Arkansas Real Estate License Agency and Fiduciary Duties 2 — Questions and Answers
Question 1: A buyer's agent who secretly accepts a referral fee from the seller's lender without disclosing it to the buyer has violated which fiduciary duty?
- Obedience
- Loyalty (Correct answer)
- Confidentiality
- Disclosure
Correct answer: Loyalty
Loyalty requires the agent to place the client's interests above all others, including undisclosed financial benefits received from third parties.
Question 2: Under Arkansas law, when must a licensee provide the Disclosure of Agency form to a prospective buyer?
- At closing
- Before the buyer makes an offer
- At the first substantive contact (Correct answer)
- Only if the buyer requests it
Correct answer: At the first substantive contact
Arkansas requires agency disclosure at the first substantive contact with the prospective buyer, not at the offer stage.
Question 3: A seller's agent learns that the seller is going through a divorce and must sell quickly. Sharing this information with the buyer would violate which duty?
- Disclosure
- Confidentiality (Correct answer)
- Accounting
- Reasonable care
Correct answer: Confidentiality
Confidentiality requires the listing agent to protect information the seller has not authorized to be shared, including personal circumstances affecting motivation to sell.
Question 4: An Arkansas licensee acting as a dual agent receives written consent from both parties. Which of the following activities is the dual agent still prohibited from doing?
- Presenting all offers to both parties
- Disclosing the seller's minimum acceptable price to the buyer (Correct answer)
- Facilitating the transaction
- Communicating material facts to both parties
Correct answer: Disclosing the seller's minimum acceptable price to the buyer
Even with dual agency consent, the agent cannot reveal the seller's bottom-line price or the buyer's maximum offer, as this would harm one party for the benefit of the other.
Question 5: Which scenario best describes an implied agency relationship in Arkansas real estate?
- A buyer signs a buyer representation agreement
- A seller signs a listing agreement
- A buyer treats a licensee as their agent without a written agreement, and the licensee acts accordingly (Correct answer)
- A licensee discloses they represent neither party
Correct answer: A buyer treats a licensee as their agent without a written agreement, and the licensee acts accordingly
Implied agency arises from the conduct of the parties rather than a written contract, which is why Arkansas strongly encourages written agency agreements.
Question 6: An agent owes the duty of 'reasonable care and diligence' primarily to whom?
- The Arkansas Real Estate Commission
- The public at large
- The agent's client (Correct answer)
- The cooperating broker
Correct answer: The agent's client
Reasonable care and diligence is a fiduciary duty owed specifically to the agent's own client, though agents also have statutory duties to third parties.
Question 7: A listing agent discovers the home has a cracked foundation not mentioned by the seller. Under Arkansas law, the agent must:
- Keep it confidential because the seller is the client
- Disclose it to prospective buyers as a material fact (Correct answer)
- Disclose it only if asked directly
- Let the buyer's inspector find it
Correct answer: Disclose it to prospective buyers as a material fact
Arkansas law requires licensees to disclose known material defects to all parties regardless of which party they represent.
Arkansas Real Estate License Agency and Fiduciary Duties 2
A buyer's agent who secretly accepts a referral fee from the seller's lender without disclosing it to the buyer has violated which fiduciary duty?