Sales Practices & Ethical Standards Flashcards

A condominium sales agent learns that a unit has a history of water intrusion that was repaired. What is the agent's ethical obligation regarding this information?

Answer: Disclose the material fact proactively to all prospective buyers

Agents must proactively disclose known material facts, including past defects, even if repaired, because they can affect a buyer's decision.

Which practice is considered a violation of ethical sales standards when marketing a condominium unit?

Answer: Advertising a lower price than the listed price to attract calls

Advertising a price lower than the listed price to generate leads is bait-and-switch advertising, which is an unethical and often illegal practice.

A buyer's agent receives an offer from a client on a condo unit. The listing agent is the agent's personal friend. What should the buyer's agent do?

Answer: Disclose the relationship to the buyer and represent them with full loyalty

The buyer's agent must disclose the personal relationship to the client and continue to represent the buyer's best interests with full fiduciary duty.

Under CCS standards, what must an agent do when a seller instructs them NOT to disclose that the condo association is involved in litigation?

Answer: Refuse the instruction and disclose the litigation as a material fact

Pending association litigation is a material fact that agents are legally and ethically required to disclose regardless of seller instructions.

What is the primary purpose of the RESPA (Real Estate Settlement Procedures Act) as it applies to condominium sales?

Answer: To prohibit kickbacks and referral fees in settlement services

RESPA prohibits kickbacks and unearned fees between settlement service providers to protect buyers from inflated closing costs.

A CCS-designated agent is representing both the buyer and the seller in a condominium transaction. This arrangement is known as:

Answer: Dual agency

Dual agency occurs when one agent or brokerage represents both the buyer and seller in the same transaction, requiring disclosure and consent from both parties.

Which statement best describes 'puffery' in condominium advertising, and how it differs from misrepresentation?

Answer: Puffery is subjective opinion (e.g., 'best views in town'); misrepresentation is a false statement of fact

Puffery consists of non-actionable subjective opinions, while misrepresentation involves false statements of objective facts that can give rise to legal liability.