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RE Principles > Chapter 4 - Agency Relationships, Ethics, and Fair Housing > Flashcards

Chapter 4 - Agency Relationships, Ethics, and Fair Housing Flashcards

1
Q

General Agent

A

A person who can act for another person for many DIFFERENT tasks.

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2
Q

Special Agent

A

A person who can act for another person for a SPECIFIC task.

Real estate agents are special agents.

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3
Q

What is an agency relationship and how are they created?

A

Agency Relationship - Relationship of trust between a PRINCIPAL and their AGENT.

Created by –

  1. EXPRESS CONTRACT
  2. IMPLIED Agency (including ostensible agency + agency by ratification)
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4
Q

Express Agency

A

An agency relationship that is expressed either orally or in writing.

WRITTEN is better than ORAL.

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5
Q

Implied Agency

A

Created by–

  1. Conduct of the parties
  2. Oral agreement
  3. Written agreement
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6
Q

What are 2 types of implied agency and how are they formed?

A
  1. Ostensible Agency - Results from a conduct and actions of the parties, even though there is no express agency agreement between the agent and principals.

Example - When SELLER allows BUYER assume that AGENT 1 is SELLER’S agent.

  1. Agency by Ratification - When a person ACTS AS THE AGENT for a principal WITHOUT a WRITTEN AUTHORIZATION, and the principal accepts (ratifies) the agent’s actions.
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7
Q

Revocation

A

When an AGENCY RELATIONSHIP is TERMINATED by either the AGENT or PRINCIPAL. This will EFFECTIVELY END the agency relationship UPON NOTICE to the other party of the termination of relationship.

**If this happens in an EXCLUSIVE AUTHORIZATION AND RIGHT TO SELL (EARS) listing agreement and the principle revokes the relationship before the end of listing period, this will effectively revoke the agreement; however the agent may be able to sue the principle for damages caused for terminating prior to its expiration date.

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8
Q

What are ways AGENCY RELATIONSHIPS can be terminated?

A
  1. Revocation
  2. Agreement
  3. Death of the agent or principal
  4. Destruction of the subject property
  5. Close of escrow
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9
Q

What are requirements of an Agency Relationship?

A
  1. Fiduciary
  2. Legality
  3. Competence of each party
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10
Q

Gratuitous Agent

A

Agent who acts as an agent (with all responsibilities & liabilities) and is not paid a commission.

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11
Q

Fiduciary Duty

A

An agent has a duty of UTMOST CARE, INTEGRITY, HONESTY, and LOYALTY in dealings with the principal.

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12
Q

What do fiduciary obligations include?

A
  1. Truth
  2. Confidentiality
  3. Competence
  4. Trust
  5. Broker’s duty to keep a principal informed

*Real estate agent must obey all LAWFUL instructions provided by the principal.

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13
Q

True or False– An agent is prohibited from sharing anything that could harm the buyer or seller in negotiations.

A

TRUE

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14
Q

Material of Fact

A

A fact that WILL AFFECT THE VALUE of a parcel of real property.

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15
Q

Hold Harmless Clause

A

A clause in a listing agreement that holds the agent harmless for incorrect information PROVIDED BY THE SELLER.

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16
Q

Duty of Honest and Fair Dealing

A

An agent owes a DUTY OF HONEST AND FAIR DEALING to other parties in a transaction.

Example – MUST DISCLOSE all MATERIAL FACTS about property

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17
Q

True or False – Compensation is required to establish an agency relationship.

A

FALSE

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18
Q

Subagency – Who is the Principal, Agent and Subagent in an agency relationship?

A

Principal = Buyer / Seller

Agent = Broker representing the principal

Subagent = Salesperson working under Agent (broker)

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19
Q

Broker Associate

A

aka Associate Licensee

A real estate broker who is working under another broker. They are NOT CONSIDERED a SUBAGENT of the principle

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20
Q

Vicarious Liability

A

A broker is liable for the actions of salespersons working under their broker’s license.

The broker and salesperson are BOTH LIABLE when a salesperson does something wrong.

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21
Q

When an agent is the agent of a SELLER – to WHOM do they owe a duty of HONEST and FAIR DEALING to?

A

The listing agent OWES a duty of HONEST AND FAIR DEALING to the BUYER.

Must disclose ALL MATERIAL FACTS!

22
Q

When an agent is the agent of a BUYER – who do they owe a duty of HONEST and FAIR DEALING to?

A

`The selling agent OWES a duty of HONEST AND FAIR DEALING to the SELLER.

Must disclose ALL MATERIAL FACTS!

23
Q

What happens if an agent does not disclose dual agency representation?

A

Agent may be –

  1. Disciplined by the Real Estate Commissioner
  2. Not receive a commission
  3. Can be grounds for either party to rescind the contract
24
Q

What is Conflict of Interest and give an example:

A

Agent has a duty to NOT COMPETE with their principal.

Example – If a property is offered for sale, the agent must not move in and make an offer to purchase the property when their principal (buyer) is attempting to purchase the property as well.

25
Q

Power of Attorney (POA)

A

Legal document giving AUTHORITY to a person to ACT ON BEHALF (or execute documents) of ANOTHER PERSON.

26
Q

Attorney-in-Fact

A

The person who acts and executes documents for another person through a Power of Attorney (POA)

27
Q

Secret Profit

A

Occurs when an agent lists a property for sale at below market value by misrepresenting the value of the property to the seller. Then either personally or through a family member, purchase the property at this below market price and immediately resells it for a higher price, thus keeping the profits.

*This is ILLEGAL!

28
Q

Desist and Refrain Orders

A

An order from DRE directing a person to stop committing an act in violation of the RE law.

29
Q

Commingling

A

Mixing a broker’s own funds with their trust account funds.

*Only $200 of the broker’s own money is allowed to cover account expenses

30
Q

Misrepresentation

A

A false or misleading statement or assertion.

31
Q

Intentional Misrepresentation

A

aka FRAUD – Occurs when a RE agent (or principal) intentionally misrepresents information.

Actual Fraud - agent purposefully makes an untrue statement that detrimentally affects the principal

Negative Fraud - intentional nondisclosures of a material fact

32
Q

Negligent Misrepresentation

A

Honest mistake that causes a client harm. - Unintentionally misrepresenting information.

33
Q

Negligent Advice

A

Incorrect information given when knowledge of the circumstances should have been within the agent’s diligent observation.

34
Q

False Promise

A

Agent makes a promise that influences a person to enter into a transaction, then does not fulfill that promise.

35
Q

Civil Rights Act of 1866

A

Provided all citizens in the US to purchase, rent, sell, hold and convey all (residential and commercial) real property and personal property without regard to race.

In addition, all persons have the right to contract, sue, be sued and enjoy the full benefits of the law

36
Q

Federal Fair Housing Act / Civil Rights Act of 1968

A 
Prohibits discrimination in the:
sale
rental
advertising
offer of brokerage services
loans
appraisal services
disciminatory actions based on a person's:
race
color
religion
sex
marital status
national origin
handicap
37
Q

If a person has been a victim of discrimination, they may file a complaint with:

A

U.S. Department of Housing and Urban Development (HUD) within 1 year.

38
Q

Steering

A

The act of steering a buyer out of one neighborhood because of racial considerations.

39
Q

Panic Selling

A

Occurs when an agent induces or attempts to induce a person to sell or rent their real property because of the entry of a certain class (race/religion) of people into the neighborhood.

40
Q

Blockbusting

A

The result of panic selling. Both ILLEGAL.

41
Q

Americans with Disabilities Act of 1990, Title III

A

Enacted to prohibit discrimination against people with disabilities.

42
Q

Equal Credit Opportunity Act (ECOA)

A

Federal law that prohibits discrimination in lending.

43
Q

Home Mortgage Disclosure Act

A

An Act that requires lenders to disclose home loan information to the public.

44
Q

What are some California State Fair Housing Laws?

A
  1. CA Fair Employment and Housing Act (Rumford Act)
  2. Unruh Civil Rights Act
  3. Ralph Civil Rights Act
  4. CA Housing and Financial Discrimination Act (Holden Act)
  5. California DRE regulations
45
Q

Boarder

A

A person renting/living inside someone’s home.

Example - room for rent

46
Q

Unruh Civil Rights Act

A

All persons are entitled to full and equal accommodations, advantages, facilities, privileges, or services in business establishments, including private and public entities.

47
Q

Ralph Civil Rights Act (hate violence)

A 
Prohibits violence or threats of violence based on an individuals:
race
color
religion
sex
gender
gender identity
gender expression
ancestry
national origin
physical or mental disability
medical condition
genetic information
marital status
sexual orientation
48
Q

Housing Financial Discrimination Act (Holden Act)

A

aka Holden Act

Prohibits discrimination in lending. A loan cannot be denied to an applicant based upon:
race, color, religion, marital status, sex, ancestry, and national origin

49
Q

Redling

A

Occurs when a lender uses a red pen/pencil to draw a circle around areas where the lender does not want to make loans. THIS IS ILLEGAL!

50
Q

Death Disclosure

A

If a person died in a property – it must be disclosed to buyers and tenants for up to 3 years from the time of death. Except in the case of AIDS.

If a client asks a DIRECT QUESTION if a person passed due to AIDS, then you must disclose so.

51
Q

California Department of Real Estate

A

Prohibits discrimination by real estate brokers.

RE Principles (14 decks)

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