Chapter 3: Agency, Brokerage, and Ethical Considerations Flashcards
one who undertakes to transact some business or to manage some affair for another by authority of the latter
agent
laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition
antitrust laws
person authorized to act under a power of attorney
attorney-in-fact
one who buys and sells for another for a fee
broker
a real estate broker retained by a prospective purchaser, who becomes the buyer’s principal or client and to whom fiduciary duties are owed
buyer’s broker (buyer’s agent)
the one by whom a broker is employed in an agency relationship (aka a principal)
client
standards of conduct adopted by the National Association of REALTORS
Code of Ethics
payment to a broker for services rendered, such as in the sale or purchase of real property
commission
problem when serving best interest of both the client and oneself
conflict of interest
written explanation of agency relationship presented to buyers and sellers
Consumer Information Statement (CIS)
third party in a transaction owed honest treatment but not owed fiduciary responsibilities
customer
one who works for both the seller and the buyer
disclosed dual agent
revealing to another any pertinent information
disclosure
representing both parties to a transaction
dual agency
salesperson whose broker pays social security, regulates hours, etc.
employee
a form of malpractice insurance for real estate licensees
errors and omissions (E&O) insurance
one legally placed in a position of trust and confidence
fiduciary
a relationship of trust and confidence between trustee and beneficiary, attorney and client, or principal and agent
fiduciary relationship
intentional deception that harms another
fraud
intentional fraud and/or deliberate lying
fraudulent misrepresentation
one authorized to act for his or her principal in a wide range of matters
general agent
designation awarded by the National Association of REALTORS after specific study
Graduate, REALTOR Institute (GRI)
salesperson who sets his or her own hours and who is not covered by income tax withholding
independent contractor
unintentional misleading of a buyer committed in ignorance
innocent misrepresentation
illegal sharing of a commission with seller
kickback
problem with the property not discoverable by ordinary prudent inspection
latent defect
rules governing conduct of agents
law of agency
a contract between a property owner (as a principal) and a licensed real estate broker (as agent) by which the broker is employed as agent to sell real estate on the owner’s terms within a given time, for which service the landowner agrees to pay a commission fee
listing agreement
agreement between a buyer and seller on major points
meeting of the minds
a NJ law requiring that communities be alerted to the presence of convicted sex offenders. All contracts and leases must include a statement advising purchasers and lessees that a list of any known sex offenders who live in the area may be obtained from the county prosecutor
Megan’s law
private nationwide organization of salespersons and brokers
National Association of REALTORS
fraud committed, not necessarily on purpose, by someone who should have known better
negligent misrepresentation
statewide group of real estate licensees who choose to join
New Jersey REALTORS (NJR)
In NJ, licensees must disclose conditions beyond the limits of the property, such as hazardous waste disposal site, that may be considered material facts by a prospective purchaser
off-site conditions
a written instrument authorizing a person , the attorney-in-fact, to act as an agent on behalf of another person
power of attorney
- a sum lent or employed as a fund or investment as distinguished from its income or profits. 2. the original amount (as in a loan) of the total due and payable at a certain date. 3. a main party of a transaction - the person for whom the agent works
principal
the broker responsible for bringing about a sale
procuring cause
exaggerated or superlative comments or opinions made to induce buyers to buy; not as representation of fact and thus not grounds for misrepresentation
puffing
one who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction
ready, willing, and able buyer
a registered trademark reserved for the sole use of members of the National Association of REALTORS
REALTOR
a person who performs real estate activities while employed by or associated with a licensed real estate broker
salesperson
one authorized by a principal to perform a single act or transaction
special agent
degree of competence normally expected of a licensee
standard of care
a broker’s sale associate, or cooperating broker in a multiple listing system, in relationship to the principal who has designated the broker as an agent
subagent
a licensee who works with a buyer, seller or both, without representing either one in an agency relationship
transaction broker
an agent who has authority to represent the principal in all matters that can be delegated
universal agent
