Chapter 11

Question 1

define a universal agent

Answer 1

acts on behalf of the client in all matters and situations.

must take legal steps to have this power of attorney, when assigned the person becomes an attorney-in-fact

Question 2

define a general agent

Answer 2

an agent who is authorized to perform a variety of transactions for the principal, mostly on a continuing basis.

Key word: ONGOING

Question 3

who is a property manager a general agent for?

Answer 3

property owners.

collects rent, pays bills, authorizes repairs, and negotiates leases on an ongoing basis

Question 4

who is a real estate agent a general agent for

Answer 4

their designated broker.

the affiliated licensee is the fiduciary

Question 5

what is vicarious liability

Answer 5

someone is held responsible for the actions or omissions of another person

in real estate, broker can be liable for the acts of his agents

Question 6

what is a special agent

Answer 6

an agent who is authorized to perform ONE SPECIFIC transaction. aka specific agent.

ex. listing broker hired by seller to find a suitable buyer for the seller’s property

Question 7

what is a single agent

Answer 7

defined as a broker (agent) who represents either the buyer or seller of real estate, but not both in a transaction

Question 8

what is a dual agent

Answer 8

broker (agent) represents both buyer and seller. always need prior written consent of both parties.

aka limited dual agency

Question 9

what is an expressed agency and some examples

Answer 9

agent and principal when agreed upon conditions either orally or in writing

ex. listing contracts with sellers, buyer-broker employment, real estate agency disclosure

Question 10

what is an implied agency

Answer 10

can be created even if not intentional.

develops with a principal more as a result of acts and conduct.

said to be ostensible (something that appears to be true but isn’t necessarily true)

Question 11

what is it called when an agency is created when the agent has interest in the property

Answer 11

agency coupled with an interest. agent receives interest in property being listed

this type cannot be revoked by principal nor can it be terminated on principals death

Question 12

when must a salesperson turn funds over to the broker and when must the broker deposit the funds in a trust account

Answer 12

immediately

UNLESS otherwise agree to in writing by all parties

Question 13

what is trust money

Answer 13

held for the benefit of the seller and should be deposited in a trust account. meant to separate operational and personal accounts

Question 14

if a broker has a trust account, how often must he keep accurate records, and must reconcile?

Answer 14

monthly

Question 15

define commingling

Answer 15

mixing personal or brokerage money with money in trust

Question 16

define conversion

Answer 16

when broker misappropriates client’s funds for a different purpose than intended

Question 17

what is never a part of the purchase contract

Answer 17

commission negotiation

Question 18

when would it be ok for an agent to disclose confidential info about a client

Answer 18

if it affects the principal’s ability to close the transaction as agreed

Question 19

how long does confidentiality last?

Answer 19

indefinitely

we do not discuss divorces, health issues, deaths, job loss etc

Question 20

it is a requirement for seller to _____ all material (important) facts

Answer 20

disclose

Question 21

what is an arm’s length transaction

Answer 21

buyers and sellers act independently and have no relationship to each other

it is to ensure that both parties in the transaction are acting in their own self-interest and are not subject to any pressure or duress from the other party.

Question 22

what must an agent do if they have an interest in property that is listed with their brokerage

Answer 22

must disclose that interest and receive client’s consent.

if they plan on selling property that they have a personal interest they must inform buyer of interest

Question 23

are verbal offers valid

Answer 23

yes. and must be presented

Question 24

what is the exception for offers being presented to the seller

Answer 24

if the seller issues written instructions stating differently

Question 25

what must an agent do if they have to take legal action to collect a comission

Answer 25

evidence that agent was properly licensed at the time the commission was earned

evidence that there was a signed written agreement

evidence that the agent was procuring cause (making the primary contribution) in securing a signed purchase contract

Question 26

what is the principal’s primary obligation to a customer

Answer 26

honest and truthful information

Question 27

what are the agent’s obligation to the customer

Answer 27

honest and fair dealings

reasonable care, so long as it doesn’t compromise their client’s interest

disclosure of material facts

Question 28

all contracts can be ended by

Answer 28

mutual agreement

or operation of law

Question 29

what is revocation

Answer 29

if client fires the agent

Question 30

what is renunciation

Answer 30

if agent fires the client

Question 31

what is abandonment

Answer 31

if agent agrees to work but does not stay in contact

Question 32

if an agreement expires and no sale has been accomplished

Answer 32

then the agency relationship ends

Question 33

if the salesperson dies or becomes incapacitated,

Answer 33

it has no impact on the agency relationship since the employment agreement is with the broker

Question 34

can bankruptcy end an agency relationship?

Answer 34

by either parties (principal or broker) it can end an agency relationship

Question 35

if the broker’s license ends

Answer 35

so do all agency relationships

Question 36

if a salespersons license expires during the listing period the status of the listing agreement is

Answer 36

unaffected

Question 37

what are latent defects

Answer 37

hidden structural defects

if known to seller, must be disclosed

seller not liable for unknown latent defects

Question 38

what is the max amount of payment a claimant can receive from the real estate recovery fund

Answer 38

$30,000 per transaction

no more than $90k will be paid out on behalf of one real estate licensee.

Question 39

what is subrogation

Answer 39

legal term referring to the substitution of one creditor for another.