Agency, Brokerage, and Ethical Considerations

Question 1

broker

Answer 1

a person licensed to assist others in real estate transactions and receive compensation for those services

Question 2

salesperson

Answer 2

works on behalf of and is licensed to work under the supervision of a broker

Question 3

Agent

Answer 3

one who undertakes to transact some business or to manage some affair for a client

Question 4

principal

Answer 4

the client who employs the broker

Question 5

antitrust laws

Answer 5

laws designed to preserve the free enterprise of the open marketplace

makes private conspriacies and monopolies illegal

Question 6

attorney in fact

Answer 6

an agent authorized to act on behalf of another person, but not necessarily authorized to practice law

Question 7

buyer’s agent

Answer 7

a real estate professional who guides home buyers through the process of purchasing a home

Question 8

buyer’s broker

Answer 8

broker retained by prospective buyer, who become broker’s principal and to whom fiduciary duties are owed

Question 9

client

Answer 9

one who employs a broker as an agent

Question 10

Code of Ethics

Answer 10

standards of conduct adopted by the National Association of REALTORS

Question 11

commission

Answer 11

payment to broker for services rendered

Question 12

conflict of interest

Answer 12

a situation in which the concerns or aims of two different parties are incompatible

Question 13

Consumer Information Statement (CIS)

Answer 13

written explanation of agency relationships presented to buyers and sellers

Question 14

customer

Answer 14

third party in a transaction owed honest treatment but not owed fiduciary duties

Question 15

disclosed dual agent

Answer 15

when broker represented both parties but both have been informed and have given consent

Question 16

disclosure

Answer 16

notification of soemthing

Question 17

dual agency

Answer 17

representing both parties to a transaction

Question 18

employee

Answer 18

on a company’s payroll and receives wages and benefits in exchange for following the organization’s guidelines and remaining loyal

Question 19

errors and omissions insurance (E&O insurance)

Answer 19

a form of malpractice insurance for real estate licensees

Question 20

fiduciary

Answer 20

one legally placed in a position of trust and confidence

Question 21

fiduciary relationship

Answer 21

a relationship of trust and confidence as between trustee and beneficiary, attorney and client, or principal and agent

Question 22

law of agency

Answer 22

ability to act on behalf of another in a transaction

Question 23

universal agent

Answer 23

has authority to represent the principal in all matters that can be delegated

Question 24

general agent

Answer 24

can represent principal in a broad range of matters

Question 25

special agent

Answer 25

authorized to represent principal in one specific capacity only

Question 26

power of attorney

Answer 26

a legal written authorization that stipulates the specific areas of authority in which the agent may act

Question 27

duties in a fiduciary relationship

Answer 27

1. care
2. obedience
3. accounting
4. loyalty (confidentiality)
5. Disclosure

Question 28

standard of care

Answer 28

degree of competence normally expected of a licensee

Question 29

subagent

Answer 29

an agent who is appointed by another agent

Question 30

independent contractor

Answer 30

salesperson who sets their own hours and is not covered by income tax withholding

Question 31

negligent misrepresentation

Answer 31

fraud committed, not necessarily on purpose, by someone who should have known better

Question 32

NJ Consumer Fraud Act

Answer 32

sets strict guidelines for anyone giving false or misleading information about real estate

Question 33

ready, willing, and able

Answer 33

When a prospective buyer is fully prepared to render the consideration required to consummate a transaction

Question 34

meeting of the minds

Answer 34

when parties agree on price, down payment, and financing method

Question 35

national Association of REALTORS

Answer 35

organization for brokers to assist in improving business abilities and educate the public about qualified real estate brokers

Question 36

New Jersey REALTORS

Answer 36

state branch of NAR

Question 37

latent defect

Answer 37

hidden problems in a property

Question 38

Megan’s Law

Answer 38

requires a community be alerted to presence of convected sex offenders

Question 39

puffing

Answer 39

an exaggeration of fact bordering on falsehood.

Question 40

fraud

Answer 40

all deceitful practices intended to harm or take advantage of another person

Question 41

fraudulent misrepresentation

Answer 41

when a party makes a false claim regarding a contract or transaction but knows that it isn’t true.

Question 42

innocent misrepresentation

Answer 42

false statement by someone who believes the information to be true but isn’t expected to have expertise in the subject