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WI Real Estate practice questions

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Question 1Wisconsin Real Estate Law, Statutes and Administrative Rules

Which state entity has the authority to grant, suspend, and revoke Wisconsin real estate licenses?

  1. The Real Estate Examining Board Correct answer.
  2. The Office of the Commissioner of Insurance
  3. The Department of Financial Institutions
  4. The Equal Rights Division

Explanation

Wisconsin Statutes chapter 452 places licensing and disciplinary authority with the Real Estate Examining Board, which is attached to the Department of Safety and Professional Services for administrative support. The Board adopts rules and decides licensing matters; the department handles the paperwork and staffing.

Question 2Wisconsin Real Estate Law, Statutes and Administrative Rules

A Wisconsin real estate license is issued for what period and expires on what date?

  1. Two years, expiring December 14 of even-numbered years Correct answer.
  2. One year, expiring December 31 each year
  3. Four years, expiring June 30 of odd-numbered years
  4. Three years, expiring on the licensee's birth date

Explanation

Wisconsin real estate licenses run on a biennial cycle that ends on December 14 of each even-numbered year. To renew, the licensee must file an application, pay the fee, and show that continuing education has been completed.

Question 3Wisconsin Real Estate Law, Statutes and Administrative Rules

How many hours of continuing education must a Wisconsin licensee complete to renew a license for a full two-year period?

  1. 18 hours Correct answer.
  2. 6 hours
  3. 24 hours
  4. 12 hours

Explanation

Wisconsin requires 18 hours of Board-approved continuing education during each biennial license period. A licensee who does not complete the hours cannot renew and must satisfy the requirement before being licensed again.

Question 4Wisconsin Real Estate Law, Statutes and Administrative Rules

A seller wants to pay a bonus directly to the salesperson who brought the buyer. Under Wisconsin law, how may that bonus be paid?

  1. Directly to the salesperson, if the seller signs a written acknowledgment
  2. Directly to the salesperson, if the salesperson reports it as income
  3. Only to the Real Estate Examining Board, which forwards it to the salesperson
  4. To the salesperson's employing broker, who then pays the salesperson Correct answer.

Explanation

A salesperson may be compensated only by the broker with whom the salesperson is licensed. Any payment offered by a party to the transaction, including a bonus, must be routed through that broker.

Question 5Wisconsin Real Estate Law, Statutes and Administrative Rules

A tenant believes a landlord refused to rent to her because she pays with a housing voucher. Which Wisconsin agency enforces the state open housing law?

  1. The Real Estate Examining Board
  2. The Wisconsin Housing and Economic Development Authority
  3. The Department of Agriculture, Trade and Consumer Protection
  4. The Equal Rights Division of the Department of Workforce Development Correct answer.

Explanation

The state open housing law is administered by the Equal Rights Division of the Department of Workforce Development, which investigates complaints of housing discrimination. Lawful source of income is one of Wisconsin's protected classes, so refusing a voucher holder can violate the statute.

Question 6Wisconsin Real Estate Law, Statutes and Administrative Rules

Where must a deed to Wisconsin real property be recorded?

  1. With the Secretary of State in Madison
  2. With the register of deeds in the county where the property is located Correct answer.
  3. With the Wisconsin Department of Revenue in Madison
  4. With the clerk of the circuit court in the county where the owner lives

Explanation

Recording takes place in the office of the register of deeds for the county where the land is situated. Recording in that office is what gives constructive notice of the conveyance to later purchasers and creditors.

Question 7Wisconsin Real Estate Law, Statutes and Administrative Rules

Wisconsin's real estate transfer fee is charged at what rate?

  1. $3.00 for each $1,000 of value Correct answer.
  2. $10.00 for each $1,000 of value
  3. $1.00 for each $1,000 of value
  4. $5.00 for each $1,000 of value

Explanation

Wisconsin imposes a transfer fee of $3.00 per $1,000 of value on conveyances, reported on the transfer return filed with the Department of Revenue. The fee is typically collected at the time the deed is recorded.

Question 8Wisconsin Real Estate Law, Statutes and Administrative Rules

A Wisconsin landlord withholds part of a residential tenant's security deposit. Within how many days after the tenant vacates must the landlord deliver a written, itemized statement of the amounts withheld?

  1. 14 days
  2. 7 days
  3. 30 days
  4. 21 days Correct answer.

Explanation

Wisconsin Statutes section 704.28 requires the landlord to return the deposit and deliver a written statement of any claims against it within 21 days after the tenant surrenders the premises. A landlord who misses the deadline may lose the right to withhold anything.

Question 9Wisconsin Real Estate Law, Statutes and Administrative Rules

A landlord wants to end a month-to-month residential tenancy that has no fixed term. What notice must the landlord give?

  1. 14 days
  2. 60 days
  3. 5 days
  4. 28 days Correct answer.

Explanation

Wisconsin Statutes section 704.19 requires 28 days' written notice to terminate a month-to-month tenancy. Week-to-week tenancies require only 7 days' notice, and a lease for a year or more requires notice equal to the rental period.

Question 10Wisconsin Real Estate Law, Statutes and Administrative Rules

A residential tenant fails to pay rent when due, and the landlord wants to terminate the tenancy. What notice does Wisconsin law require?

  1. A 30-day notice served by the sheriff
  2. A 5-day written notice giving the tenant the chance to pay or vacate Correct answer.
  3. A 3-day notice to quit with no chance to cure
  4. A 28-day notice to vacate

Explanation

Wisconsin Statutes section 704.17 allows a 5-day written notice when a residential tenant fails to pay rent. If the tenant pays the full amount due within the 5 days, the tenancy continues and no eviction action may proceed.

Question 11Wisconsin Real Estate Law, Statutes and Administrative Rules

What is the amount of Wisconsin's homestead exemption that a judgment debtor may claim?

  1. $100,000
  2. Wisconsin has no homestead exemption
  3. $40,000
  4. $75,000 Correct answer.

Explanation

Wisconsin Statutes section 815.20 exempts up to $75,000 of a homestead from execution on a judgment. The exemption protects the debtor's home but can be lost or limited depending on how the property is owned and used.

Question 12Wisconsin Real Estate Law, Statutes and Administrative Rules

Which transaction requires the seller to deliver a Wisconsin Real Estate Condition Report?

  1. Sale of vacant commercial land zoned for industrial use
  2. Transfer of a home by a court-appointed personal representative under a will
  3. Sale of a 20-unit apartment building by its owner
  4. Resale of a single-family home occupied by its owner Correct answer.

Explanation

Chapter 709 requires a condition report for the sale of residential improved property containing one to four dwelling units. The statute exempts, among others, vacant land, property with more than four units, and transfers by fiduciaries such as estates.

Question 13Wisconsin Real Estate Law, Statutes and Administrative Rules

Under Wisconsin law, what creates an agency relationship between a brokerage firm and a buyer or seller?

  1. The firm advertising the property as its listing
  2. A written agency agreement signed by the client Correct answer.
  3. An oral understanding followed by a showing of the property
  4. Payment of a commission at the closing

Explanation

Wisconsin requires agency relationships to be established in writing, so a firm represents a client only after both sign a written agency agreement. A firm may assist a consumer without becoming that person's agent, but it owes the consumer honest and fair dealing in either case.

Question 14Wisconsin Real Estate Law, Statutes and Administrative Rules

A licensee wants to buy a listed property for her own account. What must the licensee do?

  1. Obtain prior approval from the Real Estate Examining Board
  2. Nothing, because licensees are exempt from disclosure requirements
  3. Disclose the licensee's interest in writing to the parties to the transaction Correct answer.
  4. Disclose the plan only to the listing agent

Explanation

A licensee who acts as a principal in a transaction must disclose that interest in writing and obtain written consent from the parties. The licensee also may not use confidential information obtained from a client to the client's disadvantage.

Question 15Wisconsin Real Estate Law, Statutes and Administrative Rules

A salesperson runs an advertisement for a listing without including the brokerage's name. Who may be disciplined for this advertisement?

  1. Only the broker, who is immune because he did not write the advertisement
  2. Both the salesperson and the supervising broker, because the broker is responsible for the salesperson's advertising Correct answer.
  3. Only the salesperson, because the salesperson wrote the advertisement
  4. Neither, because Wisconsin law does not regulate advertising content

Explanation

A salesperson practices only under the supervision of a broker, and the broker is answerable for the licensed activities of the salespersons the broker supervises. Wisconsin advertising rules also require that advertisements identify the brokerage, so both the salesperson and the broker face discipline.

Question 16Wisconsin Real Estate Law, Statutes and Administrative Rules

Which task may an unlicensed assistant perform for a Wisconsin brokerage?

  1. Negotiating counteroffers between a buyer and seller
  2. Holding an open house and discussing price with visitors
  3. Explaining the terms of a listing contract to a prospective seller
  4. Delivering a signed offer to the seller and scheduling a showing Correct answer.

Explanation

Unlicensed staff may perform clerical and delivery functions, such as delivering documents and arranging appointment times. They may not explain or negotiate terms, quote prices, or otherwise perform acts that require a license.

Question 17Wisconsin Real Estate Law, Statutes and Administrative Rules

Which practice is required of a Wisconsin broker who holds a buyer's earnest money in trust?

  1. Depositing the earnest money in the broker's general operating account until closing
  2. Keeping client funds separate from the broker's own funds and accounting for them accurately Correct answer.
  3. Placing the funds in a personal account selected by the broker
  4. Using the earnest money for office expenses as long as it is repaid before closing

Explanation

Trust funds must be held in a trust account and kept separate from the broker's own money, with records showing each transaction's receipts and disbursements. Commingling or converting trust funds is grounds for discipline and can result in license revocation.

Question 18Wisconsin Real Estate Law, Statutes and Administrative Rules

A seller delivers the Real Estate Condition Report 15 days after the buyer's offer was accepted. What right does the buyer have under Wisconsin law?

  1. The buyer may rescind by written notice within 2 business days after receiving the report Correct answer.
  2. The buyer may rescind at any time before closing
  3. The buyer may automatically sue the seller for fraud
  4. No remedy, because the report was eventually delivered

Explanation

The report must be furnished within 10 days after acceptance of the contract. If it is delivered late, the buyer may rescind the contract by written notice within 2 business days after receiving it, unless the contract provides otherwise.

Question 19Wisconsin Real Estate Law, Statutes and Administrative Rules

Owner O deeds Blackacre to A, who does not record. O then deeds Blackacre to B, who pays value, has no notice of A's deed, and records first. Who prevails in Wisconsin?

  1. A, because A's deed was signed and delivered first
  2. Neither, because the two deeds cancel each other and O remains the owner
  3. A, because Wisconsin is a pure race state and A paid value
  4. B, because B is a good-faith purchaser for value who recorded first Correct answer.

Explanation

Wisconsin Statutes section 706.08 makes an unrecorded conveyance void against a later purchaser who takes in good faith, for value, and records first. That combination of good faith and first recording makes Wisconsin a race-notice jurisdiction.

Question 20Wisconsin Real Estate Law, Statutes and Administrative Rules

Which protected class appears in Wisconsin's open housing law but not in the federal Fair Housing Act?

  1. National origin
  2. Religion
  3. Lawful source of income Correct answer.
  4. Familial status

Explanation

Wisconsin's open housing statute protects additional classes beyond the federal list, including lawful source of income, sexual orientation, marital status, age, and ancestry. Refusing to rent to a tenant who pays with a voucher can therefore violate state law even where federal law would not apply.

Question 21Wisconsin Real Estate Law, Statutes and Administrative Rules

A married couple lives in a home titled only in the husband's name. He wants to sell without his wife's signature. May he do so?

  1. Yes, because title stands in his name alone
  2. No, because the deed also requires signatures from the couple's adult children
  3. No, because the home is the couple's homestead and both spouses must sign the conveyance Correct answer.
  4. Yes, if he first conveys the property to himself by quitclaim deed

Explanation

Wisconsin marital property law gives each spouse an interest in the homestead, and the conveyance statute requires both spouses to sign a conveyance of homestead property even when title is in one name. A buyer who takes without the missing spouse's signature risks an invalid or voidable deed.

Question 22Wisconsin Real Estate Law, Statutes and Administrative Rules

How are the common elements of a Wisconsin condominium owned?

  1. By the association, with unit owners holding no ownership interest
  2. By the unit owners as tenants in common in undivided percentages set by the declaration Correct answer.
  3. By the unit owners as equal shareholders in the association
  4. By the declarant until control of the association is turned over

Explanation

Under Wisconsin Statutes chapter 703, unit owners hold undivided interests in the common elements appurtenant to their units, usually in proportion to each unit's percentage interest. Those interests cannot be separated from the unit and conveyed independently.

Question 23Wisconsin Real Estate Law, Statutes and Administrative Rules

Which element is required for an enforceable contract to convey Wisconsin real property?

  1. Recording of the contract before the closing date
  2. Notarization of the offer before the buyer signs it
  3. A written document signed by the parties that identifies the land and the interest conveyed Correct answer.
  4. A witness in addition to the two contracting parties

Explanation

Wisconsin Statutes section 706.02 requires a conveyance to be in writing, signed by the parties, and to identify the parties, the land, and the interest conveyed. Recording and notarization affect whether the document gives notice to third parties, but they are not needed to create an enforceable contract between the parties.

Question 24Wisconsin Real Estate Law, Statutes and Administrative Rules

Under Wisconsin's general adverse possession statute, how long must a person possess land without permission before acquiring title?

  1. 10 years
  2. 5 years
  3. 40 years
  4. 20 years Correct answer.

Explanation

Wisconsin Statutes section 893.25 sets a 20-year period during which possession must be actual, open, notorious, exclusive, hostile, and continuous. Shorter periods apply only in limited situations, such as possession under color of title with payment of all taxes.

Question 25Wisconsin Real Estate Law, Statutes and Administrative Rules

A Wisconsin broker holds $10,000 in earnest money, and both the buyer and the seller demand it while the transaction is in dispute. What is the broker's proper course of action?

  1. Apply the funds to the broker's commission before disbursing anything
  2. Pay the seller, because the seller still holds legal title to the property
  3. Divide the funds equally between the two parties
  4. Hold the funds, notify both parties, and disburse per a written agreement or court order Correct answer.

Explanation

A broker may not unilaterally decide who is entitled to disputed trust funds. The broker keeps the money in the trust account and disburses it according to a written agreement of the parties or an order of the court, such as in an interpleader action.

Question 26Wisconsin Real Estate Law, Statutes and Administrative Rules

A Wisconsin salesperson licensee wants to earn commissions from two different brokerage firms at the same time. Which statement correctly states the rule?

  1. A salesperson may affiliate with several firms after notifying the board.
  2. A salesperson may affiliate with two firms if both brokers consent in writing.
  3. A salesperson may affiliate with any number of firms as an independent contractor.
  4. A salesperson may be affiliated with only one brokerage firm at a time. Correct answer.

Explanation

A Wisconsin salesperson's license is held through a single brokerage firm, and the salesperson works under that firm's designated broker. All compensation for brokerage services flows through that one firm. A salesperson may not split affiliations among competing brokerages.

Question 27Wisconsin Real Estate Law, Statutes and Administrative Rules

How long is a Wisconsin real estate salesperson license valid before it must be renewed?

  1. Two years, expiring on December 14 of odd-numbered years. Correct answer.
  2. Three years, expiring on the licensee's birth date.
  3. One year, expiring on December 31 of each calendar year.
  4. Four years, expiring on December 14 of even-numbered years.

Explanation

Wisconsin real estate licenses run on a two-year cycle and expire on December 14 of odd-numbered years. Renewal requires timely application, the renewal fee, and completion of continuing education.

Question 28Wisconsin Real Estate Law, Statutes and Administrative Rules

A Wisconsin seller signs a listing contract stating that it continues 'until the property is sold' and containing no expiration date. What is the effect of that provision?

  1. The contract is valid for one year, the longest term the board allows.
  2. The contract remains valid, but the broker forfeits any commission.
  3. The contract is void because it lacks a definite termination date. Correct answer.
  4. The contract is valid but automatically renews every six months.

Explanation

Wisconsin law requires every written brokerage agreement to include a provision for a definite termination date. An agreement without a definite termination date is void, so the broker cannot enforce it or collect a commission under it.

Question 29Wisconsin Real Estate Law, Statutes and Administrative Rules

Wisconsin salespersons and brokers must complete continuing education during each two-year license period. What does the Real Estate Examining Board require?

  1. 18 hours total, including at least 6 hours in required courses. Correct answer.
  2. 30 hours total, including 12 hours of live classroom instruction.
  3. 12 hours total, all of which must cover fair housing.
  4. 8 hours total, with no required subject areas.

Explanation

Wisconsin licensees must complete 18 hours of continuing education per biennium, and a portion of those hours must be in courses the board designates as required rather than in electives. Credit is reported to the department as part of the renewal process.

Question 30Wisconsin Real Estate Law, Statutes and Administrative Rules

A Wisconsin landlord wants to enter a rented duplex unit to inspect it in connection with a planned sale. The tenant is at work. What must the landlord do?

  1. Give at least 48 hours' notice unless the tenant waives the notice period.
  2. Give the tenant written notice of at least 24 hours, signed by the landlord.
  3. Give the tenant advance notice of at least 12 hours and enter at a reasonable time. Correct answer.
  4. Enter without notice and leave a written card afterward explaining the visit.

Explanation

Under Wisconsin law a landlord may enter a residential unit for inspection, repairs, or showings after giving the tenant advance notice of at least 12 hours, during reasonable hours. Entry without notice is limited to emergencies and similar narrow situations.

Question 31Wisconsin Real Estate Law, Statutes and Administrative Rules

A brokerage firm already represents the seller in a transaction. A licensee at the firm also wants to represent the buyer in that same transaction. What does Wisconsin law require?

  1. Automatic termination of the seller's agency agreement once the buyer consents.
  2. Written disclosure to both parties and their written consent to multiple representation. Correct answer.
  3. Nothing, as long as the licensee stays neutral and advocates for neither party.
  4. Oral consent from the buyer only, because the seller is already a client of the firm.

Explanation

Wisconsin permits multiple representation only after written disclosure and the written consent of all parties to the transaction. Once consented to, the firm acts as a neutral intermediary with limits on advocacy, and a party may withdraw consent.

Question 32Wisconsin Real Estate Law, Statutes and Administrative Rules

At closing, a seller offers to write a check directly to the salesperson for the salesperson's share of the commission. May the salesperson accept that check?

  1. No, because a salesperson may be paid only by the salesperson's own broker. Correct answer.
  2. Yes, if the seller signs a written acknowledgment that the payment is a commission.
  3. Yes, if the salesperson reports the payment as self-employment income on the next return.
  4. No, unless the seller's broker approves the payment in writing.

Explanation

A Wisconsin salesperson may not accept compensation for brokerage services from anyone other than the broker with whom the salesperson is affiliated. The broker receives the commission, then pays the salesperson according to their agreement.

Question 33Wisconsin Real Estate Law, Statutes and Administrative Rules

A Wisconsin tenant with eight months left on a one-year lease moves out, returns the keys, and tells the landlord she will pay no further rent. What is the landlord's obligation?

  1. The landlord may leave the unit vacant and collect each month's rent as it becomes due.
  2. The landlord may re-let the unit only after obtaining a court order terminating the lease.
  3. The landlord must sue for the entire remaining balance within 30 days of the move-out.
  4. The landlord must make reasonable efforts to re-let the unit and credit the rent received. Correct answer.

Explanation

Wisconsin law imposes a duty to mitigate when a tenant abandons or breaches a residential lease. The landlord must make reasonable efforts to re-rent, and rent collected from a new tenant reduces what the departing tenant owes, along with allowable re-renting costs.

Question 34Wisconsin Real Estate Law, Statutes and Administrative Rules

O signs and acknowledges a deed naming her nephew as grantee, places it in a desk drawer, and a month later records it herself without telling him. O then dies. Who holds title?

  1. The nephew, because the deed was signed, acknowledged, and recorded.
  2. The nephew, because recording the deed gave constructive notice to the world.
  3. O's estate, because the deed was never delivered with intent to convey. Correct answer.
  4. O's estate, because a deed conveying to a relative needs the grantee's signature.

Explanation

A deed transfers title only when the grantor delivers it with a present intent to convey and the grantee accepts. Retaining the deed and recording it does not amount to delivery, so title never left O during her lifetime.

Question 35Agency Relationships and Fiduciary Duties

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

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

Explanation

Loyalty obligates a licensee to avoid conflicts of interest, refrain from self-dealing, and advocate for the client's position above the licensee's own interests. The other fiduciary duties address recordkeeping, protection of client information, and professional competence rather than prioritization of interests.

Question 36Agency Relationships and Fiduciary Duties

A buyer who has signed no agency agreement with any firm is working with the seller's listing agent. As to that agent, the buyer is:

  1. A customer owed honesty and fair dealing Correct answer.
  2. A subagent of the seller
  3. A dual client of the firm
  4. A client owed full fiduciary duties

Explanation

A party who is not represented receives customer-level treatment: honesty, fair dealing, accurate information, and required disclosures. Fiduciary duties such as loyalty, advocacy, and confidentiality run only to a client.

Question 37Agency Relationships and Fiduciary Duties

Under Wisconsin law, when must a licensee disclose in writing which party the licensee represents?

  1. At the closing, as part of the closing settlement statement package
  2. Before providing brokerage services to that party Correct answer.
  3. Only after the party has submitted a signed written offer to purchase
  4. Only when the party asks the licensee for it in writing

Explanation

Wisconsin requires a licensee to make the written agency disclosure at the earliest practicable time and before providing brokerage services to a party. The disclosure is commonly documented on the approved disclosure-to-customers form.

Question 38Agency Relationships and Fiduciary Duties

The duty of confidentiality owed to a former client:

  1. Ends when the transaction closes
  2. Ends when the listing contract expires
  3. Ends when the client stops paying the licensee
  4. Continues after the relationship ends Correct answer.

Explanation

Confidentiality survives termination of the agency, so the licensee may not later reveal or use the former client's confidences to that client's disadvantage. Duties such as loyalty and obedience end with the relationship, but the protection of confidences does not.

Question 39Agency Relationships and Fiduciary Duties

A seller agrees in the listing contract to pay a fee that will be shared with the buyer's agent. What effect does this have on the buyer's agent's agency relationship?

  1. It has no effect; the agent continues to represent only the buyer Correct answer.
  2. It makes the buyer's agent the seller's subagent
  3. It requires the buyer's agent to disclose the arrangement only at closing
  4. It makes the buyer's agent a dual agent

Explanation

Compensation is paid by whoever agrees to pay it and does not determine whom a licensee represents. The buyer's agent's fiduciary duties stay with the buyer, although the source of compensation should be disclosed to the client.

Question 40Agency Relationships and Fiduciary Duties

An agency agreement for brokerage services in Wisconsin must be:

  1. Oral if it lasts less than 30 days
  2. Oral whenever no commission is charged
  3. Created by the licensee's conduct, with no document
  4. In writing, signed by the client Correct answer.

Explanation

Wisconsin requires the agency agreement to be in writing and signed by the client, which is why listing and buyer agency contracts are reduced to approved written forms. Oral understandings and conduct alone do not create the brokerage agency relationship.

Question 41Agency Relationships and Fiduciary Duties

In Wisconsin, designated agency means that:

  1. The parties agree that neither party will be represented
  2. The broker appoints one licensee to act for both parties in a transaction
  3. The seller designates which licensee will represent the buyer
  4. The firm appoints separate licensees to represent each party Correct answer.

Explanation

Under designated agency the firm, with the required written consent to multiple representation, assigns different licensees to the seller and the buyer. Each designated licensee advocates for the assigned client, which avoids having a single licensee serve two masters.

Question 42Agency Relationships and Fiduciary Duties

A licensee receives a $5,000 earnest money check made payable to the brokerage firm. What is the licensee's obligation?

  1. Deposit it in the firm's general business account
  2. Cash it and keep the currency in the office safe
  3. Hold it in the firm's trust account and account for it to the parties Correct answer.
  4. Deliver it to the seller immediately upon receipt

Explanation

Funds belonging to others must be placed in a trust account and accounted for to the parties entitled to them. Mixing client funds with the firm's operating money, or handling them outside a trust account, is commingling.

Question 43Agency Relationships and Fiduciary Duties

A firm wishes to represent both the seller and the buyer in the same transaction. What does Wisconsin require?

  1. Written consent of all parties after disclosure of the terms Correct answer.
  2. Only verbal consent given when the offer is written
  3. Nothing, because dual representation is prohibited in Wisconsin
  4. Only the consent of the seller, who pays the commission

Explanation

Multiple representation is permitted only with the written consent of all parties after the firm discloses the terms and the effect on its duties. Without that consent the firm must decline to act for one side of the transaction.

Question 44Agency Relationships and Fiduciary Duties

In a multiple representation that the parties have consented to in writing, which action is consistent with the licensee's duties?

  1. Advocating for whichever party agrees to pay the higher purchase price
  2. Telling the buyer the lowest price the seller would accept
  3. Sharing each party's negotiating strategy to speed the transaction along
  4. Keeping each party's confidences and treating both parties evenhandedly Correct answer.

Explanation

In multiple representation the licensee may not use one party's confidences to that party's disadvantage and must treat both sides evenhandedly. Advocacy is replaced by neutrality, while confidentiality and honesty remain fully in force.

Question 45Agency Relationships and Fiduciary Duties

A seller tells the listing agent that the basement floods every spring and directs the agent not to mention it. What should the agent do?

  1. Remain silent, because the duty of confidentiality controls in this situation
  2. Disclose the flooding, because material adverse facts must be disclosed Correct answer.
  3. Tell only those buyers who ask directly about the basement
  4. Resign the listing without telling anyone about the problem

Explanation

The duty of confidentiality does not authorize a licensee to conceal known material adverse facts about the property, which must be disclosed to the parties. If a client insists on concealment, the licensee should decline to continue rather than participate in the misrepresentation.

Question 46Agency Relationships and Fiduciary Duties

A listing agent wants to buy the seller's property personally. What must the agent do?

  1. Disclose the interest in writing and obtain the seller's written consent Correct answer.
  2. Buy it through the firm and record the deed in the firm's name
  3. Buy it only after another agent shows the property to two other buyers
  4. Wait until the listing expires, then buy without mentioning any interest

Explanation

A licensee acquiring a client's property must disclose in writing the licensee's status and personal interest and obtain the client's informed consent. The seller should also be advised to seek independent advice about the transaction.

Question 47Agency Relationships and Fiduciary Duties

A seller directs the listing agent to advertise a home as having a "new roof" even though the agent knows the roof was patched, not replaced. The agent should:

  1. Refuse, because the duty of obedience extends only to lawful instructions Correct answer.
  2. Obey but note the discrepancy in the firm's file only
  3. Refuse only if a buyer asks about the roof in writing
  4. Obey, because the seller is the one responsible for the accuracy of the listing

Explanation

Obedience is limited to lawful instructions, and a licensee may not publish a misrepresentation about the property no matter who directs it. The licensee should correct the advertising and, if the seller insists on the misstatement, address the matter with the client or terminate the agency.

Question 48Agency Relationships and Fiduciary Duties

At an open house, an unrepresented buyer begins asking the listing licensee about the seller's motivation. The licensee should first:

  1. Refuse to speak until the buyer signs a buyer agency agreement
  2. Answer fully, since the buyer is not represented by anyone
  3. Treat the buyer as a customer of the firm and give advice on pricing
  4. Disclose in writing which party the licensee represents Correct answer.

Explanation

The licensee must disclose agency status in writing at the earliest practicable time, before providing brokerage services to the party. The buyer then knows the licensee represents the seller and cannot expect advice that works against the seller's interests.

Question 49Agency Relationships and Fiduciary Duties

A buyer tells her agent she would pay up to $400,000 but plans to offer $350,000. The agent may:

  1. Keep the maximum confidential and present the offer the buyer authorizes Correct answer.
  2. Tell the listing agent the buyer's maximum so the deal can close
  3. Tell the seller at the showing so that the seller accepts the offer quickly
  4. Use the maximum to persuade the buyer to offer $400,000

Explanation

A buyer's willingness to pay a higher price is confidential client information that may not be disclosed or used to the client's disadvantage. The agent submits the offer as authorized and does not pressure the client upward for the agent's own benefit.

Question 50Agency Relationships and Fiduciary Duties

A licensee best fulfills the duty of reasonable care and skill by:

  1. Advising the client about which loan program to choose
  2. Guaranteeing the condition of the roof and furnace
  3. Giving the client a personal opinion on the property's title
  4. Recommending that the client obtain a professional home inspection Correct answer.

Explanation

Reasonable care means recommending inspections and expert assistance for matters beyond the licensee's competence, such as legal, engineering, and lending questions. Offering opinions outside the licensee's field of expertise can itself breach the duty.