Georgia Real Estate Practice Exam

Answer options a, b and d are all ministerial acts by a broker and do not require an agency agreement. Providing advice and professional expertise to a client, such as advising a buyer on an offer price or the terms of an offer, are acts that require an agency agreement. Under BRRETA, a broker may perform ministerial acts for a customer, but must have a broker engagement or written agreement with a client setting forth the agency relationship, compensation terms and other information about the performance of brokerage services.

An open listing offers compensation to any broker who brings a buyer. This is an example of a unilateral agreement. The brokers are not obligated to bring a buyer, but the seller is obligated to compensate the broker who brings a buyer. If the seller finds a buyer, no broker is compensated.

An executory contract is a contract where the parties involved have items that have yet to be performed. Both parties agree to complete certain items during the specified contract period which has yet come to pass. Failure to complete the obligations outlined in the contract are considered a breach of contract. A unilateral contract involves the promise of one party which can be accepted by the performance of the other party. A voidable contract is a contract that can be rendered unenforceable for a number of legal reasons, such as fraud, which gives a party a right to repudiate the contract.

Good consideration refers to "love and affection" that can be observed when real property is transferred between two parties as a gift. It is not actually consideration that would support a contract. When transferring real property, valuable consideration should be present for a contract to be viewed as a valid contract. In contracts, there must be an exchange of something valuable such as money or a promise to complete something. This is not necessary for gifts.

Mutual consent takes place when both parties have reached "the meeting of the minds." This means that all terms are voluntarily accepted by both parties. Mutual consent is a required element for a contract to be considered a valid contract. When a counteroffer is made, it rejects and cancels the initial offer. A counteroffer forms a new offer, which when accepted, forms a contract on the terms set forth in the counteroffer.

While most real estate contracts have liquidated damages clauses to protect the buyer and seller in the event of a breach by the buyer, liquidated damages is not an essential element of a contract. To have a legal binding real estate contract, the following basics are needed: (1) mutual assent; (2) legal purpose; (3) consideration; (4) competency of the parties; (5) identification of the essential terms such as parties, property and price; and (6) be in a signed writing (Statute of Frauds).

The statute of frauds states that for a contract to be enforceable it must be in writing and signed by the parties. The contract must also identify the buyer and seller, sufficiently describe the property to be sold and state the contract price. Georgia does not honor oral agreements in transactions involving real property. The only exception is with a lease. An oral lease with a term of less than 12 months could be enforceable. A lease longer than 12 months must be in writing. Contracts do not have to be filed with the Clerk of the Superior Court to be enforceable.

The pre-payment clause allows the lender to charge a penalty fee if the borrower pays off the loan early or reduces the principal loan amount drastically. It encourages borrowers to pay over a longer time period and protects lenders from losing interest income. The partial release clause (also known as the partial release clause) directs the creditor to release part of the property from the lien and convey title to the debtor once certain provision(s) has been satisfied. The subordination clause allows a mortgage recorded later to receive priority over an earlier recorded mortgage.

Only Ginnie Mae carries the full faith of the US Government, because Ginnie Mae is a government owned corporation and not a government sponsored enterprise. Ginnie Mae is part of the Department of Housing and Urban Development. Fannie Mae and Freddie Mac are government sponsored enterprises that are privately held corporations with shareholders. Ginnie Mae guarantees securities backed by mortgages which are insured by the federal government (VA & FHA). Unlike Freddie Mac and Fannie Mae, Ginnie Mae does not directly purchase or sell mortgages or issue Mortgage-Backed Securities, rather it guarantees securities provided by approved private mortgage issuers, giving them a lower cost of funding in the capital markets.

Hypothecation is when a borrow pledges his real and/or personal property as security or collateral for the loan, while still maintaining possession of the property.

First, we determine the annual interest ($935 x 12 - $11,220). Next, divide the annual interest by the interest rate to find the balance of the loan before the next payment is submitted.

$11,220 ÷ 0.055 = $204,000
 

All clients involved in a brokerage engagement agreement belong to the broker (brokerage firm). BRRETA specifically spells out the clear agency roles allowed. It is the Georgia law that oversees the "agency" relationship that brokers have with buyers, sellers, tenants, and landlords. Only brokers can receive commission. They can then distribute what is owed to their affiliated licensees at the close of a transaction.

While a property manager may be hired as a general agent to run the business for a landlord, and have a broad scope of responsibility in the management of the property, property managers and brokers may not draft contracts, addendums, leases, etc. if they do not have a law license. Drafting of legal documents is only permitted by a licensed attorney. If a property manager or broker drafts legal documents, it would constitute the unauthorized practice of law and be subject to criminal penalties in Georgia.

The following are exemptions for needing a CAM license in Georgia:

• Owner providing CAM services within the community where they live.
• Full-time owner employee providing CAM services.
• Full-time association employee providing CAM services.
• Association member providing CAM services only to that association.
• Person performing only maintenance to the grounds/building.
• Public accountant acting solely as an incident to practice.

Witnesses are not legally required for a real estate deed transfer in Georgia. Warranty deeds and quitclaim deeds must be notarized in order to be considered valid. It is important to note that witnesses do not provide the same level of legal authentication as a notary public.

Salesperson licensees can make offers on properties. As a licensee, proper material disclosure must be given on any real estate contract for lease, purchase, or sale. The agent must disclose they hold a real estate license in the state that they are purchasing the property. As long as there is written disclosure on the contract about a licensee on either side of the transaction holding a license, it is permissible to make offers. (Unfair Practice #9) Additionally, because a broker oversees the actions of all licensees, licensees must inform the broker in writing about any real estate transactions that their affiliated licensees are a part of, even if they are personal transactions. Failure to do so would lead to reprimand from the broker and GREC.

When it comes to working with consumers, licensees must treat all people the same. No discrimination of any kind is tolerated in real estate transactions. Discrimination by a licensee is a federal and state law violation. In the practice of real estate, what you do for one you must do for all. The buyer or seller can request to have confidentiality with regards to their information and the licensee must honor that request unless disclosure is required by law. The Fair Housing Act does not require the use of the equal opportunity logo or slogan in real estate advertising.

As a licensee, you do not want your actions to be misconstrued as blockbusting. Blockbusting is soliciting property owners to sell by stating demographic changes in the neighborhood could result in a lowering of property value or school decline. Mentioning the "demographics" could violate one of the categories of protected classes.

Georgia requires that all real estate business be done through a brokerage firm with a qualifying broker. The qualifying broker oversees the activities of all licensees that are affiliated with the brokerage firm. Any violations of real estate license law that the broker becomes aware of must be reported to the Georgia Real Estate Commission.

A salesperson candidate does not need a college degree to become licensed. Completion of college courses in real estate can substitute for the prelicense course. All the other items are requirements to meet before a license can be issued.

The Commissioner does not participate in voting decisions. The Commissioner is hired by the Commission to oversee the staff and is NOT a member of the Georgia Real Estate Commission. The Commissioner is the enforcer of rules, regulations, and penalties determined by the members of the Commission. The Commissioner handles daily operations only.