BICSI Technician (TE)

Correct: An Accredited Buyer’s Representative (ABR) owes a fiduciary duty of competence and reasonable care to their client. While technological advancements like AVMs and AI tools can enhance efficiency, they are not infallible and often lack the nuance of local market conditions, such as recent zoning changes or specific property defects. The agent must exercise professional judgment by verifying the data and adjusting the technology’s output to ensure the client is not making a decision based on flawed or incomplete information.

Incorrect: Attempting to shift all legal liability to a third-party provider does not absolve the agent of their fiduciary duty to provide competent advice. Prioritizing speed over accuracy is a violation of the duty of care, as it risks the client’s financial interests. Automated systems should supplement, not replace, the professional analysis of an agent; suggesting that a CMA is no longer necessary can lead to significant valuation errors and a failure to meet professional standards.

Takeaway: Fiduciary duty requires agents to verify and supplement technological outputs with professional expertise to ensure the accuracy and competence of client advice.

Correct: In real estate transactions, the purchase agreement is the governing contract. Personal property (chattel) does not automatically convey with the real property. To ensure legal transfer and ‘coverage’ within the deal, these items must be explicitly identified in the contract or an accompanying Bill of Sale. This provides the necessary legal evidence of the parties’ intent and the scope of the sale, which is the primary priority for a buyer’s representative.

Incorrect: The seller’s disclosure form is a statement of property condition and does not function as a transfer of ownership document or a contract for personal property. Increasing insurance coverage limits addresses risk of loss but does not resolve the underlying legal dispute of ownership or inclusion in the sale. While excluding personal property from an appraisal is important for mortgage underwriting, it does not assist the buyer in securing the legal right to the items themselves.

Takeaway: The written purchase agreement and specific personal property addenda are the only definitive legal instruments for ensuring the transfer and inclusion of non-fixture items in a real estate transaction.

Correct: An Owner’s Policy is designed to protect the buyer’s investment (the full purchase price) and provides a legal defense against title challenges for as long as the owner or their heirs hold an interest. Conversely, a Lender’s Policy (Loan Policy) only protects the lender’s security interest, which is limited to the outstanding loan balance and decreases as the loan is amortized. Once the loan is paid in full, the lender’s policy terminates, whereas the owner’s policy continues to provide protection.

Incorrect: The lender’s policy is not credit insurance or hazard insurance; it is title insurance specifically for the mortgagee’s lien priority. An owner’s policy does not require annual premiums; both types of title insurance are typically paid as a one-time fee at closing. Title insurance is not related to building code compliance or down payment verification, which are handled through inspections and mortgage underwriting respectively.

Takeaway: A lender’s policy only protects the bank’s lien interest, whereas an owner’s policy is required to protect the homeowner’s equity and legal rights to the property for the duration of ownership.

Correct: An Accredited Buyer’s Representative has a fiduciary duty to protect the client’s interests by investigating potential material defects or legal non-compliance. Setback requirements (the distance a building must be from property lines) and lot coverage (the ratio of building area to total land area) are critical zoning factors. A certified land survey provides physical proof of the building’s location, while a zoning compliance letter from the municipality provides official confirmation that the property adheres to local laws. This ensures the buyer is not purchasing a liability that could result in forced demolition or fines.

Incorrect: Relying on standard title insurance is incorrect because most policies specifically exclude zoning and land use regulations from coverage unless a specific endorsement is added. Negotiating a price reduction for a variance is risky because variances are discretionary and never guaranteed; if denied, the buyer still owns a non-compliant property. Assuming grandfathered status is a common misconception; non-conforming use status is not automatic, often requires proof of legal existence prior to the code change, and may be lost if the property was ever vacant or significantly altered.

Takeaway: When zoning or setback issues are suspected, a buyer’s agent must facilitate professional verification through surveys and municipal confirmation rather than relying on assumptions or standard insurance.

Correct: A special exception, also known as a conditional use permit, is a land use that is permitted by the zoning ordinance provided that the applicant meets specific, pre-determined criteria. Because the scenario specifies the professional service is already listed as a conditional use in the code, the most effective and legally sound action is to prove the proposed use meets the established standards (such as parking, noise, or hours of operation) to receive the permit.

Incorrect: Area variances are incorrect because they relate to physical dimensions of the property, such as setbacks or height restrictions, rather than the type of use. Use variances are incorrect because they require the applicant to prove ‘unnecessary hardship,’ meaning the property cannot be reasonably used for any permitted purpose, which is a much higher legal burden than a special exception. Non-conforming use permits are incorrect because they apply to ‘grandfathering’ uses that existed legally before a zoning change occurred, not to new uses being introduced.

Takeaway: A special exception is a permitted use subject to specific conditions, whereas a variance is a request for relief from the law due to unique property hardships.

Correct: In jurisdictions or contracts that utilize ‘passive’ contingency removal, the burden of action lies with the buyer to object or cancel within the specified timeframe. If the buyer remains silent and the deadline passes, the contingency is legally considered waived or satisfied. Consequently, the buyer is now obligated to proceed with the purchase regarding that specific condition, and any later attempt to withdraw based on that contingency would constitute a breach of contract, potentially leading to the forfeiture of the earnest money deposit.

Incorrect: Option B is incorrect because passive removal means the contract stays in effect without the protection of the contingency, rather than terminating. Option C is incorrect because a missed contingency deadline affects the buyer’s rights to cancel but does not create a cloud on the title, which relates to ownership encumbrances. Option D is incorrect because while the agent may have breached their duty of care, the fiduciary relationship is not automatically severed by a missed deadline, nor does it trigger a statutory right of rescission.

Takeaway: Under passive contingency removal, a buyer’s failure to provide notice before the deadline results in an automatic waiver of the contingency, making the contract binding regarding that condition.

Correct: Under the Fair Housing Act, a reasonable accommodation includes making exceptions to rules or policies, such as a no-pets policy, for individuals who require assistance animals. Because assistance animals (including service animals and emotional support animals) are not legally classified as pets, housing providers, including HOAs, are prohibited from charging pet-related fees, deposits, or surcharges as a condition of the accommodation.

Incorrect: Paying the fee and seeking reimbursement later is incorrect because the fee is legally unenforceable from the start, and the agent should prevent the client from being charged unlawfully. The idea that a fee is acceptable if applied uniformly is incorrect because assistance animals are not pets; therefore, pet fees do not apply to them regardless of uniform application. Local zoning boards do not have the authority to mediate individual Fair Housing Act accommodation requests within private HOAs; such matters are handled through the housing provider’s internal processes or federal/state fair housing agencies.

Takeaway: Housing providers must waive no-pet policies and are prohibited from charging any pet-related fees for verified assistance animals under federal fair housing laws.

Correct: In a short sale or loss mitigation scenario, the lender is a third-party creditor, not the owner of the property. While the buyer and seller may reach an agreement, the contract is typically contingent upon the lender’s approval to accept less than the full mortgage balance. Because the lender is not a signatory to the initial purchase agreement, they are not legally bound by the closing dates, inspection periods, or price points contained therein until they issue a formal approval letter.

Incorrect: The lender is not the seller of record; the homeowner remains the seller until a foreclosure is finalized, making the de facto seller claim incorrect. There is no federal mandate requiring loss mitigation departments to respond to offers within 10 business days; these processes often take months. A dual agency relationship is not created because the lender is a third-party entity with its own legal representation or internal staff, and the buyer’s agent does not owe fiduciary duties to the lender.

Takeaway: Loss mitigation departments act as third-party decision-makers whose approval is a necessary contingency but who are not bound by the initial contract terms between the buyer and seller.

Correct: To fulfill fiduciary duties such as reasonable care and disclosure, an agent must ensure the client fully understands the legal documents they are signing. Using certified third-party professionals minimizes the risk of misinterpretation, ensures neutrality, and protects the firm from claims of Fair Housing violations or professional negligence. This approach aligns with the high standard of care required in agency relationships.

Incorrect: Relying on internal staff who are not certified translators risks legal inaccuracies and potential conflicts of interest. Using family members as interpreters can lead to misunderstandings of complex legal terms and may compromise the client’s confidentiality or lead to undue influence. Automated translation software often lacks the precision required for legal real estate terminology, increasing the risk of significant contractual errors and professional liability.

Takeaway: Ensuring clear communication through certified translation services is critical for maintaining fiduciary duties and legal compliance when language barriers are present in real estate transactions.

Correct: Net Operating Income (NOI) is intended to measure the income-producing capacity of a property independent of its financing or the owner’s specific tax situation. Debt service (the cost of financing) and depreciation (a non-cash accounting expense) are not considered operating expenses and must be excluded to provide a standardized view of the property’s performance. This allows investors to compare properties with different mortgage structures or tax bases on an equal footing.

Incorrect: Property management fees, landscaping, property taxes, insurance, utilities, and maintenance are all necessary costs to operate and maintain the property. These are classified as operating expenses and must be subtracted from the effective gross income to correctly calculate the NOI. Excluding these items would result in an artificially high and misleading income figure that does not reflect the actual costs required to sustain the asset’s revenue stream.

Takeaway: Net Operating Income isolates a property’s operational profitability by excluding non-operating costs such as debt service and depreciation.