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UBC Real Estate Licensing Exam > Chapter 4.3: Law Of Agency > Flashcards

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

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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

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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

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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

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5
Q

The principal is who?

A

Your client!

The party that your brokerage / you represent

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6
Q

The third party is who?

A

The other parties in the transaction that you don’t represent

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7
Q

Agent capacity

Has the _________ to represent and act on behalf of another person (aka _________)

A

Authority

Principal

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8
Q

Any person of _______ mind can act as an agent

A

Sound

Aka no insane people

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9
Q

An ______ does not need the capacity to contact

A

Agent

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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

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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
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12
Q

A person must not provide real estate services to or on behalf of another, for an expectation of remuneration, unless the person is _______________ under RESA or exempted from the requirement to be licensed

A

Licensed

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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)

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14
Q

Fiduciary is Latin for what

A

Trust!! Woah, we come full circle

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15
Q

The principals give a warranty of _____ to the designated agent

A

Warranty of authority

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16
Q

Are the agents part of the sale?

A

No they are not

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17
Q

Over arching umbrella fiduciary duty =

A

Duty of loyalty

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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
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19
Q

A breach of fiduciary duty may also result in disciplinary proceedings by who?

A

The BCFSA

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20
Q

What does remuneration mean

A

Rewards, money, commissions, bonuses

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21
Q

An express contract can be________ or _________

A

Written or oral

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22
Q

An express contract has a mutual agreement of both parties, what should be made clear in the contract

A

1) A clear understanding of what is expected

2) Clear statement of terms

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23
Q

What is an express contract

A

An express contract is a clearly stated agreement, either written or spoken, where the terms and intentions of the parties are explicitly communicated and agreed upon.

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24
Q

Define ratification

“ Authority by ratification”

A

Ratification is the approval and confirmation of a previous unauthorized act, making it valid and binding as if originally authorized.

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25
Q

 implied agency, an agency can be employed by conduct through two ways, what are they?

A

1) created by/through the conduct of the parties

2) can create an agency relationship through your actions based on your actions/words

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26
Q

What is an example of implied agency

A

An example of implied agency in real estate is when a buyer regularly relies on a specific agent for property advice and negotiations, and the agent acts on behalf of the buyer in several transactions, creating an agency relationship through their conduct without a formal agreement.

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27
Q

What is agency by estoppel

A

An agency by estoppel occurs when a principal’s actions lead a third party to reasonably believe that an agent has authority to act on the principal’s behalf, and the third party relies on that belief to their detriment.

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28
Q

Two very clear standards that must be in effect for agency by estoppel to count

A
  1. Principal’s Conduct: The principal’s actions or behavior must lead a third party to reasonably believe that an agency relationship exists. (Not the agent)
  2. Reliance: The third party must rely on this belief to their detriment, acting based on the assumed agency relationship.
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29
Q

Actual authority… With _____ contract relationship

A

Express contract

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30
Q

What is express authority?

A

Express authority is the explicit power granted to an agent by the principal, either verbally or in writing, to perform specific tasks or make decisions on the principal’s behalf.

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31
Q

What are some examples of express authority

A

Multiple listing contract, length, agency, commission

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32
Q

What is implied authority

A

Implied authority is the power of an agent to perform acts that are reasonably necessary to accomplish the purpose of the agency, even if not explicitly stated by the principal.

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33
Q

What are examples of implied authority

A
  1. Scheduling Showings: An agent schedules property showings without explicit instructions from the principal.
  2. Advertising Listings: An agent places advertisements for a property to attract buyers.
  3. Negotiating Offers: An agent negotiates terms with potential buyers within the scope of standard practices.
  4. Conducting Open Houses: An agent holds open houses to market the property.
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34
Q

Usual or customary

A

How you do the job

The agent is governed by what is the usual in the trade

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35
Q

Give examples of usual or customary authority

A
  • Setting Listing Prices: An agent recommends and sets listing prices for properties based on market analysis.
  • Hosting Open Houses: An agent organizes and hosts open houses to market the property.
  • Advertising Listings: An agent creates and places advertisements for properties in various media.
  • Negotiating Offers: An agent negotiates offers and counteroffers on behalf of the client.
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36
Q

To summarize the different types of authorities what are the simplest definitions of each one

A
  • Express Authority: Authority explicitly granted to an agent by the principal, either in writing or verbally.
  • Implied Authority: Authority an agent has to perform acts that are reasonably necessary to accomplish the agency’s purpose, even if not explicitly stated.
  • Apparent Authority: Authority perceived by a third party due to the principal’s actions, leading them to believe the agent is authorized to act.
  • Usual or customary authority is the authority an agent has to perform acts that are typical or standard for their role or industry, based on common practice.
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37
Q

Apparent _____ : results from the operation of the legal doctrine of estoppel

A

Apparent authority

With agency by estoppel relationship

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38
Q

Define apparent authority

A

Where the third-party would reasonably consider, from the conduct of the principal and the agent, that the agent did in fact possess authority

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39
Q

Note the difference between implied agency and apparent authority 

A

Implied Agency: An agency relationship formed by the actions or conduct of the parties, without explicit agreement.

Apparent Authority: Authority perceived by a third party based on the principal’s actions, leading them to believe the agent is authorized to act, even if no actual authority was granted.

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40
Q

There are five ways to terminate authority, what are they

A

1) At will
2) revocation
3) by conduct
4) frustration
5) death, insanity, bankruptcy 

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41
Q

One way to terminate authority: at will

A

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

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42
Q

One way to terminate authority: revocation

A

Revocation is the act of officially withdrawing authority

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43
Q

One way to terminate authority: by conduct

A

Termination by conduct occurs when one party’s actions clearly indicate they no longer intend to be bound by the contract, leading to its end without formal notice.

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44
Q

One way to terminate authority: frustration

A

Termination by frustration occurs when an unforeseen event makes it impossible to fulfill the contract’s terms, through no fault of either party, thereby automatically ending the contract.

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45
Q

What are the four duties the agent owes to his principal

A

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

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46
Q

One of the four duties the agent owes to his principal is the duty of __________, ____________, and __________

A

Loyalty
Confidentiality
Full disclosure

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47
Q

One of the four duties the agent owes to his principal is the duty to exercise reasonable _________ and __________

A

Care and skill

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48
Q

One of the four duties the agent owes to his principal is the duty to carry out the ______________________ of the principal

A

Lawful instructions

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49
Q

One of the four duties the agent owes to his principal is the duty to account for all _________ held for the principal

A

Monies

50
Q

What does not terminate when relationship ends?

A

The duty of confidentiality

51
Q

What are the 3 duties the principal owes to the agent

A

1) to pay commission
2) duties to indemnify (repay) the agent
3) comply with the agency agreement

52
Q

Commission is owed when?

A

When the title has been exchanged for money

53
Q

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

A

Conspired

54
Q

Reminder, the __________ is not a party to the contract

A

Agent

55
Q

The rights between the agent and the 3rd party

A

1) no disclosure of agency
2) no authority or insufficient authority
3) torts committed by the agent

This card is stupid lol

56
Q

What happens if there is No disclosure of agency to a party

A

The injured party may choose to sue either the principal or the agent

57
Q

No authority or insufficient authority

A

“No authority” means an agent has not been given any power to act on behalf of the principal. “Insufficient authority” means the agent’s granted powers are inadequate to perform the specific act or decision in question.

58
Q

Torts committed by the agent

A

“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
Q

Before ___________ or ___________ anyone, an agent must disclose about the type of relationship / representation

A

Assisting or representing

60
Q

The consumer must be fully informed to give their _______________

A

Informed consent

61
Q

The ______ law may still require further disclosure (in terms of granting authority)

A

Common law

62
Q

Sole agency is what!

A

A sole agency is an agreement where a principal appoints one agent exclusively to act on their behalf, and the principal agrees not to appoint any other agents. If the principal sells the property on their own, they do not owe the agent a commission.

63
Q

No agency is what?

A

“No agency” means that a real estate professional is not representing or acting on behalf of any party in a transaction. They are simply providing general assistance without fiduciary duties to either buyer or seller.

64
Q

With no agency, you only owe limited services, such as what?

A
  • provide general market information
  • help fill out / complete a contact without providing advise
  • presenting the offers to / from the unrepresented party
65
Q

Dual agency is what?

A

Dual agency occurs when a real estate agent represents both the buyer and the seller in the same transaction, owing fiduciary duties to both parties simultaneously.

Essentially banned in BC

One narrow exception - super small town with minimal realtors

66
Q

There are _______ prescribed standard forms from BCFSA

A

7

67
Q

What are the rules around BCFSA prescribed standard forms

A
  • must use the exact form as provided by BCFSA

- must not alter the form in any way

68
Q

The 7 BCFSA prescribed standard forms

A

1) DIT - disclosure of interest in trade form (5-9)
2) DRITS - Disclosure of Representation In Trading Services form (5-10)
3) DRUP - Disclosure of Risks to Unrepresented Parties form (5-10.1)
4) DRADA - Disclosure of Risks Associated with Dual Agency - must be sent to BCFSA
5) CIMC - Conflict of Interest when acting with Multiple Clients (5-18)
6) NSRAT - Notice to seller regarding Assignment Terms (8-2)
7) DER - Disclosure of Expected Remuneration form (5-11.1)

69
Q

All 7 BCFSA prescribed standard forms must be submitted to _______________

A

The brokerage

70
Q

BCFSA Mandatory Form 5-9 Disclosure of Interest in Trade

A

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
Q

The disclosure of ___________ does not apply to rental agreements the agent wants to enter

A

Disclosure of Interest in Trade

72
Q

If the agent forgets the Disclosure of Interest in Trade, now what?

A

Non-disclosure = void contract, disciplinary proceedings

73
Q

BCFSA Mandatory Form 5-10 Disclosure of Representation in Trading Services form (DORIS)

A

Key purpose: before providing services, you must disclose the difference between being a client and an unrepresented party

74
Q

When is BCFSA Mandatory Form 5-10 Disclosure of Representation in Trading Services form (DORIS) not required?

A
  • When hosting an open house
  • Providing factual responses to general questions
  • Do not receive any personal information from the consumer (motivation, financial, needs)
75
Q

BCFSA Mandatory Form 5-10.1 Disclosure of Risks to Unrepresented Parties form (DORUP Form)

A

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
Q

BCFSA Mandatory Form 5-10.1 Disclosure of Risks to Unrepresented Parties form (DORUP Form) should be given when?

A

Given when they turn down the DORTS form

77
Q

BCFSA Mandatory Form 5-17 Disclosure of Risks Associated with Dual Agency

A

Gives information about the concept of dual agency

78
Q

BCFSA Mandatory Form 5-17 Disclosure of Risks Associated with Dual Agency must be submitted to who!

A

1) must submit to BCFSA

2) the managing broker must sign this form

79
Q

BCFSA Mandatory Form 5-18 Agreement Regarding Conflict of Interest Between Clients form

A

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
Q

Duty to avoid Conflict of Interest

If a conflict exists, then what?

A

Full disclosure must be given to your client and you must obtain the consent / permission of principal to continue acting

81
Q

3 situations where Conflicts of interest respecting current clients could exist

A

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
Q

Acting for both clients in a conflict or interest is considered _______________ and that is banned

A

Dual agency

83
Q

If a conflict of interest starts, what must you do?

A

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
Q

BCFSA Mandatory Form 8.2 Notice to Seller regarding Contract Assignments

A

It is used to inform sellers about the terms and conditions under which a buyer can assign their contract to another party, ensuring transparency and the seller’s understanding of the assignment process.

85
Q

BCFSA Mandatory Form 5-11(1) Disclosure to Sellers of Expected Remuneration

A

The remuneration must be expressed as a dollar amount $$$

Doesn’t have to sign

86
Q

Impracticable =

A

Not to be done in any other way

It is beyond inconvenient

87
Q

Section 6-1 of the Real Estate Services Act prohibits a real estate _______ from engaging in trading services unless they are _______ and affiliated with a brokerage.

A

Licensee

Licensed

88
Q

You can pay remuneration to another agent as long as they are an agent __________________

A

In another province

This is how professionals cooperate

89
Q

You must refer ___________________ and you should refer at least ___________

A

Qualified professionals

Refer at least 3

Not must, but should

90
Q

Must submit a disclosure of expected remuneration (payment) form _____________

A

With every offer

91
Q

A licensee can be paid their remuneration by who only?

A

By their brokerage only!

92
Q

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

A

Net listings

93
Q

Net listings is considered what?

A

“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
Q

An agent may not earn a _____________

A

Secret profit

95
Q

What is secret profit

A

Undisclosed remuneration or benefits received by an agent as a result of performing duties on behalf of the principal

96
Q

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?

A

You MAY have to forfeit that profit to the principal

97
Q

There are _____ non-mandatory form

A

2

98
Q

What are the 2 non-mandatory forms?

A

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
Q

Non-mandatory form 5-11 Disclosure of Remuneration

A

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
Q

Non-mandatory form 5-13 Disclosure of Material Latent Defects

A

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
Q

The 2 non-mandatory forms must still be submitted to ______________ if they are used

A

The brokerage

102
Q

What are the three types of real estate agency contracts

A

1) exclusive listing
2) multiple listing
3) open (general) listing

103
Q

Exclusive listing

A

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
Q

Exclusive listing specific

A

No MLS exposure

More secretive

Hide it from the kids kinda sale

105
Q

Multiple listing

A

It’s an exclusive right to sell

A property is listed with a multiple listing service (MLS) and available to all agents who are members of that MLS.

106
Q

A multiple listing is not valid unless

A

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
Q

Open (general) listing

A

The seller can list the property with multiple agents, and only the agent who brings a buyer earns the commission.

If home owners sells it they don’t pay commission at all

108
Q

What is the MLS?

A

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
Q

Specifics to the MLS

A

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
Q

Which of the following statement is false with respect to an agent?

A

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
Q

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

A

The principal and the third party

112
Q

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 ________ authority

A

Apparent authority

113
Q

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

A

Implied authority

114
Q

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?

A

Assumed authority… There literally isn’t even this type of authority existing

115
Q

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

A

Duty to indemnify the agent for any expenses which the agent may have incurred during the transaction

116
Q

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

A

The third-party may sue either the agent or the principal to enforce the contract

117
Q

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

A

Be entitled to commission where the vendor and purchaser have conspired to sell after the expiry of the listing to avoid commission

118
Q

An “Unrepresent party” is

A

Not a client of any licensee in a particular real estate transaction

119
Q

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

A

This is false… Net listing is not allowed

120
Q

True or False:
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

A

True

UBC Real Estate Licensing Exam (24 decks)

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