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40 Cards in this Set
- Front
- Back
Agency Defined
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Agent acts on behalf of another
Broker as Agent of the Client vs Associate as Agent of the Broker |
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Agency Classifications….
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Universal Agency
General Agency Special Agency |
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Special Agency
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Authority to Perform only Specified Acts
Shorter Term; Limited Authority Listing Agreements; Buyer Representation |
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General Agency
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Authority to Conduct Series of Transactions
Longer Term, Broader Authority Broker/Salesperson; Landlord/ Property Manager |
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Universal Agency
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Broad & General Scope of Power
Not Common in Real Estate |
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Fiduciary Duties & Responsibilities
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Fiduciary Trust
Highest Good Faith Exclude All Selfish Interests Special Duties of Fiduciary Beyond Those in Agreements Put Client FIRST |
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Fiduciary Duties (OLD CAR)
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Obedience
Loyalty Disclosure Confidentiality Accounting Reasonable Care & Diligence |
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Fiduciary Duties: CARE…
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Higher Standard of Care to Client
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Fiduciary Duties: CARE….
Duties for buyers and sellers |
Discover/disclose relevant facts
Prepare/explain contractual provisions Keep principals focused on deadlines |
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Fiduciary Duties: CARE….
Duties Just For Seller-clients |
Determine appropriate listing price
Aggressive marketing/advertising efforts Investigate material facts |
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Fiduciary Duties: CARE….
Duties Just For Buyer-clients |
Reasonableness of asking price
Aggressive property search Investigate material facts Recommend use of experts |
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Fiduciary Duties: CARE
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Basic knowledge of real estate law
Agents do more than act as fiduciaries |
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Fiduciary Duties: OBEDIENCE
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Lawful Instructions
Client Chooses “Experts” Client Approves of Agent’s Actions Withdraw from Illegal Instructions |
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Fiduciary Duties: LOYALTY…
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Act in Client’s BEST Interests
Agreement between Broker & Client Sales Associates Represent Broker |
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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 |
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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 |
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Fiduciary Duties: DISCLOSURE
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Must be Full, Fair, & Timely
Material Fact Defined |
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Fid. Duties: DISCLOSURE….
To a Customer |
Property defects
Title Defects Survey Issues Rights of Parties in Possession Environmental/Safety/Health Issues |
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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 |
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Fid. Duties: DISCLOSURE…
Disclosure of relationships |
Between agent and other party
Compensation from referrals Compensation from other party |
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Fid. Duties: DISCLOSURE…
Disclosure of other offers |
Offers and counteroffers
Backup offers Issue of “equitable title” |
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Fid. Duties: DISCLOSURE…
Knowledge of other party’s |
Motivation to buy/sell
Financial strengths/weaknesses |
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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! |
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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 |
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Fid. Duties: DISCLOSURE…
Property Value |
Opinion of value – client only
Comparable properties Changes in value during listing period May need independent appraisal |
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Fid. Duties: DISCLOSURE…
Commission split |
Fee-sharing arrangements
Disclose in writing NOTE: TRELA 15(a)(6)(F) |
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Fid. Duties: DISCLOSURE
Contract provisions |
Explain provisions of contract
Disclose pertinent facts Explain meaning of factual or business details |
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Fid. Duties: Confidentiality
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Certain information remains confidential forever
Customer entitled to factual information about property but not personal information about the client |
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Fid. Duties: Accounting
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Trust funds
Commingling prohibited Signed releases from both parties Brokers generally do not hold earnest money |
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Suggestions for Brokers
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Develop Company Programs re:
Implications of Agency Relationships Fiduciary Duties Train Associates How to Avoid Unintended Agency Brokers Responsible for Licensee Professional Actions |
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1
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(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. |
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2
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Generally the agent has no authority to sign contracts or make decisions for a
client. |
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3
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(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 licensees 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)] |
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4
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(p.22) 22 TAC 535.156(a) A licensee shall convey to the client all known
information which would affect the clients decision to make, accept or reject offers |
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5
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22 TAC 537.11(c) and TRELA 16(a) prohibit licensees from practicing law
or giving legal advice without an attorneys license. Writing powers of attorney would require an attorneys license; all others involve duties the fiduciary owes to a client (OLD CAR). |
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6
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The duty of confidentiality owed to a client includes withholding from the
customer the clients motivation for selling or buying if such information could adversely impact on the clients negotiating position. |
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7
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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 |
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8
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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. |
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9
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A material fact is one that a reasonable person might feel is important in
choosing a course of action. |
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10
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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. |