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76 Cards in this Set

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  • Back

What is the term for the relationship between a client and a real estate licensee and do any laws govern this relationship?

Yes, this relationship is known as Agency, and the laws governing this relationship is called Agency laws.

What is the purpose of agency law?

To make sure you know whom you are representing and what your obligations are when you act for another person.

Define Agency, and name the kind of relationship created between the agent and the principle.

A legal relationship in which a principle authorizes an agent to act as the principle's representative when dealing with third parties. The relationship created is a fiduciary relationship.

What is a fiduciary relationship?

It implies a position of trust or confidence. The agent is in a position of trust with the principle and owes the principle certain fiduciary duties.

What fiduciary duties does an agent owe a principle?

Loyalty, integrity, and utmost care to the principle.

T or F: an agent isn't exactly obligated to act fairly with third parties if it benefits the client.

False. An agent is obligated to act fairly and honestly with third parties.

What is a special agent (real estate)?

An agent employed to perform a specific task.

What is a general agent?

An agent that has been given a broad scope of authority for an unspecified period of time. Opposite of a special agent.

T or F: a real estate broker is a special agent.

True, the broker is contracted to perform certain acts for a specified time.

What is actual authority?

Authority given to an agent by the principle and described in a written agreement.

T or F: a principle is responsible for the actions of an agent even if the agent acts beyond their actual authority.

False.

What is power of attorney?

A written document that gives personal legal authority to act on behalf of another person.

How many types of power of attorney are used in real estate?

Two types. Special power of attorney (specific acts), and general power of attorney (transact all business of the principle). The agent is then known as an attorney-in-fact.

What is an attorney-in-fact?

A person that has been given written authority aka power of attorney for another person.

T or F: a principle in a real estate transaction can be either the buyer or the seller.

True. Whoever the agent is representing, is the principle.

T or F: the agent is always a licensed real estate broker. That is why they are also called a listing agent. A selling broker is called a selling agent.

True.

What is single agency?

When a broker represents only the buyer or the seller in the transaction.

What is dual agency?

When a broker represents both principles in a transaction.

T or F: a listing agent represents the buyer.

False.

T or F: a selling agent, cooperative broker, dual agent can all have a principle who is a buyer or seller.

True.

What is a listing?

A listing is a contract between an owner of real property and an agent who is authorized to obtain a buyer.

What is a sub-agent?

A broker delegated by the listing agent (if authorized by the seller) who represents the seller in finding a buyer for the listed property.

What is a buyer's agent?

A broker employed by the buyer to locate a certain kind of real property.

T or F: a broker doesn't need the written consent of both the seller and the buyer to be a dual agent.

False. The broker does need to inform the buyer and seller and needs written permission from both.

T or F: A dual agent may work independently or through an associate license.

True

If two or more associate licensees employed by the same broker represent two or more parties to a transaction, what becomes of the broker?

It is called dual agency and the broker would be a dual agent.

T or F: A real estate broker functioning as a dual agent may disclose to the seller that the buyer is willing to pay more than the buyer's written offer to purchase since he or she has a fiduciary responsibility to both parties?

False.

T or F: a dual agent cannot disclose to the buyer that the seller is willing to take less than the listing agreement, without the express written consent of the party authorizing the disclosure.

True

What is a selling agent?

The broker who finds a buyer and obtains an offer for the real property.

A cooperating broker is?

A selling agent who assists another broker by finding a buyer. A cooperating broker participates on the MLS, and finds a buyer for a property listed in the MLS. May rep either the seller or buyer.

Is the cooperating broker a sub-agent?

No. A sub-agent is someone already the agent of the principle. Nothing in the listing agreement compels the cooperating broker to represent the seller. The cooperating broker should choose buyer or seller to avoid conflict of loyalties or a violation of real estate law. The cooperating broker receives a piece of commission.

Does a cooperating broker automatically become a sub-agent if they show a listed property?

No, but as long as the disclosure about agency relationships is made, the cooperating broker can represent either of the seller or buyer.

What is a sales associate?

A licensed real estate sales person or broker whose license is held by an employing licensed broker.

T or F: a broker is not responsible for the actions of a sales associate working for them.

False.

T or F: sales associates are not agents of the buyer or seller in real property transactions.

True. A sales associate is the agent of the employing broker and must deal fairly with the broker's customers.

A sub-agent represents the?

Seller.

What is the agency disclosure act?

An act passed in 1988 in an attempt to clarify agency relationships among sellers, agents and buyers. This disclosure must be made prior to taking a listing or writing an offer. It applies to all residential property transactions of one to four units.

Who presents a written disclosure?

Listing agent (or their sales associate) must deliver the form to the seller before entering into a listing agreement. Selling agent must provide form to buyer before the buyer makes offer to purchase. Selling agent (if different from the buying agent) must provide form to seller before the offer to purchase is accepted.

In the agency disclosure form, the second part required is for all parties to confirm they understand the agent's role. This is called?

Elect the agency

The third part of the agency disclosure form is?

The acknowledgement by all parties they understand who is representing whom, and sign the form.

T or F: a license can be revoked or suspended for violation of the agency disclosure law. Ignorance of the law is not a defense.

True.

T or F: brokers are fiduciaries whether the agency is created by oral agreement or by express (written) agreement.

True.

T or F: an agency relationship is created between an agent and principle, by agreement, ratification, or estoppel. It is created by express or implied , written or oral contract.

True.

T or F: an agency relationship may be created by agreement but should be in writing to be legal in court.

True

Name two ways to create agency with a written real estate contract:

A listing agreement or a buyer representation agreement.

What is a listing agreement?

A written contract by which a principle, or seller, employs a broker to sell real estate.

Is a listing agreement a unilateral or bilateral agreement?

Depends on wording but generally it is bilateral - payment for services.

What does ready, willing and able mean?

Prepared to enter into purchase contract, is ready to buy, and meets the financing requirements of purchase.

Ratification is?

Acceptance of an act already performed. Agency by ratification is same.

Agency by estoppel is?

Agency by estoppel is authority given when principle allows a third party to believe that another person is the agent, even if the third party is unaware of the appointment.

Ostensible or implied agency occurs when?

One's conduct implies a relationship even though no express employment contract has been signed, or payment established.



Needs edit pg.23

A seller's agent may provide following services to buyer without becoming ostensible or implied agent of buyer..

Show buyer properties, complete standard purchase contract, inform buyer of financing, legal service, inspection, title comps and related services required to complete transaction.

How is an agency terminated?

Full performance, expiration of term, agreement of parties, acts of parties, destruction of property, death, incapacity of principle or broker, bankruptcy of principle

What is an agency coupled with interest?

An agency where the agent gets an interest in the subject of the agency.

What are the four commonly used types of Listing Agreements?

Exclusive right to sell, Exclusive agency, Open Listing, Net Listing

What is an Exclusive Listing and Right to Sell Listing?

An exclusive contract where the seller must pay the listing broker a commission if the property is sold within the time limit by the listing broker, any other person, or even by the owner (Bi-Lateral Contract). The owner does not have to accept offers that meet or exceed the asking price and terms but they are obligated to pay the commission.




The phrase right to sell means the broker has the right to find a buyer, not the authorization to sell the property on their own unless the agent has a written power of attorney to do so.

What is an Exclusive Agency Listing?

An exclusive contract where the seller must pay a listing broker a commission if any broker sells the property. Initially, it is a unilateral contract because nothing is owed unless the broker produces a buyer. It becomes a bilateral contract if and when the broker produces a buyer because at that point both parties have obligations that must be fulfilled and can be enforced. However, the seller has the right to sell the property without a broker, pay no commission. This type of listing must specify a definite termination date.

What is an Open Listing?

An Open Listing is an agreement that gives any number of brokers the right to sell a property. It is not exclusive and may be given to any number of agents at the same time. It is a unilateral contract because only one party (the Seller) is obligated to act if and when an agent produces a buyer. The first broker to obtain a buyer who meets the terms of the listing, and whose offer is accepted by the seller, earns the commission. This type of listing does not require a specified termination date.

What does procuring cause mean?

It refers to the broker who produces a buyer ready, willing, and able to purchase the property for the price and on the terms specified by the seller.

What is a Net Listing?

An employment contract in which the commission is not definite. Instead, the broker receives all of the money from the sale of the property that is in excess of the selling price set by the seller. The broker must disclose the selling price to the buyer and seller within 30 days after closing the transaction.

What is an "Option-Listing"?

An "Option-Listing" gives the broker right to purchase the property that is listed. A broker with an option is acting as a principle as well as the agent. Prior to exercising the option, the seller must be informed of the full amount of the broker's profit and agree to it in writing.

Breach of contract can result in?

Unilateral rescission, lawsuit for money damages, lawsuit for specific performance

Name two ways to discharge a contract:

By assignment or by novation

What is assignment?

It transfers all the interest of the assignor (principle) to the assignee.

What is assignment?

It transfers all the interest of the assignor (principle) to the assignee.

What is novation?

Substitution, by agreement, of a new obligation for an existing one.

What is unilateral rescission?

A breach of contract that occurs when one party backs out of an agreement.

What types of money damages are there?

Liquidated damages (earnest money), compensatory damages (determined by the court)

Who determines liquidated damages?

Negotiated between buyer and seller.

Who determines compensatory damages?

The court.

What is the purpose of compensatory damages?

To restore the damaged party back to their original position.

What are punitive damages/exemplary damages?

To punish a person or corporation so they wont repeat their actions.

What is a lawsuit for specific performance?

A lawsuit filed when a party breaches an agreement.

T or F: Do rules and regulations have the full force and effect of law?

True

Who does a sub-agent work for?

The seller and works with the buyer.

What is the absolute amount of authority one can give an agent?

Universal Agency