4. Real Estate Brokerage and Law of Agency Flashcards
Agency
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.
Agency By Ratification
An agency relationship that is established after the fact.
Agent
One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be her agent.
Antitrust Laws
Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Violations of antitrust laws in the real estate business generally involve price-fixing (brokers conspiring to set fixed compensation rates), allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties), or agreement to
boycott competitors.
Appointed License Holder
A license holder associated with and appointed by an intermediary broker to communicate with, carry out instructions of, and provide opinions and advice to the parties to whom the license holder is appointed.
Broker
One who buys and sells for another for a commission.
Brokerage
For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.
Buyer Representation Agreement
A contract that establishes a broker-buyer agency relationship.
Caveat Emptor
A Latin phrase meaning “let the buyer beware.”
Client
The person who employs an agent to perform a service for a fee.
Commingle
The illegal act of a real estate broker who mixes the money of other people with his own money instead of maintaining a separate trust account for other parties’ funds held temporarily by the broker.
Commission
Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Consumer
An individual, partnership, corporation, or Texas government agency that seeks or acquires, by purchase or lease, any goods or services, as defined by the Texas Deceptive Trade Practices Act.
Customer
One who purchases or sells property without being represented by an agent.
Employee
One who works under the supervision and control of another. !e employer is obligated to withhold income taxes and Social Security taxes from the compensation of an employee. See also independent contractor.
Express Agency
An agency created by specific agreement, whether written or oral, of principal and agent.
Fiduciary Relationship
A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.
Fraud
A misstatement of a material fact made with intent to deceive or made with reckless disregard of the truth, and that actually does deceive.
General agent
One authorized by the principal to represent the principal in a broad range of matters, for example, a property manager.
Implied Agency
An agency created by acts or words of principal and agent; an agency inferred by circumstances.
Independent Contractor
Someone retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which she performs the act. Unlike an employee, an independent contractor pays for all her own expenses and both Social Security and income taxes and receives no employee benefits. Most real estate sales agents are independent contractors.
IABS Disclosure
Texas law requires all real estate license holders to give the following information about brokerage services to prospective buyers, tenants, sellers and landlords.
Intermediary Broker
A broker who is employed to negotiate a transaction between both parties and who for that purpose may be an agent of both parties to the transaction, acting fairly so as not to favor one party over the other.
Law Of Agency
defines the rights and duties of the parties in a real estate transaction—the principal, the agent, and the customer.
Listing Agreement
A contract between a landowner (as principal) and a licensed real estate broker (as agent) by which the broker is employed to sell real estate on the owner’s terms within a given time, for which service the landowner agrees to pay a commission.
Misrepresentation
An unintentional misstatement of a fact; incorrect or misleading representation.
Principal
- A sum lent or employed as a fund or investment, as distinguished from its income or profits.
- The amount of the note due and payable.
- A main party to a transaction—the person for whom the agent works.
Procuring Cause
The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.
Puffing
Exaggerated or superlative comments or opinions not made as representations of fact and thus not grounds for misrepresentation.
Ready, Willing, and Able Buyer
One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.
Special Agent
One authorized by a principal to perform a single act or transaction; a special agent for a seller is authorized to find a ready, willing, and able buyer for a particular property; a special agent for a buyer is authorized to assist a buyer in locating and negotiating the purchase of a property.
Subagent
A license holder who represents a principal through cooperation with and consent of a broker representing the principal and who is not sponsored by or associated with the principal’s broker.
Texas Deceptive Trade Practice-Consumer Protection Act
Makes it illegal to use false, misleading, or deceptive acts or practices in the advertising, offering for sale, selling, or leasing of any real or personal property.
