A real estate licensee lists a home for $205,000. Later that same day, a potential buyer comes into the licensee's office and asks for information on houses for sale in the $180,000 - $215,000 price range. The licensee offers to represent the buyer as a buyer's agent, but the buyer refuses representation. Based on these facts, which of the following statements best describes this situation?
Rationale
The seller is the client under the listing agreement, owing fiduciary duties. The buyer, refusing representation, is a customer, owed honesty but not loyalty. Both as customers (B) or equal duties (C) ignores the listing agreement. The buyer isn't a client (D).
A licensee lists a home knowing the seller capped and then filled a fuel oil tank with sand. Does the licensee need to disclose this information to potential buyers?
Rationale
Licensees must disclose material facts, like a filled oil tank, that could impact property use or value. Disclosure isn't limited to buyer inquiries (A). A duty is owed to buyers (B) for material facts. The seller's statement (D) doesn't negate the duty to disclose.
Standard title insurance would protect a buyer
Rationale
Title insurance covers defects like forged deeds. Post-closing liens (B) or known issues (C) are excluded. Tenants (D) aren't a title defect.
Brokers maintaining escrow accounts must maintain all of the following records EXCEPT a
Rationale
Escrow account record-keeping requires a journal, ledger, and monthly reconciliations to track funds accurately. A profit and loss statement is a financial report for the brokerage, not specific to escrow account management.
In a jurisdiction where the common law of agency prevails, a buyer enters into a buyer agency agreement with a real estate licensee. This agreement establishes a
Rationale
A buyer agency agreement creates a fiduciary relationship, where the licensee owes duties of loyalty, care, and diligence to the buyer. Dual agency (A) requires representing both buyer and seller, not applicable here. Sub-agency (B) involves another agent acting for the broker, not the buyer directly. A customer relationship (D) lacks fiduciary duties.
Which of the following methods of payment does NOT comply with the requirement that good funds be delivered at closing?
Rationale
A title company check is not considered good funds for closing, as it lacks the guaranteed payment assurance provided by certified checks, wire transfers, or teller checks from financial institutions.
Which of the following types of funds belonging to others are NOT required to be maintained in a separate trust account by licensees?
Rationale
Withholding taxes are not required to be held in a separate trust account, as they are remitted to tax authorities, unlike security deposits, advance rentals, and earnest money, which must be held in escrow.
A licensee wants to determine the market values for a given residential area. In which of the following data should the licensee have the most interest?
Rationale
Recent selling prices of comparable properties are the most direct indicator of market value. Offers (A) may not reflect final prices. Assessments (B) affect cost, not value. Improvements (D) are less relevant than actual sales data.
Which of the following is considered a breach of fiduciary duties for a licensee representing a buyer?
Rationale
A licensee must present all offers unless instructed otherwise, as part of fiduciary duty. Divorce disclosure (A) is to the client, not a breach. Price comparison (B) aids the buyer. Refusing an agency agreement (D) avoids a fiduciary relationship, not breaches it.
Minors are held liable for real estate contract obligations if they
Rationale
A guardian's co-signature provides legal capacity for a minor's contract. Age (A), notarization (B), or graduation (C) don't confer liability.
Which of the following names MUST appear on the trust account of a corporation dealing in real estate?
Rationale
The trust account must include both the corporations name and the responsible brokers name to comply with Colorado regulations for transparency and accountability.
A borrower will likely be required to pay mortgage insurance premiums if a property is financed by
Rationale
FHA loans require mortgage insurance to protect lenders, especially for low down payments. Owner-financed loans (B) and land contracts (D) typically don't require it. VA loans (C) may require a funding fee, not mortgage insurance.
The Closing Instructions provide for all of the following EXCEPT
Rationale
Closing Instructions do not mandate the release of earnest money if a party fails to close; this is governed by the contract terms and dispute resolution processes.
In order to collect a commission, which of the following is a requirement for a broker with an open listing?
Rationale
In an open listing, the broker who procures the buyer earns the commission. MLS (A) isn't required. Protection clauses (B) apply to exclusive listings. Notification (D) isn't a standard requirement.
In the Residential Exclusive Right-to-Sell Listing Contract, the length of the holdover period is
Rationale
The holdover period, during which a broker may earn a commission for a sale to a buyer introduced during the listing period, is negotiable in the Residential Exclusive Right-to-Sell Listing Contract.
You are leaving this quiz
What would you like to do with your progress?
You're in the middle of a quiz
What would you like to do before switching?
Practice complete
You finished this free practice quiz.