Laws Of Agency - Chapter 7

Front 1

Laws of Agency

A. The brokerage business is one of agency; the broker is hired by the principal to become her or his agent.

Back 1

2. The principal is the party who delegates to the agent the authority to represent the principal's interest in a transaction.

3. Agency refers to the fiduciary relationship between the agent and the fiduciary.

4. Fiduciary describes the relationship of trust and confidence between principal and agent. Sometimes the broker (agent) is referred to as a fiduciary.

Front 2

Laws of Agency

B. The broker owes a fiduciary duty to the principal, who may be the seller, buyer, lessor, or lessee of property; the broker must perform duties of "COALD"

Back 2

Care, Obedience, Accounting, Loyalty, and Disclosure for the principal.

Front 3

General agent vs Special agent

Back 3

1. A general agent is one authorized by another to negotiate contracts for that person in a given range of matters.

2. A special agent is authorized to represent the principal in one specific transaction; a real estate broker is a special agent.

Front 4

E. To be entitled to a brokerage commission, a broker must...

Back 4

1. Be a licensed broker.

2. be the procuring cause of the sale/purchase.

3. Be employed by the principal.

4. Act according to the laws of agency.

Front 5

Real estate brokers may share a commission only with...

Back 5

their own salespeople or with other licensed brokers.

Front 6

Dual Agency

Back 6

Without both parties' prior written, mutual knowledge and consent, the broker is prohibited from representing both a seller and a buyer in the same transaction.

Front 7

Designated Agency

Back 7

allows for two different salespersons from the same brokerage firm to represent their individual buyer-client and seller-client in the same transaction. In its absence, this would generally create a dual agency situation, but some states allow for designated agency or appointed agency to occur provided that full disclosure is made in writing to all of the agreed parties.

Front 8

Brokers role in depositing funds

Back 8

The broker may be required to deposit all funds entrusted to her or him in a trust account or do what all parties agree should be done with the funds and may not commingle such funds with operating funds.

Front 9

The broker generally is prohibited from placing blinds ads

Back 9

Those that do not identify the broker as the advertiser.

Front 10

The brokers commission is negotiable between...

Back 10

the client and the broker.

Front 11

Buyer agency

Back 11

The broker may be hired by a potential buyer

Front 12

The Transactional broker (non-agent or facilitator)

Back 12

is not an agent of either party

Front 13

Designated Brokerage

Back 13

This agency model allows the designated broker to appoint agents within the office to singularly represent either a seller or buyer to the exclusion of every other agent in the office.

Front 14

Broker protection clause

Back 14

States that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires, the owner transfers the property to someone the broker originally introduced to the owner.