First, let’s review terminology here so that everyone is on the “same page”. In Massachusetts, there are three primary statuses of real estate licensees [suspended and revoked licenses are not considered in this discussion]: Active; Inactive and Expired.
1. “Active” status indicates that the licensee is in good standing with the Board of Registration of Real Estate Brokers and Salespersons, has completed the required number of continuing education credits during the prior renewal period and has paid the licensing fee for the current two-year period ending on his/her birthday. Individuals with active real estate licenses may lawfully engage in the business of real estate with members of the public and derive commission-based income or a salary from their employer from their efforts.
2. “Inactive” status indicates that the licensee is in good standing with the Board of Registration of Real Estate Brokers and Salespersons, has not completed the required number of continuing education credits during the prior renewal period, but has paid the licensing fee for the current two-year period ending on his/her birthday. Individuals who hold inactive real estate licenses may not engage in the business of real estate with members of the public, but may receive referral fees, except as described below.
3. “Expired” status indicates that the licensee is no longer in good standing with the Board of Registration of Real Estate Brokers and Salespersons, has not completed the required number of continuing education credits during the prior renewal period[s] and has not paid the licensing fee for the current [or past] two-year periods ending on his/her birthday. Individuals who hold expired real estate licenses may not engage in the business of real estate with members of the public and may not receive compensation for their services or receive referral fees.
Massachusetts General Law Chapter 112, Section 87XX ½ created an “inactive” license status for those licensees who have not completed the required continuing education credits. As inactive licensees are prohibited from affiliating with a broker, a referral fee may be paid to them directly. This is the only instance where a salesperson can receive a referral fee directly. Massachusetts General Law Chapter 112, Section 87RR requires that an active salesperson’s referral fee must be paid to the broker in which they are affiliated.
Most questions to the Broker Legal Hotline deal with salespersons who have left the business and are still in their two-year renewal cycle and are considered “active”, but are no longer actively selling real estate [i.e. they retired or permanently left the business]. As stated above, the only way for a salesperson with an “active” license to be compensated is to be affiliated with a broker. Certain “referral only” brokerages have been established where “active but not practicing” licensees may hang their licenses solely to earn referral income. However, because of Mass General Law Chapter 112, Section 87XX ½, once a salesperson’s license becomes inactive, the individual is no longer allowed to hang their license with the referral only brokerage company. Therefore, many salespersons make the personal decision to keep their license "active"; a solid reason being that the referral only brokerage is responsible for collecting the fee from the referring brokerage, thus decreasing the amount of personal follow up necessary when trying to collect the referral fee from a brokerage who has been less than forthcoming with their obligations. On the downside, there typically are costs associated with belonging to a referral only brokerage.
It is important to note that a licensee with an “active” license cannot elect to become “inactive.” The change of status only becomes effective upon the next renewal period when the licensee pays a licensing fee and certifies that they have not obtained the required number of continuing education credits for the prior two-year period.
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Terms in this set [37]
Buyer Jones makes a full price offer to purchase to seller Smith, who rejects the offer outright. What recourse does Jones have?
- Sue Smith for damages
- Sue Smith for specific performance
- Sue for damages and specific performance
- Buyer Jones cannot sue
Buyer Jones cannot sue. Since Smith refused the offer, there was no contract created and Jones has no legal complaint. At this point Smith is not obligated to sell his property. However, if the property was listed with a broker, the latter could successfully sue for his full commission.
A bilateral contract is one in which:
- only one of the parties is bound to act
- the promise of one party is given in exchange for the
promise of the other party
- a restriction is
placed, by one party, to limit the actuarial
performance by the other party
- something is to be done by one party only
The promise of one party is given in exchange for the promise of the other party
The Colorado law that requires real estate contracts to be in writing is called the:
- statute of estoppel
- statute of descent and distribution
- statute of frauds
- statute of limitations
Statute of frauds
Which of the following is not essential to a valid real estate sales contract?
- Offer and acceptance
- Notarization
- Consideration
- Description of the property
Notarization
Which of the following gives best evidence of a buyer's intention to carry out the terms of a real estate sales contract?
- The signing of the buy and sell contract
- Agreement to seek mortgage financing
- The earnest money deposit
- The provision that "time is of the essence"
The earnest money acts as a "good faith" deposit.
A buyer makes an earnest money deposit of $2,000 on a $175,000 property and then withdraws the offer before the seller accepts it. The broker should dispose of the buyer's earnest money by:
- turning it over to the seller
- deducting the agreed-upon commission and delivering
the balance to the seller
- returning it all to the buyer
- depositing it in his or her special bank account
The earnest money should be returned to the buyer, as the buyer has the right to cancel prior to notification that the offer has been accepted.
Which of the following is the best explanation of specific performance?
- The date set for closing at which all parties involved, or
their attorneys, must be present and must sign and
deliver all documents necessary to close the transaction
- The right of either party to cancel the contract, provided
legal notice is given
- A legal procedure or action brought by either buyer or
seller to enforce the terms of a contract
- An executed contract in which all elements of the
contract must be specifically
fulfilled
A legal procedure or action brought by either buyer or seller to enforce the terms of a contract
Broker K arrives to present an offer to Mrs. G, an invalid, and finds her son and his wife also present. Both individuals persistently urge Mrs. G to accept the offer on her home, though it is much lower than the price she was asking. If Mrs. G signs the offer, she may later claim:
- that Broker K
should not have brought her a low offer
- that she was under undo duress from her son and
daughter-in-law and that the agreement is voidable
- that Broker K defrauded her by allowing her son and
daughter-in-law to see the agreement
- that her son and his wife have usurped her consumer protection rights
That she was under undo duress from her son and daughter-in-law and that the agreement is voidable
The law requires that every contract include:
- offer and acceptance
- consideration
- competent parties
- all of the above
All of the above
To assign a contract for the sale of real estate means to:
- file a contract with a county recorder
- transfer the rights under the contract
- have the buyer assign the contract to a relative
- all of the above
Transfer the rights under the contract. An assignment of a contract transfers the rights to purchase the property from the assignor to the assignee.
A broker, Fred Wilcox, is selling a home to Alice Quincy. He tells her the foundation is "solid as a rock," when he knows for a fact that it is slowly sinking into the swampy ground on which it was built. Licensee Wilcox may be subject to:
- having his license revoked
- criminal
action
- civil action
- all of the above
All of the above. Not only is Broker Wilcox in violation of the Real Estate License Law, he is breaking civil and criminal law.
When the license of an employing broker is suspended or revoked, his/her licensees must:
- transfer existing contracts to a new employer
- continue listing and selling pending an appeal
- stop listing and selling
- obtain an
independent broker's license
Stop listing and selling
Consideration is an essential element of valid contracts. Consideration may be:
- a promise
- the giving up of some legal right
- labor
- all of the above
All of the above.
Virtually anything of value may be "consideration." It does not have to be material, it could be for "hugs and kisses and best
wishes."
After title has passed, to whom may an employing broker assign any and all legal rights for a commission?
- Broker may keep commission
- Seller of transaction
- Buyer of transaction
- Broker and any employed licensees
Broker and any employed licensees.
If an employing broker loses their license, what are the consequences for the employed agents?
- Continue working as usual
- Step in and take over the leadership role
- The broker may give the agents licenses to another
broker of his choice
- Commissions or fees earned before the suspension,
revocation, expiration, or transfer to inactive license, may
still be received
Commissions or fees earned before the suspension, revocation, expiration, or transfer to inactive license, may still be received.
Which statement is false about unlicensed assistants?
- An unlicensed assistant may be paid a commission by a
licensee, based on the success of the transaction
- The broker may allow the assistant to chauffeur and show
a listed property
- An assistant does not need a license
- Unlicensed assistants may prepare a market analysis on
behalf of the broker
An unlicensed assistant may be paid a commission by a licensee, based on the success of the transaction
A developer is selling several parcels of property that have been developed. The developer wants to have his attorney prepare a sales contract that refers to the legal description and stipulates the warranties the developer is making. Which of the following is true?
- The developer cannot do this, as he must use only the
commission approved forms
- The developer's
warranties cannot be included within the
body of the contract
- The developer can hire an attorney to prepare his own
contracts and include warranties and other information
- The developer can hire a broker to prepare the contracts
The developer can hire an attorney to prepare his own contracts and include warranties and other information. Builders are not required to use state forms.
An option is a contract that:
- Transfers title when signed
- Does not set the sale price
- Specifies a time limit in which to buy or lease a piece of
property
- Is a bilateral executory agreement
An option gives a specific time for the buyer or seller to exercise a specific action.
The seller at closing refuses to pay the broker. What should the broker do?
- Refuse to close the deal
-
File a complaint with the Real Estate Commission
- Close the transaction, then sue for the commission
- Keep the earnest money as commission
Close the transaction, then sue for the commission.
The broker is not allowed to delay the transfer of the property.
Which of the following best describes rescission of a contract:
- The voiding of a contract
- A revision in the terms of the contract
-
Ratification of a contract by all parties
- A transfer of responsibility from one party to a contract to
a third party
Rescission is the termination of a contract from the beginning [as if it never existed], rendering it void.
In the Colorado Brokerage Relationship law, the seller's agent may not disclose which of the following to the buyer?
- All adverse material facts about the title to the
property
- All adverse material facts about the property
- All of the environmental hazards effecting the property
- All adverse psychological impacts or stigmas about the
property
All adverse psychological impacts or stigmas about the property
Chuck is a licensee who has listed the Carson's home as a seller's agent and it is now under contract. The Carson's ask Chuck to also work with them to find and purchase a new home. What will be Chuck's role in the purchase transaction?
- he may be either an agent or transaction-broker
depending on the mutual agreement
- he does not have to decide until the Carson's decide what
home they want
- he will be agent for the seller of their next home and must
disclose that
- he will continue to be their agent for all transactions with
them
He may be either an agent or transaction-broker depending on the mutual agreement.
A buyer and seller have written two contracts for one property: a higher contract to submit for a larger loan request and another with a lower actual purchase price because they know the seller is anxious to sell quickly. Which correctly describes this arrangement?
- risky but acceptable because the lender will have the
right to appraise and inspect the property
- good business since
the parties agree and the loan can
only be made if the property appraises at the higher value
- fraudulent dual contracting
- acceptable for conventional loans, but not for VA or FHA
loans
The buyer and seller are committing fraud and if a broker knew of the arrangement, he or she is also committing fraud and risks disciplinary action as well. You can not dual contract
Under what conditions is it permissible for a broker to pay a referral fee to a person who does not possess a Colorado real estate license?
- Under no conditions
- When the duties performed by that person would not
normally require a real estate license
- Only if the unlicensed person is in the employ of and
under the direct control of the broker
- The unlicensed person may perform any duty deemed
acceptable by the broker and receive a referral fee, if
permission is granted by all
interested parties, and so
stipulated in writing
When the duties performed by that person would not normally require a real estate license
Which of the following will not terminate an offer?
- An offer from a third party
- Death of an offeror before acceptance
- A counter offer by the offeree
- Revocation of the offer before acceptance
An offer from a third party
Can broker associate Friday write an offer for a buyer if broker associate Friday listed the property and also finds the buyer?
- No, you cannot collect both commissions
- No, it is against Federal Antitrust Laws
- Yes, only you have to have a buyer broker agreement in -
place
- Yes, if explicitly stated in the contract and agreed to by
both buyer and seller.
Yes, if explicitly stated in the contract and agreed to by both buyer and seller.
The Real Estate Commission must investigate:
- Any licensee accused of a crime
- Disputes between brokers
- Any verified written complaint
- At least 5% of all brokers each year
The operative word here is MUST. Colorado law requires investigation of all verified, written complaints. A licensee convicted of a crime may be investigated if the crime involved real estate activities. Also, a licensee may be investigated for any reason, or no reason.
To be the broker of record for a corporation:
- The person must hold a position as a director of the
corporation
- The person must have a valid Colorado Broker's license
- Be an executive of the corporation such as president, vice
president, CEO, etc
- Have some ownership in the corporation
The only requirement to be the broker of record for the corporation is that they must have a valid Colorado broker's license.
The Real Estate Commission may issue a temporary "hardship" license when the employing broker of a corporate brokerage is unable to continue in that role. This "hardship" license may be issued to:
- A member of the board of directors
- A person who has a sufficient ownership in the
corporation
- An officer or director with a broker's license from another
state
- A Colorado licensee approved by the corporate board of
directors
Every company must have an employing broker at all times. If something should happen to an employing broker, such as leaving the company, the real estate commission can issue a "hardship" license to someone else to act as the interim employing broker while the company settles on a permanent employing broker. The only rule for the "hardship" employing broker is that he/she must have an active Colorado license.
A contract in which all the parties have fulfilled all their promises and performed the contract is known as:
- an executory contract
- an executed contract
- an express contract
- a unilateral contract
An executed contract
A building sold for $180,000. The buyer put up 10% cash and obtained a loan for the balance. The lending institution charged a 1% loan origination fee. What was the total amount the buyer used for this purchase?
19620
In a sales transactions, how are commissions determined?
by agreement of the broker and principal
A bilateral contract is one in which:
there is a promise for a promise
Tom and Wendy agree that Tom will buy Wendy's farm for $400,000 cash, with the sale to take place in three months. This an example of what type of a contract?
Bilateral, express, executory
Ernie Pyle offers to pay $100.00 to anyone who will clear his driveway of snow. This is an example of what type of contract
unilateral
If an owner takes property off the market for a definite period of time, for consideration; and grants the right to purchase the property within that period at a stated price, this is called:
an option
Under an installment land contract, title to the land is held by:
the seller
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