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40 Cards in this Set

  • Front
  • Back
Agency Defined
Agent acts on behalf of another

Broker as Agent of the Client
vs
Associate as Agent of the Broker
Agency Classifications….
Universal Agency
General Agency
Special Agency
Special Agency
Authority to Perform only Specified Acts
Shorter Term; Limited Authority
Listing Agreements; Buyer Representation
General Agency
Authority to Conduct Series of Transactions
Longer Term, Broader Authority
Broker/Salesperson; Landlord/ Property Manager
Universal Agency
Broad & General Scope of Power
Not Common in Real Estate
Fiduciary Duties & Responsibilities
Fiduciary Trust
Highest Good Faith
Exclude All Selfish Interests
Special Duties of Fiduciary
Beyond Those in Agreements
Put Client FIRST
Fiduciary Duties (OLD CAR)
Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable Care & Diligence
Fiduciary Duties: CARE…
Higher Standard of Care to Client
Fiduciary Duties: CARE….

Duties for buyers and sellers
Discover/disclose relevant facts
Prepare/explain contractual provisions
Keep principals focused on deadlines
Fiduciary Duties: CARE….
Duties Just For Seller-clients
Determine appropriate listing price
Aggressive marketing/advertising efforts
Investigate material facts
Fiduciary Duties: CARE….
Duties Just For Buyer-clients
Reasonableness of asking price
Aggressive property search
Investigate material facts
Recommend use of experts
Fiduciary Duties: CARE
Basic knowledge of real estate law
Agents do more than act as fiduciaries
Fiduciary Duties: OBEDIENCE
Lawful Instructions
Client Chooses “Experts”
Client Approves of Agent’s Actions
Withdraw from Illegal Instructions
Fiduciary Duties: LOYALTY…
Act in Client’s BEST Interests
Agreement between Broker & Client
Sales Associates Represent Broker
Fiduciary Duties: LOYALTY….
Examples of loyal obligations
Obtain best price and terms
Obtain relevant information about other party
Exerting max effort for client’s benefit
Fiduciary Duties: LOYALTY
Disloyalty to client
Unethical and unprofessional
Forbidden and illegal
Grounds for forfeiture of license, commission, lawsuit for damages
Possible rescission of sales/lease contract
Fiduciary Duties: DISCLOSURE
Must be Full, Fair, & Timely

Material Fact Defined
Fid. Duties: DISCLOSURE….
To a Customer
Property defects
Title Defects
Survey Issues
Rights of Parties in Possession
Environmental/Safety/Health Issues
Fid. Duties: DISCLOSURE…
To a Client
Opinion of Value
Negotiating Strategies
Other Party’s Motivation
Other Party’s Financial Status
Property defects
Title Defects
Survey Issues
Rights of Parties in Possession
Environmental/Safety/Health Issues
Fid. Duties: DISCLOSURE…
Disclosure of relationships
Between agent and other party
Compensation from referrals
Compensation from other party
Fid. Duties: DISCLOSURE…
Disclosure of other offers
Offers and counteroffers
Backup offers
Issue of “equitable title”
Fid. Duties: DISCLOSURE…
Knowledge of other party’s
Motivation to buy/sell
Financial strengths/weaknesses
Fid. Duties: DISCLOSURE…
Status of earnest money deposits
Burden on buyer to deposit
In practice: agent delivers
EM is agreement between parties – get seller’s OK for IOU!
Fid. Duties: DISCLOSURE…
Buyer’s financial condition
To seller-client: disclose any known negative information about buyer
Buyer’s agent: cannot disclose to seller-customer
Fid. Duties: DISCLOSURE…
Property Value
Opinion of value – client only
Comparable properties
Changes in value during listing period
May need independent appraisal
Fid. Duties: DISCLOSURE…
Commission split
Fee-sharing arrangements
Disclose in writing
NOTE: TRELA 15(a)(6)(F)
Fid. Duties: DISCLOSURE
Contract provisions
Explain provisions of contract
Disclose pertinent facts
Explain meaning of factual or business details
Fid. Duties: Confidentiality
Certain information remains confidential forever
Customer entitled to factual information about property but not personal information about the client
Fid. Duties: Accounting
Trust funds
Commingling prohibited
Signed releases from both parties
Brokers generally do not hold earnest money
Suggestions for Brokers
Develop Company Programs re:
Implications of Agency Relationships
Fiduciary Duties
Train Associates How to Avoid Unintended Agency
Brokers Responsible for Licensee Professional Actions
1
(p.15) A general agent conducts transactions for the principal and can thus obligate
the principal to contractual agreements; therefore, brokers authorize associates to act
for the broker in any number of business activities. General agency sometimes exists
between a broker and landlord in the field of property management.
2
Generally the agent has no authority to sign contracts or make decisions for a
client.
3
(p.22) 22 TAC 535.16(c) states that the licensee is obligated to advise a property
owner of value when negotiating to purchase property for the licensee’s own account
as a result of contact made while acting as an agent. 22 TAC 535.144 states a
licensee is obligated to inform the client that the broker is acting on their own behalf.
Also, license can be suspended or revoked for acting in the dual capacity of broker
and undisclosed principal [TRELA 15(a)(6)(J)]
4
(p.22) 22 TAC 535.156(a) A licensee shall convey to the client all known
information which would affect the client’s decision to make, accept or reject offers
5
22 TAC 537.11(c) and TRELA 16(a) prohibit licensees from practicing law
or giving legal advice without an attorney’s license. Writing powers of attorney
would require an attorney’s license; all others involve duties the fiduciary owes to a
client (OLD CAR).
6
The duty of confidentiality owed to a client includes withholding from the
customer the client’s motivation for selling or buying if such information could
adversely impact on the client’s negotiating position.
7
All known facts relevant or material to the transaction (such as an increase
in value due to the zoning change) relates to the agents duty to make a full, fair and
timely disclosure to the client. [TRELA 535.156.(c
8
OLD CAR does not include inspection. TRELA (I)(5) prohibits a licensee
from acting in the dual capacity of inspector and real estate broker or salesperson in a
transaction.
9
A material fact is one that a reasonable person might feel is important in
choosing a course of action.
10
10. A (p.10) A customer is not entitled to an opinion of value but is entitled to material
facts about the property because 22 TAC 535.156.(d) imposes duty to convey
accurate information to the public.