Chapter 7: Real Estate Agency Flashcards
General Agency Law
General agency law is the body of legal rules that applies to agency relationships in most contexts.
In Washington, a state statute has largely replaced general agency law in the real estate field.
REBRA
The Real Estate Brokerage Relationships Act (REBRA) is the Washington statute that governs real estate agency relationships.
For the most part, it supersedes general agency law in the real estate context.
Ratification
An agency is created by ratification if the principal gives approval after the fact to acts that weren’t authorized at the time the agent performed them.
Estoppel
An agency may be created by estoppel when a principal allows a third party to believe that an unauthorized person is acting as her agent.
The principal is estopped from denying an agency relationship, because that would be unfair to the third party.
Vicarious Liability
Under general agency law, a principal may be held liable for torts committed by his agent.
This is called vicarious liability.
Washington’s Real Estate Brokerage Relationships Act largely eliminates vicarious liability in real estate transactions.
Imputed Knowledge
Under general agency law, a principal is held to have notice of all information that is in the possession of the agent.
This is called the imputed knowledge rule.
In Washington, the rule no longer applies in real estate transactions.
Termination by all parties
Under general agency law, an agency relationship may be terminated by mutual consent, or the principal may revoke the agency, or the agent may renounce the agency.
Unilateral termination may be a breach of contract.
Termination by operational law
Under general agency law, an agency relationship may terminate automatically by operation of law.
This may occur because of expiration of the agency term; fulfillment of purpose; death, incompetence, or bankruptcy; or extinction of the subject matter.
Termination under WA Statue
Washington’s statute provides that a real estate agency can terminate by completion of performance, expiration of term, mutual consent, or notice from one party to the other.
After termination, the licensee still owes the principal the duties of accounting and confidentiality.
in-house transactions
It’s an in-house transaction when the listing agent and the selling agent are both working for the same brokerage firm.
Unless otherwise agreed, the listing agent represents the seller, the selling agent represents the buyer, and the designated broker for the firm is a dual agent.
This arrangement may be referred to as split agency, designated agency, assigned agency, or appointed agency.
Independent contractor: IRS Requirements
A real estate agent is usually an independent contractor in relation to the brokerage firm and designated broker.
To be considered an independent contractor by the IRS, the broker must have a written contract to that effect and must be compensated primarily by commission.
