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Real Estate for Dummies > Agency Law > Flashcards

Agency Law Flashcards

1
Q

Express Agency

A

Agency relationship created through agreement. Agent and principal state their intentions to enter relationship in words (orally or writing)

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2
Q

Implied agency

A

Agency relationship established through actions of both parties. Nothing formal needs to be said or written down

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3
Q

Agency by estoppel

A

Created when principal doesn’t stop agency from going beyond the agent’s normal duties, which given impression that relationship has been created.

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4
Q

Agency by ratification

A

Created by accepting circumstances that created the agency after the fact.

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5
Q

Agency coupled with an interest

A

Situation in which an agent has some kind of interest in property being sold (such as part=-time broker is also architect)

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6
Q

Exclusive right to sell listing

A

Broker is given exclusive right to market property on behalf of seller. Broker is paid regardless of who sells the property.

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7
Q

Who retains right to sell property in exclusive right to sell listing?

A

Owner always retains their right, but with ERSL in effect, owner must pay broker even if owner sells their own property without help from broker.

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8
Q

Exclusive agency listing

A

Broker is hired to act as exclusive agent representing the owner in marketing of the property. If broker sells property, then s/he earns the fee. If owner sells property w/o broker help, then owner will not need to pay broker.

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9
Q

Open listing

A

Property owner can use as many brokers as needed to sell the property. No broker has exclusive right.

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10
Q

Other names for open listing?

A

Nonexclusive or general listing

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11
Q

Open listing - payment?

A

If owner sells property, they do not need to pay any brokers. If a broker sells, then owner will pay pre-agreed commission.

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12
Q

Net listing

A

Broker is hired to sell property for certain amount of money called net amount/price. Broker keeps any amount in excess of net price.

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13
Q

Net listing - example

A

Seller wants to net $200K from sale. You sell it for $225K. You keep $25K as your commission.

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14
Q

Option listing

A

Clause in any listing that gives the broker the right to buy the property.

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15
Q

Multiple listing system/service (MLS)

A

Marketing service that permits brokers to share listings with other brokers.

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16
Q

Exclusive buyer agency agreement

A

Agreement that makes broker the exclusive agent for the buyer. No matter who finds the property that buyer is seeking, a fee is owed to broker.

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17
Q

Exclusive agency buyer agency agreement

A

Broker is exclusive agent of buyer, but broker is only paid if broker finds the property that buyer ultimately purchases.

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18
Q

Open buyer agency agreement

A

Buyer can enter into agreements with any number of brokers. Not exclusive. Buyer only pays broker who finds property that buyers buy.

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19
Q

Other names for principal?

A

Client (can be either seller or buyer)

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20
Q

Binder (or earnest) money

A

Money that goes with buyer’s offer to purchase a property

21
Q

Commingling

A

Combining of client and customer funds with broker’s business or personal funds. Illegal, even if you can account for every penny and don’t spend any on yourself.

22
Q

Conversion

A

Act of using client or customer funds for the agent’s personal or business expenses. Illegal.

23
Q

Fiduciary responsibilities

A

Accounting, care, confidentiality, disclosure, loyalty, and obedience.

24
Q

Seller’s obligation to disclose latent and material defects

A

Is not governed by fiduciary duty of confidentiality

25
Q

Customers

A

Third party to a transaction. Can be either seller or buyer.

26
Q

Agent’s obligation to customer

A

Honest and fair dealing
Reasonable care
Disclosure of material facts

27
Q

Types of information principals & agents are obligated to reveal to customers

A

Discovering defects
Stigmatized property
Respecting Megan’s Law
Fraud and negligent misrepresentation

28
Q

Latent defects

A

Fault in the property that could not have been discovered by a reasonably thorough (normal) inspection before the sale.

29
Q

Material defects

A

A problem with a property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property.

30
Q

Megan’s Law

A

Federally enacted law that requires registration of sex offenders with police and possible notification of neighbors regarding location of a sex offender.

31
Q

Puffing the property

A

Exaggerating virtues or benefits of property. Legal. Done all the time. Ex: This house is the prettiest house on the street.

32
Q

Fraud

A

Intentional misrepresentation in order to sell property. Illegal. Ex: No plans to extend six lane road past your house.

33
Q

Negligent misrepresentation

A

When you don’t disclose something because you don’t know it, but you SHOULD have known it.

34
Q

In general, who pays you if your principal is the buyer?

A

The seller.

35
Q

Does fiduciary responsibility follow the source of the fee?

A

No. You can represent Person A and be paid by Person B even if your job is to represent Person A against Person B.

36
Q

When, during the process, do real estate agents earn their fees?

A

When the broker produces a ready, willing, and able buyer.

37
Q

Procuring cause

A

Person who brought the deal together, usually the broker

38
Q

Does there need to be a transfer of ownership of the real estate before the agent earns their fee?

A

No. Fee is earned when minds of seller and buyer meet in an agreement. Meeting of the minds.

39
Q

What happens when broker procures buyer and seller changes their mind?

A

If broker is procuring cause of transaction and seller does something to cause sale not to happen, then broker is entitled to compensation.

40
Q

Fiduciary duty of confidentiality - end of agency relationship

A

Survives end of agency relationship. Agent cannot reveal information received from client even after relationship is over.

41
Q

Ways to end agency relationship - Completion of terms of an agreement

A

You do what you agreed to do. Agent gets paid.

42
Q

Ways to end agency relationship - Expiration of time period of agency agreement

A

Relationships tend to be written for 6 months. If it expires and no sale has been accomplished, agent is not paid.

43
Q

Ways to end agency relationship - destruction of property

A

Agreement ends if property is destroyed by natural causes. Agent is not paid. Owner can relist destroyed house/land for sale.

44
Q

Ways to end agency relationship - Taking of property through an eminent domain proceeding (condemnation)

A

Property does not belong to seller anymore through no fault of their own. Agent is not paid.

45
Q

Ways to end agency relationship - bankruptcy

A

Bankruptcy filing by either party can end an agency relationship. Usually, agent is not paid.

46
Q

Ways to end agency relationship - agreement by both parties

A

Both parties agree to end relationship before terms are met. No transfer of property takes place. Agent may get payment for advertising costs.

47
Q

Ways to end agency relationship - Death or declaration of incompetence

A

When occurs to either party, relationship is ended and agent is not paid. Broker may seek to collect some costs from the estate.

48
Q

Ways to end agency relationship - Renunciation or revocation

A

Indicate the desire of one party but not the other to end agency relationship. Renunciation by agent or revocation by principal.

Real Estate for Dummies (2 decks)

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