Agencies Flashcards
A buyer is looking at homes with a salesperson. The buyer is being treated as a customer, a relationship that was disclosed to the buyer by the salesperson in the initial consultation. When making an offer on a property, the buyers disclose to the salesperson that they have been preapproved for a figure significantly higher than the offer they are making. The salesperson:
- Must disclose this information to the seller/client
- Must keep this information confidential
- Must ask the buyer for written permission to disclose the financial information
- Must simply comply with the guidelines for a disclosed dual agent
- Must disclose this information to the seller/client
- Your duty to disclose is to your client
- Since the buyer is only a customer, whatever they tell the you is not confidential and must be disclosed to the seller
A salesperson agrees to represent a prospective buyer in the search for a home. The buyer subsequently decides to rent a home instead of buying. If the salesperson is also representing another buyer/client who wants to see some of the homes that were shown to the previous buyer/client, the salesperson:
- Can show them the homes without regard to the previous buyer/client
- Cannot show them the homes without the permission of the previous buyer/client
- Can show them the homes, but only as a disclosed dual agent
- Cannot show them the homes unless the sellers are informed of the conflict of interest
- Can show them the homes without regard to the previous buyer/client
California License Law – there is no conflict of interest in showing two different buyers the same properties, however
- However, it is advisable to have to all parties you are represent sign CAR Form
- POSSIBLE REPRESENTATION OF MORE THAN ONE BUYER OR SELLER - DISCLOSURE AND CONSENT
When a salesperson takes a listing on a property on behalf of the broker, the seller is typically termed:
- The customer
- The subagent
- The principal
- The agent
- The principal
The Principle is a main party to transaction
• Seller (Grantor) or Buyer (Grantee)
- Principal/client is who you work for
- Customer is who you work with, but not for
- Broker is the legal agent; salesperson is subagent
- All listings belong to the broker
A salesperson has a listing on a property. The salesperson is going to show that property to a buyer/customer. The salesperson must disclose:
- The dual agency to both parties
- To the buyer that the agent represents the seller
- To the seller that the agent represents the buyer
- That the agent will act as a facilitator
- To the buyer that the agent represents the seller
- The listing salesperson is presumed to be representing the seller
- Need to disclose to buyer that you are the seller’s agent
- There is no dual agency, unless the buyer were to become a client
Client versus Customer
A listing agent knows of a defect in the listed property. When the listing agent becomes ill, another agent in the same company takes over the listing. The second agent:
- Is not responsible for disclosing the defect unless the agent had actual knowledge
- Must disclose the defect only if asked
- Is relieved of any liability based on the fiduciary responsibility to the seller
- By law has the same responsibility regarding the defect as the listing agent whether or not the listing agent disclosed it to the second agent
- By law has the same responsibility regarding the defect as the listing agent whether or not the listing agent disclosed it to the second agent
By statute, all agents representing a party owe the same fiduciary duties
• When the second agent took over, they too are presumed to know all defects, etc., that the first agent knew and will be held just as liable
A salesperson has a listing on a property. The seller has several mortgages on the property, all of which are delinquent, as well as an IRS tax lien. When a prospective purchaser makes an offer, the seller insists on the earnest money deposit check being paid to the seller rather than deposited in the broker’s trust account. The salesperson has a duty to:
- Write a counter offer per the seller’s instructions
- Inform the buyer of the seller’s mortgage default
- Cancel the listing
- Observe the fiduciary responsibility of confidentiality to the buyer
- Write a counter offer per the seller’s instructions
- While you could disclose the seller’s tax lien (as this is public record), you cannot disclose the seller’s delinquent mortgage (as this is confidential)
- Your fiduciary duty is to the seller, not the buyer
- You must obey all legal instructions of your principal
A salesperson has an exclusive right to sell listing on a residential property. One offer has already been received, but not yet presented, when another offer is
submitted by a different purchaser. The salesperson’s
duty regarding the multiple offers is:
- With the seller’s permission, disclose the existence of the multiple offers to the buyers
- Present the first offer first, then the second if the first was not accepted
- Present the offers together, but only in the order received
- Tell the second buyer of the first, regardless of the wishes of the seller
- With the seller’s permission, disclose the existence of the multiple offers to the buyers
• You must present all bona fide offers, no exceptions
–Verbal offers are bona fide offers
–Note: Transfer of Real Estate MUST be in writing
- You may only inform a buyer of another outstanding offer if the seller allows it
- Present all bona fide offers, regardless of when received and regardless of what order they were received in
The Smiths want to erect a fence around their property. Their neighbor next door opposed their fence at a zoning meeting and won. As a result they can only fence three sides of their property. If their lot is 180’ of frontage x 200’ deep how many linear feet will they need of fencing?
- 720
- 560
- 400
- 800
- 560
- Front Foot is the first measurement of a lot.
- To calculate linear footage simply add the dimensions of the 3 sides to be fenced, or all 4 if question asks for all 4 sides
- 180 + 200 + 180 = 560
An agent knew a large sum of money was hidden by his client in the client’s house. After the client passes away, the agent tells the widow about the money. This:
- Is okay, because the agency contract ends with the
death of the client - Is not okay, because confidentiality lasts forever
- Is okay, because the wife will get the money anyway
- Is not okay, because of the Statute of Descent and
Distribution
- Is not okay, because confidentiality lasts forever
• Confidentiality is the fiduciary duty that lasts forever. It survives the termination of the contract
– However, if subpoenaed, the agent must disclose the confidential information
You are showing a property and discover a significant crack in the foundation, which is covered up by boxes. What should you do?
- Tell your broker
- Tell the buyer
- Instruct the seller to tell the buyer
- Have the seller correct the seller Transfer Disclosure Statement
- Tell the buyer
• This question assumes that the sellers have tried to hide the defect, thus the agent should disclose this defect directly to the buyers or their agent
• The sellers are under no duty to amend the property disclosure statement Latent – hidden, must disclose!
Patent – open, Caveat Emptor!
According to California Law, the buyer in a real estate transaction is represented by:
- Nobody
- The broker
- The broker and the salesperson
- All licensees within the company
- Nobody
- There is no presumption that a broker or agent represents anyone until a listing or buyer brokerage contract is actually signed
- The answers would have to say “buyer’s broker” and “buyer’s agent”
What type of Agent has power of attorney?
A. Exclusive Right to Sell Agency
B. Dual Agent
C. Universal Agent
D. Special Agent
C. Universal Agent
Universal agent
- Acts on behalf of client in all matters and situations
- Has unlimited authority • (adult child/elderly parents).
- Requires power of attorney
- Agent becomes attorney-in-fact
- Paper = Power of Attorney
- Person = Attorney-in-Fact
A Property Manager is generally what type of agent?
A. Special Agent
B. Dual Agent
C. Single Agent
D. General Agent
D. General Agent
General agent is authorized to perform variety of transactions for principal on continuing basis.
- Property manager is a General Agent to owners. Collects rent, pays bills, authorizes repairs, and negotiates leases on ongoing basis for owner.
- Real estate agent is General Agent to designated broker. Ongoing business of assisting clients with buying, selling, or leasing properties.
- Special agent (Specific) is authorized to perform one specific transaction for principal. Such as listing broker representing seller to sell property.
- Single agent represents either the seller or the buyer - most common form of representation.
- Dual Agent represents both the seller and buyer - Requires informed written consent by both parties, prior to any contractual negotiations.
- Limited dual agency occurs when salesperson representing buyer sells listing of another salesperson with same broker. Requires prior written informed consent of both parties
How can an agency be formed?
A. Expressed Agency
B. Implied Agency
C. By the source of the compensation
D. Both A and B
D. Both A and B
Expressed agency is created when principal and broker express agreed upon terms and conditions in writing. By using the Real Estate Agency Disclosure & Election (AD Form), The listing contracts with sellers, or the Buyer-broker employment agreements.
Implied agency is created as result of acts or conduct. Also called ostensible because outward appearances imply agency relationship. Extremely rare in real estate because of the rule that real estate contracts must be in writing. Agency relationships regarding real estate must be in writing.
An agent does not necessarily represent the person who pays the agent’s commission.
What are the steps to disclose an agency relationship?
A. Elect, Confirm, Disclose
B. Disclose, Confirm, Elect
C. Disclose, Elect, Confirm
D. Elect, Disclose, Confirm
C. Disclose, Elect, Confirm
