Lyon Spring 2014 Legal Update

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| By Lyonrealestate
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Lyonrealestate
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Quizzes Created: 2 | Total Attempts: 1,091
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  • 1/25 Questions

    When writing an offer on an off-market property, it is a good idea to get a Buyer Representation Agreement prior to writing and presenting the offer to the seller.

    • True
    • False
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About This Quiz

The 'Lyon Spring 2014 Legal Update' quiz evaluates knowledge on recent changes in US real estate law, focusing on transaction disclosures, taxation, loan regulations, and plumbing fixture requirements. It's designed for professionals seeking to update their legal compliance skills.

Real Estate Law Quizzes & Trivia

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  • 2. 

    The best risk management procedure is for sellers to complete their TDS in person rather than completing and signing electronically.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Completing the TDS (Transaction Disclosure Statement) in person allows sellers to have a better understanding of the risks involved in the transaction and enables them to address any concerns or questions directly. It also ensures that sellers have a physical record of their completion and signature, which may be more reliable and legally binding compared to electronic signatures. By completing the TDS in person, sellers can mitigate potential risks and ensure a more effective risk management procedure.

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  • 3. 

    If an agent communicates with a client by text, and if the text contains important information or advice, it is best to follow up with the client by sending an e-mail.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    When an agent communicates with a client through text and provides important information or advice, it is crucial to follow up with an email. Text messages can be easily overlooked or forgotten, whereas emails provide a more formal and documented form of communication. By sending an email, the agent ensures that the client has a written record of the information or advice, reducing the chances of miscommunication or misunderstandings. Additionally, email allows for more detailed explanations or attachments if needed. Therefore, it is best practice to follow up with an email after texting important information or advice to a client.

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  • 4. 

    When a listing agent receives a sharp offer/relative bid in a multiple-offer situation, the seller must accept that offer because it is always the highest price.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    In a multiple-offer situation, the seller does not necessarily have to accept the highest price offer. Other factors such as the terms and conditions of the offer, the financial stability of the buyer, and the contingencies included in the offer can also influence the seller's decision. The seller may choose to accept a lower offer if it has more favorable terms or if they believe the buyer is more likely to follow through with the purchase. Therefore, it is not always the case that the seller must accept the highest price offer.

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  • 5. 

    It is advisable for listing agents to provide their sellers with a “Seller Advisory re TDS” prior to sellers completing their TDS disclosures, and also to go through it with them so that they understand their disclosure obligations.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    It is advisable for listing agents to provide sellers with a "Seller Advisory re TDS" prior to completing their TDS disclosures. This ensures that sellers understand their disclosure obligations and can accurately complete the disclosures. By going through the advisory with sellers, listing agents can address any questions or concerns sellers may have, ensuring a smoother and more informed disclosure process.

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  • 6. 

    When taking a listing, it is okay to use the MLS photographs from the previous listing agent.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    It is not okay to use MLS photographs from the previous listing agent when taking a new listing. Each listing should have its own set of photographs that accurately represent the current condition and features of the property. Using old photographs can be misleading to potential buyers and may lead to dissatisfaction or legal issues. It is important to provide accurate and up-to-date information to ensure transparency and trust in the real estate process.

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  • 7. 

    The contingency for the sale of buyer’s property (form COP) is a complicated form and should be reviewed carefully before allowing either the buyer or seller to sign.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because the contingency for the sale of the buyer's property is a complex form that requires careful review before signing. This suggests that there may be various conditions and clauses within the form that need to be understood and agreed upon by both the buyer and the seller. Failing to review the form carefully can lead to misunderstandings or potential legal issues in the future. Therefore, it is important to take the time to thoroughly examine the contingency form before proceeding with the sale.

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  • 8. 

    Buyer representation agreements are like listing agreements in that they are enforceable and must be signed by the buyer to be effective.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Buyer representation agreements are similar to listing agreements in that they are legally binding and require the buyer's signature to be valid. These agreements outline the terms and conditions of the buyer's relationship with their real estate agent, including the agent's responsibilities, the duration of the agreement, and any fees or commissions involved. By signing the agreement, the buyer agrees to work exclusively with that particular agent and allows them to represent their interests in the home buying process. Therefore, the statement that buyer representation agreements are enforceable and require the buyer's signature to be effective is true.

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  • 9. 

    When a buyer decides to buy a property “non-contingent,” it is good risk management to give the buyer a “Market Conditions Advisory” form and confirm in an e-mail that the buyer has made the decision to proceed without contingencies after having been warned of the dangers by his/her agent.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    When a buyer decides to buy a property "non-contingent," it means that they are willing to proceed with the purchase without any conditions or contingencies. In such cases, it is important for the buyer to be aware of the potential risks involved. By providing the buyer with a "Market Conditions Advisory" form and confirming their decision via email, the agent ensures that the buyer has been properly informed about the dangers and is making an informed decision. This helps in managing the risk associated with a non-contingent purchase. Therefore, the statement is true.

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  • 10. 

    In a mixed-use building with 1 to 4 residential units, a seller doesn’t have to complete a TDS because the property has non-residential uses as well.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    In a mixed-use building with 1 to 4 residential units, a seller still needs to complete a TDS (Transfer Disclosure Statement) regardless of whether the property has non-residential uses. The TDS is a form that sellers in California are required to fill out and provide to potential buyers, disclosing any known material defects or issues with the property. The fact that the building has non-residential uses does not exempt the seller from completing this disclosure. Therefore, the correct answer is False.

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  • 11. 

    If a buyer’s agent presents an offer to an off market seller, they are entitled to compensation because they are the “procuring cause” even if the seller has not signed a compensation agreement.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is false because in order for a buyer's agent to be entitled to compensation, there must be a signed compensation agreement between the agent and the seller. Being the "procuring cause" alone does not automatically entitle the agent to compensation without a signed agreement.

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  • 12. 

    The flood insurance law which resulted in huge premium increases on the sale of a property in a FEMA “A” or “V” zone, as shown on a NHD report, was recently modified to provide that a sale no longer triggers a premium increase, but premiums can increase by as much as 25% per year over the next three years.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The flood insurance law was modified to eliminate the premium increase triggered by the sale of a property in a FEMA "A" or "V" zone, as indicated on a NHD report. However, premiums can still increase by up to 25% per year over the next three years. Therefore, the statement that the flood insurance law no longer triggers a premium increase on the sale of a property is true.

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  • 13. 

    Regarding the 2014 Water-Conserving Plumbing Fixtures law requiring the replacement of “non-compliant plumbing fixtures,” all owners of single-family residences must comply if they “alter or improve” the property with a permit after January 1, 2014, unless the City has a stated exemption.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The explanation for the correct answer "True" is that according to the 2014 Water-Conserving Plumbing Fixtures law, all owners of single-family residences must comply with the requirement of replacing "non-compliant plumbing fixtures" if they make any alterations or improvements to the property with a permit after January 1, 2014, unless the City has a stated exemption. Therefore, it is true that all owners of single-family residences must comply with the law under these conditions.

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  • 14. 

    If an agent has his/her own corporation, it is okay to use that corporate name in working for the broker on real estate transactions.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Using one's own corporate name while working for a broker on real estate transactions is not acceptable. This is because when an agent works for a broker, they are typically acting as an agent of the broker and not as an individual entity. Therefore, it is important for the agent to use the broker's name and branding to maintain consistency and ensure that clients understand the relationship between the agent and the broker. Using one's own corporate name could potentially confuse clients and lead to misunderstandings.

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  • 15. 

    When showing property with dangerous conditions to buyers, if the listing agent gives a verbal warning to look out for dangers, that is sufficient.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Giving a verbal warning to buyers about dangerous conditions in a property is not sufficient. While it is important for the listing agent to inform potential buyers about any hazards, a verbal warning alone may not provide enough protection. It is advisable for the listing agent to also document the warnings in writing and ensure that buyers understand the risks involved. This helps to establish a clear record of disclosure and ensures that buyers are fully informed before making a decision.

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  • 16. 

    The best way to remove contingencies is with a contract addendum.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    A contract addendum is not necessarily the best way to remove contingencies. Contingencies are conditions that must be met in order for a contract to be binding. While a contract addendum can be used to modify or supplement an existing contract, it may not be the most effective method for removing contingencies. Other options such as negotiating with the other party, obtaining waivers, or fulfilling the conditions directly may be more appropriate depending on the specific situation. Therefore, the statement is false.

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  • 17. 

    It is advisable for an agent to agree to accept a referral from an internet referral broker so long as the agent agrees to the online “terms and conditions.”

    • True

    • False

    Correct Answer
    A. False
    Explanation
    It is not advisable for an agent to agree to accept a referral from an internet referral broker solely based on agreeing to the online "terms and conditions." There are other factors that should be considered before accepting a referral, such as the reputation and credibility of the broker, the quality of leads provided, and the potential for conflicts of interest. Simply agreeing to the terms and conditions does not guarantee a successful or beneficial referral.

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  • 18. 

    Sharp offers or relative bids should not be written because they are illegal.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The given statement suggests that sharp offers or relative bids should not be written because they are illegal. However, the correct answer is False, indicating that the statement is not true. This implies that sharp offers or relative bids are not necessarily illegal and can be written.

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  • 19. 

    If an agent hires a photographer to shoot photos of his/her listing, that agent automatically owns those photographic images.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is false because the ownership of photographic images is determined by the terms of the contract between the agent and the photographer. By hiring a photographer, the agent may have the right to use the images for marketing purposes, but it does not automatically mean that the agent owns the images. The photographer may retain the copyright and ownership of the images unless stated otherwise in the contract.

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  • 20. 

    Regarding taxation on short sales, the following statement is true for sellers of 1 to 4 residential properties: “There is no “Forgiveness of Indebtedness” or “Capital Gains” tax because of new IRS and FTB policy.”

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is false. Sellers of 1 to 4 residential properties are subject to taxation on short sales. They may be liable for "Forgiveness of Indebtedness" tax, which is the tax on the canceled debt, and "Capital Gains" tax, which is the tax on the profit made from the sale of the property. The new IRS and FTB policy does not exempt them from these taxes.

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  • 21. 

    Referral fee agreements from one salesperson to another are okay if they are in writing.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Referral fee agreements from one salesperson to another are not okay if they are in writing. This suggests that written agreements for referral fees between salespeople are not acceptable or permissible. It is important to note that the explanation does not provide any further details or reasons for why this is the case.

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  • 22. 

    According to the Civil Code, the new TDS form must be used for all transactions starting January 1, 2014.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The explanation for the given correct answer, which is False, is that the statement is incorrect. The Civil Code does not state that the new TDS form must be used for all transactions starting January 1, 2014. It could be the case that the new TDS form is not required at all or that it is required but with a different effective date. Without further information, we cannot determine the exact reason for the statement being false.

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  • 23. 

    CalBRE will be checking agent websites for the employing broker’s CalBRE license number in addition to the agent’s license number.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    CalBRE will not be checking agent websites for the employing broker's CalBRE license number in addition to the agent's license number.

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  • 24. 

    Regarding owner-carry loans (“OC”) on residential 1 to 4 properties after the Dodd-Frank Act was passed, all such sellers have to make a determination whether the borrower is capable of re-paying the loan.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    After the Dodd-Frank Act was passed, not all sellers of residential 1 to 4 properties with owner-carry loans ("OC") are required to make a determination regarding the borrower's ability to repay the loan. This statement is false.

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  • 25. 

    When presenting an offer to a seller of an off-market property, you should present a commission agreement at the same time as the offer.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    It is not necessary to present a commission agreement at the same time as the offer when presenting an offer to a seller of an off-market property. The commission agreement is typically discussed and negotiated separately from the offer itself.

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Quiz Review Timeline (Updated): Mar 21, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • May 12, 2014
    Quiz Created by
    Lyonrealestate
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