Chapter 3 - Agency, Brokerage, and Ethical Considerations

Question 1

Violations such as price-fixing and allocations of customers to markets. Under the Sherman Act, people who fix prices may be subject to a misdemeanor and punishable by a maximum $1,000,000 fine and 10 years in prison. In a civil suit may recover triple the value of actual damages plus attorney fees. The laws that govern these violation are ___ ___.

Answer 1

Antitrust laws

Question 2

Person authorized to act for another in a legally binding capacity. Agency created by a power of attorney, a legal written authorization that stipulates specific areas of authorization. The agent acting in such capacity is known as ___-_-___

Answer 2

Attorney-in-fact

Question 3

In the real estate business, a ___ is defined as a person who is licensed to assist others in real estate transactions and to receive compensation for those services.

Answer 3

Broker

Question 4

A prospective buyer or a person seeking property to rent can also be a principal and hire a broker as a buyer’s broker or a ___ ___. In this type of relationship, the buyer is the client and the seller is the representative for the customer.

Answer 4

Buyer’s Agent

Question 5

Code of conduct adopted by members of the National Association of REALTORS*. All members of NAR are expected to subscribe to this ___ __ ___.

Answer 5

Code of Ethics

Question 6

Payment to a broker for services rendered, such as in the sale or purchase of real property is called a ___.

Answer 6

Commission

Question 7

Statement real estate agents are required to furnish before any discussion of a seller’s/landlord or buyer’s/tenant’s motivation or financial situation is initiated. If no motivation or discussion has taken place, the agent must furnish before any property is listed. Does not require it to be signed to acknowledge receipt - if signed must be retained for six years. Sellers and buyers must acknowledge receipt of the ___ ___ ___ on all offers, contracts and leases.

Answer 7

Consumer Information Statement(CIS)

Question 8

Third party in a transaction owed honest treatment but not owed fiduciary duties, this is a ___.

Answer 8

Customer

Question 9

___ __ ___ means that the broker is representing both parties in the same transaction at the the same time. Not illegal, but undisclosed dual agency is. Dual agency in NJ is legal if the broker: explains the duties that may not be available, discloses any other business relationships, obtains the buyer’s and sellers written informed consent (in addition to the CIS), and advises that each party may want to consult an attorney.

Answer 9

Dislosed dual agent

Question 10

In new Jersey licensees must ___ to a buyer any defects of a material nature that effect the physical condition of the property, this is act of ___

Answer 10

Disclose/disclosure

Question 11

Real estate industry’s equivalent to medical malpractice insurance. Subject to limitations, it defends against many circumstances but does not cover fraud, This is known as ___ _ ___ Insurance.

Answer 11

Errors and Omissions (E&O) Insurance

Question 12

One legally placed in a position of trust is a ___

This relationship as between trustee and beneficiary, attorney, and client, or principal and agent. The confidential relationship carries with it certain duties that an agent must perform the following duties:

Answer 12

Fiduciary

• Obedience,
• Loyalty.
• Disclosure,
• Resonable Care
• Accounting

Question 13

Intentional deception that harms another is ___.

Answer 13

Fraud

Question 14

One authorized to act for his or her principal in a wide range of matters is a ___ Agent.

Answer 14

General Agent

Question 15

Designation awarded by the National Association of REALTORS* after specific study.

Answer 15

Graduate, REALTOR* Institute (GRI)

Question 16

Unintentional misleading of a buyer committed in ignorance is an ___ ___.

Answer 16

Innocent misrepresentation

Question 17

Return of part of the commission as gifts or money to sellers are prohibited. Illegal for broker to share commission with anyone who is not licensed as a salesperson or broker except in certain circumstances to a buyer, this is known as a ___.

Answer 17

Kickback

Question 18

Problem with property not discoverable by ordinary prudent inspection is a ___ defect. Licensees must disclose defects that are uncoverable. These defect would include such things as water seepage, unused oil tanks in the basement, and sloping floors.

Answer 18

Latent

Question 19

A contract between a property owner (as principal) and a licensed real estate borker (as agent) by which a the broker is employed as agent to sell real estate on the owners terms within a given time, for which service the landowner agrees to pay a fee. Must state whether subagency is being offered to cooperating firms and whether seller has authorized sharing of commission with subagents, buyer’s brokers or transaction brokers. An “Addendum to Real Estate Listing/Commission Agreement must be included with every listing contract. This is a ___ ___.

Answer 19

Listing agreement

Question 20

___ __ __ ___ is said to have taken place when the parties are in agreement on price, payment and financing method.

Answer 20

Meeting of the minds

Question 21

___ ___ requires that a community be alerted to the presence of convicted sex offenders enacted in New Jersey in 1995. all contracts and leases on residential real estate that are prepared by a licensee must include a Megan’s law statement. Licensees are not permitted to inquire about or give any information regarding the presence of convicted sex offenders in the neighborhood. a buyer’s broker can suggest that a concerned client check the New Jersey police website.

Answer 21

Megan’s Law

Question 22

The ___ ___ __ lists in detail all sorts of misleading, fraudulent acts and include penalties up to $10,000 for the first violation. Law offers exemptions from liabilities to licensees who can prove they had no actual knowledge, a diligent effort was made to learn the truth and the broker or salesperson was relying on information provided by q home,e inspector or similar specialist. government employee or sellers property disclosure statement.

Answer 22

Consumer Fraud Act

Question 23

Fraud committed, not necessarily on purpose, by someone who should have known better. is ___ ___.

Answer 23

Negligent misrepreresentation

Question 24

In New Jersey, licensees must disclose conditions beyond the limits of a property known as ___ conditions, such as a hazardous waste disposal site, that may be considered material facts by a prospective purchaser. Two discloures are required. One refers to new construction; the other, to resales. The new construction notice includes a five-day period for cancellation, the sale does not include a similar right of recission.

Answer 24

Offsite

Question 25

A main party to a transaction for which the agent works is the ___.

Answer 25

Principal

Question 26

The “___ ___” of a real estate transaction is the agent whose actions and efforts ultimately result in the sale of a proerty. It is the agent who ultimately caused the buyer to purchase the home.

Answer 26

Procuring cause

Question 27

Extravagant statements of opinion (“this house has the most gorgeous view in the world are permissible, as long as they are offered as opinions without any intentions to deceive is ___.

Answer 27

Puffing

Question 28

One who is prepared to buy property on seller’s terms and is ready to take positive steps to consummate the transaction is considered a ___, ____ and ___ ___.

Answer 28

Ready, willing and able buyer

Question 29

One authorized by a principal to perform a single act or transaction, is a ___ Agent.

Answer 29

Special Agent

Question 30

An agent must exercise a reasonable degree of care and diligence while transacting business on behalf of the principal also known as ___ _ ___. Brokers are expected to possess expertise in real estate matters above that of average persons, and may be liable to the principal for any loss resulting from negligence or carelessness.

Answer 30

Standard of care

Question 31

A broker’s sales associate,or cooperating broker is known as a ___ in a multiple listing system, in relation to the principal who has designated the broker as an agent.

Answer 31

Subagent

Question 32

A licensee who works with a buyer, seller, or both, without representing either one in an agency relationship is a ___ ___.

Answer 32

Transaction broker

Question 33

Has authority to represent the principal in all matters that can be delegated. He or she can transact on behalf of the principal without prior permission, as a ___ agent.

Answer 33

Universal Agent

Question 34

One who undertakes to transact some business or to manage some affair for another by authority of the latter is an ___.

Answer 34

Agent