Chapter 10 - Real Estate Agency

Question 1

The AGENT in The LAW OF AGENCY is defined as:

Answer 1

AGENT - the individual who is authorized and consents to represent the interests of another person in dealing with a third party. The sales associate and or/the broker could be the agent.

Question 2

The PRINCIPLE in the LAW OF AGENCY is defined as:

Answer 2

The individual WHO HIRES the agent and delegates to that agent the responsibility of representing the principal’s interests. Same as THE CLIENT.

Question 3

The AGENCY in the LAW OF AGENCY is defined as:

Answer 3

The fiduciary relationship between the principle (the client) and the agent by which the agent is authorized to represent the principal in one or more transactions.

Question 4

FIDUCIARY in the LAW OF AGENCY is defined as:

Answer 4

the relationship in which THE AGENT IS HELD in a position of SPECIAL TRUST and confidence by the principal.

Question 5

The CLIENT in the LAW OF AGENCY is defined as:

Answer 5

The principle in a real estate transaction for whom a real estate broker acts as agent

Question 6

The CUSTOMER in the LAW OF AGENCY is defined as:

Answer 6

the third party or non represented consumer who is not a principal but for whom some level of service may be provided. (no agreement signed)

Question 7

The NONAGENT in the LAW OF AGENCY is defined as:

Answer 7

A FACILITATOR, INTERMEDIARY, TRANSACTIONAL BROKER, TRANSACTION COORDINATOR, OR CONTRACT BROKER - someone who works with a buyer and a seller (or landlord or tenant) assisting one or both parties with transaction WITHOUT REPRESENTING EITHER PARTY’S INTERESTS. (he becomes neutral)

Question 8

The agent works ______the principal and ______the customer.

Answer 8

Works FOR the principal and WITH the customer.

Question 9

EXPRESS AGREEMENT is a contract in which the parties formally express their intention to establish an agency and state it’s terms and conditions. The agreement may be either WRITTEN or ______

Answer 9

ORAL unless a written agreement is required by las.

Otherwise you’re treating them as a customer or facilitator.

Question 10

An agency relationship between a real estate seller and a broker is generally created by a written employment contract, commonly called a?

Answer 10

LISTING AGREEMENT

or SELLER REPRESENTATION AGREEMENT

Question 11

The BUYER REPRESENTATION AGREEMENT stipulates the activities and responsibilities the buyer expects from the?

Answer 11

Broker in finding the appropriate property for purchase or rent.

Question 12

An AGENCY may also be created by_______ _______. This occurs when the parties ACT AS THOUGH they have mutually consented to an agency, even if they have not entered into a formal agency agreement.

Answer 12

IMPLIED AGREEMENT

Question 13

In a real estate transaction, the SOURCE OF COMPENSATION ______ ______ DETERMINE AGENCY.

Answer 13

DOES NOT

Question 14

The agent’s FIDUCIARY RELATIONSHIP of trust and confidence means that the real estate broker owes the principal certain duties. These duties are ..the law…the common law of agency and/or the statutory law governing real estate transactions. There are 6…what are they?

Answer 14

COLD-AC

1. Care - Agent’s skill and expertise
2. Obedience - act in good faith at all times, obey the contract
3. Loyalty - place the clients interests above all others
4. Disclosure - keep client informed of all facts that might affect a transaction.
5. Accounting - able to report the status of all funds received from the principle
6. Confidentiality - an agent MAY NOT disclose the clients personal information including financial condition.

Question 15

A type of agency where a person is empowered to do anything the principal could do personally is called a?

Answer 15

A UNIVERSAL AGENT
It’s virtually unlimited.
generally court appointed

Question 16

A type of agency where a person represents the principal in a specific range of business matters generally is called a?

Answer 16

GENERAL AGENT
The general agent may bind the client to any contract within the scope of the agent’s authority.
(ie an entertainer may employ more than one general agent - an agent to find work, as well as a business manager to hire and supervise staff, etc)

Question 17

A type of agency where a person represent ONLY for SPECIFIED TRANSACTIONS, such as the sale of a house is called a?

Answer 17

SPECIAL AGENT or limited agent.
= 1 specific act or business transaction only.
A REAL ESTATE BROKER IS USUALLY A SPECIAL AGENT.

Question 18

In DUAL AGENCY the agent represents

Answer 18

TWO PRINCIPALS (or clients) IN THE SAME TRANSACTION.
Dual Agency requires EQUAL loyalty to Two different principles at the same time.
Dual agency arises, when a real estate broker is the agent of both the seller and the buyer. BOTH SIDES HAVE TO AGREE TO IT.

Question 19

Due to the conflict of interest in a Dual Agency,_________ is intended to minimize the risk for the broker.

Answer 19

DISCLOSURE. It’s called Disclosed Dual Agency

BOTH SIDES HAVE TO AGREE TO IT>

Question 20

A broker may not intend to create a dual agency. It might occur UNINTENTIONALLY or INADVERTENTLY. When this happens it can create a________

Answer 20

IMPLIED AGENCY with the buyer and violate the duties of loyalty and confidentiality to the principal-seller. This UNDISCLOSED DUAL AGENCY violates licensing laws. It can result in the rescission of the sales contract, forfeiture of a commission, a lawsuit for damages, and possible license problems.

Question 21

An agency may be terminated for any of the following reasons:

Answer 21

1. Completing or fulfillment of the purpose for which the agency was created.
2. Death or incapacity of either party
3. Destruction or condemnation of the property
4. Expiration of the terms of the agency.
5. Mutual agreement by all parties to cancel the contract.
6. Breach by one of the parties
7. Buy operation of law, as in bankruptcy of the principal.
   Fiduciary responsibilities of the agent such as the duty of confidentiality, might continue.

Question 22

Exaggeration of a property’s benefits is called?

Answer 22

PUFFING
puffing is legal but it is considered unethical for real estate professionals. we must ensure that none of their statements can be interpreted as fraudulent.

Question 23

Intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person is called?

Answer 23

FRAUD