Pennsylvania Real Estate Broker Exam — All Questions

RELRA lists duties a Pennsylvania licensee owes to every consumer and states that they may not be waived. The one exception the statute itself carves out is:

• a.Dealing honestly and in good faith with every consumer served
• b.Disclosing a conflict of interest to the consumer in good time
• c.Accounting in a timely manner for money received from a consumer
• d.Presenting written offers while the property is under contract✓

Section 606.1(a)(3) requires the licensee to present all written offers, notices and communications in a timely manner, "except that the duty of a licensee under this paragraph to present written offers may be waived by a seller of a property that is subject to an existing contract for sale" where the waiver is in writing and in the manner the Commission prescribes by regulation. Section 35.292(a)(3) carries the same carve-out into the rules. Every other duty in section 606.1(a) is introduced by the words "which may not be waived," so honesty and good faith under paragraph (2), accounting for money under paragraph (5), and timely conflict disclosure under paragraph (7) stay in place no matter what the parties agree. The distinction matters in practice because the waiver is the seller's to give, is limited to a property already under contract, and must be written.

An agency relationship between a Pennsylvania licensee and a principal has ended. The licensee may reveal the former principal's confidential information when:

• a.A cooperating broker asks for it in the course of a later transaction
• b.The transaction has been closed for more than six months
• c.The licensee believes the information has become public anyway
• d.A subpoena or court order requires the information to be disclosed✓

Section 606.1(g) forbids a licensee to reveal or use a principal's confidential information "during or following the termination of an agency relationship" and then lists five closed exceptions, of which one is that "the information is required to be disclosed under subpoena or court order." Section 35.311(d) states the rule and the same five exceptions in the regulations. The other four exceptions are the principal's consent, disclosure to a licensee or third party acting solely on the principal's behalf, disclosure necessary to prevent the principal from committing a crime, and use in the licensee's own defense against an accusation of wrongdoing. A cooperating broker in a later deal is not acting on the former principal's behalf, the passage of time is not one of the exceptions, and the licensee's own belief that a fact has become public is not the test the statute applies.

A Pennsylvania seller's agent is told by the seller, in confidence, that the basement floods every spring. The agent must:

• a.Withhold it, because confidentiality binds the agent to the seller's instruction
• b.Reveal it, because the confidentiality duty does not reach material defects✓
• c.Withhold it unless a prospective buyer asks a direct question about flooding
• d.Reveal it only once a buyer and the seller have signed an agreement of sale

Section 35.312(a)(2) states the seller's agent's duty of confidentiality and immediately qualifies it: "except that a licensee has a duty to reveal known material defects about the property." The Consumer Notice in section 35.336 makes the same point to consumers in plain words for seller agents, buyer agents, dual agents and transaction licensees alike, and section 35.284a(c) requires a licensee to disclose to the buyer in writing all material defects not otherwise disclosed of which the licensee has actual knowledge. Loyalty under section 35.312(a)(1) does not override that, because the duty runs to the buyer rather than being owed to the seller. Waiting for a direct question would be the caveat emptor rule Pennsylvania abandoned when it enacted the Real Estate Seller Disclosure Law, and disclosure after signing comes too late, since 68 Pa.C.S. section 7303 requires the disclosure statement before the agreement is signed.

A Pennsylvania licensee's first substantive discussion of a buyer's real estate needs happens over the telephone, so the licensee gives the required oral disclosure. The written Consumer Notice must then be delivered no later than:

• a.The later of the first in-person meeting or the first showing
• b.The signing of a written agreement between the broker and consumer
• c.The earlier of the first in-person meeting or the first showing✓
• d.The presentation of the consumer's first written offer to purchase

Section 608(d) sets the deadline at the earlier of "the first meeting that the licensee has in person with the consumer after the initial interview" or "the time a property is first shown to the consumer by the licensee or any person working with the licensee," and section 35.284(a)(2) repeats it. The initial interview is defined in section 608(a) and section 35.201 as the first contact at which a substantive discussion about real estate needs occurs, so a phone call counts and triggers the oral script in section 35.339, which warns the consumer that nothing said is confidential yet. Choosing the later of the two events would let a licensee show property before the notice arrives, which is precisely what the rule prevents. Waiting for a written agreement or an offer is later still, and section 35.286(a)(1) then requires the signed or refused acknowledgment to be kept for six months where no transaction follows.

Before acting as a dual agent in Pennsylvania, a licensee must have written consent from both parties following the disclosures given at the initial interview. That consent must also include:

• a.A waiver of the duty of confidentiality
• b.A statement of the terms of compensation✓
• c.An acknowledgment of the recovery fund
• d.A release of the broker from all liability

Section 606.4(a) allows dual agency "only with the written consent of both parties to the transaction following the disclosures given at the initial interview required by section 608," and adds the requirement in one sentence: "The consent must include a statement of the terms of compensation." Section 35.314(a) states the written-consent rule, and section 604(a)(7) makes acting for more than one party without the written knowledge and consent of all of them a prohibited act. Confidentiality is not waived by consenting to dual agency; section 35.314(b)(3) keeps the dual agent's confidentiality duty in place, subject to the standing obligation to disclose known material defects. Recovery Fund language belongs in written broker agreements and sales contracts under sections 608.1(6) and 608.2(2), and a blanket liability release is not a component of dual-agency consent at all.

Under RELRA, a Pennsylvania subagent is:

• a.A broker outside the listing broker's employ who acts for the seller✓
• b.A licensee inside the listing broker's employ who acts for the seller
• c.A licensee inside the listing broker's employ who acts for the buyer
• d.A broker outside the listing broker's employ who acts for the buyer

The section 201 definition is precise on both points: a subagent is "a broker, not in the employ of the listing broker, who is engaged to act for or cooperate with the listing broker in selling property as an agent of the seller," and "a subagent is deemed to have an agency relationship with the seller." Section 35.312(c) lets a seller's agent compensate other brokers as subagents if the seller agrees in writing and gives subagents the same duties and obligations to the seller as the seller's agent has. A cooperating broker who acts for the buyer is a buyer agent under the section 201 definition, and section 35.313(c) confirms that such a broker represents the buyer even when the seller's side pays. A licensee employed by the listing broker is already the seller's agent by virtue of section 35.312(e) unless designated otherwise, so there is nothing sub about that relationship. Pennsylvania still defines and uses subagency, unlike states that have repealed or deleted it.

A Pennsylvania transaction licensee owes limited confidentiality. Under that duty the licensee may not disclose that:

• a.The property has a known material defect in the roof
• b.The seller would take a price below the listed price✓
• c.The seller has received a competing offer this week
• d.The listing broker is paying the licensee's fee here

Section 606.6 and section 35.316(2) confine limited confidentiality to three specific facts: that the seller will accept a price less than the asking or listed price, that the buyer will pay more than the price in a written offer, and that either party will agree to financing terms other than those offered. A known material defect is on the other side of the line, because the closing words of section 606.6 and the Consumer Notice in section 35.336 both say that transaction licensees, like licensees in agency relationships, must disclose known material defects about the property. The existence of a competing offer is not among the three protected facts. Who is paying the licensee is a matter to be disclosed rather than concealed, since section 606.6(1) requires the transaction licensee to tell the consumer that the licensee is not acting as an agent or advocate and should not be given confidential information.

A Pennsylvania broker designates one licensee to act for the seller and another to act for the buyer in the same transaction. In that transaction the broker:

• a.Is a transaction licensee and owes no agency duty to either party
• b.Is a dual agent and must direct and supervise both designated agents✓
• c.Is the seller's agent, because the listing reached the firm first
• d.Is free of agency duties once the two designations are made

Section 606.5(a)(1) states that a broker who represents both the seller/landlord and the buyer/tenant in the same transaction is a dual agent, and section 606.5(a)(3) adds that the broker "has the responsibility to direct and supervise the business activities of designated agents and thereby owes duties to both the seller/landlord and the buyer/tenant as a dual agent." Section 35.315(f) repeats the point and pairs it with a duty to take reasonable care to protect the confidential information each principal gave to that principal's own designated agent. Designation therefore narrows the agency of the individual licensees, not of the broker: section 35.315(d) provides that licensees who are not designated have no agency relationship with either party. Section 606.5(b)(3) also requires each designated agent to tell the principal, before writing or presenting an offer, that the other party is represented within the same firm and that the broker is a dual agent.

A Pennsylvania licensee provides services to a consumer before any written agreement has been signed. The licensee:

• a.May do so and may recover a reasonable fee for the work performed
• b.Has violated RELRA merely by working before an agreement is signed
• c.May recover a fee if the consumer later acknowledges the work orally
• d.May do so, but cannot recover a fee without a signed agreement✓

Section 606.1(b)(1) bars a licensee from taking a fee paid by or on behalf of a consumer unless the nature of the service and the fee are set out in a written agreement signed by the consumer, then adds: "This paragraph shall not prohibit a licensee from performing services before such an agreement is signed, but the licensee is not entitled to recover a fee, commission or other valuable consideration in the absence of such a signed agreement." Section 35.281(c) states the rule in the same two halves, which is why doing the work is not itself the violation. A quantum meruit recovery is exactly what the sentence forecloses, and an oral acknowledgment afterwards does not supply the signature the statute demands. The narrow exceptions in section 606.1(b)(2) and section 35.281(b)(1) let an open listing or a nonexclusive buyer agency agreement be oral, but only if the consumer receives a written memorandum of the terms.

A Pennsylvania salesperson earns compensation on a completed sale. RELRA permits that compensation to be accepted from:

• a.The seller directly, where the listing agreement authorizes it
• b.The cooperating broker who produced the successful buyer
• c.The employing broker with whom the salesperson is affiliated✓
• d.The settlement agent, out of the proceeds held at closing

Section 604(a)(12) makes it a prohibited act for a salesperson or associate broker to accept "a commission or any valuable consideration ... from any person, except the licensed real estate broker with whom he is affiliated," and section 604(a)(12.1) closes the loop from the paying side by barring a broker from paying anyone other than the broker's own licensed employees or another real estate broker. That is why cooperative compensation moves broker to broker and reaches the salesperson only through the employing broker. A seller cannot pay the salesperson directly however the listing reads, and a settlement agent disbursing to the salesperson would be paying a person the broker's own funds have to reach first. The single carve-out is the qualified association added by Act 14 of 2009: section 604(c) permits a broker to pay a qualified association, and a salesperson to be paid by one in which the salesperson holds an interest, but section 201 requires that entity to be owned solely by licensees all affiliated with the same broker.