Ch.4 - Real Estate Brokerage and Law of Agency Flashcards
Licensee
The person who is authorized to represent an act on behalf of another person
Principal
The seller, buyer, landlord, or tenant. A client to an agency
The person who hires the licensee and delegates to them the responsibility of representing the principles interest
Fiduciary
The relationship of trust or confidence between the licensee and the principal
Agency
The fiduciary relationship between the licensee and the principal
Client
The principal
Customer
The third-party with whom the licensee deals when working on behalf of the principal.
What is the difference between a customer and a client?
The difference is that a customer is not represented.
Universal agency
In this relationship, the principal empowers them to perform any and all actions that may be legally delegated to an agency representative
What is the instrument of authorization called in a universal agency?
The power of attorney
General agency
The relationship that the principal delegates to them ongoing task and duties within a particular business or enterprise.
What can a principal delegate to a general agency?
This delegation may include authority to enter into contracts.
*in what kind of agency?
Special agent
Also known as specific agent
Under this agreement, the principal delegate authority to conduct a specific activity. Then the relationship is terminated.
In most cases, there may not be a contract that binds to the principal
COALD
An acronym for the agents fiduciary duties to a principal
What does COALD stand for?
C- care (reasonable care) O- obedience A- Accountable L- Loyalty D- Disclosure or notice
Express agency
This is the most common way of creating an agency relationship through a written agreement.
What is expressed in a written agreement in an expressed agency?
The formally involved parties expressed the intention to form an agency relationship
The outline the terms and conditions of that agreement
Listing agreement
This is the common form of express written agency agreement between a seller and a broker.
What does a listing agreement authorize?
It authorizes the broker to find a ready, willing, and able buyer for the property.
The listing agreement is part of what type of agency
The common form of express written agency
Buyer/tenant representation agreement
This is a common form of express written agency agreement between a buyer and a broker.
What does the buyer/tenant representation agreement authorize?
It authorizes the broker to find a suitable property to purchase or rent.
What are the types of agreements in express agency?
Listing agreement- Broker and seller relationships
Tenant/buyer representation agreement- Broker and buyer relationship
Implied agency
Does not need to be in written form the relationship can be implied and formed when the actions of the parties indicate that they have mutually consented to an agency.
It is possible to be unaware that a relationship has been formed due to actions that were unintentional, inadvertently, or accidental.
Estoppel
A legal doctrine that prevents a person from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct, or silence
Ratification
The adoption or confirmation of an act someone already performed on behalf of a person without prior authorization
Single agency
Is when a licensee represents either a seller/landlord or buyer/tenant directly and exclusively as an agent
A single agency is normally bound by what type of agreement?
A relationship is normally bound by a written agency agreement like a listing or a buyer/tenant representation agreement
Sub-agency
This is practice between brokerage firms where cooperating licensees, or other firms, our sub agents of the listing supervising broker of the principal.
Is sub agency legal in Texas?
Yes
Intermediary agency
This is where a licensee represents both sides of the transaction in a agent-client capacity
Transaction broker
They provide third-party real estate services to buyers and sellers and can be described as a professional assistant.
Is a transaction broker recognized in Texas?
No
Commingling
The act of mixing the brokers personal or business funds with escrow funds.
What is the broader definition of commingling?
A broader definition includes the failure to deposit earnest money into escrow in a timely manner
Conversion
This is more serious than near commingling and is effectively an active theft where the broker is using money that does not belong to them
Market allocation
This occurs when competing firms agreed to split up an area and they agreed to refrain from doing business in each others territory
Co-brokerage
A transaction involving a cooperating sub agent.
How is the commission split in a co-broker transaction?
The listing broker sports the commission with the co-broker typically on a 50-50 basis
Listings
The traditional source of the brokers income
Antitrust laws
Why do they exist?
State and federal laws designed to maintain and preserve business competition
Law is based on the believe that free enterprise and healthy competition are good for individual consumers and the economy
Sherman Antitrust Act of 1890
This is the principal federal statue that covers competition and is one of the most important pieces of antitrust legislation
Agency relationship is created when
A person delegates to a licensee the right to act on his or her behalf in a business transaction
Which agency representation is illegal in Texas?
Undisclosed intermediary agency