Chapter 5 - Agency Relationships Flashcards
Buyer’s Agent
An agency relationship between a buyer and a licensee in a real estate transaction.
Buyers agent owe all loyalty to buyer in real estate transaction.
Seller’s Agent
When representing only the seller in a transaction, the agent owes all loyalty to that seller client.
Single Agency
The most basic form of real estate agency is when one agent of a brokerage represents just one party in a specific transaction. (aka single agency, principal agency, traditional agency)
Vicarious Liability
Since an agent’s authority comes from the principal, in this case, the sponsoring broker, when an affiliated licensee acts within the scope of his or her authority, the sponsoring broker is legally liable for the licensee’s acts
Liability that is created because of the relationship between the principal and the actions of an agent who is actually liable.
Gratuitous Agency
An agent may choose to offer his or her services free of charge. Although compensation is not part of the agreement, the agent is not released from his statutory obligations to his client.
Implied Agency
created through the actions of words of one or both parties. Implied agreements are difficult to enforce and often lead to confusion and misunderstanding between the parties.
Expressed Agency
An agency relationship is formed through a contract between the agent and the principal for example a listing agreement between a broker and a seller or broker and buyer.
Agency coupled w/ Interest
This is when the agent holds an ownership interest in the property being sold.
Special Agent
also called a limited agent, has limited authority to perform a specific task or conduct a specific transaction.
For example when a real estate broker is contracted by a client to sell a house, the broker is considered a special agent.
General Agent
Is authorized to represent the principal in a broad range of specified matters, usually as part of a long-term relationship.
A real estate agent is actually a general agent of his or her sponsoring broker.
Universal Agent
A universal agent is authorized to do anything and everything that can be lawfully delegated to a representative.
Real estate agents are rarely considered universal agents
Universal agents may be created through the granting of power of attorney, which allows the attorney-in-fact to do almost everything the person granting the authority could do (sell assets, make purchases, sign legal documents)
Express Vs. Implied Authority
Express - is power or permission for a specific act or outcome communicated by principal to agent.
Implied - (incidental) is the authority to do everything reasonably necessary to carry out the principal’s express orders, within the limits of the law
Reasonable Care
Common Law Fiduciary Duties
Agents must always use reasonable care, skill, diligence when acting on behalf of a client. The agent is viewed as a professional and expert. A form filled out incorrectly or a law misunderstood could cause problems for the client. If a client loses money due to an agent’s incompetence or carelessness, the agent can be held liable for negligence, which is an unintentional breach of legal duty.
Accountability
Common law fiduciary duties
The duty of financial accountability recognizes that money received in an agency relationship is received on behalf of the principal, not the agent. Since the agent acts on behalf of the principal, the agent has the duty to strictly account for any amount received.
Confidentiality
Common law fiduciary duties
To keep from destroying the integrity of the agency process, an agent can neither reveal confidential information nor take advantage of it for personal benefit
Loyalty
Common law fiduciary duties
The agent must put the principal’s interests above all others’, including his own.
Can’t tell owner not to accept a low bid because of commission to agent.
Obedience
Common law fiduciary duties
An agent must follow the legal instructions of the principal, obey the parameters of the agency relationship, and not stray beyond the scope of his authority.
Of course if principal gives agent an illegal instruction the agent must not follow it
Fiduciary Relationship - OLD CAR
In most general sense, relationship between the agent and principal can be described as fiduciary.
Which is one of trust and confidence where one party owes the other a higher standard of good faith than they owe to third parties or customers.
The fiduciary role is that of an advocate and the agent owes such duties only to the client.
O - Obedience
L - Loyalty
D - Disclosure
C - Confidentiality
A - Accountability
R - Reasonable care
Customer
A third party to a transaction whom the agent work with, but not for, is considered to be a customer of the agent.
Client/Principal
The party granting the right of representation through an agency relationship, such as in real estate transaction, is known as the client or principal in the relationship.
Agency
Is the relationship of trust created when one party gives another the right to represent him in dealings with third parties.
Consensual relationship that both parties enter into willingly
Alludes to a relationship between a principal and a party representing her interests
Brokerage
Is a business concept premised primarily on bringing parties together for the purpose of a transaction
Dual Agency
Refers to a single licensee who represents both a buyer and seller in the same transaction.
A dual agent owes statutory duties to both the buyer and the seller but must remain neutral at all times
Must be careful not to disclose confidential information from one party to the other
In-House Transaction
Keeping transactions within the brokerage. This occurs when the brokerage procures a buyer for one of it’s listed properties.
