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82 Cards in this Set
- Front
- Back
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What is agency governed by? Two kinds of law |
Statutory law-Enacted by legislature and other governing bodies Common law-The rules of a society established by court decision |
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What does agency refer to in real estate |
Agency is a strict defined legal relationship It refers to the relationship that a broker, managing broker, or leasing agent may have with buyers, sellers, landlords, or tenants. |
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What is the term for people in an agency who conduct hiring? |
Clients or principals |
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What is the term for people in an agency who are hired? |
Agents |
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How does a real estate licensee become an agent? |
Through expressed or implied contractual agreement |
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What does the agent owe the client or principal? |
A duty of loyalty, which rises above any personal interests of the agent. |
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What is the relationship of the broker, managing broker, or leasing agent with the sponsoring broker called? |
General agency because they represent the sponsoring broker in all daily actions. Contracts are needed |
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The body of law on which Illinois agency is based is what? |
Article 15 of the Real Estate License Act of 2000 Defines the rights and duties of the principal and the agency |
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Who is an individual who is authorized and consents to represent the interests of another person? |
An agent |
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In the real estate business, who is the agent in a firm? |
The sponsoring broker and shares responsibility with the licensees who work for him. |
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What is an agreement for an agent or firm to provide brokerage services to a consumer and to receive compensation for said services? |
Brokerage agreement Must be in writing in Illinois |
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Who is a person or entity that a licensee represents in a real property transaction? |
A client |
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What is payment (monetary or otherwise) made to a person or entity for executing services? |
Compensation |
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What is information given by a client to a licensee that must be kept in confidence (either by writing or verbal) that relates to the negotiating position? |
Confidential Information |
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When can Confidential Information be shared? |
If the client gives authorization If it must be shared by law If the information is revealed by some person or entity other than the licensee |
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Who is a person or entity for whom an agent provides services, which are only to be provided by a licensee, or person or entity who seeks such services from a licensee? |
A Consumer |
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Who is a person or entity for whom a licensee is providing services (including ministerial acts) but who is not represented by the licensee in an agency relationship |
A customer |
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What is the difference between a customer and a client? |
A client is represented by the licensee, a customer is not yet |
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What are Ministerial acts? |
Informative or clerical services provided by a licensee to a consumer. Providing Ministerial acts is not equivalent to active representation |
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The agent works ______ the client and ________ the customer |
An agent works for the client and with the customer |
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What is the principal?
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The client is the principal to whom the agent gives advice and counsel. |
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What is the agent entrusted with when working with the client or principal? |
The agent is entrusted with certain confidential information and has fiduciary responsibilities (aka Statutory responsibilities in Illinois) to the principle |
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What are some of the principal's duties? |
Comply with the brokerage agreement and cooperate with the agent. Must not under the agent and must deal with the agent in good faith. Must compensate agent according to terms |
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What are the six common law fiduciary duties? |
COLD AC Care Obedience Loyalty Disclosure Accounting Confidentiality |
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Violating what duty may lead to negligence found in court? |
Duty to care |
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What do sponsoring brokers purchase that is similar to malpractice insurance? |
Errors and omissions (E&O) insurance policies for the firm. |
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What does E&O insurance cover? |
Errors and omissions insurance covers errors and negligence in the usual listing and selling activities of a real estate office. They do not cover criminal acts |
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What fiduciary responsibility includes obeying the principal's instructions in accordance to the contract unless it is unlawful or unethical? |
Duty of Obedience |
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What form must be completed by the seller of one-four unit residential properties to give to the buyer prior to the offer? |
The Illinois Association of REALTORS Residential Real Property Disclosure Report |
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If the Residential Real Property Disclosure Report is delivered after the offer is made and has negative information, how much time does the buyer have to cancel it? |
Three days |
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Who helps the seller complete the Residential Real Property Disclosure Report? |
It must be done by the seller, and under no circumstances should a real estate licensee help the seller physical or by answering any questions. |
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If the seller learns of a new problem after the contract is signed and up until closing, what occurs? |
The buyer does not have the power simply to cancel the contract, compensation may be negotiated or the problem remedied by the seller. |
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When is the limit for violation of the residential property disclosure act? |
On year from the earlier of the date of possession, date of occupancy, or date of recording of an instrument of conveyance of the residential property. |
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What fiduciary duty requires that licenses give accurate copies of all documents to all affected parties and keep copies on file for a specified time? |
Duty of Accounting |
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Illinois licenses require what time deadlines in regards to copies of all executed sales contracts? |
They must deliver true copies to the people who signed them within 24 hours. |
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All funds entrusted to a licensee must be deposited in what type of account and how fast? |
In a special escrow account by the next business day following the signing of a sales contract or lease (unless otherwise specified by the contract) |
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What is the act of mixing money from entrusted funds with personal or general business accounts? |
Commingling and it is illegal. |
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What is the act of using escrow funds as the licensee's own money? |
Conversion, and it is illegal |
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Records of escrow account transactions and reconciliations must be kept on file for how long? |
Five years |
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Though an agent may not disclose personal or confidential information about the principal, what must always be disclosed? |
Material Fact |
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What is Material Fact |
Any fact, if known, that might reasonably be expected to affect the course of events |
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What is a general vague exaggeration of a property's benefits? |
Puffing (not illegal but must not be fraudulent) |
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What is the intentional misrepresentation of a material fact so as to harm or take advantage of another person? |
Fraud Not only false statements but concealing or failing to disclose important facts |
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What is when the licensee should have known that a statement about a material fact was false? |
Negligent misrepresentation |
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What act prohibits the use, within a trade or profession, of any deception, fraud, false promise, misrepresentation or concealment, omission of any material fact with the intent that others rely on it? |
The Illinois Consumer Fraud and Deceptive Practices Act Licensees found in violation may be required to pay the plaintiff's attorney's fees and court costs in addition to damages. |
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What is a structural defect that would not normally be uncovered over the course of an ordinary inspection? |
Latent defect |
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In addition to the seller's duty to disclose latent defects, the seller's real estate agent has an independent duty to conduct what? |
reasonably competent and diligent inspection of the property |
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If material facts are discovered by the licensee what must occur? |
It must be disclosed to prospective buyers. A licensee who should have known about a substantial defect that is detected later may be held liable. |
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What are properties that society has branded undesirable due to an event that occurred there? |
Stigmatized property, due to homicide, suicide or gang-related activity |
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What should licensees seek when dealing with stigmatized property? |
Legal counsel |
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What is the general name for state and federal law requiring law enforcement authorities to make information available to the general public regarding registered sex offenders? |
Meghans Law |
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Is there a legal duty for listing agents regarding the disclosure of registered sex offenders near a listed home? |
No, buyer's agents should refer to their buyer client to public available sex offender location lists |
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Where are fiduciary/statutory duties set forth? |
The Article 15 of the Real Estate License Act of 2000 |
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When must any action brought under Article 15 commence? |
It must commence within two years after the person bringing the action knew or should have known about the act or omission. It cannot be brought on more than 5 years after the date of the act or omission |
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An agency relationship based on a formal agreement is? |
Express Agency |
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An agency relationship resulting from the parties' behavior is? |
Implied Agency |
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When parties formally express their intention to establish an agency relationship and state its terms and conditions what is it called? |
An express contract or express agreement |
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What is an agency relationship between a seller and a sponsoring broker created by a written employment contract? |
Listing agreement This authorizes the sponsoring broker or designated licensees to find a buyer or tenant for the owner's property. |
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An express agency relationship between a buyer and a sponsoring broker is created by what? |
A buyer agency agreement |
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What is a buyer agency agreement entail? |
This stipulates the activities and responsibilities the buyer expects from the sponsoring broker in finding appropriate property to purchase or rent. |
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All exclusive brokerage agreements must be what? |
In writing according to the Real Estate License Act of 200 |
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When the actions of the licensee indicate that she has formed an agency relationship with a party what is formed? |
An implied contract It can be created unintentionally, inadvertently, or accidentally by actions |
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What factor does not determine agency, even thought it may seem like it does? |
Source of compensation does not determine agency. Agencys can exist without fees called a gratuitous agency |
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An agency that occurs without fees is called what? |
A gratuitous agency |
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How is compensation generally paid when selling property? |
In a cooperative commission arrangement |
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How is payment usually made in a cooperative commission arrangement? |
Seller pays the listing sponsoring broker Listing sponsoring broker pays the cooperating sponsoring broker or directs a paid out commission |
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What must be included in the brokerage agreement regarding the ending of an agency? |
A definite termination date must be included in the brokerage agreement. Automatic extension clauses are illegal in Illinois. |
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What is it called when the agent has an interest in the subject of the agency, such as the property being sold? |
Agency coupled with an interest |
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What is special about an Agency Coupled with Interest? |
This can not be revoked by the principal or be terminated on the principal's death |
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What is a person empowered to do anything the principle could do personally? |
Universal Agent Authority to act on behalf of the principle is virtually unlimited |
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What is needed for a Universal Agent? |
A written POA |
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What kind of agent may represent the principal on a broad range of matters relating to a particular business or activity? |
A General Agent A property manager is typically considered a general agent. Brokers and managing brokers are general agents to the sponsoring broker |
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What type of agent is authorized to represent the principle in one specific act or business transaction only? |
A Special Agent A real estate licensee usually is a "special" agent to the client. Limited to finding a ready, willing, and able buyer for the property. |
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What is a person authorized by the sponsoring broker to act as the agent of a specific principal? |
Designated Agent The only licensee in the company who has a fiduciary responsibility towards that principal. |
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When an agent or firm represents only one party exclusively in a real estate transaction, the relationship is? |
Single agency |
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When the agent represents two principals in the same transaction, what is it called? |
A dual agency. This requires equal loyalty to two separate principals at the same time. The challenge is fulfilling fiduciary obligations to both parties |
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What must occur before a Dual Agency is formed? |
Both parties must consent in writing |
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Real estate licensee are _______ to disclose the parties they represent? |
Required |
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What are some examples of ministerial acts? |
Quoting and availability of pricing of brokerage services Responding to inquiries concerning price and location of property Attending an open house and answering questions Setting an appt to view property |
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Can a licensee void liability through the use of a waiver or exculpatory clause in the sales contract? |
No, |
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If an agent elicits the assistance of other licensees who cooperate in the transaction, what are they? |
Subagents of the principal |
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What is important about blanket offering of subagency by a MLS in Illinois? |
Its illegal |
