Chapter 11 Flashcards
agency
relationship
legal relationship where
one party (the agent) acts on
behalf of another party (the
principal) to perform certain
tasks or make decisions
agent
person or entity authorized
to act on behalf of another
party (the principal) to
perform specific tasks or
make decisions
customer
party who engages the
services of an agent but does
not have a formal agency
relationship with them
disclosure
act of providing relevant
information to parties in a
transaction, including any
material facts or potential
conflicts of interest
dual
agency
agency relationship where
the same agent represents
both the buyer and seller in a
real estate transaction, or
both the landlord and tenant.
facilitator
neutral party who assists
with a real estate transaction
without representing either
the buyer or seller as an
agent.
fiduciary
duties
legal obligations of an
agent to act in the best
interests of the principal,
including duties of loyalty,
obedience, disclosure,
confidentiality, and
accountability
general
agency
agency relationship where
the agent is authorized to
perform specific types of
tasks or act within certain
limits on behalf of the
principal
implied
agency
agency relationship that is
inferred or implied from the
conduct or actions of the
parties, rather than being
explicitly stated in a written
agreement.
law of
agency
body of law governing the
legal relationship between
principals and agents,
including their rights, duties,
and responsibilities.
principal
person or entity who
authorizes another party (the
agent) to act on their behalf
and represent their interests.
single
agency
agency relationship where
the agent represents only one
party (the principal) in a
transaction, excluding any
representation of other
parties
special
agency
agency relationship where
the agent is authorized to
perform a specific task or
transaction on behalf of the
principal
subagency
agency relationship where
an agent delegates their
authority to another agent,
who acts on behalf of the
principal but is ultimately
accountable to the original
agent.
universal
agency
agency relationship where
the agent is authorized to
perform all legal acts and
make decisions on behalf of
the principal
What is a key component of the fiduciary duty of confidentiality that a real estate agent owes to their client?
Keeping the client’s personal and financial information private and not disclosing it without the client’s consent.
The agency relationship is defined by
the laws of agency
An agent informs a buyer that a clause in a contract is standard language. After explaining the clause, the agent assures the buyer that the clause does not mean anything significant. If something goes wrong with the transaction, the agent could be liable for
practicing law without a license
An owner’s agent is showing a buyer an apartment building. The buyer notices water stains on the ceiling, and informs the agent. The agent’s best course of action is to
inform the seller
A property seller empowers an agent to market and sell a property on his behalf. This is an example of
special agency
In an agency relationship, the principal is required to
provide sufficient information for the agent to complete the agents tasks
Which of the following is true of the connection between compensation and the agency relationship?
The relationship is independent of any compensation arrangement
One of the agent’s fiduciary duties that continues even after a listing agreement expires is
confidentiality
If an agency relationship terminates because one of the parties defaulted, which of the following is true?
The defaulting party may have a financial liability
A transaction broker should disclose his or her agency relationship to the transaction principals
upon first substantive contact
Agent Bob, who works for Broker Bill, obtains an owner listing to lease a building. Bill’s other agent, Sue, locates a tenant for Bob’s listing. In the absence of any arrangement to the contrary, Broker Bill in this instance is
a dual agent
An agent fails to discover flood marks on the walls in the basement of a property. The agent sells the property, and the buyer later sues the agent for failing to mention the problem. In this case, the agent
has an exposure to a charge of negligent misrepresentation
Implied agency arises when
a party creates an agency relationship outside of an express agreement
The essence of the agency relationship between an agent and a principal can best be described as a relationship of
trust, confidence, and good faith
The duties of an agent acting as a facilitator are most similar to those of a
dual agent
Which of the following situations has the potential for creating an implied dual agency?
A listing agent’s subagent learns that a potential buyer has made false claims about his financial qualifications and does not inform the listing agent
If a potential buyer discloses financial qualifications to a seller’s agent, the agent is required to
disclose the information to the seller
An agency relationship may be involuntarily terminated for which of the following reasons?
Death or incapacity of the agent
Which of the following is TRUE of a designated agency relationship?
The agency agreement must name all associate brokers who are authorized to act as supervisory brokers.
Licensee Gretchen of the Jumbo Mountain Agency takes a listing to sell the home of John Hess. Prospective buyer Lucy Bingham asks licensee Calvin Bentley of the same agency to assist her in purchasing the Hess property. What can the broker of the Jumbo agency do to prevent Gretchen and Calvin from creating unwanted dual agency conflicts for Jumbo?
Appoint Gretchen and Calvin as designated agents of the seller and buyer, respectively.
Which of the following is a dual agency situation?
One agent represents both sides in a transaction
A tenant representative should disclose his or her agency relationship to the owner’s agent
upon initial contact
The level of competence that a principal has the right to expect from an agent is generally that which is
comparable to that of other practitioners in the area
Among the fiduciary duties imposed on a real estate agent is the requirement to
present all offers to the principal
An agent is operating as a disclosed dual agent on a transaction. In this case, the agent
may not represent one party’s interests to the detriment of the other
A principal empowers an agent to conduct the ongoing activities of one of her business enterprises. This is an example of
general agency
Among the duties of a broker who is acting as a transaction broker, or facilitator, is
disclosing material facts that affect the value of the property to both parties
Owner agents must disclose their agency relationship to tenants or buyers
whenever substantive contact is made
