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RI Real Estate practice questions

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Question 1Agency, Brokerage Relationships and Fiduciary Duties

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

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

Explanation

Loyalty is the fiduciary duty that forbids self-dealing, secret profits, and advancing the licensee's interests over the principal's. It is the core duty from which conflicts-of-interest rules flow. Accounting concerns money and documents, obedience concerns lawful instructions, and reasonable care concerns competence.

Question 2Agency, Brokerage Relationships and Fiduciary Duties

A prospective buyer who has signed no representation agreement but is shown a listing by the seller's agent is best described as:

  1. A customer Correct answer.
  2. A dual client of both brokers
  3. A subagent of the buyer
  4. A client of the listing broker

Explanation

An unrepresented consumer in a transaction is a customer, not a client. The licensee owes that person honesty, fairness, and disclosure of known material facts, but not the full package of fiduciary duties owed to a principal.

Question 3Agency, Brokerage Relationships and Fiduciary Duties

A Rhode Island salesperson's agency relationship is generally with:

  1. The multiple listing service that published the listing
  2. The seller only
  3. Each client personally
  4. The broker the salesperson works under Correct answer.

Explanation

Salespersons are licensed under and affiliated with a broker, and they act on the broker's behalf. The broker holds the agency relationship with the client, and the salesperson's duties flow through that broker.

Question 4Agency, Brokerage Relationships and Fiduciary Duties

An agency relationship between a Rhode Island broker and a seller is most reliably created by:

  1. Accepting a commission at the closing
  2. Advertising the property in the newspaper
  3. A verbal understanding reached at the showing
  4. A signed written listing agreement Correct answer.

Explanation

Express agency is created when the principal and broker sign a written agreement spelling out the scope of authority and compensation. Advertising, showing property, or receiving a commission does not by itself establish agency.

Question 5Agency, Brokerage Relationships and Fiduciary Duties

A broker representing both the buyer and the seller in the same transaction must:

  1. Obtain the informed written consent of both parties Correct answer.
  2. Withhold the consent requirement if both parties are friends
  3. Resign from representing the seller once an offer is made
  4. Give full loyalty to whichever party pays the larger fee

Explanation

Dual agency requires the informed, written consent of both principals before the broker may act for both. Without that consent the broker must avoid the conflict, typically by referring one party to another brokerage.

Question 6Agency, Brokerage Relationships and Fiduciary Duties

Under a designated agency arrangement within a single brokerage, which statement is accurate?

  1. The seller's designated licensee must share the buyer's confidential information with the broker
  2. Designated agency removes the need for any written disclosure to the parties at any time
  3. Each designated licensee represents one party; the broker remains neutral Correct answer.
  4. Both designated licensees owe their fiduciary duties to the broker rather than to the parties

Explanation

Designated agency assigns one licensee to represent the buyer and another to represent the seller within the same firm. Each designated licensee owes fiduciary duties to that licensee's own party, while the broker supervises without advocating for either side.

Question 7Agency, Brokerage Relationships and Fiduciary Duties

A listing agent discovers a leaking roof that the seller has not mentioned. The agent's best course is to:

  1. Say nothing because the seller is the agent's client
  2. Wait until after the inspection period to mention it
  3. Disclose the defect to prospective buyers Correct answer.
  4. Tell only buyers who ask directly about the roof

Explanation

A licensee must disclose known material defects affecting the property to prospective buyers, even when the seller would prefer silence. The duty of loyalty to the seller does not authorize concealing material facts from the other side.

Question 8Agency, Brokerage Relationships and Fiduciary Duties

A broker receives an earnest money deposit on a listing. The broker must:

  1. Deposit it in the broker's business operating account
  2. Keep it in a separate trust account as the contract directs Correct answer.
  3. Apply it toward the broker's commission if closing is delayed
  4. Hold it in cash in the office safe until closing

Explanation

Deposit funds belong to the transaction, not the broker, and must be held in a separate trust or escrow account under the terms of the contract. Mixing client funds with the broker's own money is prohibited.

Question 9Agency, Brokerage Relationships and Fiduciary Duties

The duty of obedience requires a licensee to follow:

  1. All lawful instructions of the principal Correct answer.
  2. Only instructions confirmed in writing
  3. Instructions from the buyer as well as the seller
  4. Any instruction that increases the chance of a sale

Explanation

Obedience is limited to instructions that are lawful and within the scope of the agency. A licensee must refuse instructions that would require misrepresentation, discrimination, or another violation.

Question 10Agency, Brokerage Relationships and Fiduciary Duties

A buyer's agent knows the buyer would pay $40,000 above list price. When the listing agent asks how high the buyer will go, the buyer's agent should:

  1. Reveal it only if the seller agrees to pay the agent's fee
  2. Disclose it after the buyer signs an offer
  3. Reveal the figure to speed negotiations
  4. Decline to reveal the buyer's negotiating position Correct answer.

Explanation

A buyer's agent owes confidentiality and loyalty to the buyer, which includes protecting the buyer's negotiating position. Disclosing the buyer's maximum price would harm the client financially and breach loyalty.

Question 11Agency, Brokerage Relationships and Fiduciary Duties

Broker A lists a home. Broker B, acting as a subagent, brings the buyer who purchases the home. Which statement is correct?

  1. Broker B became a dual agent when the buyer made an offer
  2. Broker B owed no duties to anyone because subagents are not agents
  3. Broker B owed fiduciary duties to the buyer
  4. Broker B owed fiduciary duties to the seller through Broker A Correct answer.

Explanation

A subagent is brought into the transaction by the listing broker and represents the listing broker's principal, the seller. The subagent's fiduciary duties therefore run to the seller, not to the buyer it happens to assist.

Question 12Agency, Brokerage Relationships and Fiduciary Duties

A buyer's agent is paid a commission out of the seller's proceeds under a cooperative arrangement. As a result:

  1. The agent still represents only the buyer Correct answer.
  2. The agent legally represents the seller
  3. The agent owes loyalty to whoever pays the fee
  4. The agent becomes a dual agent

Explanation

Who pays the commission does not determine who the licensee represents. A buyer's agent paid from the seller's proceeds remains the buyer's fiduciary and owes loyalty to the buyer alone.

Question 13Agency, Brokerage Relationships and Fiduciary Duties

Which statement best describes how agency disclosure must be made to a Rhode Island consumer?

  1. After the purchase agreement is signed
  2. Only if the consumer asks about agency
  3. At the closing table
  4. In writing before the consumer agrees to be represented Correct answer.

Explanation

Rhode Island requires licensees to make agency disclosure to consumers in writing before the consumer agrees to be represented. Waiting until closing or until the consumer asks defeats the purpose of informed consent.

Question 14Agency, Brokerage Relationships and Fiduciary Duties

The difference between an exclusive right-to-sell listing and an exclusive agency listing is that with an exclusive agency listing:

  1. Any broker may sell and earn the commission
  2. The seller may not sell the property without paying a commission
  3. The seller keeps the right to sell without owing a commission Correct answer.
  4. The listing broker must be the only broker who shows the property

Explanation

Under an exclusive agency listing the seller retains the right to sell the property personally without owing the broker a commission. Under an exclusive right-to-sell, the broker is paid no matter who produces the buyer, including the seller.

Question 15Agency, Brokerage Relationships and Fiduciary Duties

A broker is entitled to a commission based on procuring cause when the broker:

  1. Produced a ready, willing, and able buyer Correct answer.
  2. Showed the property once several months before the sale
  3. Was the first to advertise the property
  4. Attended the closing as a courtesy

Explanation

Procuring cause is the broker's effort that sets in motion an unbroken chain of events resulting in a sale on the seller's terms. The classic formulation is producing a ready, willing, and able buyer. Advertising or isolated showings alone do not establish it.

Question 16Agency, Brokerage Relationships and Fiduciary Duties

A licensee wants to buy a home the licensee has listed. The licensee must:

  1. Withdraw the listing and buy through an unlicensed friend
  2. Disclose the licensee's interest in writing and obtain consent Correct answer.
  3. Wait until the listing expires and then buy without disclosure
  4. Buy quietly so other buyers are not discouraged

Explanation

Self-dealing requires full written disclosure of the licensee's interest and the informed consent of the principal. Buying quietly, directly or through a straw party, breaches the duties of loyalty and disclosure.

Question 17Agency, Brokerage Relationships and Fiduciary Duties

The duty of reasonable care generally requires a licensee to:

  1. Verify the seller's square footage statements by hiring an appraiser
  2. Guarantee that the home is free of structural problems
  3. Recommend inspections and disclose known defects Correct answer.
  4. Provide legal advice about the deed and title

Explanation

Reasonable care means exercising the skill and diligence expected of a competent licensee, which includes recommending professional inspections and disclosing known material facts. It does not make the licensee a guarantor or an attorney.

Question 18Agency, Brokerage Relationships and Fiduciary Duties

A seller instructs the listing agent to steer buyers of a particular religion away from the property. The agent should:

  1. Refuse, because obedience covers only lawful instructions Correct answer.
  2. Follow the instruction but document it in the file
  3. Ask the broker to handle the showings instead
  4. Follow the instruction because obedience is a fiduciary duty

Explanation

The duty of obedience reaches only lawful instructions, and fair housing law forbids discrimination based on religion and other protected characteristics. The agent must refuse and may need to terminate the representation if the seller persists.

Question 19Agency, Brokerage Relationships and Fiduciary Duties

Which event terminates a broker's agency relationship with a seller?

  1. The listing term expires by its own terms Correct answer.
  2. The broker advertises the home in a new publication
  3. The seller signs a purchase agreement with a buyer
  4. The broker's salesperson leaves the brokerage

Explanation

Agency terminates by expiration of the agreed term, by performance, by mutual agreement, by revocation, or by death or incapacity. A pending contract does not by itself end the listing, which usually runs to closing.

Question 20Agency, Brokerage Relationships and Fiduciary Duties

A licensee represents the buyer but privately advises the seller without telling either party. This conduct is best characterized as:

  1. Lawful if no extra commission was charged
  2. A minor paperwork issue correctable at closing
  3. Undisclosed dual agency Correct answer.
  4. Lawful because both parties benefited

Explanation

Advising both sides without the informed written consent of both parties is undisclosed dual agency, which breaches loyalty and disclosure. The licensee must either represent one party only or obtain proper consent to dual representation.

Question 21Agency, Brokerage Relationships and Fiduciary Duties

After a listing agreement expires without a sale, the broker's duty of confidentiality:

  1. It ends when the broker returns the keys and file
  2. It ends the moment the listing agreement expires
  3. It continues indefinitely for confidential information Correct answer.
  4. It continues only if the seller pays an additional fee

Explanation

Confidentiality survives the end of the agency relationship and continues for information the client asked to keep confidential. Returning keys and documents does not release the broker from that duty.

Question 22Agency, Brokerage Relationships and Fiduciary Duties

A salesperson affiliated with a brokerage misrepresents a property's zoning to a buyer. The employing broker:

  1. Has no responsibility because the salesperson is an independent contractor
  2. Is protected as long as the salesperson holds an active license
  3. May be responsible for the salesperson's acts and for supervision Correct answer.
  4. Is liable only if the broker personally attended the showing

Explanation

A broker is responsible for the acts of affiliated licensees and for reasonable supervision of their work. Independent contractor status for tax purposes does not eliminate that supervisory responsibility.

Question 23Agency, Brokerage Relationships and Fiduciary Duties

Upon receiving an offer, a seller's agent must:

  1. Disclose the offer terms to competing buyers
  2. Present the offer promptly to the seller Correct answer.
  3. Hold the offer until a better one arrives
  4. Open the offer only with the buyer present

Explanation

The agent must transmit every offer promptly and objectively to the seller, who decides whether to accept, counter, or reject. Withholding an offer to shop for a better one breaches the duties of obedience and disclosure.

Question 24Agency, Brokerage Relationships and Fiduciary Duties

A licensee receives a payment from a mortgage broker for referring a buyer client. The licensee must:

  1. Report the payment only to the listing broker
  2. Split the payment with the buyer at closing
  3. Disclose the referral arrangement to the client Correct answer.
  4. Keep the arrangement private as a business matter

Explanation

Undisclosed compensation creates a conflict of interest and must be disclosed to the client so the client can evaluate the referral. Secret referral fees breach the duty of loyalty and may violate law.

Question 25Agency, Brokerage Relationships and Fiduciary Duties

A salesperson signs a listing agreement without the broker's authority. The broker later accepts the listing and begins marketing it. The agreement is enforceable because of:

  1. Subagency by operation of law
  2. Ratification by the broker Correct answer.
  3. Estoppel by the seller
  4. Novation at closing

Explanation

Ratification occurs when a principal adopts an unauthorized act, giving it the same effect as if authority had existed from the start. By accepting the listing and performing under it, the broker ratified the salesperson's act.

Question 26Agency, Brokerage Relationships and Fiduciary Duties

A licensee is acting as a seller's agent in a transaction. Which duty does the licensee owe to the buyer who is not represented by any licensee?

  1. Full confidentiality of the buyer's finances
  2. Advancement of the buyer's negotiating position
  3. Undivided loyalty
  4. Honesty and fair dealing Correct answer.

Explanation

A licensee owes unrepresented parties honesty and fair dealing but not the fiduciary duties owed to a client. Loyalty, confidentiality, and advocacy run only to the client.

Question 27Agency, Brokerage Relationships and Fiduciary Duties

In Rhode Island, when must a licensee provide a consumer with the agency disclosure notice?

  1. At the first substantive contact and before any confidential information is shared Correct answer.
  2. Only after a written offer is submitted
  3. Only at the closing table
  4. Within ten days of the first showing

Explanation

Rhode Island requires agency disclosure at the earliest practical moment, before the consumer discloses confidential information. The disclosure is meant to let the consumer choose what to reveal.

Question 28Agency, Brokerage Relationships and Fiduciary Duties

A listing broker holds an accepted offer and a backup offer on the same property. How should the broker handle the backup offer?

  1. Hold it unopened until the first transaction closes
  2. Discard it because the property is already under contract
  3. Present it to the seller and keep it in a written backup position with the seller's consent Correct answer.
  4. Return it to the buyer without informing the seller

Explanation

All offers must be presented to the seller promptly, and a backup offer may be held in a written secondary position if the seller agrees. The broker may not withhold or destroy an offer.

Question 29Agency, Brokerage Relationships and Fiduciary Duties

A brokerage practices designated agency. Which statement about the broker's role is accurate?

  1. The broker is prohibited from receiving any compensation in an in-house transaction
  2. The broker automatically represents the seller in every in-house transaction
  3. The broker becomes a dual agent whenever both sides are clients of the firm
  4. The broker supervises the brokerage but is not the designated agent of either party Correct answer.

Explanation

Under designated agency the broker acts as a supervisor and assigns individual licensees to represent each side, so the broker is not personally the agent of either client. This structure avoids the conflicts of classic dual agency.

Question 30Agency, Brokerage Relationships and Fiduciary Duties

A licensee's client tells the licensee in confidence that the client is filing for bankruptcy. A competing buyer's agent asks the licensee about the client's finances. What is the licensee's best response?

  1. Tell the other agent off the record and ask that it not be repeated
  2. Confirm the rumor only if the other agent promises to keep it quiet
  3. Share the information because financial status affects the transaction
  4. Decline to discuss the matter and disclose nothing without the client's permission Correct answer.

Explanation

Confidentiality prohibits a licensee from disclosing a client's personal or financial information without authorization, even to other licensees. The duty survives casual requests and promises of silence.

Question 31Agency, Brokerage Relationships and Fiduciary Duties

A seller's agent learns that the seller's asking price is well above every comparable sale in the neighborhood. The agent believes the home will not appraise for the contract price. What is the agent's obligation?

  1. Say nothing because the seller sets the price alone
  2. Share the concern with the buyer's agent instead of the seller
  3. Lower the list price without consulting the seller
  4. Advise the seller candidly about pricing risk and market data Correct answer.

Explanation

The duty of care and loyalty requires the agent to give the client honest, informed advice, including unwelcome pricing information. Price decisions remain the client's to make.

Question 32Agency, Brokerage Relationships and Fiduciary Duties

A buyer's agent learns that the buyer plans to convert the garage into a rental unit. Which duty requires the agent to check the local zoning ordinance before advising the buyer?

  1. Reasonable care and skill Correct answer.
  2. Disclosure of agency status
  3. Accounting
  4. Obedience

Explanation

The duty of reasonable care and skill requires a licensee to investigate and communicate material facts such as zoning limits that affect a client's intended use. Obedience, accounting, and disclosure address other obligations.

Question 33Agency, Brokerage Relationships and Fiduciary Duties

A seller directs the listing agent to reject all offers from buyers represented by a particular brokerage. The agent should:

  1. Refuse the instruction and explain that all offers must be presented Correct answer.
  2. Postpone the offers indefinitely without telling the seller
  3. Follow the instruction because the agent owes the seller obedience
  4. Present the offers but hide the buyers' brokerage affiliation

Explanation

Obedience applies only to lawful instructions, and a seller may not lawfully instruct an agent to discriminate or withhold offers. The agent must present all offers and explain the legal limits on the client's directions.

Question 34Agency, Brokerage Relationships and Fiduciary Duties

A listing agreement has an exclusion list naming a prospective buyer. A different licensee in the same brokerage brings that excluded buyer, who buys the home. Which statement is correct?

  1. The exclusion automatically voids the entire listing agreement
  2. The broker forfeits all compensation because an excluded buyer purchased
  3. The broker may collect a commission from both the seller and the buyer
  4. Whether the broker earns a commission depends on the terms of the exclusion and safety clause in the listing Correct answer.

Explanation

Exclusion lists and safety clauses define which prospects do not generate a commission and for how long a broker's procuring-cause claim survives. The written terms of the agreement control the outcome.

Question 35Agency, Brokerage Relationships and Fiduciary Duties

A landlord's agent collects a security deposit from a tenant on the landlord's behalf. How must the agent treat the funds?

  1. Hold them in cash until the lease is signed
  2. Deposit them into the brokerage's general operating account
  3. Deposit them promptly into the designated escrow account and keep records Correct answer.
  4. Apply them toward the agent's commission if the landlord agrees verbally

Explanation

Funds held on behalf of others must be placed promptly in the broker's designated escrow account and accounted for accurately. Commingling with operating funds or holding cash is not permitted.

Question 36Agency, Brokerage Relationships and Fiduciary Duties

Which of the following best describes the duty of accounting as applied to a listing broker?

  1. Reporting known defects in the property to buyers
  2. Providing an accurate written statement of money received and disbursed on the client's behalf Correct answer.
  3. Keeping the client's motivations secret from other licensees
  4. Following all lawful instructions of the seller

Explanation

Accounting means the broker can document every dollar received or spent for the client and produce an accurate statement on request. The other choices describe confidentiality, obedience, and disclosure.

Question 37Agency, Brokerage Relationships and Fiduciary Duties

An out-of-state broker with no Rhode Island license refers a Rhode Island buyer to a licensed Rhode Island broker and receives a referral fee. Which statement is correct?

  1. Referral fees to unlicensed out-of-state brokers are always prohibited
  2. The Rhode Island broker must split the commission equally with the referring broker
  3. The out-of-state broker must open a Rhode Island office before receiving any fee
  4. The sharing may be lawful if the out-of-state broker does not perform brokerage services in Rhode Island and applicable rules are followed Correct answer.

Explanation

Compensation may generally be shared with a licensed broker of another state when that broker does not conduct brokerage activity in Rhode Island and the arrangement complies with state requirements. Performing in-state brokerage without a license is what is prohibited.

Question 38Agency, Brokerage Relationships and Fiduciary Duties

A buyer's agent is showing a home listed by another brokerage. Who does the buyer's agent represent in that showing?

  1. Neither party, because no offer has been written
  2. Both parties, as a matter of law
  3. The buyer, under a written or disclosed agency relationship Correct answer.
  4. The seller, because the listing brokerage controls the showing

Explanation

The buyer's agent represents the buyer, and that relationship exists independent of whether an offer has been written. The listing brokerage's control of the showing does not create representation of the seller by the buyer's agent.

Question 39Agency, Brokerage Relationships and Fiduciary Duties

A licensee's personal friend asks for general information about a listing at an open house but states that she is not ready to work with an agent. The licensee should:

  1. Obtain the friend's confidential financial details to prequalify her informally
  2. Provide the agency disclosure and explain that confidential information should not be shared until representation is decided Correct answer.
  3. Treat the friend as a client because of the personal relationship
  4. Withhold all property information until a representation agreement is signed

Explanation

A licensee must give the agency disclosure early and help the consumer understand that information shared before representation may not be protected. A personal friendship does not create an agency relationship.

Question 40Agency, Brokerage Relationships and Fiduciary Duties

A seller's agent receives a full-price offer from a buyer whose agent says the buyer will not agree to any inspection contingency. The seller wants to counter with a shorter closing date. What is the agent's proper role?

  1. Convey the counteroffer promptly and explain its risks and benefits to the seller Correct answer.
  2. Delay the counteroffer until a second offer arrives
  3. Reject the offer on the seller's behalf to protect the seller's interests
  4. Advise the buyer's agent of the seller's minimum acceptable closing date

Explanation

The agent's role is to transmit communications promptly and advise the client, while the client makes the decision. The agent has no authority to accept or reject offers on the client's behalf.

Question 41Rhode Island Real Estate License Law and Regulation

Which state agency administers real estate licensing and enforcement under the Rhode Island Real Estate Brokers and Salespersons law?

  1. The Department of Business Regulation Correct answer.
  2. The Department of Labor and Training
  3. The Office of the Attorney General
  4. The Secretary of State

Explanation

Rhode Island General Laws chapter 5-20.5 places the licensing, investigation, and discipline of real estate brokers and salespersons with the Department of Business Regulation, which administers the law through its real estate division and the Rhode Island Real Estate Commission.

Question 42Rhode Island Real Estate License Law and Regulation

What is the minimum age for an applicant for a Rhode Island real estate salesperson license?

  1. 25 years
  2. 16 years
  3. 18 years Correct answer.
  4. 21 years

Explanation

An applicant must be at least 18 years old, hold a high school diploma or its equivalent, complete the required pre-license course, and pass the licensing examination before a salesperson license is issued.

Question 43Rhode Island Real Estate License Law and Regulation

A homeowner advertises and sells her own house without hiring a brokerage and without holding a license. How does Rhode Island law treat this?

  1. It is allowed only with a temporary permit from the department
  2. Yes; owners may sell their own property Correct answer.
  3. It is prohibited; every residential sale must involve a licensee
  4. It is allowed only if the price is below the area median

Explanation

The licensing statute reaches persons who perform brokerage services for another for compensation. An individual who buys, sells, or leases her own property is not acting for another and therefore does not need a license.

Question 44Rhode Island Real Estate License Law and Regulation

A salesperson negotiates a sale and the seller tenders a check for the salesperson's share of the commission. What must the salesperson do?

  1. Turn the check over to her broker, who pays her Correct answer.
  2. Endorse it over to the cooperating broker
  3. Keep it as a bonus, provided her broker is notified
  4. Deposit the check and report it to the department within 10 days

Explanation

A salesperson may be compensated only by the broker with whom the salesperson is affiliated. Compensation earned in a transaction belongs to the brokerage, which then pays the salesperson according to their arrangement.

Question 45Rhode Island Real Estate License Law and Regulation

Rhode Island's agency disclosure requirement is satisfied when the licensee provides:

  1. Oral explanation at the first showing
  2. A clause in the purchase contract signed at closing
  3. A posted notice in the office lobby
  4. Written disclosure acknowledged by the consumer Correct answer.

Explanation

The licensee must give the consumer the prescribed agency disclosure in writing and obtain the consumer's acknowledgment, so the consumer knows whom the licensee represents before proceeding. Oral statements, office postings, and contract clauses do not satisfy the requirement.

Question 46Rhode Island Real Estate License Law and Regulation

A licensee intends to act as a dual agent representing both the seller and the buyer in the same transaction. What does Rhode Island law require?

  1. Nothing beyond the standard agency disclosure given at first contact
  2. The informed written consent of the seller and the buyer Correct answer.
  3. Approval from the local board of realtors
  4. That the licensee reduce her commission by half

Explanation

Dual agency must be disclosed to both parties and consented to in writing by each of them. Without informed written consent, a licensee may not represent both sides of the same transaction.

Question 47Rhode Island Real Estate License Law and Regulation

In a designated agency arrangement within a single brokerage, which statement is correct?

  1. The arrangement is not permitted in Rhode Island
  2. The managing broker must personally represent both parties as a dual agent
  3. Confidential information is shared freely between the two licensees
  4. Each designated licensee represents the party appointed to them Correct answer.

Explanation

In designated agency the broker appoints different licensees to represent each side, and each owes full fiduciary duties to the client to whom the licensee was appointed. Confidential information of one client is not shared with the other designated licensee.

Question 48Rhode Island Real Estate License Law and Regulation

A buyer asks the seller's agent why the sellers are moving, and the agent knows the sellers are facing foreclosure. The agent should:

  1. Answer honestly because the buyer is entitled to all known facts
  2. Refer the buyer to the listing agreement for the answer
  3. Hint that the sellers are motivated so the buyer can negotiate
  4. Decline to answer and keep the sellers' motivation confidential Correct answer.

Explanation

A seller's agent owes the seller confidentiality and loyalty, which includes not revealing the seller's motivation or financial circumstances without permission. The agent may decline to answer while still treating the buyer honestly.

Question 49Rhode Island Real Estate License Law and Regulation

A broker who holds a buyer's earnest money deposit must:

  1. Keep the deposit in a separate escrow account Correct answer.
  2. Deposit it in the firm's general business account
  3. Apply it to the firm's marketing expenses
  4. Hold it in the broker's personal savings account

Explanation

Funds held for others must be maintained in a separate escrow or trust account and may not be commingled with the broker's business or personal funds. Earnest money is not the broker's money to spend.

Question 50Rhode Island Real Estate License Law and Regulation

Buyer and seller both claim the earnest money deposit after the sale collapses, and the broker cannot determine who is entitled to it. The broker should:

  1. Return the whole deposit to the buyer, since the sale failed
  2. Hold the funds pending a written agreement or court order Correct answer.
  3. Divide the deposit equally between the buyer and seller
  4. Deposit the money in the broker's general operating account

Explanation

When entitlement to escrowed funds is disputed, the broker acts as a stakeholder and must not disburse unilaterally. Release requires a written agreement signed by the parties or a court order.