Brokerage Relationships

Question 1

Ethics

Answer 1

managed by local realtor board

Question 2

Employing broker reqs

Answer 2

1. active license for 2 yrs
2. passed brokerage administration course
3. pass state test again

Question 3

Referral prohibitions

Answer 3

• state laws say that real estate licensee cannot take a referral without disclosing to client
• federal law says that no one can take a referral for any kind of federal loan
• if you are a mortgage and real estate broker then you can get a fee unless its a federal loan

Question 4

Creating agency relationship

Answer 4

1. performance of act doesn’t create agency - must be done in writing
2. must involve consent, control, expectation

Question 5

Authority of Agent

Answer 5

1. actual authority
   - express: comes from word or writing
   - implied: reasonably needed
2. Apparent authority
   - words or conduct cause third parties to believe that the agent has authority

Question 6

duties and liabilities of agency

Answer 6

1. principal to agent
   - perform agency contract
   - compensation
   - reimburse for expenses
   - indemnify for loss suffered because of agency
2. agent to principal
   -perform agency contract
   -loyalty to principal
   -reasonable skill in performing agency
   - account for all money received
   -cannot sign for client
   without power of attorney
3. agent and third party
   - only principal and third party are liable on a contract created in the proper course of agency
   - always make sure 3rd party knows youre an agent
4. principal and third party
   - both bound by the contract made through their agents

Question 7

Vicarious liability

Answer 7

principal is liable for an agents actions, if they know of or authorized the agent to commit a wrongful act or not

Question 8

Termination of Agency

Answer 8

1. acts of parties
   - mutual consent
   - terms of agency contract
   - revocation by principal or agent
2. operation of law
   - death, insanity, bankruptcy, change of law, fire, etc

Question 9

Death in contract

Answer 9

• if principal dies, contract ends
• -if agent dies, brokerage assigns a new agent
• in a purchase contract btwn buyer and seller, the agreement is still valid bc its not a personal services agreement and there’s no agency

Question 10

Colorado Brokerage Relationship Act

Answer 10

• removed assumption that all brokers work for seller
• created and defined buyer agency
• relieves principals of vicarious liability for acts of a transaction broker
• providers standards for the RE commission and legal actions
• set expectations for “in house deal”
• offers clients choices as to representation
• required disclosure of duties, obligations, and relationship options
• requires agency be voluntary
• sets forth duties owed to principals

Question 11

in house deal

Answer 11

when buyer and seller are represented by agents from same company

Question 12

designated broker

Answer 12

• broker in company who has been designated to work as an agent
• may work as a single agent for one party and treat the other party as a customer
• can never act as an agent for both parties

Question 13

Power of Attorney

Answer 13

• an authorization to act on something in a legal or business matter
• can never sign on behalf of a principal without power of attorney