Legal Quiz

Take our latest quiz on our most popular, weekly Q&As.

BY WILL MARTIN, GENERAL COUNSEL

These questions are based on weekly Q&As published in the REALTOR® Rundown between December 2021 and March 2022. Answers include title and reference to location of full Q&A in Q&A archives on NC REALTORS® website.

1. Does the new Standard of Practice 10-5 of the Code of Ethics, which bars REALTORS® from using “harassing speech, hate speech, epithets or slurs based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity,” apply to speech by a REALTOR® that is not directly related to a real estate transaction? Yes or no?

2. Is it unethical for me to tell a buyer that they may hire me at no cost to them? Yes or no?

3. May a real estate firm become liable for the action of an affiliated agent if the agent did not have authority from the firm to take that action? Yes or no?

4. May an agent enter into a contract to purchase his own listing? Yes or no?

5. If a tenant resides in a property under an oral lease, would the lease be binding on someone who purchases the property? Yes or no?

6. Would it be okay for a buyer during a showing to turn the thermostat on to see if the heating system works? Yes or no?

7. May a buyer agent withdraw an offer on behalf of their buyer client? Yes or no?

8. If a buyer agent learns that their client got laid off from his job, does the agent have any obligation to inform the buyer’s lender of the client’s job loss? Yes or no?

9. If a buyer agency agreement provides for the payment of a retainer fee, may the buyer pay the retainer directly to the individual buyer agent with the consent of the agent’s firm? Yes or no?

10. Can a listing agent offer MLS compensation expressed as a percentage of the net sales price rather than the gross sales price? Yes or no?

Legal Quiz Answers

1. Yes. Standard of Practice 10-5’s prohibition on the use of harassing speech, hate speech, epithets and slurs is not limited to real estate transaction-related speech and it extends to images and symbols, not merely verbal and written statements. [How broad is Standard of Practice 10-5’s prohibition on “hate speech”? Category: Code of Ethics]

2. Yes. Effective January 1, 2022, Standard of Practice 12-1 of the Code of Ethics was amended to provide that “REALTORS® must not represent that their brokerage services to a client or customer are free or available at no cost to their clients, unless the REALTOR® will receive no financial compensation from any source for those services.” [May I tell a buyer that they can hire me at no cost to them? Category: Code of Ethics]

3. Yes. Under certain circumstances, a firm can be liable for an agent’s unauthorized action if a person with whom the agent is dealing reasonably believes the agent possessed authority to take that action. [Limiting a Firm’s Exposure When an Affiliated Agent Has a Side Business Category: Agency]

4. Yes, provided that the agent complies with Real Estate Commission Rule 58A.0104(p), which requires that the agent, prior to entering into the contract, (i) discloses in writing to the seller that the agent may have a conflict of interest in purchasing the client’s property and that the client may want to seek independent counsel of an attorney or another licensed broker, and (ii) either terminates the listing agreement or transfers it to another broker affiliated with the firm. In addition, it is strongly recommended that a listing be exposed to the market for a reasonable amount of time before the listing agent attempts to purchase the property. [How does an agent purchase their own listing? Category: Real Estate License Law/Rules]

5. Yes. An oral agreement to lease property is legally enforceable unless the term of the lease exceeds three years, and a buyer who purchases property with knowledge of the lease takes title subject to its terms. [Will a buyer be bound by an oral lease on the property? Category: Miscellaneous/Other Laws and Rules]

6. Without permission from the listing agent or seller, probably not. Permission to view a property does not include authorization to conduct any sort of investigation. As a general proposition, absent permission from the seller or the listing agent, the time for buyers to perform their due diligence investigation is after a contract has been signed, not before. [Guidelines for buyers and their agents when attending a showing Category: Miscellaneous/Other Laws and Rules]

7. Yes, provided that the buyer has authorized the buyer agent to do so, and provided that the buyer agent gives notice of the withdrawal to the listing agent before the offer is accepted. [What is the best way to withdraw an offer? Category: Contract Law]

8. No. While the job loss may be a material fact that the buyer agent would be required to disclose to the listing agent or seller, and while the buyer likely has a legal requirement to notify the lender of any job loss, the buyer’s agent is not a party to the financial arrangement between the buyer and their lender, and would be under no obligation to disclose the job layoff to the lender.

9. No. According to Real Estate Commission Rule 58A.0120, “[a]n affiliated broker shall not be paid a commission or referral fee directly by anyone other than their current BIC or the person who served as their BIC at the time of the transaction.” [May a retainer fee be paid directly to an agent? Category: Fees/Commissions]

10. Yes, but only if the local MLS has elected to allow the offering of cooperative compensation as a percentage of the net sales price. [Can a listing agent offer compensation expressed as a percentage of the net sales price? Category: Miscellaneous/MLS Issues]

STUDY HARD: If you’re not doing so already, be sure to read the Q&As that appear in the REALTOR® Rundown every Monday. It’ll help you on the next quiz!