CHAPTER 2 SHORT-ANSWER · PDF fileCHAPTER 2 – SHORT-ANSWER QUESTIONS . 1. The _ portion of the state license exam will test you on the _ law of agency, but the Colorado portion

CHAPTER 2 – SHORT-ANSWER QUESTIONS 1. The ____________ portion of the state license exam will test you on the ____________ law of agency, but the Colorado portion will test you on changes to the common law, including ____________ brokerage and ____________ brokerage. 2. The definition of agency is a relationship that results from an agreement (contract) that one person, called the ____________, shall act for and subject to the control of another person, called the ____________. 3. There are three main classifications of agents. Those are: a. ____________________________________; b. ____________________________________; c. ____________________________________. 4. A general agent is one who has ____________ authority to conduct a series of transactions over a period of time on behalf of his ____________. A good example of a general agent is a department store manager. 5. A special agent is one who has ____________ authority and usually acts for a single purpose. Examples of special agents are an accountant, an ___________, and a ___________ ___________ ___________. 6. An agency agreement is a ____________ between a ____________, and an ____________. It is also designated as an employment contract. In the case of the real estate broker, the type of agency contract is called a ____________ agreement, and is usually a contract between the broker and a ____________. The subject matter of the contract involves the sale of a piece of real estate. 7. An agency agreement can also involve an agreement where the broker represents a ____________, rather than a seller. In that case, the broker has a buyer's agency. 8. In the normal listing contract, the consideration on the part of the ____________ is his/her agreement to find a ____________ ____________, and ____________ buyer. The ____________ on the part of the seller is to pay a commission to the broker if the above is accomplished. 9. The listing contract may be either ____________ or written. It is extremely unwise practice to rely on an oral listing. In Colorado, an agency contract with the seller or buyer must be in writing. 10. In order for a broker to act on behalf of his principal, the broker must be given authority to act by the agency agreement. The two types of authority are: a. ___________________________; b. ___________________________.

MacIntosh Real Estate School Uniform Course – Chapter 2

Copyright 2018 – All Rights Reserved 1 Real Estate Law & Practice (48 hrs)

11. Actual authority is the most common type of authority. Its name describes its nature; it is actually given to the agent either: a. ___________________________, or b. ___________________________. 12. Express authority will be given to the agent either orally or in writing. The agent will be expressly directed to do some act or series of acts. Implied authority is that authority that the agent ____________ needs to perform his basic function. For example, a real estate broker may not be expressly told to advertise the house for sale in the newspapers, but he has the right to do so, because it is ____________ in order to sell the property. This is ____________ authority. 13. A real estate broker may delegate his authority to a ____________. This implied authority arises out of ____________ and ____________. 14. Apparent authority is that authority that other people believe the agent has. The reason they believe this is that they are led to believe it due to the ____________ actions. Even though the agent does not have actual authority, ____________ authority can bind the ____________ and make that person liable for the agent's actions. 15. The principal owes four basic duties to his agent. They are: a. ________________________________________________; b. ________________________________________________; c. ________________________________________________; d. ________________________________________________. 16. What are the five basic duties an agent owes to a principal? a. ________________________________________________; b. ________________________________________________; c. ________________________________________________; d. ________________________________________________; e. ________________________________________________. 17. The most complex of these duties is the duty of loyalty and trust from the agent to the principal. The agent may not personally ____________ from the agency agreement, except for the agreed upon ____________. Furthermore, the agent may not ____________ either during or after the relationship, ____________ information detrimental to the principal. An agent may neither have for himself, nor represent anyone else who has interests that are ____________ or opposed to the interests of his principal without the principal's consent. 18. All of the rules and duties that an agent owes to his principal apply to both ____________ and ____________. 19. The third category of duties and loyalties lies between the agent and third parties. It is to be remembered that the basic contract is between the principal and the ____________ ___________. The agent has no ____________ responsibility to perform the contract. The



exception to this rule is when the agent is a(n) ____________ agent. In other words, the agent enters into a contract on behalf of his principal without revealing that he or she is an agent. 20. If a person represents himself as an agent and actually has no authority to act as an agent, that person may be responsible to any ____________ for any loss caused. 21. An agent is ____________ responsible to any third party against whom he commits a civil wrong known as a ____________. This is true whether the agent commits the tort with or without the principal's knowledge or permission. If an agent acts with the principal's consent or within the scope of his ____________, the third party has the choice of recovering against either the principal or the agent. Of course, a ____________ ___________ is liable for any ____________he may commit against the agent. 22. The ___________ has the duty to the ___________ ___________ of performing contracts made by his agent. In the usual real estate contract, both the ____________ and ____________ sign the contract so that the issue of liability of the ____________does not arise. 23. Under what circumstance is the principal liable for the acts of the agent? a. ________________________________________________; b. ________________________________________________. 24. Is it possible for an agent to be responsible for a misrepresentation made on his principal's behalf? ____________. 25. There are two basic methods of terminating an agency relationship. They are: a. ________________________________________________; b. ________________________________________________. 26. There are four types of acts by the parties that will terminate an agency relationship. They are: a. ________________________________________________; b. ________________________________________________; c. ________________________________________________; d. ________________________________________________. 27. Five ways that an agency agreement may be terminated by operation of law are: a. _____________________; b. _____________________; c. _____________________; d. _____________________; e. _____________________. 28. The parties may always by _______________ agreement terminate an agency agreement. If only one party terminates the contract, it is a breach with possible legal consequences.



29. Most agency contracts will terminate in a specified length of time. If no time is specified, the contract terminates in a ____________ length of time. Remember, however, that by Commission rules, a ____________ contract must have a definite ____________ date. 30. While a principal may at any time, terminate an agency agreement, the principal may be liable to the ____________ for ____________. Cancellation by the principal is called revocation. 31. Conversely, the agent may at any ____________ cancel the agency agreement, but if the agent does so without ____________ ____________, the agent may be liable to the principal. Cancellation by the agent is called renunciation. 32. The first three methods of termination by operation of law, ________________________ ____________, and ________________________ apply to either the principal or the agent. The last two ________________________ or ________________________ are not created by actions of the parties, but by circumstances not influenced by the individuals. 33. A change of law which causes the purpose of the agency to become ____________ will cancel the relationship. 34. Destruction of the subject matter ____________ ends the agency. The parties need not take any action themselves. 35. It is clear that agency and the Colorado ____________ ____________ are significantly different. 36. The Brokerage Relationships in Real Estate Act was enacted in Colorado to ____________ the common law. 37. The Colorado law attempts to clarify case law and liability. a. No longer a ____________ that all brokers work for the ____________; b. ____________ agency is specifically recognized and defined; c. Buyer, seller, landlord or tenant, are relieved of liability for acts of a ____________ ____________. (Misrepresentation, negligence.) 38. It offers choices to the above parties as to their ___________ and ____________ relationships. 39. It requires ____________ disclosure of ____________ types of relationships available to the public. 40. The first part of the Act sets forth the duties owed to the principals by:

a. Single agents engaged by the ____________ or ____________; b. Single agents engaged by ____________ or ____________; c. ____________ brokers. 41. Seller's or landlord's agents; List the eight duties owed by the agents:



a. ________________________________________________; b. ________________________________________________; c. ________________________________________________; d. ________________________________________________; e. ________________________________________________; f. ________________________________________________; g. ________________________________________________; 1) ________________________________________________; 2) ________________________________________________; 3) ________________________________________________; 4) ________________________________________________; h._______________________________________________________________

_________________________________________________________________. 42. Buyer’s (or tenant’s) agent has the following duties to buyer: a. ____________ ____________ actually known;

b. ____________ the principal (buyer or tenant) that they will not be ____________ liable for the agent’s acts that were not ____________, ____________, or ____________ by the buyer or tenant;

c. inform seller of adverse facts concerning buyer’s ___________ ability to perform. 43. A buyer’s or tenant’s broker has no duty to conduct an independent ____________ of the property, nor ____________ the accuracy or completeness of statements made by seller, landlord, or ____________. 44. A buyer’s or tenant’s broker may ____________with other brokers, but this can never create ____________. 45. In addition, a broker in Colorado can no longer act as a ____________ agent who represents both parties. 46. The broker is presumed to be a ___________ broker unless a ____________ agency has been established through a written agreement. (This will be tested on the license exam!) 47. A transaction broker is defined as a broker who assists one or more parties throughout a real estate transaction with: a. _____________________; b. _____________________; c. _____________________; d. _____________________;

e. _____________________; f. _____________________. without being an agent or advocate for the interest of any party to the transaction. 48. The transaction broker has the following obligations and responsibilities: a. ________________________________________________; b. ________________________________________________;



c. ________________________________________________; d. ________________________________________________; e. ________________________________________________; f. ________________________________________________; g. ________________________________________________. 49. The Transaction Broker may not ____________ any of the things a dual agent could not disclose (in states that allow dual agency, that is!) 50. Removing certain of the fiduciary duties does not eliminate ____________ exposure. 51. All brokers must adopt a written ____________ policy that describes the relationships the broker will enter into with the ____________. 52. Whatever policy the brokerage adopts, it will be subject to the following restrictions: a. ________________________________________________; b. ________________________________________________;

c. ________________________________________________ ________________________________________________;

d. ________________________________________________ 1) ________________________________________________; 2) ________________________________________________; 3) ________________________________________________; 4) ________________________________________________; 5) ________________________________________________; 6) ________________________________________________; 7) ________________________________________________; e. ________________________________________________; 53. Written disclosure must be made prior to entering into the following activities: a. _____________________________________________________________ ______________________________________________________; but not: b. _____________________________________________________________ _____________________________________________________________. 54. Disclosures must be ____________, and contain the statement that “DIFFERENT BROKERAGE RELATIONSHIPS ARE AVAILABLE WHICH INCLUDE ___________ AGENCY, __________ AGENCY, OR STATUS AS A ______________ BROKER. 55. Compensation may be paid by ____________ party to the transaction, or by a ____________ party. 56. Payment does not establish an ____________ agreement, per se.



57. A broker registered in the Commission office as in the employ of another broker is a(n) ____________ of the employing broker. A termination of employment between broker and employed licensee must be ____________ in writing to the Commission by the employing broker ____________ the employee, and ____________ has a duty to notify the ____________ of the termination. 58. A real estate broker as an agent is not entitled in a real estate transaction to ____________ documents which purportedly bind parties to the real estate transaction without express ____________ authority. This written express authority is given by means of a ____________ of ____________. If this is used, it must be recorded in the county where the property is located. Whenever a principal's signature appears "____________ ____________ " the power of attorney must be made available to Commission auditors. 59. A buyer agency comes into effect when the broker contractually agrees to represent the ____________ instead of the ____________. 60. A buyer's agent must reveal to the ____________ and the ____________ broker the fact that he or she is a buyer’s agent at the ____________ reasonable opportunity. 61. ____________ agents owe the same ____________ duties to their principals as seller's agents. 62. One of the most common complaints to the Commission is that buyer brokers fail to provide ____________ ____________ or ____________ ____________ the terms of buyer agency to the potential purchaser. 63. The complaints often center on allegations that the buyer broker has either failed to explain the ____________ nature of the agreement or has been ____________ to assist the buyer. This may result in competing claims for ____________. 64. Simple signing of an exclusive buyer agency contract does not automatically entitle a broker to a ____________. The terms of the ____________ must be ____________, and the broker must ensure that the buyer is ____________ and ____________ the exclusive nature of the contract. 65. It is ____________ agreement that determines the agency relationship; not who pays the broker's commission. 66. Where purchaser and seller are clearly represented by their ____________ agent, ____________ splitting is simply another item of negotiation between the parties. 67. The above is true in the case where a ____________ broker is used. 68. It is essential that all parties to a transaction know who is representing whom at the first ____________ opportunity. This relationship must also be disclosed in the ____________ to ____________.



69. It is essential that the ____________ consent be obtained before payment is made to a ____________ agent or a ____________ agent. 70. Paragraph ____ of the Listing Contract can help the seller understand in advance about the payment of ____________ to the broker working with the ____________. 71. The 2003 Amendment to the Brokerage Relationships Act declares that ____________ members of the public should not be held ____________ for acts or omissions of brokers that have not been ____________, ____________, or ____________ by the individual. 72. The public’s legal relationship with brokers is limited to the ____________ broker they have engaged (hired). The Act removed the ____________ broker and the brokerage ____________ from the relationship. 73. Knowledge by the ____________ broker is not imputed (legally attributed) to the ____________ or other licensees in the company. 74. “Designated Broker” is defined as an ____________ broker or an ____________ broker who is ____________ in writing by an employing broker to serve as a ____________ agent or ____________ broker for seller, landlord, buyer or tenant. “Designated Broker” does not include a brokerage firm that has only ______ _________. 75. The employing broker may ____________ more than ____________ broker(s) in a transaction. 76. The brokerage relationship, including the agency duties, between the party and the designated broker shall not extend to the ____________ broker, nor any other broker in the firm who has not been ____________. 77. The fact that a firm may have a designated broker acting as a(n) ____________ agent for buyer and a designated broker acting as a(n) ____________ for seller in the same ____________, does not create dual ____________. 78. One individual broker may not be designated to act as both a ____________ agent for the seller and a ____________ agent for the buyer in the same transaction. The individual must work as a single agent for the seller and treat the buyer as a ____________, or vice versa. 79. These limitations must be ____________ to the seller, landlord, buyer, or tenant working with the designated broker regarding ___________ and ____________ policies. 80. ____________ is defined as a party to a real estate transaction with whom the broker had no brokerage relationship because such party has not engaged or ____________ a broker.



CHAPTER 2 – QUIZ 1. Which of the following is an agent in the eyes of the law? a. Special Agent b. Implied Agent c. Both of the above d. Neither a. nor b. 2. Which of the following would constitute an agency agreement? a. Listing contract b. Attorney's retainer agreement c. Accountant's retainer agreement d. All of the above 3. Which is the most legally binding of the following types of authority? a. Actual Authority b. Implied Authority c. Apparent Authority d. None of the above 4. Which of the following is a duty the principal owes to the agent? a. To compensate the agent b. To be loyal to the principal c. To account for all money and property received d. All of the above 5. Which of the following are rules that bind the agent? a. Not to disclose confidential information b. Not to represent another individual who has adverse interests to his principal c. To receive only his agreed compensation d. All of the above 6. The agent owes all the following duties to his principal, except: a. to keep his principal informed of material facts b. to keep the principal's monies safe in his business account c. to account to the principal for all monies received on behalf of the principal d. to use reasonable care in the performance of his duties 7. Which of the following is correct? a. Agent who signs contract on behalf of his principal has no duty to perform the

contract b. An agent who signs a contract on behalf of his principal is obligated to perform

the contract if the principal doesn't c. An agent cannot in any case sign a contract on behalf of his principal d. An agent may always sign a contract on behalf of his principal



8. Which of the following is a correct statement? a. A principal is always liable for the acts his agent performs b. A principal is never liable for the torts his agent commits c. An agent is always liable for the torts he or she commits d. The agent is never liable, only the principal is liable 9. Which of the following terminates an agency agreement by acts of the parties? a. Cancellation of the agency contract b. Death of the principal c. Bankruptcy of the principal d. All of the above 10. When a power of attorney has been given to the agent, then it is effective: a. in all cases when dealing with the principal's business b. when the principal dies before the closing c. when the agent is acting as an attorney in fact d. only when recorded with the Secretary of State 11. Buyer's agents must inform the potential purchaser: a. when the broker will be unavailable to assist the buyer b. that when the purchaser finds a property they are interested in, the broker will do

the rest c. of the exclusive nature of the buyer agency d. that the broker is actually a sub-agent of the seller 12. In the common law, (not Colorado) a broker cooperating with the listing broker is: a. a sub-agent of the seller b. a sub-agent of the purchaser c. an employee of the seller d. a transaction-broker 13. A purchaser's agent may: a. never accept compensation from the seller b. never accept compensation from the seller's broker c. always accept a commission from the buyer d. All of the above 14. Which of the following is the most important factor in determining the existence of

agency: a. Payment of a commission b. Existence of a consensual agreement c. Fee splitting d. The absence of a written contract



15. The listing contract does not allow the listing broker to offer compensation to: a. anyone who finds a buyer b. subagents c. buyer's agents d. transaction brokers 16. Which of the following aspects of the common law of agency is not changed by

Colorado’s “Brokerage Relationships in Real Estate Act”? a. transaction brokerage b. designated brokerage c. presumption that the broker working with the buyer is a subagent of the listing

broker d. the seller’s agent owes the seller the duty of loyalty 17. According to Colorado Law, the broker acting as a buyer’s agent: a. has a duty to conduct an independent investigation of the property for the buyer; b. must verify the accuracy of statements made by independent investigators; c. must disclose all material facts actually known by the buyer; d. must inform the buyer that the buyer may be vicariously liable for acts that are

not approved, ratified, or directed by the buyer. 18. Which of the following may a Colorado broker representing the seller disclose to

the buyer without the seller’s consent? a. Adverse material facts actually known to the broker pertaining to the physical

condition of the property; b. That the broker would accept a lower price; c. Material information about the seller; d. The seller’s motivations for selling. 19. Absent a written single-agency agreement in Colorado, a broker is presumed to

be a: a. dual agent; b. transaction broker; c. selling broker; d. buyer broker. 20. Which of the following common law duties does a transaction broker in Colorado

owe to his or her client? a. Loyalty; b. Fidelity; c. Accounting; d. Advocacy.



21. In Colorado, every commission-approved disclosure must contain a statement that different agency relationships are legally available. Which of the following is not included in that statement?

a. Buyer agency; b. Seller agency; c. Transaction brokerage; d. Subagency. 22. Absent a power of attorney authorizing such acts, in Colorado which of the

following would be acceptable for a broker to execute on behalf of their client? a. Receipt of buyer’s earnest money deposit; b. Seller’s signature on a counterproposal; c. Seller’s signature on a deed; d. Buyer’s signature on a sales contract. 23. In Colorado, a party to a transaction with whom the broker has no brokerage

relationship, is referred to as a: a. buyer; b. seller; c. customer; d. client. 24. Designated Brokerage in Colorado did not have the effect of abolishing which of

the following? a. Single agent; b. Dual agent; c. Subagent; d. Agency where the employing broker has imputed knowledge of the employed

broker’s acts. 25. Which of the following is not true concerning designated brokerage in Colorado? a. More than one broker may be designated for a transaction b. A one-person firm must designate a broker from another firm for each transaction c. No imputed knowledge above the designated broker d. The designated broker’s relationship with a party extends only to that broker’s Employing or Managing broker.



Documents

CHAPTER 2 SHORT-ANSWER · PDF fileCHAPTER 2 – SHORT-ANSWER QUESTIONS . 1. The _____ portion of the state license exam will test you on the _____ law of agency, but the Colorado portion

CHAPTER 2 SHORT-ANSWER · PDF fileCHAPTER 2 – SHORT-ANSWER QUESTIONS . 1. The _ portion of the state license exam will test you on the _ law of agency, but the Colorado portion