3 - Agency Basics Flashcards
443 Disclosure Form
The agency disclosure statement mandated by New York Real Estate Law, Article 12-A Section 443 to be given to consumers explaining agency relationships and serving as acknowledgement that such information was presented. It is not a contract.
Accountability
Duty recognizing that money received in an agency relationship belongs to the principal, not the agent. Agent has the duty to account strictly to the principal for any amount received.
Affidavit
A sworn statement that is written and acknowledged. It may be submitted as evidence in a trial.
Affiliated Licensee
Individuals licensed as salespersons or associate brokers who are employed by the same broker.
Agency
A relationship of trust is created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties.
Agency Disclosure Form
Form that states whether an agent is representing the seller, buyer or both in a transaction.
Agency Relationship
Relationship between a broker and a seller or a broker and a buyer. Imposes certain duties, obligations, and high standards of good faith and loyalty on the agent, as the representative of the principal.
Antitrust
An area of law concerned with maintaining competition in private markets by prohibiting any restraint on trade.
Arm’s Length Transaction
A transaction that occurred under typical conditions in the marketplace, with each party acting in his or her own interest.
Boycott
An agreement by two or more people who refuse to deal with a person or company.
Breach of Contract
An unexcused failure to perform according to the terms of a contract.
Broker’s Agent
Engaged and works directly for the broker - a broker’s agent is not a subagent of the seller or buyer. Still owes the same fiduciary duty to the broker’s seller or buyer the broker does.
Buyer’s Agent
An agent representing the interests of the buyer of a property.
Client
Person who employs a broker, lawyer, or other professional. Real estate clients can be sellers, buyers or both.
Commission
The State Real Estate Commission is responsible for carrying out the requirements set forth in in the Real Estate Licensing and Registration Act.
Confidential Information
Information exchanged between two people who intend that the information be kept secret, such as an agent’s fiduciary obligation to maintain a client’s confidential information.
Confidentiality
Any information learned during the course of the agency relationship can never be revealed or used later against the principal, even after the transaction is closed.
Consensual Dual Agency
Occurs with 1. the broker and all licensees are dual agents for both parties in the transaction, or 2. the buyer and seller each appoint a designated agent who fully represents them. The broker, however, would (with consent) act as a dual agent in the transaction.
Cooperating Agent
An agent who works with a listing agent to sell property in a real estate transaction; the selling agent who found a buyer for the listed property. The cooperating agent could be a buyer’s agent, or a cooperating agent could be a subagent of the seller, working as an agent of the listing agent. Also called Cooperating Broker.
Customer
A party in a transaction to whom an agent does not have a fiduciary duty or relationship.
Designated Agency
An agency relationship where a licensee is assigned by a broker to represent a buyer or seller in a transaction, usually in an in-company dual agency situation.
Disclosure
The revelation of any material facts, often used to refer to defects in the property of which the owner is aware but are not obvious to the buyer. Owners may be liable for undisclosed defects.
Dual Agent
When a broker or salesperson represents both parties (buyer and seller) in a transaction.
Estoppel
A legal doctrine that prevents a person from asserting rights or facts that are inconsistent with his or her earlier actions or statements, when he or she failed to object (or attempt to “stop”) another person’s actions.
Expressed Agency
Authority expressly communicated, in words or in writing, buy the principal to the agent. Also called Express Authority.
Fiduciary Duties
Obedience, loyalty, disclosure, confidentiality, accountability and reasonable care owed to all clients in an agency relationship.
First Substantive Contact
An event triggering agency disclosure (e.g., prior to entering into a listing agreement, showing a property, etc.).
Actionable Fraud
Fraud that meets certain criteria, so that a victim can successfully sue. Victim/plaintiff must prove the defendant concealed material facts or made false statements (intentionally or negligently) with intent to induce victim to enter a transaction, and victim was harmed by relying on misrepresentations.
Constructive Fraud
A negligent misrepresentation or concealment of a material fact; when a person carelessly fails to disclose material information or makes statements that he or she should realize are false or misleading.
General Agent
An agent authorized to handle all of the principal’s affairs in one area or in specified areas.
Implied Agency
Authority indirectly given to an agent to do everything reasonably necessary to cary out the principal’s express orders. Also called Implied Authority.
Informed Consent
Written evidence that a client is aware of and has given permission to an agent to perform a specific action or take on a specific role in the client agent relationship.
In-House Transaction
A real estate transaction in which the listing broker is the only broker involved.
Kickbacks
Fees or other compensation given for services not performed but as a means of undisclosed commission for business referrals (prohibited by RESPA).
Listing
A written agency contract between a seller and a real estate broker, stating that the broker will be paid commission for finding (or attempting to find) a buyer for the seller’s real property. A listing is a personal services contract.
Listing Broker
The broker with whom a seller signs a listing agent and to whom commission is typically paid upon the successful procurement of a buyer. Also called a Listing Agent or Seller’s Agent.
Loyalty
An agent must put the principal’s interests above all others’ including the agent’s own.
Material Facts
A truth that would change the individual’s actions of it were known; in real estate, this usually refers specifically to things wrong with the property itself.
Misrepresentation
A false or misleading statement. See: Actual Fraud.
Negligence
Conduct that falls below the standard of care a reasonable person would exercise under the circumstances; an unintentional breach of a legal duty resulting from carelessness, recklessness, or incompetence.
Obedience
An agent must follow the (legal) instructions of the principal, obey the parameters of the agency relationship, and not stray beyond the scope of authority.
Offer of Cooperation
Usually published in the form of an MLS listing, the listing includes the amount, (most frequently a percent of the gross sales price or a flat fee) offered as compensation for either a subagent, broker’s agent, or buyer’s agent.
Price-Fixing
An antitrust violation that occurs when two or more competitors agree to fix the prices that they will change.
Principal
A person who grants another person (the agent) authority to represent him or her in dealings with third parties.
Ratification
Later confirmation or approval of an act not authorized when it was performed.
Real Estate Recovery Fund
A fund administered by the State Real Estate Commission to protect consumers by providing some degree of satisfaction to someone who has won a final judgement due to fraud, misrepresentation, or deceit of a licensee.
Reasonable Care
Must always be used, because an agent could be held liable for negligence - an unintentional breach of legal duty.
Renunciation
When someone who has been granted something or has accepted something later gives it up or rejects it; as when an agent withdraws from the agency relationship.
Revocation
When someone who granted or offered something withdraws it; as when a principal withdraws the authority granted to the agent or an offeror withdraws the offer.
Secret Profit
A financial benefit an agent takes from a transaction without authority from the principal, nor informing the principal of the benefit retained.
Self-Dealing
When a real estate agent buys the principal’s property (or sells it to a relative, friend, or associate, or to a business he or she has an interest in), without disclosing that fact to the principal, and then sells it again for a profit.
Seller’s Agent
An agent representing the interests of the seller of a property. Also called Listing Agent.
Selling Agent
The agent who finds a buyer in a real estate transaction, often as a cooperating agent. Also called Selling Broker.
Special Agent
An agent with limited authority to do a specific thing or conduct a specific transaction, also called a limited agent.
Subagent
An agent of an agent; a person that a client permits an agent to delegate authority to, so that the subagent can assist in carrying out the principal’s orders. In a real estate scenario, a broker who cooperates with a listing broker to represent the seller is a subagent of the seller client.
Tie-In Agreement
An agreement in which one transaction or agreement is contingent on a second transaction or agreement; also called a tying agreement.
Traditional Agency
An agency relationship where the seller is the only client and the buyer has no representation.
Transaction Coordinator
A licensee not working directly for either party whose duty is to see that all details of the transaction are completed in a timely and accurate manner. Also called Transaction Licensee.
Undisclosed Dual Agency
Very often may be practiced unintentionally, possibly by implying to a party that, for example, an agent’s loyalty is to them when the agent’s duty is actually to someone else.
Undivided Loyalty
A fiduciary obligation that is given up by both the buyer and seller when they consent to dual agency or dual agency with designated agents.
Universal Agent
An agent authorized to do everything that can be lawfully delegated to a representative.
Vicarious Liability
Liability that is created because of the relationship between someone and the actions of the person who is actually liable, such as a broker who has vicarious liability for the actions of his or her affiliated agents even though the broker may have done nothing wrong.
