Vermont Real Estate Salesperson Exam — All Questions

The principle of contribution states that the value of a component or improvement is measured by:

• a.The raw number of square feet of floor area or land area that the improvement happens to occupy
• b.The owner's personal emotional attachment to and sentimental feelings about that improvement
• c.Its original construction or installation cost in every case, dollar for dollar, with no exception
• d.How much it adds to the overall value of the property, not its cost✓

Under contribution, an improvement is worth the amount it adds to the whole property's market value, which may be more or less than its cost. This principle explains why some renovations do not fully return their expense, a key point in over-improvement analysis.

Under Internal Revenue Code Section 121, a qualifying homeowner may generally EXCLUDE from taxable capital gain:

• a.Up to $250,000 of gain if single, or $500,000 if married filing jointly✓
• b.Up to a full one million dollars of gain on any property at all, at any time and any frequency
• c.All gain on any and every investment or rental property the taxpayer happens to own and sell
• d.Absolutely nothing, because gain on the sale of a home is always fully and entirely taxable

Section 121 lets homeowners who owned and used the home as their principal residence for at least two of the prior five years exclude up to $250,000 of gain (single) or $500,000 (married filing jointly). It applies to a primary residence, not to investment property.

Depreciation recapture on the sale of investment real estate means that:

• a.All of the depreciation deductions previously claimed are simply refunded to the investor in cash
• b.The investor is legally required to physically restore and rebuild the depreciated building itself
• c.Gain from prior depreciation may be taxed, often at a special rate✓
• d.No income tax is ever owed at all on the sale of a property that has previously been depreciated

When depreciated property is sold at a gain, the portion of gain due to depreciation deductions is 'recaptured' and taxed under special rules, reflecting the earlier tax benefit. It is a tax concept, not a requirement to rebuild, and it increases, not eliminates, tax on sale.

Which appraisal approach is generally MOST reliable for a special-purpose property, such as a church or public school, that rarely sells and earns no market income?

• a.The sales comparison approach, which depends on recent sales of similar comparable properties
• b.The income approach, which converts a property's market rental income into an indicated value
• c.The gross rent multiplier method, which relies on typical market rents that these lack entirely
• d.The cost approach✓

Special-purpose properties have few or no comparable sales and generate no market rent, so the cost approach (replacement cost new, less depreciation, plus land) is typically most reliable. Sales comparison lacks comparables and the income/GRM methods need market income these properties do not produce.

The four characteristics an item must have to possess value in the market, often remembered as DUST, are:

• a.Debt, Utility, Supply, and Taxes, a mix of unrelated financing and cost terms rather than value
• b.Demand, Utility, Scarcity, and Transferability✓
• c.Depreciation, Use, Sale, and Title, which describe stages of ownership rather than value itself
• d.Demand, Ownership, Scarcity, and Time, which swaps in two terms that are not part of the concept

For something to have market value it must have Demand (buyers who want it), Utility (usefulness), Scarcity (limited supply), and Transferability (the ability to convey it). The DUST acronym captures these four essentials of value.

Real estate salespersons in Vermont are licensed and regulated by:

• a.The Vermont Association of Realtors
• b.The Vermont Real Estate Commission, within the Office of Professional Regulation✓
• c.The Vermont Department of Taxes
• d.The town clerk where the property sits

The Vermont Real Estate Commission, within the Office of Professional Regulation (OPR) under the Secretary of State, licenses and disciplines brokers and salespersons under 26 V.S.A. Chapter 41. A trade association is a private membership group and does not issue licenses.

In Vermont, a licensed salesperson may conduct real estate brokerage:

• a.Only after also becoming a broker
• b.Only in affiliation with and under the supervision of a licensed broker✓
• c.Independently after the license issues
• d.For any broker willing to share a fee

A Vermont salesperson may act only in affiliation with and under the supervision of a licensed broker and may not operate independently. The affiliated broker is responsible for the salesperson's real estate conduct and for the brokerage's trust accounts.

A Vermont salesperson may lawfully be paid a commission by:

• a.Any cooperating broker in the transaction
• b.The broker with whom the salesperson is affiliated✓
• c.The seller directly upon listing
• d.The buyer directly at closing

A Vermont salesperson is compensated only through the affiliated broker, not directly by a buyer, seller, or another broker. The affiliated broker supervises the salesperson and is accountable for handling client funds.

Under Vermont rules, the mandatory consumer disclosure of brokerage relationships should be given:

• a.Only after a contract is signed
• b.At the closing table
• c.Early in the relationship, before the consumer shares confidential information✓
• d.Within 30 days after an accepted offer

Vermont requires licensees to provide the mandatory consumer disclosure early in the working relationship, before the consumer shares confidential information. The disclosure explains seller agency, buyer agency, and dual agency so the consumer can decide how to proceed.

In Vermont, may a firm act as agent for both the buyer and the seller in the same transaction?

• a.Yes, with no disclosure needed to either of the parties
• b.Yes, and it arises automatically when a firm has both sides
• c.No, both firm types are barred from dual or limited agency✓
• d.Yes, provided both parties give informed written consent

Vermont does not permit dual agency, with or without consent. The Commission's rules say a Non-Designated Agency Firm and all its licensees 'shall not practice dual or limited agency, acting as agent for both a buyer and seller in the same transaction', and impose the identical bar on a Designated Agency Firm and its designated agents. Either may still act for one party where the other side is an unrepresented CUSTOMER. Vermont uses designated agency where other states would use consented dual agency, which is why the consent answer — true in most states — is wrong here. Cite: Vermont Real Estate Commission Administrative Rules 4.3(d)(1), 4.4(e)(1).

Regarding a known material defect in a property, a Vermont licensee must:

• a.Disclose it only if the buyer asks in writing
• b.Ignore it because of caveat emptor
• c.Conceal it if the seller requests
• d.Disclose the known material defect and deal honestly with the parties✓

Vermont licensees must disclose known material defects that could affect a reasonable buyer's decision and must deal honestly with all parties. A licensee may not conceal or misrepresent a known defect even at the seller's request.

Earnest money a Vermont salesperson receives from a buyer must be:

• a.Delivered promptly to the affiliated broker for deposit in the brokerage trust account✓
• b.Sent to the Office of Professional Regulation for safekeeping
• c.Held by the salesperson in a personal account until closing
• d.Given directly to the seller when the offer is written

Client funds such as earnest money must be handled through the brokerage's trust account, which the broker maintains and keeps separate from personal funds. A salesperson who receives money must deliver it promptly to the affiliated broker. Commingling or converting client money is a serious violation of Vermont license law.

To qualify for a Vermont salesperson license, an applicant must first complete:

• a.A four-year college degree in real estate
• b.A 90-hour broker course
• c.A two-year apprenticeship under a broker
• d.The required 40-hour pre-license course from an approved provider✓

Vermont requires an applicant to complete the required 40-hour pre-license course from an approved provider before taking the salesperson licensing examination. After passing the exam and meeting eligibility requirements, the salesperson must affiliate with a broker to activate the license.

The Vermont Real Estate Commission is made up of:

• a.Three members serving with two alternates
• b.Five members, all of them licensed real estate brokers
• c.Seven members, three of whom are licensed brokers✓
• d.Nine members appointed by the Secretary of State

The Commission consists of seven members: three licensed brokers whose vocation has been real estate brokerage for at least four years, one licensed salesperson, one attorney at law, and two members of the public with no financial interest in the regulated activity. Cite: 26 V.S.A. 2251.

Among the broker members of the Vermont Real Estate Commission, at least one:

• a.Must not belong to a real estate trade association✓
• b.Must also hold an appraiser certification
• c.Must practice in Chittenden County or nearby
• d.Must serve as the chair of the Commission each year

Three members must be licensed brokers whose vocation has been that of real estate broker for at least four years, and at least one of the broker members may not be a member of a professional real estate association at appointment or at any time during tenure. Cite: 26 V.S.A. 2251(b).

For purposes of the Vermont real estate broker and salesperson chapter, "real estate" excludes:

• a.Improvements affixed to the land
• b.Freehold estates in land
• c.Land located outside Vermont
• d.Leaseholds and mineral interests✓

The Vermont definition covers any interest or estate in land, excepting leaseholds, and expressly excludes oil, gas, and mineral leases and any other mineral leasehold, estate, or interest. Cite: 26 V.S.A. 2211(a)(3).

A person in Vermont who, for a fee, offers to lease real property owned by others and advertises as being in the leasing business:

• a.Needs a Vermont real estate salesperson license
• b.Needs a Vermont real estate broker license
• c.Needs no Vermont real estate license for that activity✓
• d.Needs a temporary permit from the Commission

The statute excludes from the definitions of broker and salesperson any person who leases real estate or any interest in it, offers to lease, negotiates a lease, or advertises as being in the business of leasing real estate. The Commission's rules repeat that offering property for lease does not require a license. Cite: 26 V.S.A. 2211(b)(8).

A person may sell Vermont real estate for others without a real estate license when acting as:

• a.An unlicensed employee who negotiates the price terms
• b.A relocation consultant who is paid a fee by the employer
• c.An auctioneer at an advertised bona fide public auction✓
• d.A property scout paid a finder's fee by the buyer

Vermont's exclusions cover bona fide owners, attorneys handling sales in the usual course of law practice, banks and trust companies as to their own property, holders of a power of attorney, court-appointed fiduciaries, public officers, and any person selling real estate as an auctioneer where the sale is advertised as a bona fide public auction. Cite: 26 V.S.A. 2211(b)(3).

When a licensed Vermont broker dies, the Commission may issue the broker's legal representative:

• a.A permanent broker license without examination
• b.A temporary license good for up to one year✓
• c.A salesperson license that is valid for six months
• d.No license of any kind under any circumstance

On application by the legal representative, the Commission may issue without examination a temporary license to that representative or a designee it approves. The temporary licensee may transact the business for a period not to exceed one year and may not enter into new brokerage service agreements. Cite: 26 V.S.A. 2299.

A nonresident applying for a Vermont real estate license must have held a license in the previous state of residence for:

• a.Two years before applying✓
• b.Five years before the application
• c.Six months before the application
• d.One full year before applying

A nonresident who has held a broker's or salesperson's license in the previous state of residence for two years before applying may be licensed in a similar capacity in Vermont, and the application must include a statement from that state's regulatory body about any criminal or disciplinary investigation or action. Cite: 26 V.S.A. 2297.

A Vermont brokerage firm that keeps a second office in the State must:

• a.Register the branch and designate a broker in charge✓
• b.Notify the town clerk where the branch is located
• c.Operate the branch under the branch manager's own name
• d.Register the branch and give it a distinct trade name

If a brokerage firm maintains more than one place of business in the State, a branch office registration is required for each one, the branch must use the same registered brokerage firm name as the main office, and a licensed broker in charge must be designated for each branch. Cite: 26 V.S.A. 2294(c).

A Vermont licensee contacted by the Commission about a matter relating to the regulation of the profession must respond in good faith:

• a.Only through the licensee's attorney
• b.Within ninety days of the contact
• c.As soon as practicable or within thirty days✓
• d.Only after a formal complaint is filed

As soon as reasonably practicable or within 30 days, whichever is sooner, a licensee must respond in good faith when contacted about any matter related to the regulation of the licensee's profession by the Commission or by the Office of Professional Regulation acting for it. Cite: Vt. Real Estate Commission Rule 4.15.

To be licensed as a Vermont real estate salesperson, an applicant must be at least eighteen, complete the approved course, and:

• a.Hold a certificate from a Vermont-based school only
• b.Post a surety bond with the Office of Professional Regulation
• c.Be associated with a brokerage firm and its principal broker✓
• d.Have resided in Vermont for at least one full year

A salesperson license is granted to a person who has passed the required examination, is at least 18 years of age, has been employed by or become associated with a brokerage firm and that firm's principal broker, and has completed an approved course of at least 40 hours. Cite: 26 V.S.A. 2292(b).

A Vermont salesperson applying for a broker license must show at least two years of satisfactory experience as a licensed salesperson, including:

• a.Five closed transactions in commercial property
• b.Eight separate and unrelated closed transactions✓
• c.Twenty listings taken in the licensee's own name
• d.Three years of supervising other salespersons

A broker license is granted to a person who has passed the required examination, has gained at least two years of experience satisfactory to the Commission as a licensed salesperson including at least eight separate and unrelated closed transactions, and has completed an approved course of at least 40 hours. Cite: 26 V.S.A. 2292(a)(2).

The Commission-approved prelicensing course a Vermont broker applicant must complete is at least:

• a.Twenty hours
• b.Forty hours✓
• c.Sixty hours
• d.Ninety hours

Both the salesperson prelicensing course and the broker prelicensing course must be at least forty hours of instruction approved by the Commission. Cite: 26 V.S.A. 2292(a)(3).

Vermont real estate licenses are renewed:

• a.Every four years, on payment of a single fee
• b.Annually, on the licensee's own birthday
• c.Every two years, without re-examination✓
• d.Every three years, with a written examination

Licenses are renewed every two years without examination on payment of the required fees, provided the applicant has completed the required continuing education during the preceding two-year period. Cite: 26 V.S.A. 2293.

For each Vermont renewal period, the approved continuing education required is:

• a.Twelve hours for brokers and eight for salespersons
• b.Twenty-four hours for brokers and sixteen for salespersons✓
• c.Sixteen hours for brokers and twenty-four for salespersons
• d.Twenty hours for brokers and twenty for salespersons

A renewing licensee must complete at least 24 hours of approved instruction for brokers and 16 hours for salespersons during the preceding two-year period. Cite: 26 V.S.A. 2293.

Of the Vermont continuing education hours required each renewal period:

• a.Four hours must address legislation the Commission names✓
• b.Eight hours must be taken in a live classroom setting
• c.None of it is reserved for any particular subject
• d.Two hours must cover federal and state fair housing rules

Four hours of the continuing education instruction must address legislation and other topics specified by the Commission for each renewal period. Cite: 26 V.S.A. 2293.

A Vermont salesperson renewing a license for the first time must show completion of the required post-licensure education:

• a.Within one year of obtaining the initial license
• b.Before the second license renewal falls due
• c.Only if the Commission audits the renewal application
• d.Within ninety days of obtaining the initial license✓

Salespersons renewing for the first time must provide evidence of having completed the required hours of Commission-approved post-licensure education within ninety days of obtaining their initial salesperson's license. Cite: Vt. Real Estate Commission Rule 5.2(a).

A Vermont salesperson who was licensed and in good standing in another jurisdiction is excused from post-licensure education if licensed there for at least:

• a.Twenty-four months✓
• b.Sixty months
• c.Six months
• d.Twelve consecutive months

A salesperson regulated under the laws of another jurisdiction, licensed and in good standing there, who has been licensed for at least twenty-four months in that jurisdiction, is not required to complete the post-licensure education. Cite: Vt. Real Estate Commission Rule 5.2(a).

Under the Vermont Real Estate Commission's rules, a brokerage firm and its licensees:

• a.May not practice dual or limited agency✓
• b.May practice dual agency only on commercial property
• c.May practice dual agency if the firm has one office
• d.May practice dual agency with written consent of both sides

Both kinds of Vermont firm are barred from dual agency: a Non-Designated Agency Firm and all its licensees shall not practice dual or limited agency by acting as agent for both a buyer and a seller in the same transaction, and the same prohibition applies to a Designated Agency Firm and its designated agents. The firm may still act for one party where the other is an unrepresented customer. Cite: Vt. Real Estate Commission Rules 4.3(d)(1) and 4.4(e)(1).

A Vermont brokerage firm may elect to practice Designated Agency only if the firm has:

• a.At least one branch office
• b.A licensed attorney on staff
• c.At least ten affiliated licensees
• d.More than two licensees✓

If a brokerage firm has more than two licensees, the firm may elect to practice Designated Agency, and its status as a Designated Agency Firm must be disclosed in the seller and buyer service agreements. Cite: Vt. Real Estate Commission Rule 4.4(a).

In a Vermont Designated Agency Firm, the fiduciary duties to a particular client are owed by:

• a.Every licensee affiliated with the brokerage firm
• b.The designated agent or agents for that client✓
• c.The principal broker alone, in every transaction
• d.Whichever licensee first met the client

A Designated Agency Firm delegates all firm agency and fiduciary responsibilities for specific clients to individual licensees under written service agreements, and only the designated agent or agents owe that client the duties of a fiduciary. Cite: Vt. Real Estate Commission Rule 4.4(b).

When a Vermont designated agent is appointed, information the agent knows or acquires:

• a.Is imputed to every licensee in the firm
• b.Is not imputed to the firm or to other licensees✓
• c.Must be reported to the client on the other side
• d.Becomes public once an offer is accepted

When a designated agent is appointed, information known to or acquired by that designated agent is not imputed to the brokerage firm or to other licensees within the same firm. Cite: Vt. Real Estate Commission Rule 4.4(i).

A Vermont Designated Agency Firm must obtain the client's written consent to the appointment of designated agents:

• a.When the seller or buyer service agreement is signed✓
• b.Only if the client asks who will be handling the file
• c.Within ten days after the first showing of a property
• d.At the closing of the transaction itself

The firm and the designated agents must obtain the written consent of the client to the appointment of the initial and any subsequent designated agents at the time the seller or buyer service agreement is executed or amended. Cite: Vt. Real Estate Commission Rule 4.4(d)(1).

In a Vermont Non-Designated Agency Firm:

• a.All affiliated licensees act as agents of the clients✓
• b.Licensees owe fiduciary duties only to buyers and tenants
• c.Each licensee chooses which clients to represent
• d.Only the principal broker owes fiduciary duties

Non-Designated Agency is the practice by which all licensees affiliated with a brokerage firm act as the agent of the firm's clients, and all of those licensees owe the client the duties of a fiduciary. Cite: Vt. Real Estate Commission Rule 1.8(r).

A Vermont licensee must deliver the Commission's consumer disclosure form to an unrepresented person with whom the licensee has substantial contact:

• a.Within thirty days after their first meeting in person
• b.Only when the person asks to receive it
• c.At the closing of the transaction itself
• d.Before a service agreement is signed or a showing✓

The firm and its licensees must provide a true copy of the most recent consumer disclosure form adopted by the Commission at the first reasonable opportunity, and it must occur before entering into a brokerage service agreement or showing a property. Cite: Vt. Real Estate Commission Rule 4.6(b).

A Vermont consumer received the consumer disclosure form more than twelve months ago. The licensee must:

• a.Obtain the consumer's oral confirmation instead
• b.Rely on the earlier form for two full years
• c.Give a new consumer disclosure form✓
• d.File a copy of the earlier form with the Commission

If it has been more than twelve months since the consumer disclosure form was given, a new consumer disclosure form must be given. Cite: Vt. Real Estate Commission Rule 4.6(c).

At first contact with a member of the Vermont public who expresses interest in buying or selling, the licensee must disclose:

• a.The seller's lowest acceptable price on any listing
• b.The firm's usual commission rate for that type of property
• c.That nothing is confidential without a signed agreement✓
• d.The names of the other clients the firm represents

At the time of first contact with a member of the public who expresses an interest in buying or selling real property, a licensee must give an oral or written disclosure informing the person that there is no confidentiality between them until and unless there is a signed brokerage service agreement. Cite: Vt. Real Estate Commission Rule 4.6(a).

A Vermont client instructs the licensee not to reveal a fact the licensee believes must be disclosed. The licensee must:

• a.Withdraw from the agency relationship✓
• b.Disclose the fact only to the other licensee
• c.Ask the Commission for a declaratory ruling
• d.Follow the client's instruction and stay silent

A licensee working for a firm employed by a seller must fully and promptly disclose to a prospective buyer all material facts within the licensee's knowledge concerning the property. If the client refuses to consent to disclosure after being told the licensee considers it necessary, the licensee must withdraw from the agency relationship. Cite: Vt. Real Estate Commission Rule 4.5(b).

Before showing real property in Vermont, a licensee must disclose any known significant limitation on the seller's ability to convey a fee simple, such as:

• a.The number of showings held in the past month
• b.The commission the seller agreed to pay
• c.The size of the seller's remaining mortgage balance
• d.An option or right of first refusal on the property✓

A licensee, before showing real property, must disclose any known significant limitations on the seller's ability to convey a fee simple interest, such as options, rights of first refusal, or the property being subject to prior closings. Cite: Vt. Real Estate Commission Rule 4.5(c).

A Vermont brokerage firm holding an earnest money deposit under a purchase and sale agreement must place it in the firm's trust or escrow account:

• a.Within fifteen days after both parties sign
• b.Any time before the scheduled closing date
• c.The same business day on which the firm receives the deposit
• d.Not later than five banking days after both parties sign✓

Every broker must deposit earnest money and contract deposits in a trust or escrow account within five banking days, and the rule fixes the deadline at not later than five banking days after the purchase and sale agreement is executed by both seller and buyer. Cite: 26 V.S.A. 2214(a) and Rule 4.7(b).

After opening a trust or escrow account, a Vermont broker must notify the Commission of the institution holding it:

• a.At the next biennial license renewal
• b.Only if the Commission requests the information
• c.Within ten days after opening the account✓
• d.Within sixty days after opening the account

The broker must notify the Commission, within 10 days after opening any trust or escrow account, of the bank or other financial institution in which the account is located. Cite: 26 V.S.A. 2214(a).

When a Vermont deposit is not reasonably expected to earn a substantial amount of interest, the broker places it in a pooled interest-bearing account and directs the interest to:

• a.The Office of Professional Regulation
• b.The buyer named in the contract
• c.The brokerage firm's operating account
• d.The Vermont Housing Finance Agency✓

If a deposit is not reasonably expected to earn a substantial amount of interest, the broker places it in a pooled interest-bearing trust or escrow account and directs that the interest be remitted to the Vermont Housing Finance Agency. Cite: 26 V.S.A. 2214(c).

A Vermont brokerage service agreement must contain a specific expiration date, and it may not exceed:

• a.Six months from the effective date
• b.One year from the effective date✓
• c.Three years from the effective date
• d.Ninety days from the effective date

Agreements for brokerage services must contain a specific expiration date not to exceed one year from the effective date, and may not contain any provision for automatic extension or renewal. Cite: Vt. Real Estate Commission Rule 4.8(b).

A Vermont seller proposes that the brokerage keep everything above a set net price as its fee. The licensee may:

• a.Not use the arrangement; net listings are prohibited✓
• b.Accept, if the net price is at least market value
• c.Accept, with the principal broker's written approval
• d.Accept, if the seller signs a written waiver

A net listing is a brokerage service agreement in which the benefit of negotiating a higher price for the seller or a lower price for the buyer accrues only to the agent or the firm. Use of a net listing or any variation of it is prohibited. Cite: Vt. Real Estate Commission Rules 4.8(e) and 1.8(q).

In every Vermont real estate advertisement, the most prominent and largest identifier must be:

• a.The team name used by the agents
• b.The web address of the listing
• c.The listing agent's personal name
• d.The brokerage firm's registered name✓

Every advertisement must conspicuously display the brokerage firm's registered name as it appears on the firm's registration, and that name must be the most prominent and largest identifier, larger than the agent's name, phone number, team name, or web address. Cite: Vt. Real Estate Commission Rule 4.12(a).

A Vermont "for sale" sign, or several signs on the same premises taken together, may not have an area greater than:

• a.Four square feet in total area
• b.Six square feet, including panel, frame and riders✓
• c.Twelve square feet, not counting the frame or riders
• d.Sixteen square feet, including the post

Signs used in advertising must comply with Vermont state and municipal sign laws; a for sale sign, or multiple signs on the same premises taken together, may not have an area of more than six square feet including panel, frame and riders. Cite: Vt. Real Estate Commission Rule 4.12(c)(1).

A Vermont listing goes under contract and the agent wants to add a rider to the sign. Under the Commission's rules:

• a.A "sale pending" rider is permitted for thirty days
• b.A "sold" or "sale pending" rider is not permitted✓
• c.Any rider is permitted if it stays within the size limit
• d.A rider is permitted with the town clerk's approval

Signs attached to for sale signs stating sold, sale pending, sale under contract, or similar messages are not permitted. Cite: Vt. Real Estate Commission Rule 4.12(c)(2).

A Vermont brokerage firm must keep its records of brokerage services provided, at its usual place of business, for at least:

• a.Ten years
• b.Three years
• c.Five years
• d.Seven years✓

A brokerage firm must maintain for at least seven years, at its usual place of business, all paper or electronic records of brokerage services provided, and they must be available to the Commission and its agents during regular business hours. Cite: Vt. Real Estate Commission Rule 4.14(a).