11. Agency Flashcards
What is the agency relationship in real estate?
The agency relationship is the legal relationship between a broker (agent) and a client (principal) in real estate transactions.
Who are the parties involved in an agency relationship?
The parties are the principal (client), the agent (broker), and the customer (third party).
What is the essence of the agency relationship?
The essence is trust, confidence, and mutual good faith.
What are the basic roles in an agency relationship?
The principal hires an agent as a fiduciary to perform a desired service on the principal’s behalf.
What are the three types of agency?
The three types are universal agency, general agency, and special agency.
What is universal agency?
In universal agency, the principal empowers the agent to perform any and all actions that may be legally delegated.
What is general agency?
In general agency, the principal delegates ongoing tasks and duties within a particular business or enterprise.
What is special agency?
In special agency, the principal delegates authority for a specific activity, after which the agency relationship terminates.
How can an agency relationship be created?
An agency relationship can be created through an express agreement or by the actions of the parties by implication.
What is an implied agency?
An implied agency arises when the parties act as if there were an agreement, even without a specific agreement.
How can an agency relationship be terminated?
An agency relationship can be terminated by full performance, mutual agreement, expiration, or involuntary termination.
What are the fiduciary duties of an agent to the client?
The agent’s duties include skill, care, loyalty, obedience, confidentiality, accounting, and full disclosure.
What is the duty of loyalty in an agency relationship?
The duty of loyalty requires the agent to place the interests of the client above all others.
What is the agent’s duty of confidentiality?
The agent must hold in confidence any personal or business information received from the client.
What are the principal’s duties in an agency relationship?
The principal must be available, provide information, and compensate the agent if agreed.
What is single agency?
Single agency means the agent represents one party in a transaction, either the seller or the buyer.
What is subagency?
In subagency, a broker works as the agent of another broker who is the agent of a client.
What is dual agency?
Dual agency means representing both principal parties to a transaction, such as both buyer and seller.
What is transaction brokerage?
Transaction brokerage is a form where no agency relationship exists in the transaction.
What is the role of a broker’s salespersons?
The broker’s salespersons are subagents of the listing broker and owe fiduciary duties to the broker and the broker’s client.
What does dual agency mean?
Dual agency means representing both principal parties to a transaction, such as both the buyer and seller.
How can dual agency arise?
Dual agency may arise from a voluntary agreement between the principal parties or from the parties’ actions, similar to implied single agency.
What is a conflict of interest in dual agency?
Dual agency contains an inherent conflict of interest as many fiduciary duties can only be rendered to one party.
What is required for written, informed consent in dual agency?
In states that permit dual agency, the agent must meet strict disclosure requirements, and principals must agree in writing.
What is disclosed (voluntary) dual agency?
Disclosed dual agency is created when parties give written consent in disclosure forms, confirming the agent’s relationship with both principals.
What is implied and undisclosed dual agency?
Implied dual agency occurs when an agent’s actions lead a customer to believe they are being represented, potentially creating a dual agency situation.
What are the duties of a disclosed dual agent?
A dual agent must disclose the agency relationship to both parties and obtain their written consent.
What is the role of a transaction broker?
A transaction broker acts as a facilitator and does not represent either the buyer or seller.
What are the duties of a transaction broker?
Duties include accounting for money, exercising reasonable skill and care, providing honesty, and keeping parties informed.
What duties are not imposed on the transaction broker?
Transaction brokers are not bound by fiduciary duties and are held to standards for dealing with customers.
What is the no subagency approach?
Some states disallow subagency, requiring agents to represent either the buyer or seller directly.
What are the objectives of agency disclosure?
Objectives include notifying clients about representation, informing them of fiduciary duties, and obtaining acknowledgment of disclosure.
What is required for seller agent disclosures?
An agent must disclose the agency relationship in writing before executing the listing agreement.
What constitutes substantive contact?
Substantive contact occurs when an agent shows a property, elicits confidential information, or executes a contractual offer.
What must a buyer agent disclose?
A buyer agent must disclose the agency relationship to the seller or seller’s agent on first contact.
What is required for dual agent disclosures?
A dual agent must obtain informed written consent from all parties and confirm disclosure in subsequent contracts.
What disclosures are prohibited for a dual agent?
A dual agent cannot disclose certain information, such as a seller’s willingness to accept less than the listed price.
What are facilitator disclosures?
Facilitators must provide written notice of their non-agency status to all parties on first substantive contact.
