California · state portion

Free California Laws of Agency and Fiduciary Duties practice questions

10 original questions with full explanations. 26 of the 150 scored exam questions (about 17%) come from this area.

1. 1

   A seller's agent knows the seller is considering bankruptcy. A buyer's agent asks 'is the seller motivated?' What is the compliant answer?

   • A. Say the seller is not motivated, to strengthen the seller's position
   • B. Decline to characterise the seller's circumstances — motivation is confidential
   • C. Say the seller is very motivated, because it will attract a faster offer
   • D. Disclose the possible bankruptcy because it is a material fact
   Show answer & explanation

   Answer: B

   Neither revealing nor misstating the seller's position is permitted; decline to characterise.

2. 2

   Which is TRUE of a 'net listing' in California?

   • A. Legal only for commercial and industrial property listings
   • B. Legal only with full disclosure of the broker's compensation before acceptance
   • C. Legal without any special disclosure to the seller at all
   • D. Illegal in every circumstance under the Real Estate Law
   Show answer & explanation

   Answer: B

   Net listings are lawful but disfavoured; the broker must disclose the amount of compensation before acceptance.

3. 3

   When must a licensee give a party a copy of a listing agreement that party has just signed?

   • A. Within five days of the signing date
   • B. At the time the signature is obtained
   • C. When the first offer is later presented
   • D. Only if the party requests a copy
   Show answer & explanation

   Answer: B

   A licensee must deliver a copy of any agreement to the person signing it at the time the signature is secured.

4. 4

   Which situation creates an agency by ratification?

   • A. A court declares an agency after litigation
   • B. The parties' conduct implies mutual consent from the start
   • C. The agent posts a bond covering the transaction
   • D. The principal accepts the benefits of an unauthorised act with full knowledge
   Show answer & explanation

   Answer: D

   Ratification occurs when the principal, knowing the facts, adopts an act done without authority.

5. 5

   A property manager handling an owner's portfolio over years is best described as which kind of agent?

   • A. A general agent
   • B. A gratuitous agent
   • C. A special agent
   • D. A universal agent
   Show answer & explanation

   Answer: A

   Ongoing authority across a continuing series of transactions makes a property manager a general agent, unlike the single-transaction special agency of a listing.

6. 6

   A buyer's agent receives a counteroffer by email at 11 p.m. on the night before it expires at noon. The agent does not check email until 1 p.m. the next day. What duty is implicated?

   • A. The duty to account — the agent must log the time the email was received
   • B. The duty of confidentiality — the agent must not reveal when the email was read
   • C. The duty of diligence — an agent must monitor communications so the client can act in time
   • D. No duty — agents cannot be expected to check email outside of business hours
   Show answer & explanation

   Answer: C

   Diligent representation includes timely handling of time-sensitive communications.

7. 7

   An agent presents an offer and the seller says 'I'll think about it.' What is the offer's status?

   • A. Converted into an option
   • B. Rejected by the delay
   • C. Still open until accepted, rejected, revoked, or lapsed
   • D. Automatically accepted after 24 hours
   Show answer & explanation

   Answer: C

   Silence or deliberation is neither acceptance nor rejection; the offer remains open until one of the terminating events occurs.

8. 8

   An agent represents a seller. A prospective buyer shares that they 'just lost a bidding war and will pay anything.' What should the agent do?

   • A. May share it with the seller — it is information from a non-client
   • B. Must refuse to hear such information
   • C. Must keep it confidential as fiduciary information
   • D. Must tell the buyer to get their own agent first
   Show answer & explanation

   Answer: A

   A seller's agent owes no confidentiality to the buyer; information benefiting the principal may be relayed.

9. 9

   What does the duty of 'utmost care, integrity, honesty and loyalty' describe in the agency statute?

   • A. The fiduciary standard owed to the agent's own principal
   • B. The standard owed equally to both parties
   • C. A duty owed only in dual agency
   • D. The standard for advertising accuracy
   Show answer & explanation

   Answer: A

   That phrase states the fiduciary duty to the principal; third parties are owed honesty and fair dealing, not loyalty.

10. 10

    A listing agent learns the buyer is a licensed agent buying for their own account. What must the buyer disclose?

    • A. Their intended resale price
    • B. Their licensed status, in writing, to the seller
    • C. Their commission split with their broker
    • D. Nothing — buying personally needs no disclosure
    Show answer & explanation

    Answer: B

    A licensee acting as a principal must disclose their licence status to the other party.