Chapter 1. Agency Relationships and Contracts Flashcards
Express Agency
When the parties state the contract’s terms and express their intention, either orally or in writting.
What creates an agency relationships?
The listing, buyer agency, and property management agreement.
Implied Agency
When the actions or conduct of the parties communicate that there is an agreement.
General Agent
When the principal delegates a broad range of powers, and the relationship is expected to be on-going.
Special Agent
When the principal delegates a specific act or business transaction.
Universal agent
A party is given full power of attorney to represent another person.
Single Agency
When a broker represents the seller or the buyer in the transaction, but not both
Dual Agency
When an agent represents two principals in the same transaction.
Facilitator or transaction broker
One who does not represent either party in a transaction. Both parties are treated as customers in the transaction
Designated Agency
Created when an agent is appointed by a broker to act for a specific principal or client.
Fiduciary Relationship
Position of trust and confidence
Listing Agreement
Personal service contract securing the employment of a brokerage firm to find a ready, willing, and able buyer.
Responsibilities of an Agent
COALD Care Obedience Accountability Loyalty Disclosure
Care
A broker is to exercise reasonable care and skill as a professional while transacting the business of the principal.
Obedience
The agent is to act in good faith and obey the principal’s instructions given in the contract
Accountability
The agent is accountable for all funds or property of others that come into agent’s possession.
Loyalty
The agent must be loyal, putting the principal’s interests above those of all others.
Disclosure
The agent must keep the principal informed, disclosing all facts and information that could affect the transaction.
Ministerial Acts
Acts that a licensee may perform for a consumer that are informative in nature and do not rise to the level of active representation.
Unilateral contract
Only one party is obligated to perform
Bilateral Contract
Both parties are obligated to perform
Express contract
The parties have specifically agreed, either orally or in writing, to enter into a contract.
Implied Contract
The parties by their actions or conduct enter into a contract
Valid Contract
Meets all the essential elements and is an enforceable contract.
Meeting of the minds
Offer and acceptance. Offer by the offeror, accepted by the offeree.
Legal Consideration
A promise, or something of value, made by one party to include another party to enter into a contract.
Reality of Consent
The contract was entered into without duress, menance, misrepresentation, or fraud.
Void
It is missing the essential element and has no legal force and effect.
Voidable
When the innocent party if entered into under duress, under undue influence, through misrepresentation, through fraud, with a minor, or with an incompetent person.
Unenforcable
When neither party can sue the other to force performance.
Executory Contract
One or both parties have duties to perform in an executory contract.
Executed contract
All parties have fulfilled their duties and responsibilities in the executed contract.
Addendum
Supplement (addition) to the contract. Part of the original contract.
Lease Option
The Lessee (tenant) has the right to purchase the property under specific conditions or to renew or extend the lease at its end.
Land Contract
The vendor (seller) finances the property and retains title to it until the final payment is made or the some other condition is met by the vendee (buyer).
Assignment
A transfer of rights and/ or duties from one contract to another contract or from one person to another person.
Novation
One contract is substituted for another contract with the intent to discharge the obligation of the original contract. It is a release of liability from the original contract.
Ambiguities
Any ambiguities in a contract are constructed against the writer of the contract.
Contingency
A contingency in a contract requires the the completion of a certain act or promise before the contract is binding, or it may cancel contract obligations.
Equitable Title
In an executory contract, the buyer’s interest in the property is called an equitable title intrest. Although the legal title is held by another party, the buyer does have the right of possession and an insurable intrest in the property.
Forfeiture Clause
Many contracts contain a forfeiture clause, which means that under certain circumstances, one party must forfeit or give something to the other party.
Suit for specific performance
A legal action to enforce or compel the performance of the terms of a contract.
Caveat Emptor
“let the buyer beware”
Caveat Venditor
“Let the seller beware”
Exculpatory Clause
A Hold harmless Clause that may be found in contracts relieving a party from liability for injuries to another.
Indemnification Clause
A Clause in which one party agrees to compensate another for a loss or damage that is sustained.
Exclusive-right-to-sell Listing
One broker lists the property and the other brokers have the right to sell the property.
Exclusive-agency listing
One broker lists the property and the seller retains the right to sell the property.
Open Listing
The seller enters into listing agreements with any number of brokerage firms and retains the right to sell the property.
Net Listing
This listing does not contain a specified sales price or commision. Net listings are illegal in most states.
