Chapter 10 - Brokerage Relationships Flashcards
To what type of transaction does the Brokerage Relationship Disclosure apply?
Residential transactions only
Residential=1-4 family (or vacant and zoned for 1-4 family) or agricultural of 10 acres or less
Only applies to leases if option to purchase is coupled with it.
What are the three types of agency?
1 Universal: can perform all acts and do anything the principal can do (General POA)
2 General: can perform on the principal’s behalf on particular jobs or in a certain business of the principal (sales agent is general agent of the employing broker)
3 Special: can perform on only a specific business transaction. (Single agency; CPA can speak to IRS on your behalf for a specific tax return).
What type of relationship is presumed between broker and seller or buyer and the customer is not responsible for the acts of the Broker?
Transactional broker relationship
No fiduciary relationship
Customer is not responsible for acts of the licensee
What information about the property must be disclosed to the buyer?
All known facts that materially affect the value of the property and are not readily observable to the buyer.
What are the duties of all the brokerage relationships?
Deal honestly and fairly Account for all funds Use skill, care and diligence in the transaction Disclose all known latent defects Present all offers and counter-offers Exercise limited confidentiality Perform mutually agreed upon duties
If Single Agent, be COLD Confidentiality Obedience Loyalty Disclosure (full)
What is a designated sales associate, and when is it used?
Nonresidential transaction
Buyer and Seller each have at least $1 million in assets
Both parties represented by the same brokerage
Two separate sales associates of the brokerage can be designated sales associates for each party.
Broker acts as neutral adviser to each sales associate
Each sales associate must get their client’s signature on the special designated sales associate disclosure notice where they also certify their assets
How long must the Broker maintain copies of brokerage relationship disclosure forms?
5 years on any transaction that results in a contract, even if the contract fails to close.
What action terminates a single agent brokerage relationship?
Fulfillment of the relationship (found a buyer or seller);
Mutual agreement to terminate;
Expiration of the agreement;
Broker renounces the agreement by giving written notice of such to the client or customer;
The principal revokes the agreement;
The broker’s death before fulfilling the agreement;
Destruction of the property by condemnation or Eminent Domain;
Bankruptcy of the principal or customer
What is the one duty that is only found in the transaction broker relationship?
The duty of “limited confidentiality” (can’t tell the other party; may tell other associates in your office):
Can’t disclose (without express prior permission):
Negotiability: Buyer’s willingness to pay more
Negotiability: Seller’s willingness to take a lower price
Motivation: Either party’s motivation for buying or selling the property
Terms: A party’s willingness to accept financing terms other than those listed
Any other info that the party requests to remain confidential
What is something that may or not be true that a single agent is required to disclose to his principal?
Rumors about the property or anything else that affects the transaction.
At what time must the brokerage relationship disclosure be made?
Before or at the time of entering into a listing agreement or agreement for representation, or
Before the showing of property,
Whichever occurs first
When is a transition to a transaction broker form required?
When the brokerage has a single agency relationship with a client and another client of the brokerage who is also single agency or transactional brokerage, you have to transition the single agency to transaction to avoid dual agency.
Get them to sign the transition form at the time they sign the single agency.
Which brokerage relationship disclosure forms REQUIRE a signature?
Transition to transaction broker and designated sales associate notice
Single agency, no brokerage, and transaction brokerage require no signatures.
