Ch. 10

Question 1

Agency

Answer 1

The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

Question 2

Agent

Answer 2

One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent. A prospective property buyer may authorize a real estate broker to act as the buyer’s agent to find a suitable property.

Question 3

Buyer Representation Agreement

Answer 3

A principal-agent relationship in which the real estate professional acts on behalf of the buyer, usually as an agent, with fiduciary responsibilities to the buyer.

Question 4

Buyer’s Agent

Answer 4

A real estate professional who is under contract to locate property for a buyer and represent the buyer’s interest in a transaction.

Question 5

Client

Answer 5

The principal in an agency relationship or other form of representation.

Question 6

Customer

Answer 6

The third party or nonrepresented consumer for whom some level of services provided.

Question 7

Designated Agency

Answer 7

A process that accommodates an in-house sale in which two different agents are involved. The broker designates one agent to represent the seller and one agent to represent the buyer.

Question 8

Designated Agent

Answer 8

A real estate professional authorized by a broker to act as the agent for a specific principal in a particular transaction; also may be called assigned agent or appointed agent.

Question 9

Dual Agency

Answer 9

Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in some states.

Question 10

Express Agency

Answer 10

An agency relationship based on a formal agreement between the parties.

Question 11

Express Agreement

Answer 11

An oral or written contract in which the parties state the contract’s terms and express their intentions in words.

Question 12

Fiduciary

Answer 12

One in whom trust and confidence is placed; a reference to a real estate professional employed under the terms of a listing contract or buyer representation agreement.

Question 13

Fiduciary Relationship

Answer 13

A relationship of trust and confidence, as between trustee and beneficiary, attorney and clients, or principal and agent.

Question 14

Fraud

Answer 14

Deception intended to cause a person to give up property or a lawful right.

Question 15

General Agent

Answer 15

One who is authorized by a principal to represent the principal in a specific range of matters.

Question 16

Implied Agency

Answer 16

If the actions of the parties imply that they have mutually consented to an agency relationship, an implied agency relationship is formed.

Question 17

Implied Agreement

Answer 17

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Question 18

Latent Defect

Answer 18

A hidden structural defect that could not be discovered by ordinary inspection and that threatens a propert’s soundness or the safety of its inhabitants. Some states impose on property sellers and real estate professionals a duty to inspect for and disclose latent defects.

Question 19

Law of Agency

Answer 19

The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

Question 20

Listing Agreement

Answer 20

A contract between an owner (as principal) and a real estate professional (as representative of the owner) by which the real estate professional is employed to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission or other form of compensation.

Question 21

Negligent Misrepresentation

Answer 21

Occurs when the real estate professional should have known that a statement about a material fact was false.

Question 22

Nonagent

Answer 22

An intermediary between a buyer and a seller, or landlord and a tenant, who assist one or both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator, and contract broker.

Question 23

Principal

Answer 23

(1)A sum loaned or employed as a fund or an investment, as distinguished from its income or profits. (2) The original mount (as in a loan) of the total due and payable at a certain date. (3) A main party to a transaction - the person for whom and agent works.

Question 24

Puffing

Answer 24

Exaggerated or superlative comments or opinions.

Question 25

Single Agency

Answer 25

Agency relationship in which the agent represents only one party to a transaction.

Question 26

Special Agent

Answer 26

One who is authorized by a principal to perform a single act or transaction; a real estate professional is usually a special agent authorized to find a ready, willing, and able buyer for particular property, when representing a seller, or a special agent authorized to find a suitable property, when representing a buyer.

Question 27

Transaction Broker

Answer 27

Helps both the buyer and the seller with paperwork and formalities in transferring ownership of real property, but who is not an agent of either party.

Question 28

Universal Agent

Answer 28

A person empowered to do anything the principal could do personally.