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PA Real Estate practice questions

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Question 1Real Estate Principles and Practices

A Pennsylvania real estate salesperson has earned a commission on a completed transaction. From whom may the salesperson lawfully collect that compensation?

  1. The buyer, if the buyer signs a separate written agreement
  2. Any party to the transaction who promised to pay it
  3. The listing broker, even if that broker does not employ the salesperson
  4. The salesperson's employing broker Correct answer.

Explanation

A salesperson's license authorizes brokerage activity only while supervised by a licensed broker, so all compensation flows first to the employing broker. The broker then pays the salesperson according to their own agreement.

Question 2Real Estate Principles and Practices

Under the Pennsylvania Seller's Property Disclosure Law, when must the residential seller's disclosure statement ordinarily be delivered to the buyer?

  1. Only if the buyer submits a written request for it
  2. Within seven days after the agreement of sale is signed
  3. Before the buyer signs the agreement of sale Correct answer.
  4. On the day of settlement, before the deed is recorded

Explanation

The statute requires delivery of the completed disclosure statement before the buyer becomes bound by a written agreement of sale. The point is to let the buyer weigh the seller's known defects while the buyer can still withdraw.

Question 3Real Estate Principles and Practices

Which fiduciary duty obligates a licensee to place the principal's interests above the licensee's own interests and above those of any other party?

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

Explanation

Loyalty is the duty to advance the principal's interests above all others, and it underlies the rules against self-dealing, secret profit, and advocacy for a competing party. The other duties concern money handling, competence, and protecting the principal's private information.

Question 4Real Estate Principles and Practices

The Pennsylvania Human Relations Act prohibits housing discrimination on a basis that the federal Fair Housing Act does not cover. That additional protected class is:

  1. Occupation
  2. Marital status
  3. Age Correct answer.
  4. Educational level

Explanation

Federal law protects race, color, religion, sex, national origin, familial status, and disability. The Pennsylvania Human Relations Act adds ancestry and age to that list for housing.

Question 5Real Estate Principles and Practices

Which form of deed gives the grantee the broadest covenants of title?

  1. Special warranty deed
  2. Deed of release
  3. General warranty deed Correct answer.
  4. Quitclaim deed

Explanation

A general warranty deed contains covenants that reach back over the entire chain of title, including the acts of prior owners. A special warranty deed covers only defects arising during the grantor's own period of ownership.

Question 6Real Estate Principles and Practices

To be enforceable, an agreement for the sale of land in Pennsylvania must be:

  1. Acknowledged before a notary public
  2. In writing and signed by the party to be charged Correct answer.
  3. Recorded in the county where the property is located
  4. Witnessed by two disinterested adult witnesses

Explanation

The statute of frauds requires land sale contracts to be in writing and signed by the party against whom enforcement is sought. Notarization and recording are requirements associated with deeds and their recording, not with the enforceability of the contract itself.

Question 7Real Estate Principles and Practices

Money a broker holds for a client, such as a deposit on a pending sale, must be:

  1. Deposited in the broker's general operating account
  2. Converted to a cashier's check and handed to the salesperson
  3. Kept in a separate escrow account Correct answer.
  4. Held in the broker's personal savings account

Explanation

Trust funds must be segregated in an escrow account so they are not commingled with the broker's business money. This protects consumers if the brokerage fails or is sued by its own creditors.

Question 8Real Estate Principles and Practices

Under an exclusive right-to-sell listing, the broker earns a commission when the property is sold:

  1. Only if the sale closes through a cooperating broker
  2. Only if the broker personally procures the buyer
  3. Through any source, including the owner Correct answer.
  4. Only after the listing expires and the property is relisted

Explanation

An exclusive right to sell entitles the broker to compensation no matter who produces the buyer: the broker, a cooperating broker, or the owner. That is what distinguishes it from an exclusive agency listing.

Question 9Real Estate Principles and Practices

A brokerage firm represents both the seller and the buyer in the same transaction. Under Pennsylvania law, the firm may act as a dual agent only if:

  1. Both parties give informed written consent Correct answer.
  2. The seller agrees verbally at the listing presentation
  3. The transaction is exempt from agency disclosure rules
  4. The licensees involved are related by family

Explanation

Dual agency requires the informed consent of every party, in writing, after the brokerage explains what dual agency means and how it limits the brokerage's duties to each client. Without that consent the firm may not represent both sides.

Question 10Real Estate Principles and Practices

A home sells for $300,000 in a Pennsylvania county where the local realty transfer tax rate is 1% and the state rate is 1%. What is the total realty transfer tax on the transaction?

  1. $3,000
  2. $9,000
  3. $6,000 Correct answer.
  4. $1,500

Explanation

Pennsylvania imposes a 1% state realty transfer tax plus a local tax that is commonly 1%, producing a combined rate of 2% here. Two percent of the $300,000 consideration is $6,000.

Question 11Real Estate Principles and Practices

A tenant signs a one-year lease at $1,200 per month. Under the Pennsylvania Landlord and Tenant Act, what is the maximum security deposit the landlord may require during that first year?

  1. $3,600
  2. $1,200
  3. $4,800
  4. $2,400 Correct answer.

Explanation

Pennsylvania limits a residential security deposit to two months' rent during the first year of the lease and to one month's rent after the first year has passed. Two months at $1,200 is $2,400.

Question 12Real Estate Principles and Practices

Which statement about tenancy by the entireties in Pennsylvania is correct?

  1. It may be terminated unilaterally by one spouse's deed
  2. It can be created only by a married couple Correct answer.
  3. Any two co-owners may create it by written agreement
  4. It provides no right of survivorship

Explanation

Tenancy by the entireties is a form of co-ownership reserved for spouses and carries a right of survivorship. Because each spouse holds the whole, one spouse acting alone cannot convey the property free of the other's interest.

Question 13Real Estate Principles and Practices

A retail store operated lawfully for years sits on a parcel that a newly adopted zoning ordinance now designates for residential use. The owner keeps operating the store. This continuing use is best described as:

  1. Spot zoning
  2. A legal nonconforming use Correct answer.
  3. A use variance
  4. A special exception

Explanation

A use that was lawful before a zoning change and is allowed to continue is a legal nonconforming use, often called a grandfathered use. The ordinance cannot ordinarily force the immediate shutdown of an existing lawful use.

Question 14Real Estate Principles and Practices

A borrower with a conforming conventional loan and a good payment history may request cancellation of private mortgage insurance when the loan-to-value ratio, based on the original value, reaches:

  1. 85%
  2. 90%
  3. 80% Correct answer.
  4. 70%

Explanation

The Homeowners Protection Act lets a borrower request PMI cancellation at 80% loan-to-value based on the home's original value. The servicer must terminate PMI automatically when the ratio reaches 78%.

Question 15Real Estate Principles and Practices

A lender agrees to refer all of its borrowers to one title agency in exchange for a monthly payment from that agency. This arrangement is:

  1. Permissible if disclosed on the settlement statement
  2. A prohibited kickback under RESPA Correct answer.
  3. Permissible for loans under $50,000
  4. Permissible if the payment equals fair market value of services

Explanation

Section 8 of RESPA prohibits giving or accepting anything of value in exchange for referrals of settlement service business. Disclosure does not cure the violation; only bona fide payments for goods or services actually furnished at a reasonable price are allowed.

Question 16Real Estate Principles and Practices

At a local association meeting, several competing brokers agree that all of them will charge the same 6% commission. This agreement is:

  1. Acceptable if no seller objects in writing
  2. Illegal price fixing under antitrust law Correct answer.
  3. Acceptable if the state real estate commission approves the rate
  4. Acceptable because it standardizes local practice

Explanation

Commission rates are negotiated between each broker and each client and are never set collectively by competitors. An agreement among competitors on price is per se illegal price fixing under the Sherman Act.

Question 17Real Estate Principles and Practices

A licensee representing the seller shows the home to a buyer, who says, "I would pay $20,000 over the asking price if I had to." What should the licensee do?

  1. Keep the remark confidential because buyers are entitled to confidentiality
  2. Tell only the cooperating broker and let that broker decide
  3. Disclose the remark to the seller Correct answer.
  4. Say nothing to either party to avoid a conflict of interest

Explanation

The buyer is a customer, not a client, so the licensee owes the buyer no duty of confidentiality. The duty of loyalty to the seller requires the licensee to report information that is material to the seller's bargaining position.

Question 18Real Estate Principles and Practices

When must a Pennsylvania licensee give the Real Estate Commission's Consumer Notice to a prospective buyer met at an open house?

  1. At settlement, with the closing documents
  2. At first contact, before any agency is formed Correct answer.
  3. Only when the buyer asks about agency representation
  4. Only after a written agreement of sale is signed

Explanation

The Consumer Notice must be provided at the initial interview or first substantive contact so consumers learn what agency relationships are available before they reveal confidential information. Delivery is the licensee's affirmative obligation, not something triggered by a consumer's question.

Question 19Real Estate Principles and Practices

For how long must a use of another person's land continue in Pennsylvania before it can ripen into a prescriptive easement?

  1. 30 years
  2. 7 years
  3. 21 years Correct answer.
  4. 40 years

Explanation

Pennsylvania's limitations period for prescription, like that for adverse possession, is 21 years of continuous, open, and adverse use. The use must also be without the owner's permission.

Question 20Real Estate Principles and Practices

A licensee prepares an opinion of a home's probable sale price for a prospective seller using recent comparable sales, and the licensee holds no appraiser credential. This activity is:

  1. Permissible only if a certified appraiser reviews and signs the document
  2. A comparative market analysis, which a licensee may prepare Correct answer.
  3. Permissible only for residential properties under $100,000
  4. Illegal, because only a state-certified appraiser may estimate value

Explanation

A comparative market analysis or broker price opinion prepared to support a listing is part of ordinary brokerage practice. A formal appraisal for a federally related loan, by contrast, must be performed by a state-licensed or certified appraiser.

Question 21Real Estate Principles and Practices

Recording a deed in the county office primarily serves to:

  1. Guarantee that the title is free of all defects
  2. Give constructive notice to the world Correct answer.
  3. Transfer ownership from the grantor to the grantee
  4. Satisfy the requirement that the deed be notarized

Explanation

Title passes when a valid deed is delivered, not when it is recorded. Recording protects the grantee by charging later purchasers and lienholders with knowledge of the conveyance.

Question 22Real Estate Principles and Practices

A closing occurs on July 15. The seller has already paid the full year's property tax of $3,600 for the calendar year. Using a 12-month, 30-day year and charging the seller through the day of closing, how much tax should be credited to the seller at closing?

  1. $1,650
  2. $1,950 Correct answer.
  3. $2,100
  4. $2,250

Explanation

A 12-month, 30-day year gives 360 days, so the daily tax is $3,600 divided by 360, or $10. The seller bears 195 days (January 1 through July 15), which is $1,950, and the buyer bears the remaining $1,650.

Question 23Real Estate Principles and Practices

In Pennsylvania, an agency relationship between a broker and a client is created by:

  1. The mere fact that the broker shows the property
  2. A handshake and an oral promise to pay a commission
  3. Recording a notice in the county records
  4. A written agreement signed by the parties Correct answer.

Explanation

Pennsylvania requires agency relationships to be established in writing, and the agreement should state the duties, the term, and the compensation. Showing property or an oral promise alone does not establish the relationship.

Question 24Real Estate Principles and Practices

A seller and buyer sign an agreement of sale stating that the property is sold "as is." Under Pennsylvania law, which statement is correct?

  1. The clause eliminates the buyer's right to a professional inspection
  2. The "as is" clause relieves the seller of the duty to deliver a property disclosure statement
  3. The seller must still deliver the required disclosure statement Correct answer.
  4. The clause shifts all risk of latent defects to the buyer without exception

Explanation

The Seller's Property Disclosure Law applies to residential resale regardless of an "as is" sale. "As is" means the buyer takes the property in its present condition, but it does not excuse the statutory disclosure or liability for fraud and misrepresentation.

Question 25Real Estate Principles and Practices

A licensee routinely steers Hispanic homebuyers toward one neighborhood and white homebuyers toward another. This conduct is:

  1. Permissible because the licensee does not refuse to show any home
  2. Acceptable if the licensee believes the buyers prefer those areas
  3. A fair housing violation known as steering Correct answer.
  4. Acceptable if the neighborhoods are similar in price

Explanation

Steering is channeling buyers toward or away from areas because of a protected characteristic. It violates fair housing law even when no buyer is ever refused service.

Question 26Real Estate Principles and Practices

Which type of deed gives a Pennsylvania grantee the broadest protection against title defects, including defects that existed before the grantor owned the property?

  1. A general warranty deed Correct answer.
  2. A special warranty deed
  3. A correction deed
  4. A quitclaim deed

Explanation

A general warranty deed contains all of the statutory covenants of title, including warranties against encumbrances and for quiet enjoyment, and the grantor's liability extends to defects created by prior owners. A special warranty deed limits the grantor's promise to the period of the grantor's own ownership.

Question 27Real Estate Principles and Practices

Two business partners who are not married take title to an investment property as tenants in common. If one partner dies intestate, what happens to that partner's interest?

  1. It passes to the deceased partner's heirs. Correct answer.
  2. It reverts to the original grantor.
  3. It is forfeited to the commonwealth.
  4. It passes automatically to the surviving partner.

Explanation

A tenancy in common carries no right of survivorship, so each co-owner's fractional share is freely descendible and devisable. On death the share passes through the decedent's estate to heirs or devisees.

Question 28Real Estate Principles and Practices

Under an open listing, a Pennsylvania broker earns a commission only if the broker:

  1. advertises the property in a multiple listing service
  2. is the procuring cause of the sale Correct answer.
  3. is the first broker to show the property to the buyer
  4. obtains a signed buyer agency agreement before showing the property

Explanation

An open listing is a non-exclusive agreement, so the seller may list with several brokers and owes a commission only to the broker whose efforts produced the ready, willing, and able buyer. Procuring cause, not mere advertising or first contact, determines entitlement.

Question 29Real Estate Principles and Practices

A homeowner sells a house and removes the built-in dishwasher that was installed when the house was constructed. That appliance is best described as:

  1. a trade fixture
  2. an emblement
  3. a fixture conveyed with the land Correct answer.
  4. personal property the seller may keep

Explanation

An item permanently attached to the structure and adapted to the use of the property is a fixture, which passes with the real estate unless the sale contract expressly excludes it. A built-in appliance is a classic example of a fixture.

Question 30Real Estate Principles and Practices

Which fiduciary duty requires a Pennsylvania licensee to place the client's financial interest above the licensee's own when advising on offers?

  1. Confidentiality
  2. Reasonable care
  3. Loyalty Correct answer.
  4. Accounting

Explanation

The duty of loyalty obligates the licensee to act solely in the client's best interest and to avoid self-dealing, secret profits, or undisclosed conflicts of interest. The other fiduciary duties address information, money handling, and competence rather than conflicts of interest.

Question 31Real Estate Principles and Practices

In Pennsylvania, a licensed salesperson may perform brokerage services for consumers only:

  1. while supervised by a licensed broker Correct answer.
  2. if a written buyer agency agreement exists
  3. after one year of independent practice
  4. when the client pays the commission directly

Explanation

A salesperson's license is issued in association with a licensed broker, and all brokerage activity must be performed under that broker's supervision. Compensation flows through the broker rather than directly from the consumer to the salesperson.

Question 32Real Estate Principles and Practices

Under the federal Fair Housing Act, which of these is a protected class?

  1. Credit score
  2. Familial status Correct answer.
  3. Educational level
  4. Occupation

Explanation

The federal Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status, and disability. Pennsylvania law adds further protected classes, but familial status is protected under the federal statute itself.

Question 33Real Estate Principles and Practices

Which appraisal approach is most reliable for valuing a public library or a church?

  1. Income capitalization approach
  2. Cost approach Correct answer.
  3. Sales comparison approach
  4. Gross rent multiplier method

Explanation

Special-purpose properties seldom sell and produce no income, so the cost approach - replacement or reproduction cost less depreciation plus land value - is the most dependable method. The other approaches depend on comparable sales or income data that such properties lack.

Question 34Real Estate Principles and Practices

A homeowner's lot is narrower than the side-yard setback in the zoning ordinance, and the owner wants to build an addition that would violate the setback. The owner should apply for:

  1. rezoning of the parcel
  2. a variance Correct answer.
  3. a nonconforming use permit
  4. a special exception

Explanation

A variance grants relief from a dimensional or use standard because of a hardship unique to the property, and it is heard by the zoning hearing board. A special exception involves a use the ordinance already permits with conditions, while rezoning is a legislative act.

Question 35Real Estate Principles and Practices

A property sells for $300,000. The total commission is 5 percent, and the salesperson's share is 50 percent of that commission. How much does the salesperson receive?

  1. $7,500 Correct answer.
  2. $3,750
  3. $22,500
  4. $15,000

Explanation

Multiply the price by the rate to find the total commission: $300,000 times 0.05 equals $15,000. The salesperson receives half of that amount, or $7,500.

Question 36Real Estate Principles and Practices

In Pennsylvania, an otherwise valid deed may be recorded only if it includes:

  1. a current survey of the parcel prepared by a licensed surveyor
  2. the notarized signature of the grantee on the deed
  3. an acknowledgment of the grantor's signature Correct answer.
  4. a municipal certificate of occupancy for the building

Explanation

Recording statutes require that the grantor's signature be acknowledged before a notary or other authorized officer before the deed is accepted for recording. The acknowledgment is what makes the instrument eligible for the public record and supports its use as notice.

Question 37Real Estate Principles and Practices

A deed conveys property 'to Alice for life, then to Ben.' Ben's interest is best described as:

  1. a vested remainder in fee simple Correct answer.
  2. a contingent remainder in fee simple
  3. a reversion
  4. a life estate pur autre vie held by Ben

Explanation

Ben is a named, ascertainable person whose right to take is not subject to any condition, so his remainder is vested rather than contingent. Because the granting clause names no lesser estate for Ben, he takes a fee simple.

Question 38Real Estate Principles and Practices

An agreement of sale states that the buyer's obligation is 'contingent upon buyer obtaining a mortgage at an interest rate not exceeding 6.5%.' The buyer acts in good faith but can obtain financing only at 7%. What is the likely result?

  1. The buyer is in default and forfeits the deposit.
  2. The seller may sue for specific performance.
  3. The buyer may cancel and recover the deposit. Correct answer.
  4. The contract extends automatically for 30 days.

Explanation

The financing term is a condition precedent to the buyer's duty to perform. When the condition fails without fault by the buyer, the buyer is excused and is entitled to the return of earnest money.

Question 39Real Estate Principles and Practices

For a house built before 1978, federal law requires the seller to:

  1. remove all lead-based paint from the dwelling before settlement
  2. record a lead disclosure in the county deed book
  3. disclose known lead hazards and give the EPA pamphlet Correct answer.
  4. obtain a radon test before listing and share the results

Explanation

The federal lead-based paint disclosure rule requires sellers of pre-1978 housing to disclose known lead-based paint and hazards, provide the approved pamphlet, and give the buyer a period to test, which the buyer may waive. Abatement is not mandatory.

Question 40Real Estate Principles and Practices

A buyer obtains an FHA-insured mortgage. Which statement is correct?

  1. The property is exempt from any appraisal requirement.
  2. The minimum down payment is generally 3.5%. Correct answer.
  3. The loan may not be assumed by any future buyer.
  4. The buyer must make a 20 percent down payment.

Explanation

FHA-insured loans generally require a minimum cash investment of 3.5 percent of the purchase price for borrowers meeting the credit threshold. FHA loans remain assumable subject to lender approval, and an FHA appraisal is required.

Question 41Real Estate Principles and Practices

Which federal law requires a lender to disclose the annual percentage rate and the finance charge to a borrower?

  1. The Fair Housing Act
  2. RESPA
  3. The Truth in Lending Act Correct answer.
  4. The Equal Credit Opportunity Act

Explanation

The Truth in Lending Act and its Regulation Z require lenders to disclose the annual percentage rate, finance charge, amount financed, and total of payments in a standardized format. This allows borrowers to compare the true cost of credit across lenders.

Question 42Real Estate Principles and Practices

A borough condemns a privately owned vacant lot in order to build a public fire station. The owner objects. The borough may proceed only if it:

  1. receives consent from a majority of neighbors
  2. pays just compensation for the property Correct answer.
  3. proves the lot qualifies as a nonconforming use
  4. obtains a variance from the zoning hearing board

Explanation

The power of eminent domain allows government to take private property for a public purpose, but both the federal and Pennsylvania constitutions require payment of just compensation. Zoning relief and neighbor approval are unrelated to the condemnation power.

Question 43Real Estate Principles and Practices

A buyer signs an exclusive buyer agency agreement with a broker for 90 days. The buyer later purchases a home directly from a for-sale-by-owner without the broker's help. Under the agreement, the buyer likely:

  1. owes no commission because the broker did not find the home
  2. owes commission only if the broker showed the property
  3. owes the broker the agreed compensation Correct answer.
  4. may cancel the agreement at any time without penalty

Explanation

An exclusive buyer agency agreement entitles the broker to the agreed compensation when the buyer purchases property during the term, regardless of who located the property. Procuring cause is not the test when the buyer has granted exclusivity.

Question 44Real Estate Principles and Practices

The Pennsylvania Real Estate Recovery Fund exists primarily to:

  1. compensate defrauded consumers Correct answer.
  2. pay closing costs for first-time buyers
  3. reimburse brokers for unpaid commissions
  4. fund continuing education for licensees

Explanation

The Recovery Fund allows a person who obtains a court judgment against a licensee for fraud, misrepresentation, or dishonest dealing to collect unpaid damages, subject to statutory limits. Licensees help fund it through fees assessed at licensing.

Question 45Real Estate Principles and Practices

A landowner's parcel is completely surrounded by other private parcels and has no access to a public road. The most likely way to obtain access is:

  1. a license granted by the neighbors
  2. an easement by implication
  3. an easement by necessity Correct answer.
  4. a variance from the zoning board

Explanation

An easement by necessity arises when a parcel is landlocked and strict necessity exists, provided the affected parcels were once under common ownership. Courts imply the right of access because no reasonable use of the land is otherwise possible.

Question 46Real Estate Principles and Practices

A tenant vacates with eight months remaining on a lease and stops paying rent. Under Pennsylvania law, the landlord:

  1. may keep the security deposit without accounting for it
  2. may leave the unit vacant and collect the remaining rent
  3. must make reasonable efforts to relet the premises Correct answer.
  4. must sue within 10 days or waive the claim

Explanation

Pennsylvania law imposes a duty on the landlord to mitigate damages by making reasonable efforts to relet abandoned premises. The landlord may recover the unpaid rent less the amount avoided through reletting, along with reasonable expenses.

Question 47Real Estate Principles and Practices

An owner deeds the same parcel first to Ann, who does not record. The owner then deeds it to Carl, who pays value, has no notice of Ann's deed, and records immediately. In Pennsylvania, title belongs to:

  1. Carl, who took without notice and recorded first Correct answer.
  2. Ann and Carl equally, as tenants in common
  3. the original owner, because the deeds conflict
  4. Ann, because she received the first deed

Explanation

Pennsylvania follows the race-notice recording statute, under which a later purchaser who takes without notice of a prior unrecorded conveyance and records first prevails. Ann's unrecorded deed was vulnerable to a subsequent bona fide purchaser.

Question 48Real Estate Principles and Practices

A Pennsylvania salesperson's license expires on November 30, but the salesperson continues to write agreements of sale through December without renewing. Which statement is most accurate?

  1. The agreements of sale are void and the buyers lose their deposits.
  2. The salesperson is unlicensed and subject to discipline. Correct answer.
  3. The salesperson may collect commissions through the broker as usual.
  4. No penalty applies if renewal fees are paid within the year.

Explanation

Brokerage activity after a license expires constitutes unlicensed practice, exposing the salesperson to disciplinary action and jeopardizing the right to compensation for services performed while unlicensed. The supervising broker may also face discipline for permitting unlicensed activity.

Question 49Real Estate Principles and Practices

A lender servicing a federally related mortgage loan maintains an escrow account for taxes and insurance. Under RESPA, the lender's required cushion may be no more than:

  1. one-fourth of the annual escrow charges
  2. one-twelfth of the annual escrow charges
  3. one-half of the annual escrow charges
  4. one-sixth of the annual escrow charges Correct answer.

Explanation

RESPA limits the lender's escrow cushion to one-sixth of the estimated total annual escrow payments, which equals approximately two months of payments. Amounts held beyond that limit must be refunded or credited to the borrower.

Question 50Real Estate Principles and Practices

A Pennsylvania licensee lists a property and, without the seller's knowledge, arranges to buy it personally through a relative. The seller later learns of this and may:

  1. only file a complaint with the Real Estate Commission
  2. recover damages only if the price was below appraisal
  3. rescind the sale and recover the licensee's profit Correct answer.
  4. do nothing, because a relative was the buyer

Explanation

A licensee must disclose any personal interest in the transaction and obtain the client's informed consent before acquiring the property. Undisclosed self-dealing through a relative breaches the duty of loyalty and entitles the seller to rescind and disgorge the secret profit.