Chapter 4 - Real Estate Brokerage and Law of Agency

Question 1

One authorized by a principal to perform a single act or transaction; a special agent for a seller is authorized to find a ready, willing, and able buyer for a particular property; a special agent for a buyer is authorized to assist a buyer in locating and negotiating the purchase of a property.

Answer 1

special agent

Question 2

A license holder who represents a principal through cooperation with & consent of a broker representing the principal & who is not sponsored by or associated with the principal’s broker.

Answer 2

subagent

Question 3

Makes it illegal to use false, misleading, or deceptive acts or practices in the advertising, offering for sale, selling, or leasing of any real or personal property.

Answer 3

Texas Deceptive Trade Practices - Consumer Protection Act (DTPA)

Question 4

One who acts or has the power to act for another. A fiduciary relationship is created under the laws of agency when a property owner, as the principal, executed a listing agreement or management contract authorizing a licensed real estate broker to be her agent.

Answer 4

agent

Question 5

An agency relationship is established after the fact.

Answer 5

agency by ratification

Question 6

The relationship between a principal (client) and an agent wherein the agent is authorized to represent the principal in certain transactions.

Answer 6

agency

Question 7

An agency is created by acts or words of principal & agent; an agency inferred by circumstances.

Answer 7

implied agency

Question 8

Someone retained to perform a certain act but who is subject to the control and direction of another only as to the end result & not as to the way in which she performs the act. Unlike an employee, an independent contractor pays for all her expenses, both SS & income taxes & received no employee benefits. Most RE sales agents are independent contractors.

Answer 8

independent contractor

Question 9

One who acts or has the power to act for another. A fiduciary relationship is created under the laws of agency when a property owner, as the principal, executed a listing agreement or management contract authorizing a licensed real estate broker to be her agent. (agent definition)

Answer 9

law of agency

Question 10

An unintentional misstatement of fact; incorrect or misleading representation.

Answer 10

misrepresentation

Question 11

The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.

Answer 11

procuring clause

Question 12

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

Answer 12

ready, willing, and able buyer

Question 13

Exaggerated or superlative comments or opinions not made as representation of facts and thus not grounds for misrepresentation.

Answer 13

puffing

Question 14

A broker who is employed to negotiate a transaction between both parties & who for that purpose may be an agent of both parties to the transaction, acting fairly so as not to favor one party over the other.

Answer 14

intermediary broker

Question 15

A contract between a landowner ( a principal) & a licensed real estate broker (as agent) by which the broker is employed to sell real estate on th owner’s terms within a given time, for which service the landowner agrees to pay commission.

Answer 15

listing agreement

Question 16

1) A sum lent or employed as a fund or investment, as distinguished from its income or profit. 2) The amount of the note due and payable. 3) A main party to a transaction - the person for whom the agent works.

Answer 16

principal

Question 17

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies’ & combinations formed to minimize competition. Violations of antitrust laws in real estate business generally involve price fixing, allocation of customers or markets, or agreement to boycott competitions. 1) Set fixed compensation rates, 2) limit areas of trade or dealing to certain areas or properties.

Answer 17

antitrust laws

Question 18

A license holder associated with and appointed by an intermediary broker to communicate with, carry out instructions of, and provide opinions & advise to the parties to whom the license holder is appointed.

Answer 18

appointed license holder

Question 19

For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.

Answer 19

brokerage

Question 20

A contract that established a broker-buyer agency relationship.

Answer 20

buyer representation agreement

Question 21

Latin phrase meaning “let the buyer beware”.

Answer 21

caveat emptor

Question 22

The person who employs an agent to perform a service for a fee. (also principal)

Answer 22

client

Question 23

The illegal act of a real estate broker who mixes the money of other people with his own instead of maintaining a separate trust account for other parties funds held temporarily by the broker.

Answer 23

commingle

Question 24

Payment to a broker for services rendered, such as the sale or purchase of real property; usually a percentage of the selling price of the property.

Answer 24

commission

Question 25

An individual, partnership, corporation, or Texas government agency that seeks or acquires, by purchase or lease, any goods or services, as defined by the Texas Deceptive Trade Practices Act.

Answer 25

consumer

Question 26

One who purchases or sells property without being represented by an agent.

Answer 26

customer

Question 27

One who works under supervision & control of another. The employer is obligated to withhold income taxes & social security taxes from the compensation of an employee.

Answer 27

employee

Question 28

An agency created by specific agreement, whether written or oral, of principal & agent.

Answer 28

express agency

Question 29

A misstatement of a material fact made with intent to deceive or made with reckless, and disregard of the truth, that actually does deceive.

Answer 29

fraud

Question 30

A relationship of trust & confidence, as between trustee & beneficiary, attorney & client, or principal and agent.

Answer 30

fiduciary relationship

Question 31

One authorized by the principal to represent the principal in a broad range of matters, for example, a property manager.

Answer 31

general agent