Agency Flashcards
vicarious liability
If a principal has the same knowledge as their agent, they then have liability for the agent’s acts. This liability for the actions of another is called vicarious liability.
A universal agent
has the broadest authority that can be given.
Universal agents are authorized to perform all acts that can lawfully be delegated to a representative, including the power to sign contracts and other documents for their principal relating to all personal and business matters of the principal.
The power to sign can come from a court order or from a power of attorney from the principal.
A power of attorney authorizes a person to act as an attorney in fact and sign contracts on behalf of the principal. Such a power is not often included in listing agreements. When it is not, all offers must be submitted to the seller for acceptance or rejection.
A general agent
is an agent with the authority to conduct a series of transactions of a continuing nature in a broad, but specified, range of business matters, for their principal.
An affiliated licensee is usually a general agent of their employing broker. A property manager has the authority of a general agent if they have authorization to advertise, lease, rent, and maintain the property; hire and fire employees; and purchase materials, equipment, and supplies for managed property.
A special agent
is an agent who has limited authority to conduct a single transaction for a principal. Special agents’ authority is confined to a particular specific task.
A real estate broker employed by an owner to find a purchaser for a property is a special agent with authority only to negotiate that one sale. A buyer’s agent employed by a buyer to find suitable property and negotiate one purchase on the buyer’s behalf is a special agent.
a fiduciary relationship
A fiduciary relationship is a special relationship of trust, confidence, or responsibility in certain obligations to others. It obligates the agent to be faithful and loyal to the client’s interest. A real estate agent has a duty to be honest and act in good faith when dealing with a third party, but this is far short of a duty to be loyal to the third party.
an express agreement
An express agreement may be an oral agreement or a written agreement. In real estate transactions, common agency agreements include listing agreements, buyer agency agreements, and property management agreements:
- In the listing agreement, the seller engages a broker as the seller’s agent to expose the property in the market and procure a buyer who will purchase on terms acceptable to the seller.
- In a buyer agency agreement, a buyer engages a broker as the buyer’s agent to locate and present suitable properties that the buyer may elect to buy and to assist in the negotiations for the purchaser.
- In a property management agreement, an owner of property engages an agent to handle all leasing and management aspects of their properties.
Ratification
is authority given after an act already has been performed. It begins with a person acting as an agent without the authority to do so.
If the principal, with full knowledge of what that unauthorized agent has done, later accepts the benefits of the agent’s acts and agrees to be bound by those acts and accepts an agency relationship, they are said to have ratified those acts.
estoppel
The following are conditions that result in estoppel:
- The principal intentionally or negligently gave the third party the impression that another person was their agent, or had certain authority.
- The third person relied upon the false impression and dealt with the supposed agent.
- The third party was damaged by the fact that an actual agency relationship or actual authority did not exist.
Actual authority
is authority given by either being expressly told or implied by the principal.
Express authority
may be given orally or in writing, or by the ratifying conduct of the principal. Most of a listing broker’s authority is expressed in the listing agreement. This agreement empowers the listing agent to find a purchaser. It does not give the agent the right to enter into a contract for the seller or to convey or execute a deed.
Implied authority
is the authority an agent reasonably needs to perform the duties given by express authority. Even if not expressly stated in the agency agreement, out of custom and usage, it would be implied that:
- the authority given by the seller to the broker would be exercised through those affiliated licensees
- a broker engaged to procure a buyer for a house may advertise the property
- a property manager, hired to manage an apartment building, may hire and fire employees
Apparent authority, also termed “ostensible authority,”
is the authority created by estoppel. It is authority that the principal, by words or conduct toward other people, has led others to believe the agent possesses, when no actual authority has been granted. Even when such authority was not intended, a third party who relied on this apparent authority may hold the principal liable for the acts of the apparent agent.
Single agency
is the practice of representing only one client in any transaction, whether a sale, purchase, lease, or exchange of property.
A dual agent
is a licensee who has entered into an agency relationship with both the buyer and the seller, or two buyers, in the same transaction. In states where dual agency is permitted, it must be disclosed and consensual. This means the licensee may represent both parties in the same transaction only after providing a written agency disclosure and obtaining the written consent of both parties.
The duty of loyalty
requires that an agent must do the following:
- act at all times solely in the best interests of their client to the exclusion of all other interests, including the agent’s own self-interest
- take no action that is adverse or detrimental to their client’s interest in the transaction
- not take advantage of or make personal profit from any confidential information
