Agency Basics

Question 1

Accountability

Answer 1

In an agency relationship, the agent’s fiduciary duty to account to the principal, rather related to financial accounting or responsiveness

Question 2

Actual Fraud

Answer 2

Intentional misrepresentation or concealment of a material fact; when a person actively conceals material information or makes statements known to be false or misleading

Question 3

Agency

Answer 3

A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties.

Question 4

Agency Coupled with an Interest

Answer 4

A situation in which the agent has a personal interest in the subject of the agency, as when one co- owner has been authorized by the others to sell their property.

Question 5

Agent

Answer 5

A person licensed to represent another (the principal) in a real estate transaction; a person authorized to represent the principal in dealings with third parties (clients or customers).

Question 6

Brokerage

Answer 6

A business concept premised primarily on bringing parties together for the purpose of a transaction.

Question 7

Client

Answer 7

A person being represented by a licensee. Also called a Principal

Question 8

Commingle

Answer 8

Illegally mixing personal funds with money held in trust on behalf of a client.

Question 9

Confidentiality

Answer 9

The protection of the client’s confidential information

Question 10

Constructive Fraud

Answer 10

A negligent misrepresentation or concealment of a material fact; when a person carelessly fails to disclose material information, or makes false or misleading statements.

Question 11

Consumer

Answer 11

A person or entity seeking or receiving licensed activities

Question 12

Customer

Answer 12

A party in a transaction with whom an agent does not have a fiduciary duty or relationship, but with whom an agent must still be fair and honest.

• honesty & fairness

Question 13

Designated Agency

Answer 13

A contractual relationship between a sponsoring broker and a client in which one or more licensees associated with or employed by the sponsoring broker are appointed to be the designated agent of the client.

Question 14

Disclosure

Answer 14

An agent’s fiduciary obligation to reveal certain points or facts

Question 15

Disclosures

Answer 15

Points or facts in a real estate transaction that must be revealed

Question 16

Express Agency

Answer 16

Agency relationship based on an expressed agreement, either written or oral.

Question 17

Fiduciary

Answer 17

Person in a position of trust, held by law to high standards of good faith and loyalty.

Question 18

Fraud

Answer 18

An intentional or negligent misrepresentation or concealment of a material fact. Making statements that a person knows, or should realize, are false or misleading

Question 19

General Agent

Answer 19

A person authorized to handle a principal’s affairs in one area or in specified areas.

Question 20

Gratuitous Agency

Answer 20

An agency relationship where the agent is not compensated for his or her services, but still owes the principal all statutory obligations due every client

Question 21

Implied Agency

Answer 21

Agency relationship created through the behavior (actions or words) of one or both parties.

Question 22

Latent Defects

Answer 22

A defect that is not visible or apparent; a hidden defect that would not be discovered in a reasonably thorough inspection of property

Question 23

Loyalty

Answer 23

A fiduciary duty that requires an agent to put the principal’s interests above all others’ interests, including the agent’s own.

Question 24

Material Fact

Answer 24

An important fact; one that is likely to influence a decision

Question 25

Multiple Listing Service (MLS)

Answer 25

A cooperative service whereby local member brokers agree to share listings, show properties, and share commissions on jointly sold properties

Question 26

Negligence

Answer 26

Conduct that falls below the standard of care a reasonable person would exercise under the circumstances; an unintentional breach of a legal duty resulting from carelessness, recklessness, or incompetence.

Question 27

Obedience

Answer 27

A fiduciary duty that requires an agent to follow the (legal) instructions of the principal, obey the parameters of the agency relationship, and not stray beyond the scope of authority

Question 28

Offer of Cooperation

Answer 28

Usually published in a multiple listing service that includes the amount (most frequently a percent of the gross sales price or a flat fee) offered as compensation to an agent of another brokerage for participating in a property transaction, for example, as a selling agent, buyer’s agent, or leasing agent.

Question 29

Patent Defects

Answer 29

A visible, apparent defect that can be seen during a reasonably thorough inspection of property.

Question 30

Real Estate Owned (REO)

Answer 30

Property acquired by a lending institution through foreclosure and held in inventory.

Question 31

Residential Real Property

Answer 31

Real property improved with not less than one nor more than four (4) residential dwelling units; units in residential cooperatives; or condominium units, including the limited common elements allocated to the exclusive use thereof that form an integral part of the condominium unit.

Question 32

Residential Real Property Disclosure Report

Answer 32

A standardized form that sellers must fill out, as applicable, and provide to any prospective buyer, or the prospective buyer’s agent, prior to the signing of any written agreement or contract to transfer ownership of the residential real property.

Question 33

Special Agent

Answer 33

An agent with limited authority to do a specific thing or conduct a specific transaction.

Question 34

Stigmatized Property

Answer 34

A property that may be undesirable to some people because of a past event, such as a crime or former environmental hazard.

Question 35

Universal Agent

Answer 35

An agent authorized to do everything that can be lawfully delegated to a representative. Including power of attorney

Question 36

Vicarious Liability

Answer 36

A relationship or situation in which one person is responsible for the actions of another.

Question 37

O-L-D-C-A-R

Answer 37

• Obedience
• Loyalty
• Discourse
• Confidentiality
• Accountability
• Reasonable care skill (competence)