Agency Flashcards
Principal
Who an agent represents
Fiduciary
The agent in an agency relationship with a principal
Creation of Agency in CA
By agreement
By ratification
By estoppel
Types of agents
Universal, general, special, single, and dual
An agent owes his/principal (COALN)
Care Obedience Accounting Loyalty Notice/Disclosure
An agent owes 3rd party customers HAD
Honesty
Accuracy
Disclosure of Defects
Puffing
exaggeration or superlative comment. Unethical but legal
Fraud
Deception intended to cause a person to give up property or a lawful right
Latent Defects
Something that is known to the seller but not the purchaser and not readily discoverable by inspection
Material defects
must be disclosed regardless of whom the agent represents
Dual agency
Broker CAN represent both parties(buyer and seller) in a transaction, legal but ONLY with knowledge and consent of both parties
Commissions
To collect a commission, it is required to be a licensed real estate broker or salesperson under a broker; have been employed by the principal under a valid contract and the procuring cause of the sale (a salesperson can only accept a commission from his or her own broker).
The commission are negotiable and can be a percentage of sale price, a Flat Fee or salary or a combination of both.
The fact that one party pays a commission does NOT create an agency relationship.
Sherman Antitrust Act
Prohibits Price Fixing, Group Boycotts, and Division of markets by location or price
Listing Agreements
Listing Agreements (between seller and broker): Exclusive right to sell; Exclusive Agency; Open; Net Listing; Agency Coupled with an Interest.
Agency Disclosure Requirements:
Disclosure Regarding Real Estate Agency Relationship Form: all real estate agents must provide a written disclosure to the buyer and the seller, regardless of which party to the transaction the agent represents.
Agreements: a copy of all real estate-related agreements and documents, must be given to the signing party immediately after the document is signed, under the Commissioner’s Regulations.
Record Keeping: ALL broker’s and salesperson’s records be maintained for a minimum of 3 years.
Emergency Broadens Authority: in an emergency, an agent has expanded authority, if it is clearly in the interests of the principal, and in situations in which there is no time to obtain instructions from the principal.
Money deposit rules
A broker deposit the buyer’s money in the appropriate account within 3 business days following receipt of the funds. If a broker accepts a check as an earnest money deposit, then he must make full disclosure to the seller.
During the time between the receipt of the check by the broker and the acceptance of the purchase offer by the seller, the broker must record a receipt of the check on broker’s trust fund records and hold the check in a safe place.
Promissory notes are NOT equivalent to cash.
Commingling (mixing a client’s money with the agent’s personal funds) is illegal. Conversion, also illegal, is the unlawful misappropriation and use of a client’s funds by a licensee.
Transfer Disclosure Statement
Identifies items of value on the property, must be provided by both seller and broker within 3 days after the deposit receipt is signed
Subagent vs cooperating agent
A subagent for the seller has fiduciary duties to BOTH the seller and the appointing broker.
A cooperating agent is one who attempts to find a buyer for the other broker’s listing and then to act as the buyer’s agent, rather than the subagent of the seller. A cooperating broker is a non-listing broker who also works to sell the listed property.
Agreements between brokers do NOT NEED to be in writing. An agreement between a broker and a salesperson must ALWAYS be in writing.
An individual will not be considered an employee for state income tax purposes if:
The individual is licensed by the Department of Real Estate and is performing brokerage services as a real estate licensee on a commission basis;
Substantially all remuneration for such services is related directly to sales rather than the number of hours worked;
The real estate services are performed pursuant to a written agreement between the individual and the supervising broker.
