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MA Real Estate practice questions

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Question 1Massachusetts License Law and Board Regulations

What is the minimum age at which a person may be licensed as a real estate salesperson in Massachusetts?

  1. 21 years
  2. 19 years
  3. 16 years
  4. 18 years Correct answer.

Explanation

Massachusetts license law requires a salesperson applicant to be at least 18 years old, of good repute, to complete the required pre-licensing education, and to pass the examination. Age alone is not enough; the other qualifications must also be met.

Question 2Massachusetts License Law and Board Regulations

Under Massachusetts Board regulations, how many hours of pre-licensing education must a salesperson applicant complete before sitting for the licensing examination?

  1. 24 hours
  2. 40 hours Correct answer.
  3. 12 hours
  4. 60 hours

Explanation

Applicants for a salesperson license must complete a Board-approved pre-licensing course totaling 40 hours before taking the examination. The course requirement is separate from the examination and from any continuing education taken later.

Question 3Massachusetts License Law and Board Regulations

How much continuing education must a Massachusetts real estate licensee complete in each license renewal period?

  1. 8 hours every year
  2. 12 hours every two years Correct answer.
  3. 15 hours every two years
  4. 6 hours every year

Explanation

Massachusetts requires 12 hours of continuing education during each two-year license period, with the Board specifying required subject areas within that total. The requirement applies to both brokers and salespersons.

Question 4Massachusetts License Law and Board Regulations

A licensed Massachusetts salesperson may perform brokerage activities only:

  1. after three years of experience
  2. as an independent contractor with direct clients
  3. while associated with a licensed broker Correct answer.
  4. while maintaining a separate escrow account

Explanation

A salesperson's authority is derived from the employing broker; the salesperson must be associated with a licensed broker in order to act. Independent contractor tax status does not remove the requirement of broker affiliation.

Question 5Massachusetts License Law and Board Regulations

Where must a broker keep the brokerage license issued for an office?

  1. Displayed conspicuously in the licensed office Correct answer.
  2. Locked in the broker's personal files
  3. Mailed to the Board at each renewal
  4. Filed with the local board of assessors

Explanation

Board regulations require the license to be displayed conspicuously at the licensed office so that the public and the Board can verify the license status of the office. Keeping it in a file or sending it away defeats that purpose.

Question 6Massachusetts License Law and Board Regulations

Massachusetts real estate licenses are renewed:

  1. every four years
  2. every three years
  3. every two years Correct answer.
  4. annually on January 1

Explanation

Massachusetts real estate licenses run on a two-year renewal cycle, and the continuing education requirement is tied to that same cycle. Failure to renew means the licensee may no longer perform brokerage acts.

Question 7Massachusetts License Law and Board Regulations

Which practice by a Massachusetts licensee violates state fair housing requirements?

  1. Refusing to show homes in a neighborhood because of the buyer's race Correct answer.
  2. Asking every buyer for a mortgage pre-approval letter
  3. Requiring a signed buyer agency agreement before showings
  4. Limiting a listing's advertising to the brokerage's own website

Explanation

Licensees may not deny brokerage services or vary their terms on the basis of race or any other protected characteristic. Refusing to show homes because of the buyer's race is a classic fair housing violation and also subjects the licensee to Board discipline.

Question 8Massachusetts License Law and Board Regulations

A Massachusetts salesperson earns a commission in a closing. The seller offers to pay the salesperson's share directly at the closing table. The salesperson:

  1. may split the payment with the broker at closing
  2. must be paid through the employing broker Correct answer.
  3. may accept it if the seller signs a receipt
  4. may accept it if the amount is under $1,000

Explanation

A salesperson may receive compensation for brokerage services only from the employing broker, who is responsible for paying the salesperson's share. Direct payment from a client would also blur the broker's supervisory and recordkeeping responsibility.

Question 9Massachusetts License Law and Board Regulations

A Massachusetts broker represents both the seller and the buyer in the same transaction. The broker must:

  1. have the seller sign a new exclusive listing
  2. obtain written informed consent from both parties Correct answer.
  3. reduce the total commission by half
  4. refer the buyer to another brokerage

Explanation

Massachusetts permits dual agency only with the written informed consent of both parties after full disclosure of the conflicts it creates. Without that consent the broker may not act for both sides.

Question 10Massachusetts License Law and Board Regulations

A broker receives a $10,000 earnest money deposit and puts it in the firm's general operating account, later using part of it to pay advertising bills. This conduct is:

  1. permissible with the buyer's written consent
  2. permissible if the broker keeps a ledger
  3. permissible if the money is restored before closing
  4. prohibited commingling of trust funds Correct answer.

Explanation

Client funds must be held in a separate escrow or trust account and may not be mixed with the broker's own funds or spent on business expenses. Commingling and converting trust funds are grounds for discipline.

Question 11Massachusetts License Law and Board Regulations

Which task may an unlicensed assistant lawfully perform for a Massachusetts brokerage?

  1. Holding an open house and quoting prices
  2. Scheduling appointments and answering the phone Correct answer.
  3. Negotiating counteroffer terms with a buyer
  4. Explaining the terms of a purchase agreement

Explanation

Unlicensed staff may perform clerical and administrative functions such as answering calls and scheduling appointments. Activities that involve negotiating, advising, or discussing price and contract terms are brokerage services reserved to licensees.

Question 12Massachusetts License Law and Board Regulations

A corporation wants to operate as a real estate brokerage in Massachusetts. The corporation must:

  1. designate a licensed broker as broker of record Correct answer.
  2. license every officer of the corporation
  3. employ at least three licensed salespersons
  4. register only with the Secretary of State's office

Explanation

A corporate broker entity must designate a licensed broker who is responsible for the entity's brokerage activities and for supervising its licensees. Entity registration alone does not authorize brokerage.

Question 13Massachusetts License Law and Board Regulations

A salesperson advertises a listing on social media. Massachusetts rules require the advertisement to:

  1. be approved by the seller in writing
  2. include the name of the employing broker Correct answer.
  3. include the listing price and street address
  4. state the salesperson's license number

Explanation

Advertising by a salesperson must identify the employing brokerage, because the salesperson practices under the broker's license and the public must know which brokerage stands behind the ad. License number, price, and address are not mandatory elements.

Question 14Massachusetts License Law and Board Regulations

Massachusetts brokers must retain transaction records, including listing and closing documents, for at least:

  1. one year
  2. five years
  3. seven years
  4. three years Correct answer.

Explanation

Board regulations require a broker to keep records of brokerage transactions for three years so that the Board can audit compliance. Records include listing agreements, offers, and closing documents.

Question 15Massachusetts License Law and Board Regulations

A licensee personally owns a property and advertises it for sale herself. She must:

  1. disclose in the advertisement that she is a licensee Correct answer.
  2. waive any commission on the sale
  3. list the property with another broker
  4. obtain Board approval before advertising

Explanation

When a licensee sells property in which she has an ownership interest, the advertising must disclose her licensed status so consumers know they are dealing with a licensee acting as a principal. The licensee may sell her own property without another broker or Board approval.

Question 16Massachusetts License Law and Board Regulations

A Massachusetts salesperson license may be associated with:

  1. up to two brokers in different counties
  2. only one broker at any given time Correct answer.
  3. a broker only after three years of experience
  4. any number of brokers if each is notified

Explanation

A salesperson may be affiliated with only one licensed broker at a time, and that broker supervises the salesperson's activities. Splitting allegiance among brokers would undermine supervision and escrow accountability.

Question 17Massachusetts License Law and Board Regulations

A salesperson overstates a property's square footage in a listing, and the buyer later complains. Under Massachusetts Board rules, responsibility rests:

  1. with the seller, who supplied the figure
  2. with the supervising broker as well as the salesperson Correct answer.
  3. solely with the multiple listing service
  4. with the buyer's agent for failing to verify it

Explanation

A broker must supervise the brokerage activities of affiliated licensees and is answerable to the Board for violations within the office, in addition to the salesperson who made the misstatement. Reliance on information supplied by the seller does not eliminate the duty to avoid misrepresentation.

Question 18Massachusetts License Law and Board Regulations

A broker wants to pay $500 to an unlicensed friend who introduced the buyer who purchased a listing. The payment is:

  1. allowed if the seller approves it in the listing agreement
  2. allowed if the amount is under $1,000
  3. allowed if the friend signs a W-9
  4. prohibited as unlicensed brokerage activity Correct answer.

Explanation

Compensation for procuring a buyer is compensation for brokerage services, which may be paid only to a licensed person. Paying an unlicensed finder is itself a violation by the broker, regardless of amount or client approval.

Question 19Massachusetts License Law and Board Regulations

Massachusetts regulations require a licensee to disclose which party the licensee represents:

  1. only when a written offer is signed
  2. at the first personal meeting with the prospective buyer or tenant Correct answer.
  3. only if the prospective buyer asks
  4. only at the closing

Explanation

A licensee must disclose the agency relationship, and provide the agency disclosure form, at the first personal meeting with a prospective buyer or tenant to discuss a specific property. Waiting for an offer or a closing question comes too late to inform the consumer.

Question 20Massachusetts License Law and Board Regulations

A salesperson leaves Broker A and joins Broker B. Before doing business on Broker B's behalf, the salesperson must:

  1. keep the old license card and inform Broker A
  2. wait 30 days before working with buyers
  3. complete another 40-hour pre-licensing course
  4. have her license transferred to Broker B Correct answer.

Explanation

The license must be transferred to the new employing broker, with the appropriate notice and paperwork filed with the Board, before the salesperson acts for that broker. Until then the salesperson is not authorized to practice under the new brokerage.

Question 21Massachusetts License Law and Board Regulations

A sale collapses and both the buyer and the seller claim the escrow deposit held by the broker. The broker should:

  1. apply the deposit toward the broker's unpaid commission
  2. return the full deposit to the buyer immediately
  3. hold the funds until the parties agree or a court orders Correct answer.
  4. release the deposit to the seller who gave the listing

Explanation

Where entitlement to a deposit is disputed, the broker must keep the funds intact in escrow until the parties reach a written agreement or a court directs distribution. Unilaterally releasing the money exposes the broker to liability for the full amount.

Question 22Massachusetts License Law and Board Regulations

A person whose broker license expired last month continues to list and sell homes for a fee. In Massachusetts this conduct:

  1. is lawful if renewal fees are paid within 60 days
  2. is lawful as long as no client complains
  3. is a minor violation cured by paying a late fee
  4. is unlawful practice exposing the person to penalties and license refusal Correct answer.

Explanation

Practicing brokerage without a current license is unlawful and can result in criminal penalties as well as Board action, including refusal to issue or renew a license. An expired license provides no authority to perform brokerage acts.

Question 23Massachusetts License Law and Board Regulations

A Massachusetts broker opens a second office in another town. Under Board rules, the broker must:

  1. notify the local MLS only
  2. wait until the next renewal to report it
  3. license the branch office and supervise it through a broker Correct answer.
  4. transfer the main office license to the new location

Explanation

Each office location where brokerage is conducted must be licensed and placed under the supervision of a licensed broker, so that the Board can identify who is accountable for that office. The main office license cannot simply be moved.

Question 24Massachusetts License Law and Board Regulations

A broker wishes to operate under a business name rather than her own personal name. Under Massachusetts rules, she must:

  1. do nothing further, since a sole proprietor may use any name
  2. add the abbreviation 'Inc.' after the name
  3. register the business name with the Board Correct answer.
  4. file the name only with the local MLS

Explanation

A brokerage may not advertise or operate under a fictitious or trade name unless the name is registered with the Board, so consumers can trace the business name to a licensed broker. Registration with the MLS or a corporate suffix does not satisfy this requirement.

Question 25Massachusetts License Law and Board Regulations

An applicant for a Massachusetts broker license generally must have:

  1. three years of licensed salesperson experience plus the broker course Correct answer.
  2. a bachelor's degree in business administration
  3. five years of experience in any sales field
  4. two years of experience and a sponsor's letter

Explanation

Broker applicants must have the required period of experience as a licensed salesperson together with completion of the broker pre-licensing course. Experience in unrelated sales fields and academic degrees do not substitute for licensed real estate experience.

Question 26Massachusetts License Law and Board Regulations

A Massachusetts homeowner asks a friend to find tenants for her duplex. The friend is not licensed but will receive a fee equal to one month's rent once a tenant signs a lease. Under Massachusetts license law, the friend:

  1. may accept the fee only if the new tenant pays it
  2. may accept the fee because residential leasing is exempt from licensing
  3. may accept the fee if the owner signs a written management agreement
  4. must be licensed before accepting the fee Correct answer.

Explanation

Massachusetts requires a real estate license for anyone who, for another person and for compensation, negotiates leases or procures tenants. The exemption for owners handling their own property does not extend to a friend or agent acting for a fee. Because the friend is being paid to find tenants, the activity is brokerage and a license is required.

Question 27Agency, Fiduciary Duties, and Brokerage Relationships

Under Massachusetts license law, when must a licensee give the mandatory consumer relationship disclosure to a prospective client in a residential transaction?

  1. At the closing, as part of the settlement statement
  2. Within ten days after the listing agreement is signed
  3. At the first personal meeting, before any agreement Correct answer.
  4. Only after a written offer to purchase has been accepted

Explanation

Massachusetts requires the licensee to deliver the relationship disclosure form at the first personal meeting with the prospective client and before any written agreement is entered into, with the consumer's signed acknowledgment. The purpose is to let the consumer choose the type of relationship before committing to one.

Question 28Agency, Fiduciary Duties, and Brokerage Relationships

Which fiduciary duty requires a licensee to place the client's interests ahead of the licensee's own financial interest?

  1. Accounting
  2. Confidentiality
  3. Care
  4. Loyalty Correct answer.

Explanation

Loyalty is the duty of undivided allegiance to the client; it forbids self-dealing, secret profits, and advancing the licensee's interest at the client's expense. The other duties address recordkeeping, protecting client information, and professional competence.

Question 29Agency, Fiduciary Duties, and Brokerage Relationships

In Massachusetts, how is a salesperson who obtains a listing and closes the sale compensated?

  1. By the buyer at closing as a separate fee
  2. Through the salesperson's employing broker Correct answer.
  3. From the local board's commission pool
  4. By direct payment from the seller at closing

Explanation

A salesperson's license is held under an employing broker, so commissions are paid to the broker, who then disburses the salesperson's share under their agreement. Accepting compensation for brokerage services directly from a client or other third party is grounds for discipline.

Question 30Agency, Fiduciary Duties, and Brokerage Relationships

A Massachusetts licensee assists both a buyer and a seller in a transaction but represents neither of them as an agent. The licensee is acting as:

  1. A subagent
  2. A designated seller's agent
  3. A facilitator Correct answer.
  4. An undisclosed dual agent

Explanation

Massachusetts recognizes the facilitator, a non-agent who assists the parties without representing either one. A facilitator owes honesty, fairness, disclosure of known material defects, and accounting for funds, but not fiduciary advocacy.

Question 31Agency, Fiduciary Duties, and Brokerage Relationships

For a Massachusetts licensee to act as a disclosed dual agent, what is required?

  1. A separate license endorsement from the state
  2. Informed written consent from both parties Correct answer.
  3. Approval by the local board of realtors
  4. Verbal notice to both parties before closing

Explanation

Dual agency limits the fiduciary duties the licensee can provide, so both the buyer and the seller must give informed written consent after disclosure. Without that consent, acting for both sides is undisclosed dual agency and a license-law violation.

Question 32Agency, Fiduciary Duties, and Brokerage Relationships

The Massachusetts mandatory licensee-consumer relationship disclosure form, once signed by a consumer:

  1. Waives the consumer's right to sue for misrepresentation
  2. Binds the consumer to one brokerage for a full year
  3. Does not by itself create an agency relationship Correct answer.
  4. Creates a dual agency relationship in every transaction

Explanation

The disclosure form is an informational document acknowledging that the consumer has been told about the available relationship options; it is not a contract. The actual agency relationship arises from a separate brokerage agreement between the parties.

Question 33Agency, Fiduciary Duties, and Brokerage Relationships

A buyer works with the listing broker on a home but has signed no agreement with that broker. The buyer is best described as:

  1. A customer of the broker, not a client Correct answer.
  2. The broker's lawful subagent in the transaction
  3. A facilitator's principal with limited duties
  4. A dual agent's client under a written agreement

Explanation

A customer receives honest dealing and disclosure of known material facts but is not owed fiduciary duties such as loyalty or advocacy. Here the broker's client remains the seller, so the buyer is a customer.

Question 34Agency, Fiduciary Duties, and Brokerage Relationships

A seller's agent learns that the basement has a chronic water-intrusion problem. What must the agent do?

  1. Disclose the known material defect to buyers Correct answer.
  2. Disclose it only if a buyer asks about the basement
  3. Keep it confidential as the seller's private information
  4. Disclose it only after an offer has been accepted

Explanation

The duty of honesty and fair dealing requires a licensee to disclose known material physical defects to all parties, regardless of which side the licensee represents. Confidentiality protects the client's personal and financial information, not latent property defects.

Question 35Agency, Fiduciary Duties, and Brokerage Relationships

A buyer's agent asks a listing agent whether the seller would accept less than the list price. The listing agent should:

  1. Answer honestly, since material facts must be disclosed
  2. Decline; the seller's position is confidential Correct answer.
  3. Hint at the seller's flexibility to draw an offer
  4. Refer the buyer's agent directly to the seller

Explanation

The seller's motivation, urgency, and price floor are confidential client information that the agent may not reveal without authorization. The duty of disclosure reaches material property facts and known defects, not the client's negotiating position.

Question 36Agency, Fiduciary Duties, and Brokerage Relationships

Under Massachusetts practice, what does designated agency permit?

  1. The seller being represented by two competing firms
  2. One agent who advocates fully for both parties
  3. A licensee paid by both parties without disclosure
  4. Two licensees in one firm each represent one side Correct answer.

Explanation

Designated agency allows a brokerage to stay neutral while separate licensees within the firm each advocate for their own client, provided both parties give informed written consent. Confidential information belonging to one designated client may not be shared with the licensee on the other side.

Question 37Agency, Fiduciary Duties, and Brokerage Relationships

A Massachusetts broker receives a $10,000 deposit on a purchase and sale agreement. The broker must:

  1. Deposit it in the broker's general operating account
  2. Deposit it in a separate escrow account Correct answer.
  3. Apply it to marketing costs if the deal collapses
  4. Turn it over to a salesperson to hold until closing

Explanation

Client funds may not be commingled with the broker's own money; deposits must be held in a separate escrow or trust account and accounted for. Misusing or converting those funds is a serious license-law violation.

Question 38Agency, Fiduciary Duties, and Brokerage Relationships

A broker shows a buyer several homes, but the buyer later purchases one of them through a different broker. The first broker's claim for a commission depends primarily on:

  1. Whether the first broker advertised the property online
  2. Whether the listing broker was told about the buyer
  3. Whether the buyer signed a dual agency consent form
  4. Whether the first broker was the procuring cause Correct answer.

Explanation

Entitlement to a cooperating commission generally turns on procuring cause, meaning an unbroken chain of events set in motion by the broker that culminates in the sale. A written buyer agency agreement may also define the broker's right to compensation.

Question 39Agency, Fiduciary Duties, and Brokerage Relationships

A buyer tells her agent she would pay up to $600,000 even though she offered $540,000. The listing agent asks whether the offer is the buyer's best. The buyer's agent should:

  1. Tell the listing agent the buyer can go a bit higher
  2. Withdraw the offer and resubmit it at $600,000
  3. Conceal it and convey only the terms the buyer authorized Correct answer.
  4. Disclose the $600,000 figure to encourage acceptance

Explanation

Loyalty and confidentiality forbid a buyer's agent from revealing the client's negotiating ceiling or financial capacity without authorization. The agent may transmit only the terms and information the buyer has approved.

Question 40Agency, Fiduciary Duties, and Brokerage Relationships

A licensee wants to buy a home she has listed for a seller-client. Which approach is consistent with her fiduciary duties?

  1. Buy it through a relative without telling the seller
  2. Make an offer without revealing that she is the buyer
  3. Disclose her interest in writing and get the seller's consent Correct answer.
  4. Wait for the listing to expire, then buy it cheaply

Explanation

Purchasing the client's property puts the licensee's interest in direct conflict with the client's, so full written disclosure of the licensee's status and interest, plus the client's informed consent, is required. Structuring the purchase to hide the licensee's identity compounds the breach.

Question 41Agency, Fiduciary Duties, and Brokerage Relationships

A licensee representing the seller begins privately coaching the buyer on negotiating strategy without the consent of either party. This conduct is best characterized as:

  1. Permissible customer service
  2. Undisclosed dual agency Correct answer.
  3. Designated agency without consent
  4. Lawful facilitator conduct

Explanation

Providing representation-level assistance to the opposing party without disclosure and informed written consent is undisclosed dual agency. It breaches loyalty to the seller and exposes the licensee to discipline.

Question 42Agency, Fiduciary Duties, and Brokerage Relationships

Which event terminates an agency relationship by operation of law?

  1. The buyer's request for a second showing
  2. The death of the principal Correct answer.
  3. The renewal of the licensee's license
  4. The seller's decision to raise the list price

Explanation

Agency terminates by operation of law on events such as the death or incapacity of the principal or the destruction of the property. Ordinary transaction developments and license renewals do not end the relationship.

Question 43Agency, Fiduciary Duties, and Brokerage Relationships

A Massachusetts broker wants to pay a $500 referral fee to an unlicensed friend who introduced a buyer. This payment is:

  1. Allowed if the friend signs a written release
  2. Allowed if the fee is under $1,000
  3. Prohibited; referral fees may only go to licensees Correct answer.
  4. Allowed if it is disclosed to the buyer

Explanation

The license law bars sharing compensation for brokerage activity with unlicensed persons, because paying for referrals is part of the licensed activity. Disclosure, a small dollar amount, or a release does not cure the violation.

Question 44Agency, Fiduciary Duties, and Brokerage Relationships

A seller lists under an exclusive right to sell and, during the listing term, personally finds a buyer without any help from the broker. The broker is entitled to:

  1. Half the agreed commission
  2. The full agreed commission Correct answer.
  3. Reimbursement of marketing expenses only
  4. Nothing, because the broker did not procure the buyer

Explanation

Under an exclusive right to sell, the broker earns the agreed commission if the property sells during the listing period, no matter who produced the buyer. That is what distinguishes it from an exclusive agency listing, which protects the seller who finds a buyer independently.

Question 45Agency, Fiduciary Duties, and Brokerage Relationships

A seller instructs her agent to advertise the property as 'no families with children.' The agent should:

  1. Comply but note the instruction in the MLS remarks
  2. Comply, because the seller is the agent's principal
  3. Refuse; obedience covers only lawful instructions Correct answer.
  4. Comply only if the seller signs a written indemnity

Explanation

The duty of obedience obligates the licensee to follow the client's lawful instructions, not unlawful ones. Advertising that excludes families with children violates fair housing law, so the agent must refuse and explain why.

Question 46Agency, Fiduciary Duties, and Brokerage Relationships

Which fiduciary duty obligates a licensee to perform at the level of skill and diligence expected of a competent professional?

  1. Accounting
  2. Loyalty
  3. Care Correct answer.
  4. Obedience

Explanation

The duty of care requires reasonable competence and diligence, such as verifying listing information, meeting deadlines, and recommending expert inspections when needed. Breaching it can support a negligence claim even without dishonest intent.

Question 47Agency, Fiduciary Duties, and Brokerage Relationships

A disclosed dual agent is negotiating between a buyer and a seller. Which action is permitted?

  1. Telling the seller the buyer's top price
  2. Conveying offers and counteroffers accurately to both sides Correct answer.
  3. Keeping one offer secret to improve the other side's position
  4. Arguing aggressively for the seller's position

Explanation

A dual agent may not advocate for either party or reveal one party's confidences, but must faithfully transmit offers and counteroffers and facilitate the transaction. Informed written consent to the limited role is required.

Question 48Agency, Fiduciary Duties, and Brokerage Relationships

In a cooperative Massachusetts transaction, a buyer's agent is typically compensated how?

  1. Directly by the buyer at closing, from no other source
  2. Through a split offered by the listing broker Correct answer.
  3. By retaining part of the buyer's earnest money deposit
  4. By the lender as part of the buyer's closing costs

Explanation

Buyer agents are commonly paid from a cooperating share of the total commission offered by the listing broker, and the arrangement must be disclosed to the buyer in the agency agreement. The buyer remains ultimately responsible for the agent's compensation unless the agreement says otherwise.

Question 49Agency, Fiduciary Duties, and Brokerage Relationships

At an open house, a licensee tells a visitor, 'I'll look out for your interests.' No written agreement exists. In Massachusetts, this statement most likely:

  1. Makes the visitor a dual agent's client
  2. Creates a facilitator relationship automatically
  3. Has no effect, because agency requires a writing
  4. Can create an agency relationship through conduct Correct answer.

Explanation

Agency can arise from the parties' words and conduct even without a written contract, so a licensee whose statements lead a consumer to believe she is represented may owe fiduciary duties. Licensees should be precise about whom they represent to avoid unintentionally creating an agency.

Question 50Agency, Fiduciary Duties, and Brokerage Relationships

A buyer's agent learns the buyer was recently denied a mortgage. The listing agent asks about the buyer's financing. The buyer's agent should:

  1. Disclose it as a material fact about the transaction
  2. Share the details so the seller can plan accordingly
  3. Keep it confidential; relay only authorized information Correct answer.
  4. Confirm only that financing is proving difficult

Explanation

A client's financial circumstances are confidential information that the agent may not disclose without authorization. The agent may still discuss the financing contingency the buyer has chosen to include in the offer.