Chapter 4.3: Law Of Agency Flashcards
1
Q
One reason as to why people hire agents is due to the agent possessing _____________, _________ and ___________ that the principal does not
A
Knowledge, skills, and abilities
2
Q
One reason as to why people hire agents is due to _______________ or other limitations, the agent is able to perform a certain action that the ________ cannot
A
Geographical
Principal
3
Q
One reason as to why people hire agents is due to the principal not having the ______________ or _________ to perform certain actions
A
Time or desire
4
Q
Principal vs 3rd party! Discern
A
Principal - aka your client
-the party that your brokerage / you represent
Third party - the other parties in the transaction
-the ones you do not represent
5
Q
The principal is who?
A
Your client!
The party that your brokerage / you represent
6
Q
The third party is who?
A
The other parties in the transaction that you don’t represent
7
Q
Agent capacity
Has the _________ to represent and act on behalf of another person (aka _________)
A
Authority
Principal
8
Q
Any person of ____________ can act as an agent
A
Sound mind
Aka no insane people
9
Q
An agent does not need ______________ to contact
A
The capacity
10
Q
Can an infant act as a agent?
A
An infant can 100% act as an agent
Example: your brother is your talent manager and books you all your gigs
11
Q
Under RESA, what are the criteria to become an agent?
A
- The agent must be licensed under RESA
- be at least 19 years of age
- be of good reputation
12
Q
A person must not provide real estate services to or on behalf of another, four or an expectation of remuneration, unless the person is _______________ under RESA or exempted from the requirement to be licensed
A
Licensed
13
Q
Fiduciary duty
A
A person who holds a position of trust with respect to someone else and is obligated to act solely in the other persons benefit (because of the relationship of trust)
14
Q
Fiduciary is Latin for what
A
Trust!! Woah, we come full circle
15
Q
The principals give a ______________________ to the designated agent
A
Warranty of authority
16
Q
Are the agents part of the sale?
A
No they are not
17
Q
Over arching umbrella fiduciary duty =
A
Duty of loyalty
18
Q
What are some of the key purposes of an agent?
A
- achieve best results for their principal
- act solely for the benefit of the principal
- put the principles in trust ahead of all others, including their own
- Duty of confidentially
- duty to avoid conflicts of interest
19
Q
A breach of fiduciary duty may also result in disciplinary proceedings by who?
A
The BCFSA
20
Q
What does remuneration mean
A
Rewards, money, commissions, bonuses
21
Q
An express contract can be________ or _________
A
Written or oral
22
Q
An express contract has a mutual agreement of both parties, what are these two conditions
A
1) A clear understanding of what is expected
2) Clear statement of terms, best chance of getting paid
23
Q
An expressed contract is considered the _________________
A
Ideal situation
24
Q
Define ratification
“ Authority by ratification”
A
In simple, getting authority after the action is completed
An agents authority can be granted retroactively
When the agent informs the principal of his actions and the principal excepts, the principal will be bound by the contract
25
 implied agency, an agency can be employed by conduct through two ways, what are they?
1) created by/through the conduct of the parties
| 2) can create an agency relationship through your actions based on your actions/words
26
What is an example of implied agency
An example: You are at an open house, the buyer appears out of nowhere, they want a one on one question and answer session, where you’re answering generic questions that is okay, but once you have specific questions, an implied agency is created where you now represent them
27
What is agency by estoppel
Where the principal act in such a way as to lead a third-party to believe that the agent has authority to act on behalf of the principal (client)
28
Two very clear standards that must be in effect for agency by estoppel to count
1) client is misleading third parties
| 2) The agent is not misleading the third-party
29
Actual authority… With _________________ relationship
Express contract
30
What is express authority?
In simple it is what the job is
* Created and limited by the terms of the contract
* A promise to pay commission
31
What are some examples of express authority
Multiple listing contract, length, agency, commission
32
What is implied authority
It is in simple, how you do the job
Every agent has implied authority to do anything necessary for carrying out the express authority granted
These are things that must be done in order to finish the job
33
What are examples of implied authority
Showings, negotiations, etc.
34
Usual or customary
How you do the job
The agent is governed by what is the usual in the trade
35
Give examples of usual or customary authority
To collect keys, deposits
36
To summarize the different types of authorities what are the simplest definitions of each one
Express authority: what the job is
Implied authority: how you do the job
Usual or customary authority: how you do the job
37
_________________ : results from the operation of the legal doctrine of estoppel
Apparent authority
With agency by estoppel relationship
38
Define apparent authority
Where the third-party would reasonably consider, from the conduct of the principal and the agent, that the agent did in fact possess authority
39
Note the difference between implied agency and apparent authority 
Implied agency: agent misleads someone
Apparent authority: principal misleads someone
40
There are five ways to terminate authority, what are they
1) At will
2) revocation
3) by conduct
4) frustration
5) death, insanity, bankruptcy 
41
One way to terminate authority: at will
Either party can terminate the relationship at will because the relationship is based on mutual consent
The agent can fire client, and the client can fire agent - both allowed
42
One way to terminate authority: revocation
Orally, In writing, or expressly
43
One way to terminate authority: by conduct
The act of the principal that is inconsistent with the communication of authority
* Ignore calls / emails
* house sells without the agent help
44
One way to terminate authority: frustration
House burns down
45
What are the four duties the agent owes to his principal
1) the duty of loyalty, confidentiality, full disclosure
2) the duty to exercise reasonable care and skill
3) the duty to carry out the lawful instructions of the principal
4) the duty to account for all monies held for the principal
46
One of the four duties the agent owes to his principal is the duty of __________, ____________, and __________
Loyalty
Confidentiality
Full disclosure
47
One of the four duties the agent owes to his principal is the duty to exercise reasonable _________ and __________
Care and skill
48
One of the four duties the agent owes to his principal is the duty to carry out the ______________________ of the principal
Lawful instructions
49
One of the four duties the agent owes to his principal is the duty to account for all _________ held for the principal
Monies
50
What does not terminate when relationship ends?
The duty of confidentiality
51
What are the 3 duties the principal owes to the agent
1) to pay commission
2) duties to indemnify (repay) the agent
3) comply with the agency agreement
52
Commission is owed when?
When the title has been exchanged for money
53
If a seller and a buyer __________ to wait for the listing to expire and finish the deal after, the brokerage may be entitled to the commission
Conspired
54
Reminder, the __________ is not a party to the contract
Agent
55
The rights of the agent and the 3rd party
1) no disclosure of agency
2) no authority or insufficient authority
3) torts committed by the agent
This card is stupid lol
56
No disclosure of agency
The injured party may choose to sue either the principal or the agent
57
No authority or insufficient authority
If an agent makes a contract with a third party on the principals behalf without having the authority to do so, the agent may be liable to the third party for damages for breach of warranty of authority
58
Torts committed by the agent
“My principal authorized me” is not a defence
Principals are responsible for the actions of their agents; therefore, principal may also be liable to the third party
59
Before ___________ or ___________ anyone, an agent must disclose about the type of relationship / representation
Assisting or representing
60
The consumer must be fully informed to give their _______________
Informed consent
61
The ______________ May still require further disclosure
Common law
62
Sole agency is what!
The classic, you were hired relationship
“Client” agency relationship
Loyalty, avoid conflicts of interest, full disclosure, confidentiality
63
No agency is what?
Dealing with ‘unrepresented party’
No fiduciary duty, no advise, no negotiations on behalf
64
With no agency, you only owe limited services, such as what?
* provide general market information
* help fill out / complete a contact without providing advise
* presenting the offers to / from the unrepresented party
65
Dual agency is what?
Essentially banned in BC
One narrow exception - super small town with minimal realtors
66
There are _______ prescribed standard forms from BCFSA
7
67
What are the rules around BCFSA prescribed standard forms
- must use the exact form as provided by BCFSA
| - must not alter the form in any way
68
The 7 BCFSA prescribed standard forms
1) disclosure of interest in trade form (5-9)
2) Disclosure of Representation In Trading Services form (5-10)
3) Disclosure of Risks to Unrepresented Parties form (5-10.1)
4) Disclosure of Risks Associated with Dual Agency - must be sent to BCFSA
5) Conflict of Interest when acting with Multiple Clients (5-18)
6) Notice to seller regarding Assignment Terms (8-2)
7) Disclosure of Expected Remuneration form (5-11.1)
69
All 7 BCFSA prescribed standard forms must be submitted to _______________
The brokerage
70
BCFSA Mandatory Form 5-9 Disclosure of Interest in Trade
A) a license buying or selling real estate for himself or an associate
B) used when the offer is made to the seller, must be given before the agreement is entered into
71
The __________________________ does not apply to rental agreements the agent wants to enter
Disclosure of Interest in Trade
72
If the agent forgets the Disclosure of Interest in Trade, now what?
Non-disclosure = void contract, disciplinary proceedings
73
BCFSA Mandatory Form 5-10 Disclosure of Representation in Trading Services form (DORIS)
Key purpose: before providing services, you must disclose the difference between being a client and an unrepresented party
74
When is BCFSA Mandatory Form 5-10 Disclosure of Representation in Trading Services form (DORIS) not required?
* When hosting an open house
* Providing factual responses to general questions
* Do not receive any personal information from the consumer (motivation, financial, needs)
75
BCFSA Mandatory Form 5-10.1 Disclosure of Risks to Unrepresented Parties form (DORUP Form)
A) key purpose: to advise of the risks involved in being an unrepresented present
B) used when providing trading services to an Unrepresented party and a client in the same transaction
76
BCFSA Mandatory Form 5-10.1 Disclosure of Risks to Unrepresented Parties form (DORUP Form) should be given when?
Given when they turn down the DORIS form
77
BCFSA Mandatory Form 5-17 Disclosure of Risks Associated with Dual Agency
Gives information about the concept of dual agency
78
BCFSA Mandatory Form 5-17 Disclosure of Risks Associated with Dual Agency must be submitted to who!
1) must submit to BCFSA
| 2) the managing broker must sign this form
79
BCFSA Mandatory Form 5-18 Agreement Regarding Conflict of Interest Between Clients form
Disclose a conflict of interest and get permission from all parties
A “three way agreement” between the licensee and the ‘continuing client’ and the ‘released client’
80
Duty to avoid Conflict of Interest
If a conflict exists, then what?
Full disclosure must be given to your client and you must obtain the consent / permission of principal to continue acting
81
Conflicts of interest respecting current clients, 3 components
1) buyer client interested in seller clients property
2) two buyer clients are interested in the same property
3) former client wants you to represent him in buying your listing
82
Acting for both clients in a conflict or interest is considered _______________ and that is banned
Dual agency
83
If a conflict of interest starts, what must you do?
Stop providing services to either client in the same transaction
Continue representing only one client, if you get written agreement to do so by both of your clients
If one party doesn’t sign, you gotta drop both clients
84
BCFSA Mandatory Form 8.2 Notice to Seller regarding Contract Assignments
Must present this form to the seller where the buyer removes 2 standard terms to assign
1) removing written consent
2) removing profits
85
BCFSA Mandatory Form 5-11(1) Disclosure to Sellers of Expected Remuneration
The remuneration must be expressed as a dollar amount $$$
Doesn’t have to sign
86
Impracticable =
Not to be done in any other way
It is beyond inconvenient
87
Section 6-1 prohibits a licensee from paying, offering to pay, or agreeing or allowing to be paid, remuneration to a person in relation to real estate services of the person is required to be __________ in relation to those services but is not _________
Licensed
Licensed
88
You can pay remuneration to another agent as long as they are an agent __________________
In another province
This is how professionals cooperate
89
You must refer ___________________ and you should refer at least ___________
Qualified professionals
Refer at least 3
Not must, but should
90
Must submit a disclosure of expected remuneration (payment) form _____________
With every offer
91
A licensee can be paid their remuneration by who only?
By their brokerage only!
92
Section 5-14 prohibits “___________”, which are listing contracts that provide the licensee’s commission Will be the difference between the price at which Real Estate is listed for
Net listings
93
Net listings is considered what?
“Collect the difference”
Net commission = illegal
Aka this is the seller want $1m for their place, you happen to get $1.1m, and you insist on keeping the $100,000
94
An agent may not earn a _____________
Secret profit
95
What is secret profit
Undisclosed remuneration or benefits received by an agent as a result of performing duties on behalf of the principal
96
If you don’t properly disclosed to your principal about a benefit that you will get from your work with the principal (that isn’t being given to you by them) then what?
You MAY have to forfeit that profit to the principal
97
There are _____ non-mandatory form
2
98
What are the 2 non-mandatory forms?
5-11 Disclosure of Remuneration
5-13 Disclosure of Material Latent Defects
*the disclosure of these items must still be disclosed but not the exact form*
99
Non-mandatory form 5-11 Disclosure of Remuneration
A) helps to minimize the conflict of interest
B) client must understand how the agent is compensated
C) Must include the source, the amount
100
Non-mandatory form 5-13 Disclosure of Material Latent Defects
A) if a client instructs a licensee to withhold a disclosure of a material latent defect known to the licensee, the licensee must refuse to provide further trading services to or on that clients behalf
101
The 2 non-mandatory forms must still be submitted to ______________ if they are used
The brokerage
102
What are the three types of real estate agency contracts
1) exclusive listing
2) multiple listing
3) open (general) listing
103
Exclusive listing
An exclusive right to sell for a specific period of time
If the owner sells himself, he must still pay commission
If the owner uses 2 agents to sell his property, 2 commissions could be payable
104
Exclusive listing specific
No MLS exposure
More secretive
Hide it from the kids kinda sale
105
Multiple listing
It’s an exclusive right to sell
Listing is distributed to all members of the real estate board and placed on MLS
106
A multiple listing is not valid unless
1) it’s in writing and a true copy has been delivered to all owners
2) it has a provision that it will expire on a certain date
107
Open (general) listing
The owner may employ a number of agents to find the purchaser
Commission is paid to the agent who is the effective cause of the sale
Owner can still sell the listing himself and not pay any commission
Brokerage promises to use best efforts to locate a ready, willing, and able purchaser
108
What is the MLS?
Multiple listing services
Provides the current inventory of available properties and a history of sales in a geographic area
A site that pulls together information on real estate topics with a focus on real estate listings
109
Specifics to the MLS
1) MLS contract must be in writing
2) manages by real estate boards
3) distributed to all members of real estate board
4) the accuracy of the information is the responsibility of the agent, not the board
110
Which of the following statement is false with respect to an agent?
Because the agent represents a party to a contract, to bind the principal and the agent, he also has the capacity to contract on his behalf
You don’t need capacity to be an agent
111
When an agent act within the scope of his authority and having disclosed that he is acting as an agent enters into a contract with a third-party, the party’s to the contract are
The principal and the third party
112
Where a principle of an agent has acted in such a manner as to lead third-party to believe that his agent has authority to perform certain acts on his behalf, and the third-party deals with the agent in bona fide belief that the agent has the authority that she represents, the agent is said to have what
Apparent authority
113
Pail grants Luke, his agent, expressed authority to list his house but has not explicitly granted the right to show it to potential buyers. If Luke shows the house to a potential buyer, he would likely be acting on
Implied authority
114
Which one of the following types of authority would not provide an agent with sufficient authority to create a binding contract between his principal and a third-party?
Assumed authority… There literally isn’t even this type of authority existing
115
In which one of the following situations will the agency authority continue to exist
Lauren list his house for sale with Steve. The house burns down
Lauren enters into an exclusive listing agreement with his agent Mark. Laurence and sells the property himself without marks assistance
Lauren enters into a written listing contract for the sale of his house with Brad. Brad dies
Laurens house is agent over the phone that he no longer has the authority to sell his house
None of the above!
All of these cancel something
116
We often talk about the duties of an agent to the principal, however, at common law, what duty is owed by a principal to his agent
Duty to indemnify the agent for any expenses which the agent may have incurred during the transaction
117
Where an agent with authority enters into a contract with a third-party and does not disclose that he or she is acting as an agent
The third-party may see you either the agent or the principal to enforce the contract
118
When a listing contract has expired, and the listed property is later sold to a purchaser who was first introduced to the property by the listing brokerage during the listing., The brokerage will
Be entitled to commission where the vendor and purchaser have conspired to sell after the expiry of the listing to avoid commission
119
And “Unrepresent party” is
Not a client of any licensee in a particular real estate transaction
120
Which one of the following is not one of the three key purposes of the section 5–10.1 disclosure of risks to unrepresented parties form?
To inform the client not the licensee is also providing trading services to an unrepresented party
The DORUP form already does this 
121
True or false… Provided that the listing contract states it explicitly, if a licensee is able to secure a higher sales price than a property is listed for, he may collect the difference between the listing price and the actual amount realized on sale
This is false… Net listing is not allowed
122
which one of the following statements regarding the multiple listing service is true
Local real estate boards manage the listing information for properties listed on the MLS in their geographic area
However the accuracy of the information is the responsibility of the licensee
