6 - Law of Agency and Real Estate Brokerage

Question 1

The relationship that exists when one person (the agent) acts for or on behalf of another person (the principal).

Answer 1

agency

Question 2

The person who hires and gives authority to an agent.

the agent represents or works for the principal.

Answer 2

principal

Question 3

Another name for the principal.

Answer 3

client

Question 4

A relationship that is built on trust.

Answer 4

fiduciary

Question 5

The agent has full authority to conduct business on behalf of the client.

They can sign documents and bind (obligate) the client in the same manner in which the client would do in person.

Answer 5

universal agency

Question 6

The agent has the right to represent a principal in a particular type of transaction or business .

Example: Property manager

the property manager is primarily responsible for preserving the value of an investment property while generating income as an agent for the owners.

Answer 6

general agency

Question 7

The most limited of all agency relationships. Also referred to as “ limited agency”. The agent May perform only limited duties for the principal. They are not able to bind the principal because he / she is not allowed to sign or accept any terms or conditions on behalf of the principal.

Answer 7

special agency

Question 8

When a potential buyer contacts an agent for information regarding a property, he or she is a ______.

Answer 8

customer

Question 9

When a license holder secures an agency relationship with the seller via a written listing agreement.

Answer 9

express authority

Question 10

This type of agency is created by behavior of the parties.

For example: if a license holder behaves in a manner that makes a party reasonably believe that he or she is being represented, this type of agency relationship may have been created.

Answer 10

implied agency

Question 11

When actions lead another person to assume that one is an agent this is called a _____ agency relationship.

Answer 11

ostensible agency

Question 12

Occurs when an agent acts without prior authorization, and upon learning of this action, the principal accepts it.

Example: at closing, the seller is surprised to learn that he will receive one week’s rent in addition to the sales price.

Answer 12

agency by ratification

Question 13

A single agents will represent either the buyer or the seller but not both in the same transaction.

Answer 13

single-agency broker

Question 14

A broker that facilitates a buyer and a seller to reach an agreement and a real estate transaction, even though he / she does not have an agency relationship with either.

Answer 14

transactional broker

Question 15

When a broker agrees to represent both the buyer and the seller, with their written permission, and a real estate transaction.

Answer 15

dual agency broker

Question 16

Occurs when the seller retains the services of a broker.

Answer 16

listing side

Question 17

Occurs when the buyer retains the services of a broker.

Answer 17

selling side

Question 18

When a property is listed by one firm and later sold by another.

Answer 18

cooperative sale

Question 19

When one firm sells a property listed by another firm to a buyer it does not represent, the selling firm represents the seller in a _____ relationship.

Answer 19

subagency

Question 20

When a single firm sells one of its own listings.

Answer 20

in-house sale

Question 21

An in-house sale.

The broker assigns an agent to represent the buyer and one to represent the seller.

The broker must make these appointments and writing.

Answer 21

intermediary with appointments

Question 22

IABS

Provides consumers with necessary information regarding agency relationships with license holders. All potential parties to a transaction must be provided with the I ABS at the first substantive discussion of a possible transaction.

Answer 22

Information about Brokerage Services

Question 23

DTPA

A Texas law that was passed in 1973 that allows an aggravated customer to sue a seller of goods for damages.

The act by the servicer of the goods has to be deceptive or unfair for the consumer to sue for monetary damages successfully.

Answer 23

deceptive trade practices act

Question 24

When an agent has the opportunity to sell their own listing.

With their Brokers permission, the agent can go ahead and complete the transaction, but cannot give advice and or opinions to either party. Must stay neutral.

Answer 24

Intermediary without appointments

Question 25

When an agent has the opportunity to sell their own listing.

With their Brokers permission, the agent can go ahead and complete the transaction, but cannot give advice and or opinions to either party. Must stay neutral.

Answer 25

Intermediary without appointments

Question 26

If a broker wishes to terminate the sponsorship of a licensed sales agent, he or she must notify the agent and writing and return the agent’s license to trec immediately.

likewise, A licensed sales agent who wishes to terminate his or her association with his or her sponsoring broker must do so in writing.

Answer 26

If a broker wishes to terminate the sponsorship of a licensed sales agent, he or she must notify the agent and writing and return the agent’s license to trec immediately.

likewise, A licensed sales agent who wishes to terminate his or her association with his or her sponsoring broker must do so in writing.