Chapter 7 Flashcards
Agent
A person authorized by another to act on his or her behalf.
Apparent Authority
A fact situation that creates the appearance of an agent’s authority.
Breach of Duty
The failure to fulfill an agent’s duty to his or her principal. This includes disloyalty; disobedience; lack of skill, care, and diligence; and failure to either properly disclose information or to accurately account for funds.
Buyer Agency Agreement
A contract in which a buyer engages an agent to act on the buyer’s behalf in purchasing a property.
Cavet Emptor
Literally “let the buyer beware.” Does not relieve agent’s obligation of disclosing material facts.
Civil Penalty
Payment or redress for a private civil wrong imposed by a civil, not a criminal, proceeding.
Client
The principal, to whom the agent owes fiduciary duties.
Customer
The “third party” in a transaction; the agent works with the customer but not for him.
Disclosure of Information
The prompt and total communication to the principal by the agent of any information that is material to the transaction for which the agency was created.
Dual Agency Agreement
Representing two parties at the same time or in the same transaction. This practice is illegal unless all parties are properly informed and consent to the agency.
Employment Authority
A document or contract giving a real estate agent the right to act for a principal with certain specific guidelines in a real estate contract (i.e., a listing contract or a buyer’s agency contract).
Estoppel
The prevention of a person from making a statement contrary to a previous statement.
Express Agency
Any oral or written agreement establishing a trust relationship between a principal and agent.
Facilitator/Transactional Broker - STATE EXAM
Not allowed in North Carolina but is used in some other states. This is a type of “nonagency” relationship in which the licensee assists buyers and seller in a transaction but does not actually represent either party. It involves essentially treating each party as a customer rather than a client. The disclosure of material facts is still required.
Fiduciary
A fiduciary relationship is based on trust. Agency is automatically considered a relationship based on trust as one party, the agent, is entrusted to represent the best interest of the principal client (another name for the principal or the person that the agent represents).
First Substantial Contact
A flexible standard that typically occurs when an agent and a prospective buyer discuss in any detail the buyer’s interest in purchasing property.
General Agency
Full authority over one particular field of business or aspect of personal affairs of the principal (e.g., a property manager managing an apartment complex for the owner).
Implied Authority
Implied authority is based on custom and may very well be the result of an expressed agreement. For example, an agent may have just listed a real-estate-owned property (i.e., foreclosure) to sell for the bank. The bank’s agreement with the broker states the broker is to maintain the property and do whatever is reasonably necessary to secure the premises. Even though the contract did not specifically state what those necessary steps might be, the agent is allowed to do whatever is reasonable to accomplish those tasks.
Loyalty
An absolute duty of an agent to a principal to serve the best interest of the principal.
Misdemeanor
A criminal violation punishable by a fine and/or imprisonment. It is not considered as severe an offense as a felony.
Negligent Misrepresentation
An unintended misrepresentation of a material fact that the party did not make knowingly but should have known the truth by exercising due skill, care, and diligence.
Negligent Omission
An unintended failure to communicate a known material fact. An unintended failure to communicate unknown material fact by a person responsible for disclosing it because this person did not exercise the due skill, care, and diligence that would have revealed the fact.
Omission
The failure to disclose information.
Principal
In the law of agency, one who appoints an agent to represent him or her. The amount of money on which interest is either owed or received.
Special or limited agency
Limited authority to act on behalf of the principal, such as created by a listing.
Subagent
A person appointed by an agent to assist in performing some or all of the tasks of the agency.
Third Party
The person or party in a transaction other than the principal and his or her agent. In a subagency relationship, the buyer is a third party; in a buyer’s agency relationship, the seller is the third party.
Facilitator/Transactional Broker
Not allowed in North Carolina but is used in some other states. This is a type of “nonagency” relationship in which the licensee assists buyers and seller in a transaction but does not actually represent either party. It involves essentially treating each party as a customer rather than a client. The disclosure of material facts is still required.
Universal Agency
Complete authority over all activity of the principal. May be created by an unlimited power of attorney.
Willful Misrepresentation
A deliberate false statement concerning a material fact by one who knows the true fact and is responsible for disclosing it.
Willful Omission
A deliberate failure to inform a party of a known material fact when one has an obligation to that party to relay all material facts.
