Retake Recovery Practice Set Preview

1. A.No, every sale must use a Commission-issued form
2. B.Yes, licensees may complete contract forms prepared by legal counsel
3. C.Only if GREC approves the form for that transaction
4. D.Only if the salesperson also holds a law license

Why each choice works or fails

• A. The statute does not require a Commission-issued sales contract.
• B. Correct. A form prepared by the firm's attorney meets the counsel-prepared requirement.
• C. GREC approval of each transaction's form is not required by this provision.
• D. The statute permits real estate licensees to complete counsel-prepared forms without becoming attorneys.

Rule to remember: Use contract forms prepared by legal counsel; the permission is not limited to GAR forms.

1. A.A CAM license or a real estate license
2. B.A real estate broker license only
3. C.No license, because no property is sold
4. D.A county business registration only

Why each choice works or fails

• A. Correct. A CAM license or a salesperson or broker license covers the activity.
• B. Misconception: only brokers may manage. A CAM or salesperson license also qualifies when working through a broker.
• C. Misconception: licensing is only about sales. Georgia treats community association management for a fee as licensed activity.
• D. Misconception: a local permit is enough. Counties do not license community association managers.

Rule to remember: Community association management for a fee requires a CAM license or a real estate license in Georgia.

1. A.Loyalty and obedience to lawful instructions
2. B.Truthful information and known adverse material facts
3. C.Confidentiality and promotion of the customer's interests
4. D.No duties, because there is no brokerage engagement

Why each choice works or fails

• A. Misconception: common-law agency duties apply. Georgia's brokerage law replaces them, and customers are not owed advocacy.
• B. Correct. A customer is owed honesty and disclosure of known adverse material facts about the property.
• C. Misconception: customers get client duties. Confidentiality and promoting interests are owed only to clients.
• D. Misconception: no engagement means no duties. The broker still may not give false information and must disclose known adverse facts.

Rule to remember: Customers get honesty and known adverse material facts. Clients also get confidentiality and advocacy.

1. A.Permitted if each fee is under $500
2. B.A kickback that violates RESPA
3. C.Permitted with written disclosure to the buyer
4. D.Permitted because both parties are licensed

Why each choice works or fails

• A. Misconception: small fees are excused. RESPA sets no dollar threshold for referral fees.
• B. Correct. A payment for referring settlement service business violates RESPA.
• C. Misconception: disclosure cures it. Disclosure does not legalize a fee paid for a referral.
• D. Misconception: professional licenses create an exception. Holding a license does not permit referral fees.

Rule to remember: A mortgage referral fee prohibited by RESPA does not become lawful through disclosure.

1. A.Deposited in the broker's operating account
2. B.Deposited in a designated trust account
3. C.Given directly to the seller
4. D.Kept by the licensee who received it until closing

Why each choice works or fails

• A. Putting trust funds in the operating account is commingling.
• B. Correct. A broker holds earnest money in a designated trust account.
• C. The deposit is held for both parties, not handed to the seller.
• D. Affiliated licensees must turn trust funds over to the broker promptly.

Rule to remember: Unless the interested parties agree otherwise in writing, the broker promptly deposits earnest money in a designated, federally insured trust account registered with GREC.

1. A.Is a voluntary best practice recommended by trade associations
2. B.Must be filed with and approved by GREC before the firm may operate
3. C.Is required by statute, and the broker must develop and enforce it
4. D.Applies only to firms with more than ten affiliated licensees

Why each choice works or fails

• A. It is a legal requirement, not a voluntary practice.
• B. The statute requires the policy but not a filing with or approval by GREC.
• C. Correct. The broker must both develop and enforce the policy.
• D. The requirement applies to every broker regardless of firm size.

Rule to remember: Every Georgia broker must develop and enforce an office policy that permits or rejects disclosed dual agency.

1. A.Transaction brokerage
2. B.Designated agency
3. C.Dual agency
4. D.Subagency

Why each choice works or fails

• A. Misconception: any two-sided firm deal is transaction brokerage. A transaction broker represents neither party; here each agent represents a client.
• B. Correct. Assigning separate agents to each client is designated agency.
• C. Misconception: one firm on both sides is always dual agency. A proper designation does not make the broker a dual agent.
• D. Misconception: in-house cooperation is subagency. Subagency involves another broker helping the listing broker.

Rule to remember: Designated agency lets one firm serve both sides through separate agents without becoming a dual agent.

1. A.Provide the names of several attorneys and let the buyer choose
2. B.Tell the buyer no attorney is needed for a cash purchase
3. C.Prepare the deed and closing documents to save the buyer money
4. D.Require the firm's preferred attorney as a condition of the sale

Why each choice works or fails

• A. Correct. Offering options and letting the client choose is appropriate.
• B. The attorney-closing requirement is not limited to financed purchases.
• C. Preparing deeds and closing documents is the practice of law, which a licensee may not do.
• D. Conditioning the sale on a particular provider improperly removes the buyer's choice.

Rule to remember: Georgia closings are run by attorneys; an agent may suggest several and let the client choose, but may not draft closing documents.

1. A.Completion of the purpose of the engagement
2. B.Expiration of the term stated in the agreement
3. C.Mutual agreement of the client and the broker
4. D.The affiliated licensee moving to another firm

Why each choice works or fails

• A. This does end it. Closing the sale, for example, completes the purpose.
• B. This does end it. The engagement expires by its own terms.
• C. This does end it. Client and broker may agree to end it at any time.
• D. Correct. The engagement belongs to the broker's firm, so a licensee's move does not end it.

Rule to remember: A brokerage engagement is with the broker's firm, so it survives the individual licensee leaving.

1. A.The unauthorized practice of law by the licensee
2. B.Proper client service, if the explanation is accurate
3. C.Acceptable, since licensees may fill in contract forms
4. D.A problem only if the buyer later suffers a loss

Why each choice works or fails

• A. Correct. Explaining the legal effect of a clause is the practice of law.
• B. Misconception: accuracy makes it acceptable. The problem is giving legal advice at all, not whether it is right.
• C. Misconception: form authority covers interpretation. Licensees may complete forms prepared by counsel but may not explain their legal effect.
• D. Misconception: no harm means no violation. The conduct itself is the problem, whatever the outcome.

Rule to remember: Fill in the blanks, do not explain the law.