Chapter 23 - Risk Managment Flashcards
Risk Avoidance:
Refraining from an activity that carries risk.
Risk Reduction:
Taking steps to reduce the probability or the severity of a potential loss.
Risk Transference:
Passing the risk to another party, by contract or other means.
Risk Retention:
Entering into an activity in spite of known risks and taking full responsibility for the consequences.
Disclosure:
Ensuring that all parties have the information they are entitled to.
General Liability:
Insurance that provides coverage for risks incurred by a property owner when the public or a licensee enters the owned property.
Errors and Omissions Insurance:
The primary method for transferring the professional liability risks of brokers, managers, and licensees.
Agency Duties:
Certain duties that licensees are required to assume by law toward the parties to the transaction. The basic duties to all parties are: honesty, fairness, reasonable care and skill, and disclosures. The basic duties to clients are: skill, care, diligence, loyalty, obedience, confidentiality, accounting, and full disclosure.
Conflict of Interest:
When an agent forgets to put the best interests of a client ahead of those of everyone else. For example: undisclosed dual agenices, broker-owned listings, licensees buying for their own account, etc.
Confidentiality:
A licensee’s responsibility to keep certain kinds of information they obtained concerning clients and customers confidential (secret/private)
Statute of Frauds:
A law requiring certain contracts to be in writing in order to be enforceable. Examples are real property conveyances, listing agreements, and longterm leases.
Unauthorized Practice of Law:
It is illegal for real estate professionals who are not attorneys to draw up contracts for transactions they are not involved in or to charge a separate fee for preparing a contract.
Fair Housing:
The Act that forbids real estate advertising that mentions race, color, religion, national origin, sex, handicap, or familial status in any way that suggests preference or discrimination.
Antitrust:
Laws that forbid brokers to band together to set a price on their services in listing and selling property.
Misrepresentation:
Unintentional misrepresentation: When a licensee unknowingly conveys inaccurate information to a consumer concerning a property, financing or agency service.
Intentional misrepresentation: When a licensee knowingly conveys false information about a property, financing or service.
