Chapter Ten - Agency

Question 1

AGENCY

Answer 1

• The legal relationship between two parties who agree that one party, the agent, will act on behalf of the other paty, the principal, subject to the principal’s reasonable direction and control.

Question 2

General Agent

Answer 2

• One who has broad authority to represent his principal in a series of transactions of a continuous nature.
• Example: property manager

Question 3

Special Agent

Answer 3

• One who acts with limited authority in conducting a specific task for a principal.

Question 4

Creation of Agency Relationship

Broker (Principal) - Salesperson (Agent)

Answer 4

• An agency created between the broker and his salesperson through a written employment agreement.

Question 5

Client (Principal) - Broker (Agent)

Answer 5

• Seller Agent or Buyer Agent relationships evidenced by a Listing Agreement or Buyer Agency Contract.

Question 6

Duties of An Agent to the Principal

“OLDCAR”

Answer 6

• Obedience
• Loyalty
• Disclosure: except information obtained through a previous relationship.
• Confidentiality
• Account
• Reasonable Care and Diligence

Question 7

Five Business Relationships

(Consumer Information Statement)

Answer 7

• Seller’s Agent
• Buyer’s Agent
• Disclosed Dual Agent
• Transaction Broker

Question 8

Business Relationship Disclosure

Answer 8

• Buyers, sellers, landlords and tenants must be given a copy of the Consumer Information Statement .
• All brokerage agreements must contain a statement that the client has received a copy of the Disclosure Statement.

Question 9

Disclosed Dual Agency

Answer 9

• Dual Agency is a limited relationship where the brokerage firm represents both the buyer and the seller.
• Requires infromed consent by the parties.
• Each party will recieve less than full agency representation from the dual agent.

Question 10

Undisclosed Dual Agency

Answer 10

• The principal can rescind any transaction procured by the dual agent without showing any injury or loss.

Question 11

Agents Buying from Owner

Answer 11

• Principal must consent.

Question 12

Termination of Agency Relationship

Answer 12

• Mutual Agreement, Revocation by the principal, renunciation by the agent.
• Accomplishment of objective.
• Expiration of agreement.
• Death of principal or agent.
• Bankruptcy of owner.
• Destruction of property.

Question 13

Power of Attorney

Answer 13

• Principal = grantor
• Attorney-in-Fact = agent

Question 14

Broker Compensation

Answer 14

• Provides a ready, willing, and able buyer under the terms set by the seller.
• Broker is entitled to fees in the event of buyer or seller default.

Question 15

Safe Harbor Provisions

3 Requirements fot Independent Contractor Status

Answer 15

1. Valid real estate license.
2. Written contract
3. 90% income from sales.

Question 16

TERMINATION OF LISTING CONTRACT

Answer 16

• Expiration
• Death of broker or principal
• Bankrupty of broker or principal
• Regulation
• Destruction of property
• Revocation
• Renunciation
• Accomplishment of goals