Chapter 4 - Real Estate Brokerage and Law of Agency Flashcards
Chapter Objectives
1) Explain the purpose of a listing contract, and identify what parties sign the contract.
2) Explain the difference between a special agent and general agent, and express agency and implied agency, and provide at least one example of each.
3) Summarize the fiduciary duties owed by a seller’s agent to the seller, and provide at least one example of each duty.
4) Summarize the fiduciary duties owed by a principal to their agent, and provide at least one example of each duty.
5) Explain the purpose of the DTPA, and list at least three examples of a misleading act under the DTPA.
Brokerage
The business of bringing buyers and sellers together and assisting in negotiations for the terms of sale of real estate.
Real Estate Broker
A person who is licensed to buy, sell, exchange, or lease real property for others and to charge a fee for these services. Acts as an agent for a principal/client
Agency
The relationship between the principal and the principal’s agent which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.
Agent
A person authorized to act on behalf of another. Will work for a client and with a customer
Principal
The employer of an agent.
Customer
The party the agent brings to the principal as seller or buyer of the property.
Fiduciary Duty
That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.
Listing Contract
A contract in which a property owner employs a real estate broker to market the property described in the contract. Describes the obligations of each party.
Also used for leasing/rental
General Agent
An agent with full authority over one property of the principal, such as a property manager.
Special Agent
An agent with limited authority to act on behalf of the principal, such as created by a listing.
Express Agency
An agency relationship created by oral or written agreement between principal and the agent. The terms are ‘expressed’ in the form of documents or oral communication (Listing/Buyer Rep Contracts)
Implied Agency
Agency that exists as a result of actions of the parties.
Agency by Ratification
like if you were giving advice to a neighbor and they were acting on it - compensation is not required
Seven Categories of Agency Termination
1) Death or Incapacity of either party
2) Destruction of property
3) Expiration of term - required by TREC
4) Mutual Agreement
5) Broker can renounce the agency
6) Bankruptcy of Owner of property
7) The completion of purpose of creation