Agency In Real Estate

Question 0

Agency

Answer 0

A strict, defined legal relationship, agency is the fiduciary relationship between the principal and the agent whenI the agent is authorized to represent the principal in a certain transaction. In real estate, it is the relationship between buyers and sellers or between landlords and tenants.

Question 1

**Law of Agency

Answer 1

Defines the rights and duties of the principal and agent.

Question 2

Agent

Answer 2

A person authorized and consenting to act on behalf of another. In real estate, the agent is the broker.

Question 3

Subagent

Answer 3

The agent (SUBCONTRACTOR) of an agent. SUBAGENTS are third parties permitted by the original agency agreement to perform work delegated by the agent.

Question 4

Principal

Answer 4

A person who authorized an agent to act on his or her behalf. The principal is the BUYER or SELLER, LANDLORD or TENANT.

Question 5

Fiduciary Relationship

Answer 5

A relationship in which the agent is placed in the position of special trust and confidence to the principal.

Question 6

Client

Answer 6

The principal to whom the agent gives advice and counsel. Agency is created in this relationship.

Question 7

Customer

Answer 7

The third party or nonrepresented consumer for whom some level of service is provided and who is entitled to fairness and honesty. No agency is created in this relationship.

Question 8

Nonagent

Answer 8

A middleman between a buyer and a seller who assists one or both parties with the transaction without representing either party’s interests.

Question 9

How is agency created?

Answer 9

1) PRINCIPAL delegates authority

2) AGENT consents to act

Question 10

Express Agency

Answer 10

A formal contract agreement between a PRiNCIPAL and an AGENT in which both parties formally express their intention to establish an AGENCY and state its terms and conditions.

Question 11

Implied Agency

Answer 11

When parties’ actions indicate mutual consent to creation of an agency.

Question 12

**What is disclosure?

Answer 12

The duty of the agent to inform the principal of all facts or information that might affect the principal’s position in a transaction.

Question 13

5 Common Law Fiduciary Duties (COALD)

Answer 13

1) CARE
2) OBEDIENCE
3) ACCOUNTING
4) LOYALTY
5) DISCLOSURE

These are owed to the principal by the broker under law.

Question 14

3 Types of Agency Relationships

Answer 14

1) UNIVERSAL agent
2) GENERAL agent
3) SPECIAL agent

Question 15

Universal Agent

Answer 15

A person empowered to do anything the principal could do personally

Question 16

General Agent

Answer 16

A person representing the PRINCIPAL on a broad range of matters related to a specific act or business transaction.

Question 17

Special Agent

Answer 17

A person authorized to represent the principal in one specific act or business transaction only. A real estate BROKER is usually a special agent.