Agency Relationships and Contracts Flashcards
What is a General Agent?
When the Principal (Client) delegates a broad range of all things in a particular manner and the relationship is expected to be ongoing
What is a Special/Limited Agent?
When the Principal (client) delegates a specific act or business transaction for a specific time
What is a Universal Agent?
A party is given full power of attorney to represent another person. Ex: A guardian of a minor or incompetent person.
What is Single Agency?
When a broker is representing the seller or the buyer in the transaction, but not both.
What is Dual Agency?
When an agent represents 2 principals (clients) in the same transaction.
What is a Facilitator or Transaction Broker?
One who does not represent either party in a transaction. Both parties are treated as customers in the transaction.
What is Designated Agency?
Both, buyer and seller are represented by the same brokerage firm but different agents within the firm. This can occur only with the written permission from both parties. Both parties are clients.
** NEED TO KNOW **
A payment of compensation or its source does not create the agency relationship. A contract or the actions of the parties, creates the agency relationship.
What represents the fiduciary duties of the agent to the principal?
The agent must act with Care, Obedience, Loyalty, Disclosure, Accounting, and Confidentiality.
What is Care?
Doing what you can do to protect client and help reach their goal.
Seller as client - Establish the correct list price, properly representing the property, delivering appropriate forms and documents needed in the transaction, and properly marketing the property.
Buyer as client - Helping find suitable property, negotiating the offer, and directing the buyer to a lender and other experts for inspections and advice.
What is Obedience?
Agent must act in good faith and obey the principals instructions given in the contract.
What is Loyalty?
Agent must be loyal, putting the principals interest above those of all others.
What is Disclosure?
The agent must keep the principal informed, disclosing all facts and information that could affect the transaction. If representing a seller, the agent must disclose if the buyer is willing to offer more for the property. If representing a buyer, an agent needs to disclose all defects and if the seller would take less for the property.
What is Accountability/Accounting?
Agent is accountable for all funds or property of others that come into the agents possession. You owe accountability to everyone including customers.
What is Confidentiality?
Agent must not share to anyone - anything that is confidential to the principal. You must protect your current and past clients even if you are no longer representing them.
** NEED TO KNOW **
Agents must use reasonable care and skill in performance, be honest, and disclose facts that materially affect the value of the property, regardless of whom they are representing.
** NEED TO KNOW **
Where a agent breaches a fiduciary duty to the principal, the agent will not be entitled to a commission and may not be additionally liable for actual damages.
What is a Ministerial Act?
Those acts that a licensee may perform for a consumer that are informative in nature and do not rise to the level of active representation.
What is Puffing?
The exaggeration of a fact.
Termination and Remedies for Nonperformance
All agreements should state the grounds for termination and remedies for nonperformance. The principal may peruse damages through civil action or file a complaint with the real estate commission.
Disclosure (Representation)
Generally, the agency disclosure statement must be in writing. The purpose is to make sure buyers and sellers understand whether they are customers or clients in a transaction. Agency disclosure usually occurs before confidential information is given. A licensee must always disclose that he/she has a real estate license when purchasing or leasing property.
What is a Unilateral Contract?
Only one party is obligated to perform in a unilateral contract.
What is a Bilateral Contract?
Both parties are obligated to perform in a bilateral contract.
What is an Express Contract?
The parties have specifically agreed, either orally or in writing, to enter into a contract.