Agency and Business Ethics Flashcards
agency
A relationship created when one person, the principal, delegates to another, the agent, the right to act on behalf of the principal and the agent consents to do so. An ________ gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations, and high standards of good faith and loyalty.
agency disclosure
State requirements that real estate agents disclose in writing the type of agency relationship that will be performed (i.e., single or appointed agency, consensual duel agency, non-client, and so on).
agent
One who is authorized to represent and to act on behalf of another person (called the principal). Real estate brokers are the agents of their clients, whether the seller’s or buyer’s, to whom brokers owe a fiduciary obligation. Salespersons are the agents of their brokers and do not have a direct personal contractual relationship with either sellers or buyers.
appointed agency
A single agency relationship where a broker assigns one agent to singularly represent either a buyer or seller to the exclusion of every other agent in the broker’s office.
attorney-in-fact
One who is authorized by another to act in his place under a power of attorney.
broker
One who acts as an intermediary between parties to a transaction. A real estate ________ is a properly licensed person who, for a valuable consideration, serves as an agent to others to facilitate the sale or lease of real property.
client
Someone for whom an agent works and who is called the principal. The ________ could be a seller, a buyer, a landlord, or a tenant.
commingling
To mingle or mix; for example, to deposit client funds in the broker’s personal or general account. Licensees found guilty of ____________ can have their licenses suspended or revoked by the state’s real estate commission.
consensual dual agency
Representing both principals (buyer and seller) in a single transaction. Here, a single agent coordinates the sale, keeping both parties’ business confidential.
cooperating broker
An outside broker who joins with another broker in the sale of real property.
customer
Someone with whom an agent works and to whom the agent must be honest.
fiduciary
A relationship that implies a position of trust and confidence wherein one is usually entrusted to hold or manage property or money for another. Among the obligations a __________ owes to the principal are duties of loyalty; obedience; full disclosure; the duty to use skill, care, and diligence; and the duty to account for all monies.
general agent
One who is authorized to perform any and all acts associated with the continued operation of a particular job or a certain business. A property manager would be a good example of a general agent.
independent contractor
One who is retained to perform a certain act, but who is subject to the control and direction of another only as to the end result and not as to how he or she performs the act. The critical feature, and what distinguishes an independent contractor from an employee or agent, is the right of control.
ostensible agency, implied agency, agency estoppel
An agency relationship that aries out of implication rather than expression. It is called __________, because on the surface an agency relationship appears to exist. Once created, a principal may be prevented from denying the existence of the agency relationship. Sometimes its called an implied agency or agency estoppel.
For example, an owner tells a real estate broker that she is thinking about selling, so the broker contacts several prospects to view the home and one of them makes an offer. The broker presents the offer and the seller accepts. Though no formal agency agreement was entered into, the agent’s actions implied that she was acting on behalf of the owner. Note that most states require that all agency relationships be reduced to writing.
power of attorney
A written instrument authorizing a person (the attorney-in-fact) to act as the agent on behalf of another to the extent indicated in the instrument.
principal broker
The licensed broker directly in charge of and responsible for the real estate operations conducted by a brokerage company.
procuring cause
The effort that brings about the desired result, as in producing the buyer for the listed property.
property disclosure reports
State laws requiring property owners to disclose everything they know about about their property to prospective buyers. This legislation places the burden of disclosing latent defects, an agent still has a duty to disclose those they do know.
seller’s property disclosure
State legislation requiring sellers to disclose (in writing) the property’s condition to a perspective buyer before accepting an offer.
special agent
An agent authorized by a principal to perform a single act, like procuring a buyer or finding a house and negotiating an offer.
subagent
An agent assigned to represent the same principal (seller) as the broker. In offices that practice subagency, all of the sales agents (in that office), on every company listing, represent the seller. Accordingly, all buyers working with these agents would have been told that the seller is being represented, but not them as a buyer. However, should both parties agree, a consensual dual agency agreement could be signed authorizing the asme agent to conduct both sides of the transaction.
undisclosed dual agency
An illegal practice of representing both sides of a transaction without the prior written consent if the parties being represented.
MISTAKEN IDENTITY
cooperating agent/subagent
The selling agent from another firm is called the cooperating agent, and may be either a buyer’s agent or a subagent of the seller. A subagent is an agent who represents the broker’s principal. If a subagent, then the cooperating agent owes fiduciary duties to the seller. It is illegal to extend subagency to an outside brokerage.
MISTAKEN IDENTITY
selling agent/seller’s agent
The selling agent works with a buyer making an offer and making the sale, whereas the seller’s agent is the listing agent.
MISTAKEN IDENTITY
fiduciary (noun)/ fiduciary (adjective)
As a noun, fiduciary describes the agent who acts in a fiduciary capacity. As an adjective, fiduciary describes a relationship involving a confidence or trust.
MISTAKEN IDENTITY
principal/principle
The client is the principal in an agency relationship. Principal can also be defined as the original amount of a loan. Sometimes, principal is misspelled as principle, which a rule or doctrine.
