Chapter 7: Brokerage, Agency, and Fair Housing Flashcards
What is an agency?
When someone gives another person permission to act on their behalf
- Can be a person or legal entity
- Can be a corporation
3.
Who is the principal?
The principal is the client requesting someone else to represent them
Who are 3rd Parties (aka customers)?
Anyone outside of the client that I must work and/or negotiate with
What are the 3 levels of agency?
- Universal: Has same power as principal
- General: Has power to do a specific trade or business
- Special: Has power to do a specific act or transaction
What are the different types of agencies?
- Ostensible: Principle makes 3rd party believe someone is an agent w/o notifying the agent
- Agency by ratification: Established after the fact
- Agency coupled with interest: Agent holding interest in a property he is representing
- Dual Agency: one representative representing a buyer and seller at the same time.
- Designated agency: Broker assigns one client to an agent and a different client to another agent.
What is a subagent?
A regular agent.
The agent is under the broker who represents the client (principal) hence the name subagent.
Who is a cooperating broker?
The broker or agent who located the buyer.
How is an agency terminated by operation of law?
- Death or incapacitation of either party
- Destruction or condemnation of property
- Bankruptcy of either party
- Foreclosure of the principal
Agency is normally terminated by:
- Purpose of agency being completed
- Expiration of the term of the agency
- Mutual agreement
- Revocation: Revoked by either party at any time
What are an agent’s fiduciary obligations:
- Care: Exercise care in all dealings
- Obedience: Act in good faith & conformity with client’s wishes as long as legal and ethical
- Accounting: Accountable for all funds and documents
- Loyalty: Put principal’s interest above all else. Represents client’s best interest at all times
- Notice: Full disclosure (keep principal fully informed)
What are an agent’s responsibilities to 3rd parties?
- Avoid puffery: exaggerating
2. Avoid fraud: intentional misrepresentation
What is a latent defect?
A defect known to the seller, but not to the buyer.
What is indemnification?
one party in the contract is responsible for compensating another for loss, damages, and/or injury incurred as a result of that party’s actions
What is a listing agreement?
When a property owner hires a broker to find a ready, willing, & able buyer
- an employment or personal service contract
- creates a special agency
- Shows ready & willing through a purchase agreement
- Shows “able” through being approved for a loan
What is a procuring clause?
When a broker has produced a ready, able, and willing guyer
What are the 3 types of listings?
- Open (General):
Multiple agents search for buyers, but only the procuring cause gets paid. Seller doesn’t have to pay if he finds buyer before agents. Doesn’t have to have a termination date. - Exclusive agency
Only one agent, but seller does not have to pay if he finds buyer before agent. It must have a termination date. - Exclusive right to sell.
Whether agent or buyer finds a buyer, the agent still gets his commission. Must be in writing and have a termination date.
What is a safety clause (protection clause):
Agent uses clause to protect himself so that if the owner finds a buyer a specified period of time after agency ends, the agent still gets the commission.
What is a net listing
A listing that allows the agent to keep the difference between the actual sales price and the seller’s desired price
What is a multiple listing service (MLS)?
An organization made up of brokers who wish to exchange listing information
What are the ways to terminate a listing agreement?
- Full performance
- Listing expires
- Revocation
- Mutual Agreement
- Death of either party
- Destruction or condemnation
- Bankruptcy
- Foreclosure
- Abandonment
What the 3 types of buyer agency agreements?
- Exclusive:
buyer’s legally responsible to pay agent no matter who located the property. - Exclusive agency:
Buyer’s not obligated to pay the agent if buyer finds the home first. Exclusive to 1 agent. - Open: Buyers can enter into an agreement with multiple agents
What are antitrust laws?
Laws that prohibit monopolies, contracts, combinations, and conspiracies that unreasonably restrain trade
Examples of Antitrust breaches.
- Price fixing: Local agents set a fixed commission price
- Allocation: Brokers divided markets and agree not to compete with each other
- Boycotting: Brokers conspire against another broker, firm, or business
Civil Rights Act of 1866
Prohibits any type of discrimination based on race
