Ca Real Estate Principles Ch 4

Front 1

Agent

Back 1

empowered to represent a principal in negotiating with a third party for the principal’s benefit

Front 2

Buyer's Agent

Back 2

Although not as common, a buyer may appoint a real estate broker to be the buyer’s agent to find property for the buyer. Under these circumstances, the buyer’s broker is bound to reveal this fact to the seller.

Front 3

Commingling

Back 3

takes place when a broker has mixed the funds of his or her principal with the broker’s own money

Front 4

Conversion

Back 4

Conversion is misappropriating and using the client’s money. This is a crime that carries a jail sentence.

(not the same thing as commingling)

Front 5

Dual Agency

Back 5

A real estate broker may represent both the buyer and seller in the same transaction, but only with the knowledge and consent of both parties. Two real estate agents working for the same broker will be a dual agency if one agent has the buyer and the other has the seller because it is the broker who determines the agency relationship.

Dual agencies are considered by many attorneys as a conflict of interest with the potential for law- suits. Real estate agents often carry errors-and-omissions insurance to help protect against this problem.

Front 6

False Promise

Back 6

is a false statement about what the promiser is going to do in the future. To prove false promise, the injured party must show that the promise was impossible of performance and that the person making the promise knew it to be impossible.

Front 7

Fiduciary

Back 7

A fiduciary relationship is one of loyalty, obedience, and confidentiality and obligates the agent to act in the principal’s best interest. This relationship is probably the agent’s most important duty. An agent cannot act in a manner that is detrimental to this fiduciary relationship.

Front 8

General Agency

Back 8

has broad powers to act on behalf of the principal

Front 9

Independent Contractor

Back 9

An independent contractor relationship exists when an individual is hired to accomplish results and little or no supervision is required

The degree of direct control over the individual hired is important in determining whether that individual is an em- ployee or independent contractor

Front 10

Misrepresentation

Back 10

includes not only what was said but also the failure of a broker or salesperson to dis- close a material fact about the property

Front 11

Principal

Back 11

Employer of an agent. Who the agent represents through agency.

Front 12

Recovery Fund

Back 12

program whereby the public can recover money when there are certain uncollectable court judgments obtained against a real estate licensee on the basis of fraud, misrepresentation, deceit, or conversion of trust funds in a transaction.

This program is financed using a portion of real estate licensing fees and was signed into law by Obama in April 2009. Maximum amount of money a person can receive from the fund is currently limited to $50,000 per individual claim, up to a $250,000 maximum for multiple claims.

Front 13

Secret Profit

Back 13

Arises when the broker, who already has a higher offer from another buyer, makes a low offer, usually through a “dummy” purchaser. The difference is the secret profit. This is sometimes referred to as divided agency; agents must always disclose any self-interest they might have in a transaction and obtain their principal’s consent.

Front 14

Seller's Agent

Back 14

The majority of real estate agencies are created when a seller (principal) appoints a real estate broker (a seller’s agent) to find a buyer for the seller’s property. The agency relationship is between the seller and the broker, not between the broker and the buyer.

Front 15

Single Agent

Back 15

When a real estate broker acts as an agent to only the seller or only the buyer

Front 16

Special Agency

Back 16

has limited or well-defined powers, frequently confined to a single transaction. Most real estate agencies are special in nature, with powers normally limited to the sale of a specific property

Front 17

Trust Fund

Back 17

defined as money or other items of value that an agent receives on behalf of a principal in the course of a real estate transaction that requires a license