property: A. By natural causes
B. By suicide C. In an accident unrelated to the condition of the property D. All of the above
Answer: D. All of the above A murder on the property and an accidental death
resulting from an accident related to a condition of the property must be disclosed.
Q5
Something that affects the property or the health of the residents of the property is called a(n):
Psychological stigma Exception Physical stigma None of the above
Answer: C. Physical stigma A psychological stigma does not affect the physical
condition of the property, but it can affect the value of the property.
,Q6
Information about Brokerage Services must be given to potential buyers, sellers, tenants, and
landlords: At the time of first meeting After the listing is taken At the closing At the first
substantive dialogue about a property
Answer: D. At the first substantive dialogue about a property Information About
Brokerage Services gives information concerning the ways a broker can represent a
person. It gives information about buyer's agency, seller's agency, intermediary, and
subagency.
Q7
How many companies are required in a subagency relationship? A. 13 B. 9 C. 4 D. 2
Answer: D. 2 For subagency to exist there must be two sponsoring brokers
(companies) and one of those brokers must have a buyer customer.
Q8
What advice would an agent give to a seller? A. Advice about market conditions and financing
options B. Advice about preparing the property for sale and negotiating contracts C. Both A and
B D. None of the above
Answer: C. Both A and B The agent is representing the seller as a client and owes
advice and opinions to the seller.
Q9
The listing broker may cooperate with the buyer's broker or a subagent. Often the commission
for all brokers in the transaction is paid by the: A. Subagent B. Buyer C. Seller D. Attorney
Answer: C. Seller The amount of the commission to be paid by the seller for the sale of
the property is set in the listing agreement.
Q10
The buyer's agent will view the transaction from the buyer's point of view and will counsel the
buyer on: A. Financing the property B. Contingencies C. Negotiating strategy D. All of the above
Answer: D. All of the above
, Q11
If the seller disclosure notice is not delivered by the effective date, the buyer has the right to
cancel the contract within days after receiving the notice. A. Ten B. Six C. Seven D. Four
Answer: C. Seven If the buyer does not have the seller's disclosure form before he
signs a contract to buy, the seller must deliver the form to the buyer after the
contract is signed. The buyer has 7 days to cancel the contract after he receives the
disclosure form.
Q12
A defect that is known to the seller and hidden from the buyer is a: Material defect Zoning
defect Intermediary defect Latent defect
Answer: D. Latent defect A seller is required to disclose any known defects and must
not hide them from the buyer.
Q13
When a broker is working with a buyer customer, the broker can: Give advice Tell the buyer the
amount to offer for the property Deliver the offer to the seller's broker Give opinions
Answer: C. Deliver the offer to the seller's broker A broker working with a buyer
customer is not allowed to give the buyer customer advice or opinions about the
property
Q14
A listing broker is not required to: Maintain a fixed office address Use Information About
Brokerage Services Allow subagency Have a license issued by TREC
Answer: C. Allow subagency A listing broker may allow or not allow subagency. He will
make a decision for his company to pay either buyers' brokers, subagents, or both.
Q15
The One to Four Residential Contract (Resale) is the form used to make an offer on a property.
It becomes the contract when: A lawsuit affects the property. The buyer has signed the form.
The offer is made to the seller. All parties have signed.
Answer: D. All parties have signed. The offer must be signed by the buyer and seller.
At this point the offer becomes a contract.
Q1
Most lawsuits involve issues of who did or did not represent whom. The number of lawsuits is:
Increasing Decreasing Stabilizing over the last several years Broker lawsuits are not allowed.
Answer: A. Increasing The correct answer is A. A broker is more likely to be sued
because he failed to make it clear to all parties who he represented as a client.
Q2
The broker working with a buyer customer and representing the seller through the seller's
broker is a: A. Buyer B. Seller C. Subagent D. Intermediary
Answer: C. Subagent For subagency to exist there must be two sponsoring brokers.
One of the brokers has a seller client and the other broker must have a buyer
customer.
Q3
All parties to the transaction must be treated honestly and fairly, but a fiduciary relationship is
owed to the: A. Customer B. Client C. Everyone D. No one
Answer: B. Client A fiduciary relationship is a relationship of trust. The broker must
always put the client's interest above the broker's interest.
Q4
The TRELA does not require disclosure if a death occurred on a property: A. By natural causes
B. By suicide C. In an accident unrelated to the condition of the property D. All of the above
Answer: D. All of the above A murder on the property and an accidental death
resulting from an accident related to a condition of the property must be disclosed.
Q5
Something that affects the property or the health of the residents of the property is called a(n):
Psychological stigma Exception Physical stigma None of the above
Answer: C. Physical stigma A psychological stigma does not affect the physical
condition of the property, but it can affect the value of the property.
,Q6
Information about Brokerage Services must be given to potential buyers, sellers, tenants, and
landlords: At the time of first meeting After the listing is taken At the closing At the first
substantive dialogue about a property
Answer: D. At the first substantive dialogue about a property Information About
Brokerage Services gives information concerning the ways a broker can represent a
person. It gives information about buyer's agency, seller's agency, intermediary, and
subagency.
Q7
How many companies are required in a subagency relationship? A. 13 B. 9 C. 4 D. 2
Answer: D. 2 For subagency to exist there must be two sponsoring brokers
(companies) and one of those brokers must have a buyer customer.
Q8
What advice would an agent give to a seller? A. Advice about market conditions and financing
options B. Advice about preparing the property for sale and negotiating contracts C. Both A and
B D. None of the above
Answer: C. Both A and B The agent is representing the seller as a client and owes
advice and opinions to the seller.
Q9
The listing broker may cooperate with the buyer's broker or a subagent. Often the commission
for all brokers in the transaction is paid by the: A. Subagent B. Buyer C. Seller D. Attorney
Answer: C. Seller The amount of the commission to be paid by the seller for the sale of
the property is set in the listing agreement.
Q10
The buyer's agent will view the transaction from the buyer's point of view and will counsel the
buyer on: A. Financing the property B. Contingencies C. Negotiating strategy D. All of the above
Answer: D. All of the above
, Q11
If the seller disclosure notice is not delivered by the effective date, the buyer has the right to
cancel the contract within days after receiving the notice. A. Ten B. Six C. Seven D. Four
Answer: C. Seven If the buyer does not have the seller's disclosure form before he
signs a contract to buy, the seller must deliver the form to the buyer after the
contract is signed. The buyer has 7 days to cancel the contract after he receives the
disclosure form.
Q12
A defect that is known to the seller and hidden from the buyer is a: Material defect Zoning
defect Intermediary defect Latent defect
Answer: D. Latent defect A seller is required to disclose any known defects and must
not hide them from the buyer.
Q13
When a broker is working with a buyer customer, the broker can: Give advice Tell the buyer the
amount to offer for the property Deliver the offer to the seller's broker Give opinions
Answer: C. Deliver the offer to the seller's broker A broker working with a buyer
customer is not allowed to give the buyer customer advice or opinions about the
property
Q14
A listing broker is not required to: Maintain a fixed office address Use Information About
Brokerage Services Allow subagency Have a license issued by TREC
Answer: C. Allow subagency A listing broker may allow or not allow subagency. He will
make a decision for his company to pay either buyers' brokers, subagents, or both.
Q15
The One to Four Residential Contract (Resale) is the form used to make an offer on a property.
It becomes the contract when: A lawsuit affects the property. The buyer has signed the form.
The offer is made to the seller. All parties have signed.
Answer: D. All parties have signed. The offer must be signed by the buyer and seller.
At this point the offer becomes a contract.
