Brokerage And The Law Of Agency

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Agent

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The individual authorized to represent the interests of another

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Subagent

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One employed by someone already acting as an agent

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Principal

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The individual who contracts an agent. This is a fiduciary relationship

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Client

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Same as the Principal

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Customer

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A third party to whom some level of service is provided, but falls short of fiduciary

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Agency

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The fiduciary relationship between the Principal and Agent

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Fiduciary

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A relationship in which the Agent is place in a position of trust and confidence to the Principal

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Subagency

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The fiduciary relationship between the Subagent and the Agent

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Brokerage

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Bringing buyers and sellers together in the marketplace

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Broker

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One who is licensed to list, lease or manage property ,buy, exchange, auction, negotiate, and sell property. LLBEANS

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LLBEANS

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List, Lease, Buy, Exchange, Auction, Negotiate, & Sell property

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Agents of the Principal

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The firm or the Broker In Charge

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Licensees employed by the firm

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Subagents of the Principal

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Subagents of the Principal

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Licensees employed by the firm.

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Agency Relationship Classifications

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Universal, General, & Special Agents

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Universal Agent

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An agent empowered to do anything the Principal could do personally. Ex: Unlimited Power of Attorney

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General Agent

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An agent representing the Principal in a broad range of matters relating to a particular business or activity

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Special Agent

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An agent representing the Principal in a specific business or activity

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Common Law Agency can be created by (contracts)

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a written listing contract, buyer agency contract, dual-agency contract, property management contract, in-house brokerage employment contract, implied agency

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Agency agreements (3 Types)

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Oral, Written, Implied

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Implied Agreement

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Agent and Principal act as if an agreement exists w/o it being in writing

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Compensation

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Does not determine agency. Anyone can pay you, regardless of who you represent.

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Termination of Agency Agreement

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Fulfillment of agreement, Expiration, Mutual agreement, Breach by one of the parties, By operation of law(Bankruptcy of Principal), Property destruction or condemnation, Death or incapacity of either party

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Agency Agreement Types

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Listing, Buyer, Property Management, Tenant Agency

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Single Agency

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Firm/Broker exclusively represents the buyer or seller in a transaction.

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Buyer Agency

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Buyer is Principal. Seller is 3rd party

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Agency Contract must be in writing

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No later than the time an offer is extended by any party

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Subagency

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All Firms and Agents are agents of the seller unless a buyer's agency agreement is in effect.

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Dual Agency

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An agent or firm represents both buyer and seller. Must be disclosed and agreed upon by both parties.

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Designated Dual Agency

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A firm designates agents to represent the buyer and seller in the same transaction. Must be disclosed and agreed upon by both parties

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Seller's - Selling Agent

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Represents the buyer w/o a buyer's agency agreement. In this case, the Principal's agent is the listing agent

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Listing Agent

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The agent who holds the listing.

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NCREC "Working with Real Estate Agents" must be given...

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to the buyer and/or seller at first substantial contact. If not face-to-face, then emailed, faxed, or mailed no later than 3 days after first substantial contact

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NCREC "Working with Real Estate Agents" brochure - agent's duty

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Read and explain to client and have them sign. Agent keeps signed copy

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Agent's Duties to Principal

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Loyalty, Obedience, Accounting, Disclosure, Skill (LOADS)

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Agent for the seller must disclose

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All offers, Identity of Purchasers, Purchaser's ability to complete the sale, Any interest the broker has in the buyer, Buyer's intention to sell for a profit

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Agent for the buyer must disclose

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Property deficiencies, Contract provisions, unsuitable financing

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Agent's Duties to 3rd Parties

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Be honest and fair, disclose material facts, Comply with the law.

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Puffing

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Exaggerating a property's benefits. Must not misrepresent.

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Material Facts

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Must be disclosed to all parties

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Agent's Prohibited Conduct

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Willful or Negligent Misrepresentation or Ommission

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Willful Misrepresentation

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Deliberately misinforming about a material fact

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Negligent Misrepresentation

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Unintentionally misinforming about a material fact

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Willful Ommission

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Deliberately failing to disclose a material fact

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Negligent Ommission

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Unintentionally failing to disclose a material fact

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Stigmatized Property Disclosure

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Not necessary. Death, Murder, and Illness are not material facts, but can be disclosed if requested. AIDS is the exception. Considered a handicap.

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Sex Offender Disclosure

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Not necessary to disclose, however you can direct client to the registry

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Consequences of a Breach of Duty

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NCREC Disciplinary action
Civil action by injured party
Criminal prosecution by the DA

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Principal's Duty to Agent

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Act in good faith
Pay the commission

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Anti Trust Laws

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Price Fixing
Group Boycotting
Allocatiing Markets or Customers