New Mexico Real Estate Broker Exam — All Questions

Under New Mexico's broker-duties framework, the statutory broker duties are owed:

• a.To the parties in a transaction, whether or not an agency relationship exists✓
• b.Only to the broker's own client
• c.Only after a written agency agreement is signed
• d.Only to the buyer in a transaction

In New Mexico, every associate broker and qualifying broker owes the statutory broker duties, such as honesty, reasonable care, and disclosure of adverse material facts, to the parties whether or not an agency relationship exists. An agency agreement adds further duties to a client, but the baseline broker duties apply to all.

Which of the following must a New Mexico broker provide to a prospective buyer or seller early in the relationship?

• a.A completed appraisal
• b.A property tax estimate
• c.A written disclosure of the broker duties✓
• d.A title commitment

New Mexico requires a broker to provide a written disclosure of the broker duties to a prospective buyer or seller, so the consumer understands the duties every broker owes before working together. This disclosure is a core compliance step for New Mexico brokers.

A New Mexico broker is about to hand a prospective seller a listing agreement to read. Under the broker duties rule, the broker must already have:

• a.Obtained the seller's signature on a dual agency agreement
• b.Delivered a written estimate of the seller's net proceeds
• c.Disclosed the applicable broker duties and obtained written acknowledgement of that disclosure✓
• d.Filed a brokerage relationship notice with the commission

Disclosure of the applicable set of broker duties must happen before the broker generates or presents any written document that has the potential to become an express written agreement, and the broker must obtain that party's written acknowledgement. Where the broker is not directly serving the party, the disclosure goes through the broker who is. Cite: 16.61.19.8 NMAC.

A New Mexico buyer tells a broker at an open house, "I want you to be my agent." Under the licensing law the agency relationship:

• a.Arises at that moment, because the buyer said so
• b.Arises once the broker begins showing property to the buyer
• c.Is presumed to exist unless the broker objects to it in writing within ten days
• d.Does not exist unless the buyer and the brokerage agree to it in writing✓

For regulated transactions, no agency relationship exists unless the person and the brokerage agree in writing. No type of agency may be assumed by a party or a licensee, or created orally or by implication. Cite: NMSA 1978 Section 61-29-10.1(A).

In New Mexico the transaction broker relationship is best described as:

• a.An agency relationship limited to ministerial acts
• b.A non-fiduciary relationship in which real estate services are provided without agency✓
• c.A relationship in which the broker represents both parties equally as fiduciaries
• d.A subagency of the listing brokerage

A transaction broker provides real estate services without entering into an agency relationship, and the commission rule expressly labels it a non-fiduciary relationship. The statutory broker duties still apply. Cite: 16.61.19.9(A) NMAC.

Two clients of the same New Mexico brokerage want to buy and sell the same house, and the qualifying broker will not use designated agency. Before writing or presenting offers the dual agent must:

• a.Obtain a separate written dual agency agreement✓
• b.Terminate one of the two existing exclusive agency agreements
• c.Notify the real estate commission of the dual agency in writing
• d.Obtain the written approval of both clients' attorneys of record

A dual agent must obtain written authority from the buyer client and the seller client in the form of a separate dual agency agreement before writing or presenting offers, and must then act as a facilitator rather than as an exclusive agent of either party. Cite: 16.61.19.10(B) and (C) NMAC.

Before a New Mexico dual agency agreement was signed, a seller told the listing broker the lowest price she would take. After dual agency begins, the broker may disclose that figure to the buyer:

• a.Whenever disclosure would help close the transaction
• b.Automatically, because dual agency makes both parties clients
• c.Only if required by law or rule, or if the seller permits it✓
• d.Never, under any circumstance

Information obtained before written dual agency authority was granted may not be disclosed to the other party unless required by law or rules or permitted by the client who originally disclosed the confidential information. Cite: 16.61.19.10(D) NMAC.

Unless the seller authorizes it in writing, a New Mexico broker directly serving that seller may not tell the buyer:

• a.The age of the roof
• b.That another offer has been received and rejected by the seller
• c.The asking price stated in the seller's listing agreement
• d.That the seller will take less than the listed price✓

The rule bars disclosure of the seller's willingness to accept less than the asking price, willingness to accept other financing terms, motivation for selling, and anything else the seller has asked in writing be kept confidential, unless disclosure is required by law. Cite: 16.61.19.8(B)(7) NMAC.

A New Mexico broker manages a residential rental for the owner. To the tenant the broker owes:

• a.Prompt accounting for money received, a receipt for cash, and written disclosure that the broker is the owner's agent✓
• b.The full duties of an exclusive agent
• c.No duties at all, because the tenant is not a client
• d.Only the duty to return the security deposit

A residential property manager is directly providing services to the owner, not the tenant, but still owes the tenant prompt accounting for all money received, including a receipt for cash, and written disclosure that the broker is the agent of the owner and not of the tenant. Cite: 16.61.19.8(C) NMAC.

Under the New Mexico broker duties rule, brokers owe other brokers a list of professional obligations. One of them is:

• a.Sharing each client's confidential information on request
• b.Non-interference with another broker's written agreement✓
• c.Disclosing the commission split offered in the transaction
• d.Delivering the list of broker duties to every cooperating broker

Obligations to other brokers include honesty and reasonable care, timely presentation of written offers, disclosure of adverse material facts and conflicts of interest, and non-interference with a purchase agreement or other express written agreement another broker has with a party. Brokers are not required to give one another the list itself. Cite: 16.61.19.8(D) NMAC.