Maine Real Estate Salesperson Exam — All Questions

A real estate licensee owes a client duties of loyalty, obedience, confidentiality, disclosure, accounting, and reasonable care. These are collectively known as:

• a.General obligations
• b.Statutory rights
• c.Ministerial duties
• d.Fiduciary duties✓

An agent owes fiduciary duties to the principal (client): loyalty, obedience, confidentiality, disclosure, accounting, and reasonable care and diligence. These arise from the position of trust in an agency relationship. Ministerial duties are routine, non-advisory tasks performed for a customer. The other choices are not the recognized term for this bundle of client duties.

A licensee represents both the buyer and the seller in the same transaction with the informed written consent of both. This relationship is called:

• a.Designated subagency
• b.A general agency
• c.Dual agency✓
• d.Single agency

Dual agency occurs when one licensee (or brokerage) represents both parties in the same transaction, and it is permitted only with the informed written consent of both because of the inherent conflict of interest. Single agency is representing only one party. Subagency extends the listing broker's agency to another broker. A general agency covers a broad range of acts, unrelated to representing both sides at once.

In a typical seller-listing arrangement, when is the listing broker generally considered to have earned the commission?

• a.When the broker produces a ready, willing, and able buyer who meets the seller's terms✓
• b.Only if the buyer obtains financing
• c.Only after the deed is recorded
• d.As soon as the listing agreement is signed

Under the common-law rule, a broker earns the commission by producing a buyer who is ready, willing, and able to purchase on the seller's stated terms (or terms the seller accepts). Signing the listing alone does not earn a commission; it only creates the agency. Recording the deed and the buyer's financing are closing events, and although most agreements tie actual payment to closing, the commission is legally 'earned' when the qualified buyer is produced.

A buyer's agent learns that the buyer is willing to pay far more than the asking price. To whom does the agent owe the duty of confidentiality regarding this information?

• a.The listing broker
• b.Both the buyer and the seller equally
• c.The seller
• d.The buyer✓

As the buyer's agent, the licensee owes fiduciary duties, including confidentiality, to the buyer (the principal). Disclosing the buyer's top price to the seller or listing broker would breach loyalty and confidentiality and harm the client's negotiating position. The duty runs to the principal, not to the other party in the transaction.

An agency relationship created when a principal accepts the benefit of a previously unauthorized act is agency by:

• a.estoppel
• b.ratification✓
• c.implication
• d.an express agreement

Agency by ratification arises when a principal approves or accepts the benefits of an act that was not previously authorized, adopting it as their own. Estoppel arises when a principal's conduct leads a third party to reasonably believe agency exists, and express agency is created by explicit agreement.

If a principal's words or conduct lead a third party to reasonably believe that someone is the principal's agent, a court may find agency by:

• a.subrogation
• b.estoppel✓
• c.ratification
• d.novation

Agency by estoppel (apparent authority) arises when a principal creates the appearance of agency and a third party reasonably relies on it; the principal is then estopped from denying it. Ratification is after-the-fact approval, and the other terms are unrelated.

The fiduciary duty that requires an agent to place the client's interests above the agent's own is the duty of:

• a.loyalty✓
• b.accounting
• c.disclosure
• d.obedience

Loyalty requires the agent to put the principal's interests first and avoid conflicts of interest or secret profits. Accounting concerns handling money and documents, disclosure concerns revealing material facts, and obedience concerns following lawful instructions.

An agent's duty to safeguard and report on all money and documents belonging to the client is the duty of:

• a.accounting✓
• b.obedience
• c.confidentiality
• d.loyalty

The duty of accounting requires the agent to track and promptly report all funds and property (such as earnest money) entrusted to them and to avoid commingling. The other duties address following instructions, keeping secrets, and undivided loyalty.

An agent must obey the client's instructions except when an instruction is:

• a.likely to reduce the agent's commission
• b.disliked by the other party to the deal
• c.unlawful or unethical✓
• d.merely inconvenient for the agent

The duty of obedience requires following the principal's lawful instructions, but an agent must not obey directions that are illegal or unethical, such as concealing a defect or discriminating. Inconvenience or a smaller commission does not excuse the duty.

To a customer - the party the licensee does not represent - the licensee owes:

• a.undivided loyalty and strict confidentiality maintained at all times
• b.obedience to the customer's instructions
• c.honesty, fair dealing, and disclosure of known material defects✓
• d.the full range of fiduciary duties

A customer is owed honesty, fair dealing, and disclosure of known material facts about the property, but not the fiduciary duties (loyalty, confidentiality, obedience) reserved for the client. Full fiduciary duties are owed only to the principal.

A licensee's statement that a home is 'the best value in town' is best classified as:

• a.legal puffing, which is opinion and not actionable✓
• b.an illegal misrepresentation of a material fact of the property
• c.a breach of the fiduciary duty of loyalty
• d.a violation of federal fair housing law

Puffing is an opinion or exaggerated sales talk that a reasonable person would not treat as a statement of fact, so it is generally legal. Stating a false material fact would be misrepresentation, but this statement is opinion, not a factual claim.

A licensee representing the seller knows the roof leaks badly. The licensee must:

• a.keep it confidential to protect the selling client
• b.misrepresent the condition to save the sale
• c.disclose the known material defect to the buyer✓
• d.reveal it only if the buyer asks

Even a seller's agent owes honesty and must disclose known material defects to the buyer; confidentiality protects the client's personal information, not property defects or fraud. Concealing a known defect can be misrepresentation, and the duty does not depend on being asked.

Which of the following may an agent NOT keep confidential from the other party?

• a.a known material defect that affects health or safety✓
• b.the seller's personal reason for moving
• c.the seller's minimum acceptable price for the property
• d.the seller's overall financial situation

Confidentiality protects the client's negotiating position and personal information (price flexibility, motivation, finances), but it never allows concealing a known material defect affecting value or safety, which must be disclosed. Fraud is not protected by confidentiality.

An agency relationship terminates in all of the following ways EXCEPT:

• a.the expiration of the agreement's term
• b.the full completion of the purpose of the agency relationship
• c.the agent finding a slightly better commission elsewhere✓
• d.the mutual agreement of both parties

Agency ends by performance (completion), mutual agreement, expiration, revocation, renunciation, or the death or incapacity of a party. An agent cannot simply abandon the relationship to chase a better commission without breaching the agreement.

A subagent is best described as:

• a.the client's own personal attorney who handles all of the transaction paperwork
• b.an agent of the broker who owes the same duties to the broker's principal✓
• c.a customer being served in the transaction
• d.an unrepresented buyer acting alone

A subagent works under the listing broker's authority and owes the same fiduciary duties to the seller-principal as the listing broker. A subagent is not the client's lawyer, a customer, or an unrepresented party.

A single agent represents:

• a.no party at all in the deal
• b.only the brokerage's own interests
• c.both the buyer and the seller at once
• d.only one party in the transaction✓

Single agency means representing only one side - either the buyer or the seller - with undivided loyalty. Representing both is dual agency, and representing neither while facilitating is a transaction or non-agency role.

In designated (appointed) agency:

• a.the buyer is left without any representation
• b.different agents in one brokerage represent the buyer and the seller separately✓
• c.the broker refuses to take the listing
• d.one single agent secretly represents both opposing sides of the very same transaction

Designated agency lets a broker appoint one licensee to represent the buyer and another to represent the seller within the same firm, giving each client individual representation while managing the firm-level conflict. It is not undisclosed dual agency.

Representing both the buyer and the seller in the same transaction without the informed consent of both is:

• a.illegal undisclosed dual agency✓
• b.a permitted form of single agency
• c.a lawful subagency arrangement
• d.standard designated agency

Dual agency is legal only with the informed, written consent of both parties; doing it secretly is undisclosed dual agency, a serious violation that breaches fiduciary duty. It is not single agency, subagency, or proper designated agency.

A transaction broker (facilitator):

• a.helps both parties complete the deal without representing either as a fiduciary✓
• b.represents only the seller in the deal
• c.owes the complete range of full fiduciary duties to both of the parties at once
• d.is prohibited by law in every state

A transaction broker assists both parties with the paperwork and process while owing honesty and fairness but not fiduciary loyalty to either. It is a recognized non-agency role in many states.

A listing agent hired to sell one specific property is typically:

• a.a general agent with broad, ongoing authority over affairs
• b.a universal agent authorized in all matters
• c.a subagent of the buyer in the deal
• d.a special agent with limited authority for that one task✓

A special agent is engaged for a specific, limited task, such as selling one property, and lacks authority to bind the principal generally. A general agent (such as a property manager) has broad ongoing authority, and a universal agent can act in all matters.

Most states require a licensee to disclose whom they represent:

• a.only if the client specifically asks
• b.at or before the first substantive discussion with a party✓
• c.only after the purchase contract has been completely signed by all
• d.only at the closing table itself

Agency disclosure laws generally require licensees to reveal who they represent early - at or before the first substantive contact - so the parties understand the relationship. Waiting until contract, closing, or a direct question defeats the purpose.

An agent who wishes to buy their client's listed property for themselves must:

• a.disregard fiduciary duties in a personal purchase
• b.keep their license status secret from the client
• c.avoid telling the client the property's true value
• d.disclose their licensee status and interest and obtain the client's consent✓

Loyalty and disclosure require the agent to reveal their licensee status and personal interest and obtain informed consent before buying the client's property; hidden self-dealing breaches fiduciary duty, and the agent must still deal honestly about value.

An agent who secretly earns a profit or referral fee beyond the agreed commission without telling the principal has:

• a.engaged in permitted puffing
• b.acted properly within agency law
• c.earned a lawful performance bonus
• d.breached the fiduciary duties of loyalty and disclosure✓

An agent may not make a secret profit; undisclosed fees or markups violate loyalty and disclosure and can require forfeiture of the profit and commission. Any additional compensation must be disclosed and consented to.

The legal concept under which a broker can be held responsible for the wrongful acts of an affiliated salesperson committed within the scope of the agency is:

• a.vicarious liability✓
• b.the doctrine of caveat emptor
• c.novation
• d.escheat

Vicarious liability (respondeat superior) holds a principal or employer, such as the broker, responsible for the wrongful acts an agent commits within the scope of the agency. Caveat emptor is buyer-beware, novation replaces a contract, and escheat is state reversion.

Two competing brokerages agree to charge all sellers the same commission rate. This illegal antitrust practice is known as:

• a.Steering, the illegal channeling of buyers toward or away from areas by their protected class
• b.Blockbusting, inducing owners to sell by claiming a protected group is moving into the area
• c.Puffing, the legal, non-factual sales exaggeration that a reasonable buyer would not rely on
• d.Price fixing✓

Price fixing is an agreement among competitors to set prices (here, commission rates) rather than letting each firm compete independently, and it violates federal antitrust law. Commission rates must always be negotiated between a broker and client. Steering and blockbusting are fair-housing violations; puffing is legal sales talk.

Several brokerages agree to divide a city so each operates only in certain areas and none compete. This antitrust violation is called:

• a.A group boycott, a concerted refusal by competitors to deal with a particular targeted firm
• b.A tie-in arrangement, conditioning one product or service on the purchase of a separate one
• c.Market allocation (division of territories)✓
• d.Dual agency, representing both the buyer and the seller in a single real estate transaction

Market allocation is an illegal agreement among competitors to divide territories or customers, eliminating competition among them. A tie-in ties one product to another, a group boycott is a concerted refusal to deal, and dual agency is a representation issue, not an antitrust one.

Two or more competing firms agree to refuse to cooperate with a broker who discounts commissions. This illegal antitrust practice is a:

• a.A tie-in arrangement, linking the sale of one service to the required purchase of a second one
• b.Group boycott✓
• c.A price ceiling that state or federal law affirmatively requires competing brokerages to observe
• d.A legitimate and lawful independent business decision made separately by each individual firm

A group boycott is a concerted agreement among competitors to refuse to deal with another firm, and it violates antitrust law even if aimed at a discounter. Each firm may independently decide with whom to work, but agreeing together to exclude a competitor is illegal.

A broker will list a seller's property only if the seller also agrees to use the broker's affiliated mortgage company. This illegal antitrust practice is a:

• a.Tie-in (tying) arrangement✓
• b.A price-fixing agreement among competing brokerages to charge sellers identical commission rates
• c.A permissible package discount that lawfully bundles several optional services at a reduced price
• d.A net listing, in which the broker keeps any amount the sale brings above the seller's set price

A tie-in arrangement conditions the sale of one desired product or service (the listing) on the customer's purchase of a separate one (the mortgage service), unlawfully leveraging market power. It is different from price fixing and from a net listing, which concerns how commission is calculated.

An agent directs minority buyers only toward certain neighborhoods and away from others based on race. This fair-housing violation is:

• a.A permissible time-saving service the agent lawfully provides to help busy buyers narrow choices
• b.Redlining, a lending practice that denies loans or insurance within certain mapped neighborhoods
• c.Blockbusting, inducing owners to sell quickly by playing on fear about a protected group arriving
• d.Steering✓

Steering is channeling buyers toward or away from particular areas based on a protected characteristic such as race, and it violates the Fair Housing Act. It is never a permissible 'convenience.' Redlining is a lending practice, and blockbusting induces sales through fear.

An agent tells homeowners a particular ethnic group is moving in so they should sell before values fall, hoping to win listings. This is:

• a.Blockbusting (panic selling)✓
• b.Legal and accurate market forecasting that a diligent agent may lawfully share with area owners
• c.Redlining, the refusal of a lender to make loans or write insurance within specific neighborhoods
• d.Steering, the channeling of prospective buyers toward or away from areas by their protected class

Blockbusting is inducing owners to sell by exploiting fear about the entry of a protected class, and it violates fair-housing law. Steering directs buyers based on protected class, and redlining denies loans or insurance by area; none of these is legitimate market advice.

A lender refuses to make loans in certain neighborhoods based on their racial composition rather than the applicant's qualifications. This illegal practice is:

• a.Blockbusting, the inducing of panic sales by exploiting fear that a protected group is arriving
• b.Prudent, individualized underwriting that lawfully evaluates the specific borrower and property
• c.Redlining✓
• d.Steering, the directing of buyers toward or away from neighborhoods based on a protected class

Redlining is the discriminatory denial of loans, insurance, or other services in specific geographic areas based on the residents' protected characteristics. It violates fair-housing and fair-lending laws. Legitimate underwriting evaluates the individual applicant and property, not the neighborhood's demographics.

Under the general principles of the REALTOR Code of Ethics, when representing a client, the member's fundamental duty is to:

• a.Protect and promote the client's interests while treating all parties honestly✓
• b.Conceal known material defects from the other side whenever doing so would help the client
• c.Treat the customer and the client in exactly the same way, owing identical duties to each
• d.Advance the member's own personal financial interests ahead of everyone else's in the deal

The Code of Ethics directs a member to protect and promote the client's interests, but that duty is expressly limited by the obligation to treat ALL parties honestly. It does not license concealing material defects or putting the agent's own interests first.

The difference between illegal misrepresentation and legal 'puffing' is that:

• a.They are effectively the same thing, and both of them are illegal and actionable in every case
• b.Misrepresentation is a false statement of material fact; puffing is opinion✓
• c.Misrepresentation can only happen after closing, whereas puffing can only happen before it
• d.Puffing is any statement made in writing, while misrepresentation only ever occurs when spoken

Puffing is an obvious opinion or sales exaggeration ('the best view in town') that a reasonable person would not treat as a fact. Misrepresentation asserts a false material FACT that others rely on, which can be fraudulent or negligent and is actionable regardless of whether it is written or oral.

An agent carelessly tells a buyer the home has 2,500 square feet without checking, when it has 2,000. Even without intent to deceive, the agent may be liable for:

• a.Fraud, which here would require proof that the agent knew the figure was false and meant to deceive
• b.Negligent misrepresentation✓
• c.A permissible good-faith estimate that carries no legal liability of any kind for the agent
• d.Legal puffing, since square footage is just an obvious opinion a buyer would never truly rely on

Negligent misrepresentation occurs when an agent makes a false statement of material fact carelessly, without a reasonable basis, and another relies on it to their detriment. Intent is not required (that would be fraud), and a specific numeric claim like square footage is a fact, not mere puffing.

A 'stigmatized property' is one where events such as a death or crime occurred. As to the seller's confidential motivation and similar facts, the listing agent must:

• a.Volunteer to every prospective buyer the lowest price the seller has privately said they will take
• b.Feel free to lie about the property's physical condition if doing so would protect the seller
• c.Keep them confidential while honestly answering about known material facts✓
• d.Disclose to buyers the seller's personal and private reasons for deciding to sell the property

The agent owes the client confidentiality about facts like the seller's motivation and bottom-line price, yet must be honest about material facts affecting the property and never misrepresent its condition. Whether a stigma such as a past death must be disclosed varies, but a client's confidential financial information is protected.

A listing agent wants to buy the listed property personally. To satisfy the fiduciary duties, the agent must:

• a.Do nothing special at all, because a listing agent is always free to buy their own listing
• b.Buy the property quietly and discreetly so as not to upset the other prospective buyers in line
• c.Automatically raise the listing price before purchasing in order to protect the selling client
• d.Fully disclose the agent's licensee status and the conflict and deal honestly✓

An agent's fiduciary duty of loyalty prohibits undisclosed self-dealing; if the agent wants to purchase, the agent must disclose the conflict and licensee status and act with complete honesty, and often the client should be advised to seek independent counsel. Concealing the agent's interest breaches loyalty and disclosure duties.

A broker deposits a client's earnest-money check into the broker's own business operating account. This is an example of:

• a.Proper and fully compliant handling of trust funds exactly as the license law requires
• b.A permissible short-term interest-free loan that the client has effectively made to the brokerage
• c.Commingling, which is prohibited✓
• d.Conversion, the more serious act of actually spending the client's funds for the broker's own use

Commingling is mixing clients' trust funds with the broker's own operating or personal funds; it is a serious license-law violation even if none of the money is spent. Actually SPENDING the client's funds for the broker's benefit is the further offense of conversion.

Under the doctrine of vicarious liability, a broker may be held responsible for:

• a.A next-door neighbor's misrepresentation about the boundaries or condition of the property
• b.The buyer's unrelated personal debts and financial obligations owed to outside third parties
• c.The acts of salespeople performed within the scope of their agency✓
• d.Any and every crime that a client happens to commit at any point during the transaction

Vicarious liability makes a principal (the broker) responsible for the acts of agents (salespeople) done within the scope of their authority. It does not extend to unrelated parties such as clients, buyers' personal debts, or third parties outside the agency relationship.

In a commission dispute, 'procuring cause' generally refers to the broker who:

• a.Began the unbroken chain of events leading the ready buyer to purchase✓
• b.Merely showed the property a single time and then had no further involvement in the transaction
• c.Was simply the first brokerage to advertise the listing anywhere, regardless of who sold it
• d.Holds the signed listing agreement, no matter which cooperating broker actually found the buyer

Procuring cause is the broker whose efforts set in motion the continuous, unbroken series of events resulting in the sale. Simply opening a door once, being first to advertise, or holding the listing does not by itself establish procuring cause if another broker actually caused the purchase.

Even toward a customer (a party the agent does NOT represent), a licensee still owes the duty to:

• a.Keep all of the customer's confidential information secret from the agent's own client
• b.Deal honestly and disclose known material defects in the property✓
• c.Negotiate the lowest possible purchase price on the customer's behalf against the agent's client
• d.Actively promote the customer's interests and place them above those of the represented client

To a customer, the agent owes honesty, fair dealing, and disclosure of known material defects, but NOT the fiduciary duties of loyalty and confidentiality, which are reserved for the client. The agent cannot advocate for the customer's price or keep the customer's secrets at the client's expense.