Agency Relationships Flashcards
What is a fiduciary?
A client representative
Under the standard of care, what should always notify your client of?
Things they do not know to ask about?
The possible consequences of their lawful instructions to you
The potential results of any decisions made
Any costs to the trade that they may not have anticipated
5 types of people licensees will often work with?
Clients
Customers
Real Estate Associates
Property Managers
Condominium Managers
Real Estate Associate
Holds the qualifications of a real estate associate
Licensed by relevant industry council
Employed by or associated with a licensed real estate brokerage in Alberta
Registered with and approved to trade in real estate on behalf of that brokerage
Three types of relationships real estate professionals can have with clients
Common Law: A real estate brokerage can act as the client’s agent.
Designated Agency: An individual real estate professional can act as the client’s agent.
Customer: Neither the real estate professional nor the brokerage owe them any type of fiduciary obligation
To whom does a real estate professional have a fiduciary obligation?
Clients that have entered into a written service agreement
Common Law Agency
A agency relationship between a brokerage and a client.
The brokerage, and all its associates are the clients agents, and can represent the client without additional contracts being signed
Information about the client is shared among all the brokerage’s associates
Designated Agency Relationship
The client enters into a service agreement with a brokerage, but, are represented only by a specific licensee or licensees.
Information about the client is confidential and not shared.
Customers
A real estate professional owes no fiduciary responsibility or obligation to a customer
The real estate brokerage or associate must share all information given to them by the customer, even if it is confidential, unless it was received while they were acting as the customer’s agent.
What do you agree to do when dealing with a customer vs a client?
Act honestly
Exercise reasonable care when they provide their services to a customer under the acknowledgement
Hold money they receive in trust, as required by the the Real Estate Act
Comply with the Real Estate Act and its regulations, and the rules and bylaws of the Real Estate Council of Alberta.
Give the customer a copy of the Customer Acknowledgment as soon as possible after signing.
What services can you provide to a customer?
Statistics and information on property
Agreements of purchase and sale and other relevant forms, and help them to complete the form
Names of real estate providers without recommending any specific providers
Presenting all offers and counter offers to and from a customer. Even if a seller may have accepted another purchase contract
Information from their client that they want the customer to know
Updated on the transaction progress
Can you offer advice or guidance to a customer
No, only factual information
Should a broker notify the Registrar when a trust account if opened or closed
Yes
Who can create and amend Rules of the Real Estate Act
The various Industry Councils with due care through industry consultation and stakeholder discussion
Can you discuss the pros and cons of a property with a customer?
No, you can’t offer your personal or professional opinion.
You can only discuss or relate to them the facts of the property.
Can brokerages employ unlicensed individuals?
Yes, to help with administrative tasks.
Can licensed associated trade real estate and carry out administrative tasks?
Yes, as long as their license is valid for the type of trade.
Perks or benefits used to attract new clients to a brokerage are called?
Incentives
Bonuses added to a deal to convince a specific client to close are called?
Inducements
Who can offer incentives?
The brokerage
Can a licensee advertise incentives of their own?
No, only incentives available to all clients and associates of the brokerage can be advertised.
Inducement
Any you offer or give to a person who is, or could be party to a real estate or mortgage transaction, to assist, persuade, or cause that person to enter into a particular real estate or mortgage transaction.
In other word, benefits or bonuses offered to convince someone to close a deal
Can a licensee offer a deal without informing their broker?
No, you must first receive written approval from your brokerage.
Can a real estate agent offer a reduced commission rate as a inducement?
No, inducements fall outside the service agreement.
The service agreement would have to be renegotiated if the licensee wants to offer a reduced commission
Who pays for the inducement?
The brokerage must both approve of the inducement in writing and pay for it.
Should incentives be included in contracts?
Yes, the incentive and all its details should be included in any written agreement between a brokerage, licensee, and a client.
Do inducements need to signed?
Yes, the brokerage, licensee, and client must all agree on the inducement and how it will be redeemed.
Does a client need to know if you’ll earn a referral fee from a service provider you’ve recommended to them?
Yes, it needs to be communicated in writing.
The licensee must also keep record of the communication.
Can a licensee receive direct payments for a referral?
No, the payments must be made to the brokerage.
Sanction
A penalty or threatened penalty for disobeying a law or rule
RECA has which process in place to asses a licensee’s behaviour
Professional conduct review (PRC)
Potential outcomes of PRC
Fine
Restrictions placed upon the licensee
temporary license suspension
permanent license suspension
Fulfillment of prescribed education requirements
Some other form of non-monetary santion
Details of the offence are published
Some combination of all the above
Types of sanctions
Monetary
Non monetary
Other types of sanctions
Written warning
Educational requirement
License suspension
What are an agent’s duties to a customer?
Deal with them honestly, with reasonable care and skill
Provide them with correct information when requested
What are a licensee’s obligation to a client?
Undivided loyalty
Confidentiality
Full disclosure
Obedience
Reasonable care and skill
Full accounting
Common Law Agency
Common Law Agency is a type of relationship where any licensee from a brokerage can step in and represent a individual client in a transaction without amending the relationship agreement.
Designated Agency
The service agreement is between the brokerage and the consumer, but the agency relationship is between the consumer and the licensee(s) designated as their agent(s).
Can a designated agent share a clients confidential information with other licensee’s at the brokerage?
No, even though the service agreement is between the client and the brokerage, on the designated agent can have access to the clients confidential information.
In designated agency, can a agent represent a buyer and another agent represent a seller?
Yes, conflict of interest arises when two of a agent’s clients, in a sole agency agreement, are interested in the same property.
Sole Agency
A brokerage or licensee acts on behalf of one individual in a transaction.
Transaction brokerage
Both parties in a transaction agree to use a single agent for both sides of a transaction
Implied Agency
If you offer a customer advice normally reserved for clients, you have created a implied agency relationship.
In case of a complain against you by the customer, a hearing panel could hold you to a higher standard as you led the customer to believe you could provide them with services normally reserved for clients that have signed a written service agreement.
Clients responsibilities to licensee
Provide honest & accurate information
Do not lie or deceive about material latent defects
If a WSA is signed, and the client sells or buys a home without the licensee’s involvement, does the licensee still earn a fee?
Yes
Transaction facillitator
A agent works both sides of a transactions rather than as the sole agent for either client.
If either the client(s) or agent disagree, then the agent must serve the client that first entered into a agency relationship with the brokerage
Who does a agent serve if a transaction facilitation is rejected.
The client that first entered into an agency relationship with the brokerage.
Even if a client signed a WSA second, if they had implied agency with the brokerage first, they will be served by the agent.
Transaction brokerage
A licensee’s duties are limited to facilitating the closure of a contract by collecting documents and answering factual questions.
The transaction facilitator does not represent either side in an agency relationship, they simply assist the parties to complete their purchase contract
What are the fiduciary obligations of a licensee acting in the capacity of a agent for a client?
Confidentiality
Reasonable care of skill
Full disclosure
Lawful obedience
What are three responsibilities of a client to a agent?
Indemnification
Renumeration
Disclosure of relevant information
What are three things an agent must do with a client?
Act honestly
Provide competent service
Ensure their role is clearly understood
Can you be held for false information extracted from an MLS listing?
Yes. Any and all information presented to a client should be verified by the agent.
Can a brokerage pay a commission to an unlicensed individual?
So long as the work done does not require a license.
What type of agency relation does the follow sentence describe? “A real estate brokerage can act as the clients agent.”
Common law
Can RECA impose non monetary sanctions?
RECA can impose:
Fines
Restrictions/conditions on a license/licensee
Temporary/permanent suspension
Additional education
Publicizing the details of your offense
Some other form of non-monetary sanction
Publication of the details of your offense
A combination of some or all the above
Conduct that could lead to sanctions?
Withholding material latent disclosure
Not completing forms or contracts correctly
Not submitting contracts to your brokerage on time
Being unprofessional with another licensee
Implied Agency
When an agent provides services to a customer/individual which are normally reserved for clients.
No WSA is signed.
Is showing a client a home of a seller you represent a conflict of interest?
No, simply showing the home is not a conflict of interest.
Entering into negotiations would be.
Transaction Brokerage
The buyer and seller agree to use a single agent.
The agent may assist buyer and seller by providing facilitation services by collecting documents and answering questions.
When the courts force a sale so for the financial recovery of a third party, what type of sale is this?
Judicial sale
Can residential areas contain leasehold properties?
Yes
Legal authorization for a designated individual, termed the agent, to act for another person, known as the principal?
Power of attorney
