Real Estate Transaction Agent Examination cheat sheet

Licensing statutes reserve brokerage activity - listing, showing for compensation, negotiating price or terms, and procuring prospects - to licensed persons; unlicensed assistants may perform clerical and ministerial tasks only.

Agency law duties (loyalty, obedience to lawful instructions, disclosure, confidentiality, accounting, reasonable care) arise from the brokerage relationship; statutory consumer duties (honesty, fairness, disclosure of material facts) apply to all consumers regardless of representation.

Disclosed dual agency requires informed written consent from both principals before the broker can act for both; undisclosed dual agency is a license violation in every U.S. jurisdiction.

Material change in status (e.g., buyer becomes a licensee, principal becomes a relative of the agent) must be disclosed in writing promptly and may require re-documenting the relationship.

Fair housing law prohibits discriminatory advertising, steering, blockbusting, and differential terms based on protected classes; protected classes vary by jurisdiction and may exceed the federal seven.

Commissions are negotiable and set by contract between broker and client; commissions cannot be fixed collectively, and compensation offered to a cooperating broker is not itself an agency relationship.

Statutes of fraud require real estate purchase contracts and listing agreements to be in writing and signed by the party to be charged; electronic signatures are enforceable under e-signature statutes.

Licensee records (listing agreements, offers, disclosures, closing statements) must be retained for the statutory period, commonly three to five years depending on jurisdiction.

Bundle of rights includes possession, use, exclusion, disposition, and quiet enjoyment; a deed can sever surface, mineral, air, and water rights from the fee estate.

Forms of co-ownership: tenancy in common (distinct, divisible shares, no survivorship), joint tenancy (equal undivided interests with right of survivorship), tenancy by the entirety (spouses only, survivorship, jurisdiction-dependent), and community property (spousal property acquired during marriage).

Recording acts: race (first to record wins), notice (first to receive notice loses), and race-notice (first to record without notice wins); the majority rule in the U.S. is race-notice.

Title insurance and the recording system protect against claims of record; adverse possession, prescriptive easements, and unrecorded interests can defeat a record owner if statutory elements are met.

Easements appurtenant run with the land; easements in gross benefit a person or entity; easements may be created by express grant, implication, necessity, or prescription and terminated by merger, release, abandonment, or nonuse.

Deed validity requires a competent grantor, identifiable grantee, words of grant, legal description, and delivery with intent to convey; recording is not required for validity between the parties but affects priority against third parties.

Encumbrances include liens (mortgage, tax, judgment, mechanic's), easements, covenants, conditions, and restrictions; liens attach by priority date of recording unless statute provides otherwise.

Marketable title is title free from reasonable doubt and encumbrances that a reasonable buyer would object to; insurable title may contain defects the insurer will accept.

Essential elements of a real estate contract: competent parties, mutual assent (offer and acceptance), consideration, lawful purpose, and a writing satisfying the statute of frauds with a sufficient legal description.

Offer terminates by revocation (before acceptance), rejection, counteroffer, lapse of time, death or incapacity of offeror, or illegality; a counteroffer is a rejection that terminates the original offer.

Acceptance must be unqualified and communicated to the offeror; the mailbox rule generally makes acceptance effective on dispatch unless the offer specifies receipt.

Contingencies (financing, inspection, appraisal, sale of buyer's home, attorney review) are conditions precedent; failure to satisfy a contingency within the stated period can permit termination or waive the contingency depending on the contract language.

Earnest money is consideration supporting the contract; its disposition on default is governed by the contract and escrow instructions, not by the broker's preference.

Remedies for breach: specific performance (common for unique real property), damages (expectation, reliance, restitution), liquidated damages (must be reasonable, not a penalty), and rescission.

Statute of frauds exceptions and doctrines affecting enforceability include part performance, promissory estoppel, equitable estoppel, and the doctrine of merger (contract terms merge into the deed at closing).

Time is generally of the essence when stated in the contract; otherwise courts balance the materiality of delay, and a party must tender performance to preserve remedies.

Agency creation: express (written or oral), implied by conduct, ratification, or estoppel; a written listing agreement is required for enforceable compensation in most jurisdictions.

Listing types: exclusive right to sell (broker earns commission regardless of who procures the buyer), exclusive agency (seller retains right to sell without commission), open listing (non-exclusive), and net listing (prohibited or restricted in many jurisdictions).

Buyer agency agreements establish the buyer as principal; without one, a licensee working with a buyer may be a subagent of the seller or a transaction broker depending on state law.

Procuring cause is the broker who initiates an uninterrupted chain of events leading to the sale; it determines compensation disputes between brokers, not the agency relationship.

Dual agency and designated agency: designated agency permits different licensees in one brokerage to represent opposing parties with informed consent; both require written disclosure.

Fiduciary duties terminate at closing or contract expiration; confidentiality survives, and the duty of accounting requires prompt remittance of funds belonging to others.

A broker's supervision duty requires written policies, training, and review of licensee activities; violations by an affiliated licensee can be imputed to the supervising broker.

Compensation is earned per the listing or buyer-broker agreement, not by performance alone; procuring cause, ready-willing-able buyer, and communication of acceptance are common contractual conditions.

Listing agreement content: parties, property description, price and terms, compensation and cooperating-broker offer, duration, agency relationship, and seller disclosures.

Marketing must be truthful and non-discriminatory; advertisements must identify the brokerage as required by law and must not target or exclude protected classes through words, images, or media placement.

MLS rules govern timely submission of listings, accuracy of data, cooperation with other participants, and restrictions on public marketing of listings during a specified period unless the seller authorizes it.

Buyer representation includes needs analysis, property search, comparative market analysis, showing logistics, disclosure of agency, offer preparation, negotiation, and coordination of inspections and closing.

Comparative market analysis and broker price opinions are not appraisals; appraisals require a licensed or certified appraiser under federal and state law.

Photographs, virtual tours, floor plans, and listing copy are generally owned or licensed by the brokerage; unauthorized use of another broker's photos can constitute copyright infringement.

Showing instructions, lockbox access, and safety protocols are part of the listing terms; unauthorized access or disclosure of access codes is a license violation and a security risk.

Marketing a property 'as is' does not eliminate disclosure duties for known material defects; it limits repair obligations, not honesty.

Seller property disclosure statements typically cover known material defects, water intrusion, roof, structural, environmental hazards, permits, litigation, and homeowner association obligations; the scope varies by state form.

Caveat emptor has been substantially displaced by statutory disclosure duties and licensee duties to disclose known material facts to all parties.

Federal disclosure requirements include the Residential Lead-Based Paint Hazard Reduction Act (pre-1978 housing), and state-specific disclosures (e.g., natural hazard, Megan's Law, septic, well, and death disclosures).

Agency disclosure must be made at first substantive contact or before an offer in most jurisdictions; written confirmation is required before a binding agreement.

Due diligence period permits buyer inspections (home, pest, radon, mold, sewer, well, structural, environmental), title review, survey, and review of HOA documents; buyer may terminate within the period per contract terms.

Stigmatized properties (deaths, alleged hauntings, former occupants with illness) are handled by state law; some states limit disclosure obligations, others require disclosure of AIDS or death only in specific circumstances.

Consumer protection statutes prohibit deceptive trade practices, false advertising, bait-and-switch, and misrepresentation of value, financing terms, or property condition.

Disclosure of known environmental hazards (lead, asbestos, radon, underground storage tanks) and flood zone status is required where statutes apply; flood disclosure requirements have expanded in many states.

Loan estimate must be delivered within three business days of application; closing disclosure must be delivered at least three business days before consummation under TILA-RESPA integrated disclosure rules.

Escrow and trust accounts require segregation of client funds, accurate ledgers, timely deposits, and reconciled monthly bank statements; commingling or conversion is a license violation.

Good faith estimate and tolerance categories: zero tolerance (lender fees, transfer taxes), 10 percent cumulative tolerance (recording fees, some third-party services), and unlimited tolerance (prepaid interest, property insurance, escrow deposits).

Settlement statement shows debits and credits to buyer and seller; prorations for taxes, rent, and HOA dues are calculated to the closing date per contract and local custom.

RESPA prohibits kickbacks, referral fees, and unearned fee splits among settlement service providers; affiliated business arrangements require disclosure and no required use.

Title insurance: lender's policy protects the lender up to the loan amount; owner's policy protects the buyer; simultaneous issue reduces cost; endorsements address specific risks (survey, access, zoning).

Escrow instructions bind the escrow holder; conflicting instructions require resolution before closing; the escrow holder is a neutral stakeholder, not an agent of either party.

Loan types and underwriting: conventional, FHA, VA, USDA, and jumbo; each has distinct down payment, mortgage insurance, appraisal, and property condition requirements affecting closing.

NAR Code of Ethics Articles address duties to the public and to clients, including honesty, non-discrimination, disclosure of compensation, and avoidance of misrepresentation; enforcement is by local boards.

Commingling of client funds with personal or brokerage funds is prohibited; trust accounts must be maintained in an insured institution with proper records and periodic reconciliation.

Recordkeeping: retain listing agreements, buyer-broker agreements, offers, counteroffers, disclosures, closing statements, and trust account records for the statutory retention period, commonly three to five years.

Confidential information learned during the agency relationship may not be disclosed without consent, even after the relationship ends, unless required by law or to prevent a crime.

Advertising and social media posts are subject to the same truthfulness, fair housing, and brokerage-identification rules as traditional advertising; personal opinions that violate fair housing are still violations.

Conflicts of interest (referral relationships, affiliated businesses, personal interest in the property) must be disclosed in writing and managed per state law and brokerage policy.

Licensees may not practice law, provide legal advice, or draft legal documents beyond statutory forms; unauthorized practice of law is a license violation.

Continuing education, license renewal, and reporting of criminal convictions or disciplinary actions are affirmative duties; failure to report can result in additional discipline.