Michigan salesperson Derek represents buyer Carla Simmons. Carla has signed a buyer representation agreement and is under contract to purchase a home in Muskegon. Derek's employing broker, Broker Walsh, also owns a mortgage company and offers Carla a mortgage product at closing. Broker Walsh does not disclose this affiliated business arrangement to Carla. Which Michigan law principle is most directly violated, and what is Derek's obligation?
Correct Answer
B) The duty of loyalty is violated; Derek must disclose the affiliated business arrangement to Carla and advise her of her right to shop for other mortgage products
This scenario implicates both federal RESPA affiliated business arrangement disclosure requirements and Michigan's fiduciary duty of loyalty (MCL 339.2512d). Derek, as Carla's fiduciary, has an independent obligation to ensure Carla is fully informed of any arrangement where her agent's broker profits from a referral. The duty of loyalty requires Derek to act in Carla's best interest, which includes ensuring she knows she can shop for other mortgage products and is not steered into a product that benefits the brokerage rather than her. Derek cannot rely solely on the broker to fulfill this obligation.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Agency Question
Background Knowledge for Agency
Real World Application in Agency
Common Mistakes to Avoid on Agency Questions
Related Topics & Key Terms
Key Terms:
Related Concepts
In real estate, a client is someone to whom the agent owes fiduciary duties through an agency relationship, while a customer is a third party to whom the agent owes only honesty and fair dealing.
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
More Agency Questions
Under agency law in Nevada, dual agency is:
Under South Dakota license law, which type of agency relationship exists when a broker represents only the seller in a real estate transaction?
Oregon broker Olivia is working with buyer couple Derek and Sarah. During their first meeting, Derek and Sarah ask Olivia who she represents in the transaction. Under Oregon law, when is Olivia required to provide a written agency disclosure to Derek and Sarah?
Missouri continuing education (CE) requirements for license renewal include:
Kentucky requires how many hours of pre-license education?
- → How is implied agency most commonly created?
- → Under current Illinois agency law, which of the following statements is NOT accurate?
- → Information about the lowest price a seller will accept is:
- → New Jersey continuing education requirements include:
- → Virginia continuing education requirements for salespersons include:
- → Kansas recognizes which agency relationships?
- → An exam-prep coach in Mooresville is sorting out a file issue involving WWREA at first substantial contact. Which statement best applies under current North Carolina law?
- → Maryland real estate licensees are regulated by the:
- → NM listing agreements must include:
- → Broker Jameson operates a large brokerage in Flint, Michigan. He has established a designated agency policy in his office. Salesperson Keisha represents buyer Donna, and salesperson Liam represents seller Frank, on the same property transaction. Broker Jameson is not personally involved in showing the property or drafting the offer. Which statement BEST describes Jameson's agency status in this transaction under Michigan law?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Related Articles
Real Estate Exam Practice Questions by Topic (2026): Free Sets for Contracts, Agency, Financing
Get topic-based real estate exam practice sets and a simple sequence to move from learning to timed mocks.
Real Estate Exam Topics (2026): High-Yield Areas + Common Traps (Contracts, Agency, Financing, Fair Housing)
Learn the highest-frequency real estate exam topics and the traps that cause most wrong answers—plus how to study them.
Real Estate Exam Agency & Fiduciary Duties (2026): Scenarios + Practice Questions
Master agency relationships and fiduciary duties using scenario patterns and practice questions built for exam wording.