Agency

Question 1

What does the principle of “imputed notice” mean?

Answer 1

That whatever the agent knows the law assumes the principal knows.

Question 2

When the agent knows something, the broker is assumed to know it also under the principle of what?

Answer 2

Imputed Notice

Question 3

A BROKER is what kind of agent for the seller?

Special or General?

Answer 3

A Broker is a SPECIAL agent for the seller because he is working for the seller on one transaction.

Question 4

A sales person is what kind of agent for the broker? Special or General?

Answer 4

A sales person is a GENERAL agent for the broker because he handles many transactions.

Question 5

A salesperson is a general agent of the employing broker, the broker is usually the agent of the seller - as agents of an agent, what is the relationship of salespersons to the seller?

Answer 5

Salespersons are SUBAGENTS of the seller (principal)

Question 6

Another name for the seller is the…

Answer 6

Principal

Question 7

Malpractice insurance for the real estate industry is called what?

Answer 7

Errors and Omissions Insurance - E&O insurance

Question 8

What is the SAFETY CLAUSE?

Answer 8

The built in carryover clause or 90-day clause, a safety in the contract which says that if the principal sells the property within 90 days after the contract expires to someone the broker showed it to, the broker gets the commission.

Question 9

When does the broker earn their commission?

Answer 9

The moment an offer to buy is accepted. (Payment of the commission does not occur until the deal closes)

Question 10

What are the two ways a seller can get out of the safety clause?

Answer 10

• Wait 91 days (or however many were on the contract) to sell the property.
• Hire a new broker and then sell the property.

Question 11

Name the three main types of listings

Answer 11

• Open Listings
• Exclusive Agency
• Exclusive Right to Sell

Question 12

What is a NET listing?

Answer 12

When the seller asks for a certain amount of money from the sale, with the broker keeping anything above and beyond the net amount. Very unpopular among brokers

Question 13

What is an Open Listing?

Answer 13

FSBO - For Sale By Owner. They are UNILATERAL contracts - the seller promises to pay ONLY if the licensee finds a buyer.

Question 14

Explain Exclusive Agency

Answer 14

This kind of sales contract pits the seller against the broker. If the seller finds the buyer, the broker does not get paid.

Question 15

Explain Exclusive Right to Sell

Answer 15

In this bilateral executory contract the listing broker promises to try to find a ready, willing, and able buyer. No matter who procures the buyer, the listing broker is paid. 99% of contracts

Question 16

A Power of Attorney is…

Answer 16

A piece of paper authorizing a natural person to stand in and act for another natural person in fiduciary matters.

Question 17

An Attorney in Fact is…

Answer 17

A natural person who has been given a power of attorney.

Question 18

An Exclusive Right to Sell listing is what kind of contract?
Unilateral or Bilateral?
Executory or implied?

Answer 18

Executory Bilateral since it is still in effect and both sides have made promises.

Question 19

What is another name for Dual Agency?

Answer 19

Limited Agency, because the conflicts created by trying to serve two principals with opposing goals limit the agent in what he or she can co.