Exam (elaborations)
ALABAMA REAL ESTATE EXAM QUESTIONS AND ANSWERS
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ALABAMA REAL ESTATE EXAM QUESTIONS AND ANSWERS
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ALABAMA REAL ESTATE EXAM QUESTIONS ANDANSWERS
A ___________ agency is created when a broker designates another real estate agent
in the same office to represent either a buyer or a seller because they cannot fully
represent both parties being a dual agency. - answer- designated agency
A _________ agency gives the agent authority to do one specific thing on the principal's
behalf. - answer- special or specific
A _________ agency gives the agent the authority to do several activities on the
principal's behalf. - answer- general
A brokerage which facilitates the transaction by showing properties and assisting with
paperwork and the real estate process but does not have an agency relationship with
the buyer and seller is called a ___, ____, or ____. - answer- nonagency, transaction or
facilitative brokerage
Resignation of an agent is called _________. - answer- renunciation
Principal's firing of an agent is called __________. - answer- revocation
Six fiduciary responsibilities of an agent: - answer- 1. loyalty 4. confidentiality
2. obedience 5. reasonable care & diligence
3. disclosure 6. accountability
Exaggerating the benefits of a property is known as ____. - answer- puffing
Is it illegal to exaggerate the benefits of a property? - answer- no, but it's not a good
idea because you could be sued for false representation or negligent misrepresentation
______ occurs when an agent intentionally tells a lie. - answer- Fraud
If a buyer was turned down for a mortgage on a prior property, should it be told to the
seller? - answer- Yes - If an agent knows of a financial problem of the potential buyer,
the agent has a duty to tell the seller in the current transaction.
Under a MLS, the property owner pays _______. - answer- the listing broker (and the
listing broker pays the selling broker's commission)
What are the six ways a listing agreement can end? - answer- 1. Termination by
performance
2. Expiration of time period
3. Mutual agreement
4. Renunciation by agent
,5. Revocation by principal
6. Legal reasons - such as destruction of property, eminent domain, bankruptcy, death
of principal or agent, or incompetence
What type of property defects is an agent bound to disclose to a buyer? - answer- 1.
Material defects such as leaking pipes
2. Things that might lower property values in the future such as construction nearby.
3. Know presence of lead paint
4. Flood zone presence or current flood insurance coverage
5. Presence of convicted sex offenders in the area
6. Property stigmas
Since the agent's responsibility is to the seller, does the agent have to reveal material
defects the agent is aware of, even if the seller doesn't want to mention them? - answer-
They HAVE to reveal anything that affects the value of usefulness of the property. But in
the right way -- For example, a dish washer has to be in working order but the agent
doesn't have to reveal that it's 20 years old
When is the agency relationship established? - answer- when the principal authorizes
the agent to perform a certain action for him/her
What are the five parts of a listing agreement? - answer- 1. action to perform
2. sales or lease price
3. commission rate
4. time period for the agreement
5. signature of both parties
What is included in the bundle of rights? - answer- 1. the right to occupy, use and enjoy
the property
2. employ the property in productive ways
3. sell, bequeath, give, or lease the property in part or total
4. that owner has all these rights and may do nothing with them if he/she so chooses
Failing to enforce or exercise a right within a proper amount of time that then causes
that right to be lost is called _________. - answer- laches
If you own a property and die without a will or relatives, the state will take your property
by _______. - answer- escheat
Someone who buys a timeshare owns it as ________. - answer- a share in a fee simple
estate
What are the order in which multiple liens are paid? - answer- 1. general real estate
taxes
2. special assessments
3. mortgage
, 4. order in which lien was recorded
What is the difference between a PUD and cluster zoning? - answer- a PUD (planned
use development) may have several zones in it (residential, commercial, etc) -- cluster
zoning is the way that they are grouped
What law and government agency regulate Interstate Land Sales (ILS)? - answer-
Interstate Land Sales Full Disclosure Act
enforced by HUD
What two things do developers have to do under the ILS Act? - answer- 1. register with
HUD
2. provide each potential buyer with a property report before the contract of sale is
signed
What is in a property report required by the ILS Act? - answer- 1. legal descr. of the
subdiv. 6. trust papers or agreement
2. map 7. copies of the deed
3. statement of cond. of title 8. easements or restrictions
4. gen. terms & cond. for selling or leasing lots in subdiv.
5. copies of articles of incorp.
With ILS, a buyer who receives a property report may cancel within ______ days of
signing. However, a buyer who did NOT receive a property report before signing, may
cancel the contract and receive a full refund up to ______ years from the date of
signing. - answer- seven (days)
two (years)
What are the criminal and civil penalties for violating the ILS Act? - answer- Criminal -
for fraud - fine of up to $10,000 or be sentenced up to 5 years in prison or both
Civil - penalties up to $1000 for each violation (each day is a separate violation) or $1
million in any one year
What are the two main exemptions for the ILS Act? - answer- 1. subdiv. with fewer than
25 lots (sometimes fewer than 100 are okay)
2. subdiv. with lots of more than 20 acres in size
A property owner may claim _________ ___________ if the public use for a neighbor's
property dimishes the claimant's use and enjoyment of his/her property. - answer-
inverse condemnation
In regards to environmental hazards, realtors can face what two types of risks? -
answer- 1. intentional misrepresentation
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