Agency Law Chap 4

Question 1

Principal

Answer 1

Is the party who owns property and employs the agent to locate a buyer or lessee, or is the party who employs the agent to find property to buy or lease.

Question 2

Broker

Answer 2

A person who is licensed by a state to act for property owners in real estate transactions, within the scope of state law. Broker are called Special agent because his powers are limited, usually to finding someone with whom his principal can deal.
Importance: Note that a real estate broker usually has little or no power actually to commit his principal to anything; the principal may refuse to deal with anyone the brokers brings to him.

Question 3

Universal agent

Answer 3

A general agent, one to whom have been delegated powers to act for the principal in all businesses and in all matters rather than in a particular business.

Question 4

Salesperson

Answer 4

A person who is licensed to deal in real estate or perform any other act enumerated by state real estate license law, while in the employ of a broker licensed by the state.
Importance: the salesperson must have a sponsoring broker.

Question 5

Realtor

Answer 5

Is a broker or salesperson who is a member of the national association of realtors (NAR), which is a trade association.

Question 6

National association of realtors

Answer 6

An organization devoted to encouraging professionalism in real estate activities. (NAR) provides educational training , economic data, and political lobbying.

Question 7

Fiduciary duties

Answer 7

A person who, on behalf of or for the benefit of another, transacts business or handles money or property not his/her own. Founded on trust; the nature of trust.

• dealing honestly and fairly
• loyalty
• confidentially
• full disclosure
• accounting for all funds
• skill, care, and diligence in the transaction
• presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing
• disclosing all know facts that materially affect the value of the residential real property and are not readily observable.

Question 8

Dual agency

Answer 8

Occurs when a broker or the brokerage firm represents apposing parties (both the buyer and seller) in the same transaction.
Importance: in order to solve the problem of representing both sides to the transaction, a dual agency disclosure has to be presented to, and agreed to, by both the prospective buyer and the owner of the property to be shown.

Question 9

Transaction brokerage

Answer 9

(Facilitative brokerage) Occurs when the broker does not represent either party but, instead, provides services and general information to either party, without looking out for the interests of a particular party.

Question 10

No-brokerage agency

Answer 10

May occur when parties to a transaction have reached agreement but seek help, such as how to fill out a contact for sale.
Importance: written disclosure should be provided to both parties so all can understand and agree to the broker’s role.

Question 11

Listing

Answer 11

A written employment contract between a principal and an agent authorizing the agent to perform services for the principal involving the latter’s property; (2) a recorded of property for sale by a Brythonic has been authorized by the owner to sell;
Exclusive agency listing, exclusive right to sell listing , net listing, open listing.

Question 12

Open listing

Answer 12

Gives the owner the right to list the property with more than one broker. The broker who sell the property earns the commission.

Question 13

Exclusive agency listing

Answer 13

Allows only one broker to sell, but the owner may sell through his own efforts without paying a commission.

Question 14

Multiple listing service (MLS)

Answer 14

Is a local organization in which many brokers participate. The listing broker brings the listing into a pool, through which all listings are known to members. The listing broker usually shares the commission with the selling broker.

Question 15

Net listing

Answer 15

Is one in which a minimum selling price is specified. The broker’s commission is the amount above the net price specified. Net listings are frowned upon or illegal in most states because in some contracts for sale, the broker’s interest may be opposed to the owner’s.

Question 16

Termination of an agency contract

Answer 16

Death or incompetence of either party.
Bankruptcy of either party.
Destruction of the property.
Performance of the contract.
Expiration of the contract.
Resignation of the agent( but may require payment for damages).
Discharge of agent by the principal (principal may be liable for damages).

Question 17

Commission rate

Answer 17

Are set by negotiation between the principal and broker.2) the amount earned by real estate brokers for their services;
Importance: commissions are the way real estate brokers earn money.

Question 18

Sherman antitrust act

Answer 18

Prevents brokers from price fixing. It can apply monetary penalties and a prison term to brokers who agree to fix commission rates.

Question 19

General agent or universal agent

Answer 19

Is a person whose powers are broader and may extend so far as to commit her employer to action.

Question 20

Agent obligations to his principal

Answer 20

• he must obey his principal’s instructions ( except, when he is instructed to do something illegal.
• he must be loyal to his principal’s interests.
• he must act in good faith
• he is expected to use professional judgment, skill, and ability in his actions.
• he must be able to account for all money, real estate brokers often collect rents, earnest money deposits and other money on behalf of their principal.
• he must perform his duties in person.
• he must keep his principal fully informed of developments affecting their relationship. Must report all offers made, and any information that may affect the principal’s property m, price, or other relevant factors.

Question 21

Principal obligations

Answer 21

-Compensate the agent for services
-reimburse the agent for expenses paid on behalf of the principal
-to secure the agent against any loss due to proper performance of her duties.
Make the agent fully aware of her duties and to inform her fully about anything that will affect her performance.

Question 22

Exclusive-right-to-sell listing

Answer 22

Guarantees that that the principal will pay the broker a commission regardless of who actually sells the property. Even if the principal herself finds the buyer, with no aid at all from the broker.

Question 23

Buyer brokerage

Answer 23

Occurs when a broker enters into a contract to represent a buyer.

Question 24

Designated agency

Answer 24

The licensees principal broker appoints another licensee (the designated agent) in the same office to represent one of the parties (usually the buyer), while the original licensee represents only the other party in this one situation.

Question 25

To sue for owed commission broker must provided

Answer 25

• That he was licensed throughout the time, beginning with the solicitation of the listing until the closing of the transaction and the passing of the title
• that he had a contract of employment with the principal.
• that he was the “efficient and procuring cause” of the sale; that he actually brought about the sale within the terms of the listing contract.