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BC Real Estate Trading Services Exam study materials
BC Real Estate Trading Services Exam study resources

BC Real Estate Trading Services Exam practice questions

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Question 1Professionalism, Ethics, and the Regulatory Framework

Under British Columbia's real estate legislation, which body is responsible for licensing real estate trading services representatives and managing complaints against them?

  1. The Canadian Real Estate Association
  2. The Real Estate Council of British Columbia Correct answer.
  3. The Financial Institutions Commission
  4. The British Columbia Real Estate Association

Explanation

The Real Estate Council of British Columbia is the statutory regulator that licenses trading services representatives and enforces the Real Estate Services Act. It handles licensing, investigations, and disciplinary hearings independently of industry associations.

Question 2Professionalism, Ethics, and the Regulatory Framework

A trading services representative receives a deposit cheque from a buyer. According to British Columbia requirements, what must happen to that deposit?

  1. It may be held personally by the representative until the deal completes
  2. It must be forwarded directly to the seller's lawyer on receipt
  3. It must be deposited into the brokerage's general operating account within five business days
  4. It must be held in a designated trust account at a recognized financial institution Correct answer.

Explanation

Deposits and other trust funds must be placed in a pooled or separate trust account maintained by the brokerage at a recognized financial institution. Commingling trust money with operating funds is prohibited under the Real Estate Services Act.

Question 3Professionalism, Ethics, and the Regulatory Framework

Which statement best describes the fiduciary duty of loyalty owed by a trading services representative to a client?

  1. The representative must place the client's interests ahead of the representative's own interests Correct answer.
  2. The representative must always obtain the highest possible price regardless of the client's instructions
  3. The representative must follow only written instructions and may ignore verbal directions
  4. The representative must disclose the client's confidential information to all competing parties

Explanation

Loyalty requires the representative to prioritize the client's interests above their own and to avoid conflicts of interest. Acting in good faith and avoiding self-dealing are core components of this fiduciary obligation.

Question 4Professionalism, Ethics, and the Regulatory Framework

A representative advertises a property on social media without identifying the brokerage's name. Which principle does this violate?

  1. The requirement that advertising be approved by the seller's lawyer
  2. The requirement that advertising include the representative's home address
  3. The requirement that advertising appear only in print media
  4. The requirement that all advertising clearly identify the brokerage Correct answer.

Explanation

Advertising rules require that all marketing material clearly identify the brokerage so the public knows which licensed entity is responsible. Failing to name the brokerage misleads consumers about who is providing the service.

Question 5Professionalism, Ethics, and the Regulatory Framework

What is the primary purpose of the Real Estate Services Act in British Columbia?

  1. To protect consumers and regulate the provision of real estate services Correct answer.
  2. To establish property tax assessment formulas
  3. To guarantee that all transactions close successfully
  4. To set standardized commission rates across the province

Explanation

The Real Estate Services Act establishes a regulatory framework whose central aim is consumer protection through licensing, conduct standards, and discipline. It governs how real estate services are provided rather than commercial outcomes or taxation.

Question 6Professionalism, Ethics, and the Regulatory Framework

A representative learns that a client is planning to sell due to a divorce and shares this information with a prospective buyer. Which duty has been breached?

  1. The duty of obedience to the buyer
  2. The duty of disclosure to third parties
  3. The duty of confidentiality Correct answer.
  4. The duty of accounting

Explanation

Confidentiality requires representatives to safeguard client information and not reveal personal or motivating circumstances without consent. Sharing the seller's divorce situation with a buyer breaches that fiduciary obligation.

Question 7Professionalism, Ethics, and the Regulatory Framework

A representative wants to buy a property that is currently listed by their own brokerage. What must the representative do to comply with conflict-of-interest rules?

  1. Proceed quietly to avoid disrupting the seller
  2. Assign the purchase to a family member without disclosure
  3. Wait until the listing expires and then approach the seller directly
  4. Obtain the brokerage's and seller's informed written consent after full disclosure Correct answer.

Explanation

When a representative has a personal interest in a transaction, they must disclose the conflict fully and obtain informed written consent from the parties, including the brokerage. Undisclosed self-dealing violates fiduciary and regulatory duties.

Question 8Professionalism, Ethics, and the Regulatory Framework

Which of the following best describes the difference between a trading services representative and a managing broker in British Columbia?

  1. The managing broker is exempt from continuing education requirements
  2. Only the managing broker may conduct showings of properties
  3. The managing broker supervises the brokerage's representatives and is responsible for its trust accounts Correct answer.
  4. The representative may operate independently without brokerage affiliation

Explanation

A managing broker holds a higher licence category and is responsible for supervising representatives and overseeing the brokerage's operations, including trust account compliance. Representatives must be licensed with and act under a brokerage.

Question 9Professionalism, Ethics, and the Regulatory Framework

A buyer's representative receives an offer from another brokerage and notices the buyer's client has authorized a maximum price higher than the offer. What is the appropriate action?

  1. Keep the buyer's authorized price confidential and present the offer to the buyer for instructions Correct answer.
  2. Submit the offer directly to the seller without informing the buyer
  3. Reject the offer on the buyer's behalf without consulting them
  4. Disclose the buyer's maximum price to the seller's representative to speed up negotiations

Explanation

The representative must protect the buyer's confidential information, including authorized price limits, and obtain the client's instructions before responding. Revealing the ceiling would harm the buyer's negotiating position and breach confidentiality.

Question 10Professionalism, Ethics, and the Regulatory Framework

Under British Columbia rules, when must a representative disclose that they are acting for both the buyer and the seller in the same transaction?

  1. Never, because dual agency is automatically prohibited
  2. Only if the seller requests it in writing
  3. Before the parties enter into any agreement, with informed written consent from both Correct answer.
  4. Only after the transaction completes

Explanation

Limited dual agency requires full disclosure to both parties and their informed written consent before they commit to an agreement. The representative must explain the implications and obtain consent in writing.

Question 11Professionalism, Ethics, and the Regulatory Framework

A representative is asked by a client to prepare a comparative market analysis for a property the client wishes to sell. Which statement is accurate?

  1. A comparative market analysis is a formal appraisal that must be prepared by a licensed appraiser
  2. A comparative market analysis may only be prepared after the property is listed
  3. A comparative market analysis is a pricing opinion a representative may prepare as part of trading services Correct answer.
  4. A comparative market analysis guarantees the eventual sale price

Explanation

A comparative market analysis is a pricing opinion based on market data that a licensed representative may provide as part of trading services. It is distinct from a formal appraisal, which is reserved for licensed appraisers.

Question 12Professionalism, Ethics, and the Regulatory Framework

A representative collects personal information from a buyer to assess their financing readiness. Which privacy principle requires limiting collection to what is necessary?

  1. The principle of openness
  2. The principle of limiting collection Correct answer.
  3. The principle of accountability
  4. The principle of individual access

Explanation

Privacy law requires organizations to collect only the personal information necessary for the identified purpose. Collecting excessive or irrelevant information violates the limiting collection principle.

Question 13Professionalism, Ethics, and the Regulatory Framework

A representative receives an offer with a deposit cheque made payable to the seller personally. What is the most appropriate response?

  1. Accept the cheque and forward it to the seller immediately
  2. Cash the cheque and hold the funds in a personal account
  3. Refuse to proceed with the transaction entirely
  4. Advise that the deposit should be payable to the brokerage in trust and follow the contract terms Correct answer.

Explanation

Deposits should be made payable to the brokerage and held in trust in accordance with the contract and regulatory requirements. Accepting a cheque payable to the seller personally undermines the protection trust accounts provide.

Question 14Professionalism, Ethics, and the Regulatory Framework

Which conduct would most likely result in disciplinary action by the regulator for failure to act with honesty and integrity?

  1. Advising a client to obtain an independent inspection
  2. Recommending a lower listing price than the seller wishes
  3. Declining to represent a client due to a conflict of interest
  4. Knowingly misrepresenting the condition of a property to a buyer Correct answer.

Explanation

Knowingly misrepresenting a property's condition is a dishonest act that violates the standards of conduct and can lead to disciplinary measures. Honest dealing requires accurate representation of material facts.

Question 15Professionalism, Ethics, and the Regulatory Framework

A representative is moving from one brokerage to another. What must occur regarding their licence before they can trade at the new brokerage?

  1. The representative must wait two years before joining another brokerage
  2. Nothing, because licences are held personally and transfer automatically
  3. The representative may trade under both brokerages during a transition period
  4. The licence must be transferred or reissued so it is held with the new brokerage Correct answer.

Explanation

A representative's licence is tied to the brokerage with which it is held, so a transfer or re-licensing must be completed before trading at a new brokerage. Trading before the transfer is completed is unlicensed activity.

Question 16Professionalism, Ethics, and the Regulatory Framework

A representative acting for a seller learns from a home inspection that the roof has active leaks. The seller instructs the representative not to mention it. How should the representative respond?

  1. Advise the seller that material latent defects must be disclosed and decline to conceal the information Correct answer.
  2. Follow the instruction and remain silent because the seller is the client
  3. Disclose the defect only if the buyer asks a direct question
  4. Withdraw from the listing without explanation and say nothing

Explanation

Material latent defects that affect the property's use or value must be disclosed to prospective buyers, and a representative cannot participate in concealing them. The representative should advise the seller of this obligation rather than follow an instruction to remain silent.

Question 17Professionalism, Ethics, and the Regulatory Framework

Which scenario best illustrates the improper practice of commingling?

  1. Reconciling the trust account monthly
  2. Depositing a buyer's deposit into the brokerage's trust account
  3. Recording a trust transaction in the trust ledger
  4. Using trust account funds to pay the brokerage's office rent Correct answer.

Explanation

Commingling occurs when trust money is used for purposes unrelated to the trust, such as paying the brokerage's operating expenses. Trust funds must be kept separate and used only for the beneficiary's purposes.

Question 18Professionalism, Ethics, and the Regulatory Framework

A representative is offered a cash bonus by a mortgage broker for referring a client. What is the appropriate course of action under conflict-of-interest and disclosure rules?

  1. Accept the bonus and share it with the client without documentation
  2. Accept the bonus because referral fees are customary
  3. Accept the bonus and disclose it only if the client asks
  4. Decline or fully disclose the arrangement and obtain consent in accordance with the rules Correct answer.

Explanation

Undisclosed referral fees or benefits create a conflict of interest and must be avoided or fully disclosed with consent. Secret compensation from a third party breaches the duty of loyalty and disclosure obligations.

Question 19Professionalism, Ethics, and the Regulatory Framework

A representative is asked to provide services to a client who does not speak English fluently. Which approach best reflects professional and ethical conduct?

  1. Proceed using complex legal terminology and assume the client understands
  2. Refuse service because the client does not speak English
  3. Arrange for interpretation or translated documents so the client can give informed consent Correct answer.
  4. Have the client sign documents without explanation to save time

Explanation

Informed consent requires that clients understand the documents and decisions involved, so arranging interpretation or translation supports that goal. Refusing service or proceeding without comprehension undermines the client's ability to make informed choices.

Question 20Professionalism, Ethics, and the Regulatory Framework

Which statement accurately reflects the continuing education requirement for trading services representatives in British Columbia?

  1. Continuing education is optional and only benefits managing brokers
  2. Representatives must complete required continuing education to maintain their licence Correct answer.
  3. Representatives are exempt if they have more than ten years of experience
  4. Continuing education is required only when changing brokerages

Explanation

Licensed representatives must complete mandatory continuing education each licensing cycle to maintain their licence and stay current with legal and practice standards. The requirement applies regardless of experience level.

Question 21Real Estate Law, Interests in Land, and Title

In British Columbia, which statute governs the registration of interests in land and the priority of registered dealings?

  1. The Real Estate Services Act
  2. The Residential Tenancy Act
  3. The Property Law Act
  4. The Land Title Act Correct answer.

Explanation

The Land Title Act establishes the Torrens-style land title system in British Columbia and sets out how interests are registered and how priority between competing registrations is determined. The other statutes address different subject matter, such as conveyancing formality, residential tenancies, and licensing of real estate professionals.

Question 22Real Estate Law, Interests in Land, and Title

Under the British Columbia land title system, what does indefeasibility of title primarily mean for a registered owner?

  1. The owner must physically occupy the land to keep title
  2. The owner's title automatically expires after a fixed number of years
  3. The owner's title is protected against most claims except those preserved by statute or fraud Correct answer.
  4. The owner holds title free of any government regulation

Explanation

Indefeasibility means a registered owner's title is generally conclusive and protected from challenge, subject to statutory exceptions and to fraud in acquiring the registration. It does not remove regulation of land use or create any occupancy requirement.

Question 23Real Estate Law, Interests in Land, and Title

Which type of interest in land is an easement?

  1. A right to exclusive possession of land for a term of years
  2. A right to purchase land at a future date
  3. A charge on land securing repayment of a debt
  4. A non-possessory right to use another person's land for a defined purpose Correct answer.

Explanation

An easement is a non-possessory right enjoyed by one parcel of land over another, such as a right of way or a right to run utilities. It does not confer possession, an option to purchase, or a monetary charge.

Question 24Real Estate Law, Interests in Land, and Title

A covenant registered against a parcel of land restricts it to residential use and is intended to benefit neighbouring lots. What is this interest called?

  1. A restrictive covenant Correct answer.
  2. A profit à prendre
  3. A life estate
  4. A lien

Explanation

A restrictive covenant is a promise that restricts the use of land and, when properly registered and intended to benefit other land, can bind successors in title. Profits, life estates, and liens create very different rights.

Question 25Real Estate Law, Interests in Land, and Title

Which of the following best describes a joint tenancy between two owners?

  1. Each owner holds title only for a fixed term of years
  2. Each owner holds title subject to the other's life estate
  3. Each owner holds a distinct half share with no right of survivorship
  4. Each owner holds an undivided interest with a right of survivorship Correct answer.

Explanation

A joint tenancy features unity of title, interest, time, and possession, together with the right of survivorship under which the surviving joint tenant takes the whole. A tenancy in common, by contrast, has distinct shares and no survivorship.

Question 26Real Estate Law, Interests in Land, and Title

A registered fee simple owner grants a neighbour a right to cross the owner's driveway to reach a public road. Which characteristic must this right have to be a valid easement?

  1. It must be recorded in the neighbour's own title as a charge
  2. It must accommodate the neighbouring parcel, not merely benefit an individual personally Correct answer.
  3. It must be granted for consideration greater than one dollar
  4. It must last no longer than twenty-one years

Explanation

A valid easement must accommodate the dominant tenement, meaning it must benefit the land itself rather than confer a purely personal advantage. Duration, consideration, and the manner of recording are not defining requirements of an easement.

Question 27Real Estate Law, Interests in Land, and Title

Which enactment primarily sets out the formal requirements for a valid transfer of an interest in land in British Columbia?

  1. The Strata Property Act
  2. The Property Law Act Correct answer.
  3. The Builders Lien Act
  4. The Land Title Act

Explanation

The Property Law Act contains the formal requirements, including that transfers of interests in land must be in writing and signed. The Land Title Act then governs registration of those instruments, while the other statutes address strata corporations and builders liens.

Question 28Real Estate Law, Interests in Land, and Title

A buyer signs a contract to purchase a home but has not yet completed or registered the transfer. What interest does the buyer typically hold at this stage?

  1. A leasehold estate for the term of the contract
  2. A beneficial interest under the contract, often protected by filing a notice in the land title office Correct answer.
  3. No interest of any kind until registration occurs
  4. A fee simple estate already registered in the buyer's name

Explanation

Before completion and registration, a purchaser under a binding contract holds an equitable or beneficial interest in the land. Filing a notice under the Land Title Act can protect that interest against subsequent registrations.

Question 29Real Estate Law, Interests in Land, and Title

Two people purchase land and register title as joint tenants. One later sells and transfers their interest to a third party without the other's knowledge. What is the usual effect of that transfer?

  1. The joint tenancy is severed and the parties become tenants in common in proportion to their interests Correct answer.
  2. The entire property automatically vests in the third party
  3. The transfer is void because a joint tenant cannot deal with their interest alone
  4. The joint tenancy continues unchanged between the remaining original owner and the third party

Explanation

A joint tenant may alienate their interest, and doing so severs the joint tenancy as to that share, converting the co-ownership into a tenancy in common. The purchaser takes the transferred share, not the whole property.

Question 30Real Estate Law, Interests in Land, and Title

What is the primary purpose of the land title register in British Columbia?

  1. To record only mortgages and no other interests
  2. To set the assessed value of land for property taxation
  3. To provide a public record of registered interests so that purchasers can rely on title Correct answer.
  4. To guarantee that land is free of environmental contamination

Explanation

The register is a public record of ownership and encumbrances, allowing a purchaser to investigate and rely on the state of title. Assessment and environmental regulation are handled through separate regimes.

Question 31Real Estate Law, Interests in Land, and Title

A person occupies land without any legal right for a long period. Under British Columbia law, what is the position regarding acquiring title by adverse possession?

  1. Title by adverse possession generally cannot be acquired against registered land under the Land Title Act Correct answer.
  2. A squatter acquires title automatically after ten years of occupation
  3. A squatter acquires title after sixty years regardless of registration
  4. A squatter acquires title after twenty years if occupation is open and notorious

Explanation

The Torrens system in British Columbia generally makes registered title indefeasible, so adverse possession does not ordinarily extinguish registered title. There is no statutory period after which a squatter gains title to registered land.

Question 32Real Estate Law, Interests in Land, and Title

Which of the following is a freehold estate in land?

  1. A tenancy for a fixed term of two years
  2. A fee simple estate Correct answer.
  3. A right of way
  4. A mortgage

Explanation

A fee simple is the largest freehold estate and can potentially last forever. A fixed-term tenancy is leasehold, a right of way is an easement, and a mortgage is a charge securing a debt.

Question 33Real Estate Law, Interests in Land, and Title

A developer registers a covenant on all lots in a subdivision requiring approval of building plans by the developer. What must generally be shown for the covenant to bind a subsequent purchaser of a lot?

  1. The covenant must be registered, touch and concern the land, and be intended to benefit other land Correct answer.
  2. The covenant must impose a positive obligation to spend money
  3. The covenant must be approved by the local municipality
  4. The covenant must be renewed by each purchaser every five years

Explanation

For a restrictive covenant to run with land, it must be negative in substance, touch and concern the land, be intended to benefit other land, and be properly registered. Renewal, municipal approval, and positive spending obligations are not requirements.

Question 34Real Estate Law, Interests in Land, and Title

Which document in British Columbia typically sets out a strata corporation's bylaws and rules governing use of strata lots?

  1. The property transfer tax return
  2. The strata plan and registered bylaws Correct answer.
  3. The land title certificate of the individual strata lot
  4. The mortgage document

Explanation

A strata corporation's governance is established through its registered strata plan and bylaws, together with rules made under them. Individual certificates of title, mortgages, and tax returns do not contain the corporation's use regulations.

Question 35Real Estate Law, Interests in Land, and Title

A lender registers a mortgage against a parcel. What interest does the lender hold?

  1. A charge on the land securing repayment of the debt Correct answer.
  2. A leasehold estate in the land
  3. A fee simple estate in the land
  4. An easement over the land

Explanation

A mortgage creates a charge against the land that secures the borrower's obligation; the lender does not acquire the estate itself. The borrower generally retains title subject to the charge.

Question 36Real Estate Law, Interests in Land, and Title

A person dies owning land in fee simple under a will that leaves the property to a trust for a minor child. What type of interest does the child typically hold?

  1. A legal fee simple registered in the child's name
  2. A beneficial interest held through the trustee Correct answer.
  3. A leasehold interest
  4. A licence to occupy

Explanation

Where a trustee holds legal title for a beneficiary, the beneficiary holds an equitable or beneficial interest. Legal title sits with the trustee, and the arrangement is neither a lease nor a mere licence.

Question 37Real Estate Law, Interests in Land, and Title

What is the effect of registering a certificate of pending litigation against a parcel of land?

  1. It converts the land to Crown ownership
  2. It immediately transfers title to the claimant
  3. It discharges all existing mortgages on the land
  4. It gives notice of a court claim affecting the land and may bind subsequent purchasers Correct answer.

Explanation

A certificate of pending litigation registers notice that a proceeding is pending that may affect the land. It warns prospective purchasers and can preserve the claimant's position, but it does not transfer title or clear existing charges.

Question 38Real Estate Law, Interests in Land, and Title

Which of the following interests is a profit à prendre?

  1. A right to cross another person's land on foot
  2. A right to possess another person's land for ten years
  3. A right to harvest timber from another person's land Correct answer.
  4. A right to restrict building height on another person's land

Explanation

A profit à prendre is a right to take something from another's land, such as timber, minerals, or crops. Crossing on foot is an easement, height restrictions are covenants, and possession for a term is a lease.

Question 39Real Estate Law, Interests in Land, and Title

A buyer discovers that a neighbour has used a path across the buyer's land for many years without permission. In British Columbia, what is the most likely legal position regarding the neighbour's claim?

  1. The neighbour automatically gains a fee simple interest after twenty years
  2. The neighbour likely has no prescriptive easement because the land is registered under the Land Title Act Correct answer.
  3. The neighbour automatically gains an easement after ten years of use
  4. The neighbour gains a leasehold interest by long use

Explanation

Because registered land in British Columbia is governed by the Torrens system, prescriptive easements generally cannot be acquired against it. Long informal use does not by itself create an easement, fee simple, or lease.

Question 40Real Estate Law, Interests in Land, and Title

Which statement best describes a tenancy in common?

  1. Each co-owner holds a separate share that may be passed on by will Correct answer.
  2. Each co-owner holds an identical interest with survivorship
  3. Each co-owner holds an undivided interest that cannot be transferred
  4. Each co-owner holds title only during the life of another person

Explanation

Tenants in common own distinct shares, which need not be equal, and there is no right of survivorship, so a share passes under the owner's will or intestacy. Joint tenancy, by contrast, features survivorship.

Question 41Real Estate Law, Interests in Land, and Title

A registered owner wishes to grant a lease of a portion of a building for three years. Which statement is correct about the formal requirements?

  1. The lease requires no writing because it is under five years
  2. The lease must be registered to be valid between the parties
  3. The lease must generally be in writing and signed to be enforceable Correct answer.
  4. The lease is enforceable only if it exceeds ten years

Explanation

Under the Property Law Act, leases of land must generally be in writing and signed by the party to be charged to be enforceable. Registration affects priority against third parties but is not what makes the lease valid between the original parties.

Question 42Real Estate Law, Interests in Land, and Title

An owner grants a right to a utility company to install and maintain cables under the owner's land. What type of interest is this most likely to be?

  1. An easement Correct answer.
  2. A life estate
  3. A restrictive covenant
  4. A mortgage

Explanation

A right to install and maintain infrastructure under another's land for the benefit of other land is typically an easement, often a statutory or express utility easement. It is not a security charge, a use restriction, or a freehold estate.

Question 43Real Estate Law, Interests in Land, and Title

Which of the following best explains why a purchaser should search the land title register before completing a purchase?

  1. To determine the property's zoning designation
  2. To verify the seller's mortgage payment history
  3. To confirm the property's market value
  4. To identify registered charges and interests that will bind the purchaser after transfer Correct answer.

Explanation

A title search reveals registered owners and encumbrances such as mortgages, easements, and covenants that may continue to bind the land after transfer. Market value and zoning come from other sources, and payment history is not shown on title.

Question 44Real Estate Law, Interests in Land, and Title

A person holds land for their own lifetime, after which it passes to another named person. What are these interests called?

  1. A mortgage followed by an easement
  2. A fee simple followed by a leasehold interest
  3. A life estate followed by a remainder interest Correct answer.
  4. A joint tenancy followed by a tenancy in common

Explanation

A life estate is a freehold estate measured by a person's life, and the interest that follows it is a remainder held by another person. The other pairings describe unrelated interests that do not fit this structure.

Question 45Agency and the Trading Services Relationship

Under British Columbia's Real Estate Services Act, which party does a licensee engaged by a seller owe the duty of undivided loyalty to?

  1. Both the seller and the buyer equally
  2. The buyer who is unrepresented in the transaction
  3. The brokerage that holds the licensee's licence
  4. The seller who engaged the licensee Correct answer.

Explanation

An agency relationship arises when a seller engages a brokerage, and the licensee's fiduciary duties run to that client alone. The buyer is a customer, not a principal, so loyalty is not owed to them. The brokerage is the licensee's employer, not the client whose interests are protected.

Question 46Agency and the Trading Services Relationship

A licensee is acting as a limited dual agent in a transaction. Which statement best describes the licensee's obligations?

  1. The licensee owes full undivided loyalty to both parties at the same time
  2. The licensee must advocate strongly for whichever client pays the higher commission
  3. The licensee may keep one party's negotiating position secret from the other
  4. The licensee must disclose the conflict and treat both parties impartially without advancing either side's position Correct answer.

Explanation

Limited dual agency requires informed written consent plus impartial treatment of both clients, with full disclosure of material information. The licensee cannot advocate for one side over the other or withhold material facts. Full undivided loyalty to both parties is legally impossible, which is why the relationship is limited.

Question 47Agency and the Trading Services Relationship

Which duty requires a licensee to keep a client informed of all facts that could affect the client's decision-making?

  1. Confidentiality
  2. Accounting
  3. Full disclosure Correct answer.
  4. Obedience

Explanation

The duty of full disclosure obliges a licensee to reveal material information that could influence the client's decisions. Confidentiality protects information rather than sharing it, accounting concerns money and documents, and obedience concerns lawful instructions.

Question 48Agency and the Trading Services Relationship

A licensee's client instructs the licensee to conceal a known structural defect from prospective buyers. How should the licensee respond?

  1. Resign silently and let another licensee handle the listing
  2. Decline to conceal the defect because disclosure of material facts is required Correct answer.
  3. Follow the instruction because obedience to the client is a fiduciary duty
  4. Disclose the defect only if a buyer specifically asks about it

Explanation

The duty of obedience applies only to lawful instructions, and concealing a material latent defect is not lawful or ethical. Disclosure obligations override a client's direction to hide material facts. Silence with a passive resignation does not satisfy the licensee's own disclosure duty.

Question 49Agency and the Trading Services Relationship

A buyer gives a licensee a deposit cheque payable to the brokerage. What is the licensee's obligation regarding these funds?

  1. Hold the cheque personally until the deal completes
  2. Cash the cheque and hold the money in a personal account
  3. Deposit the funds promptly into the brokerage's trust account and account for them accurately Correct answer.
  4. Forward the cheque directly to the seller as a courtesy

Explanation

Money held on behalf of a client must go into the brokerage's designated trust account promptly and be accurately recorded. Personal handling or holding of client funds is prohibited. Passing a deposit straight to the seller bypasses required trust safeguards.

Question 50Agency and the Trading Services Relationship

A licensee learns that a seller client is facing foreclosure and is highly motivated. The licensee wants to buy the property personally. What must occur?

  1. The licensee may proceed if a different licensee writes the offer
  2. No disclosure is needed because the licensee will pay fair market value
  3. The licensee only needs to inform the managing broker verbally
  4. The licensee must make full written disclosure of the interest and obtain informed consent before proceeding Correct answer.

Explanation

A licensee who acquires an interest in a client's property faces a conflict of interest and must disclose it fully in writing and obtain informed consent. Paying market value does not remove the conflict. Verbal notice to a broker or using a colleague to draft the offer does not cure the undisclosed conflict.