Class 2: Overview of Lawyer’s Role in Real Estate Conveyancing and Broker Competition - Jan. 10 Flashcards

1
Q

What is the market role of brokers? (Emanuel)

A

Brokers have expertise in locating parties who wish to enter into real estate transactions. (13)

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2
Q

What is the market segmentation of brokers? (Emanuel)

A

Most brokers specialize geographically and by type of transaction. (14)

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3
Q

What are residential brokers? (Emanuel)

A

Residential brokers mainly sell homes and condominiums.

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4
Q

What are commercial brokers? (Emanuel)

A

Commercial brokers sell office buildings, apartment houses, and other commercial properties.

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5
Q

What are the broker’s duties to their clients? (Emanuel)

A

The broker’s duties to their clients are the duty of loyalty, disclosure of the bottom line, duty against self-dealing, duty of full disclosure, and duty of confidentiality.

The broker’s duties stem from the law of agency. They are fiduciary duties. (C-3,15-16)

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6
Q

What is the broker’s duty of loyalty? (Emauel)

A

The broker’s duties stem from the law of agency. They are fiduciary duties. (C-3, 16)

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7
Q

What is the broker’s duty regarding disclosure of the bottom line? (Emanuel)

A

A broker may not disclose the seller’s lowest acceptable price.

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8
Q

What is the broker’s duty regarding self-dealing? (Emanuel)

A

A broker is prohibited from self-dealing.

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9
Q

What is the broker’s duty of full disclosure? (Emanuel)

A

A broker must promptly give the client all material information. (17)

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10
Q

What is the duration of the broker’s duty of full disclosure? (Emanuel)

A

The duty ends when the client relationship is terminated.

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11
Q

What is the broker’s duty of confidentiality? (Emanuel)

A

The broker must keep the confidences of the client. (17)

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12
Q

What are leasing brokers? (Emanuel)

A

Leasing brokers represent landlords who own residential or commercial properties.

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13
Q

What are mortgage brokers? (Emanuel)

A

Commercial mortgage brokers help developers and other owners locate project financing at favorable terms. Residential mortgage brokerage began as a major activity in the United States in the 1980s.

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14
Q

What is a listing broker? (Emanuel)

A

A listing broker is engaged by a property owner to assist in selling the property.

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15
Q

What is a selling broker? (Emanuel)

A

A selling broker brings a buyer to the seller.

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16
Q

How does a broker own their commission on an open listing (nonexclusive) contract? (Emanuel)

A

The broker earns his commission by procuring a ready, willing, and able buyer. (17)

17
Q

What does the procuring cause mean? (Emanuel)

A

To earn the commission the broker must be the procuring cause of the sale.

18
Q

What is exclusive agency? (Emanuel)

A

The broker is the exclusive agent for the listed property. The owner can sell without paying a commission. (17–18)

19
Q

What is the exclusive right to sell (executive listing)? (Emanuel)

A

The seller must pay the commission even if he sells the property on his own. (18)

20
Q

What is a net listing? (Emanuel)

A

The seller agrees to pay the broker all amounts received in excess of a set price. (18)

21
Q

What is constructional preference for the seller? (Emanuel)

A

Courts construe an ambiguous contract in favor of the client. (18)

22
Q

What is duration of listing contract? (Emanuel)

A

Listing contracts normally have fixed expiration dates. (18)

23
Q

What is the protective period of a listing contract? (Emanuel)

A

A term requires the owner to pay a commission for a sale to a person who had contact with the broker within a set period of time after expiration of the listing contract.

24
Q

Whom does the broker represent? (Emanuel)

A

The broker represents the seller. (18)

25
Who is the cooperating or selling broker? (Emanuel)
In many sales, two brokers are involved—not only a listing broker, but also a cooperating or selling broker. Within the Multiple Listing Service (MLS) system, most sales involve two brokers. The cooperating or selling broker is an agent of the listing broker and thus a subagent of the seller. (18– 19)
26
Who is the buyer's broker? (Emanuel)
The buyer’s broker represents the buyer. (19)
27
May a broker represent both the seller and buyer in the same transaction? (Emanuel)
A broker may, with full disclosure and consent, lawfully represent both seller and buyer in the same transaction. (19)
28
What is an implied dual agency? (Emanuel)
A dual agency may arise by implication when both seller and buyer are led to believe the broker is representing them.
29
What is a transaction broker? (Emanuel)
A transaction broker has an arm’s-length relationship with all parties. (19)
30
What happened in Crutchley v. First Trust & Savings Bank (1990)? (Q/TB)
The broker gave advice to seller regarding nonrecourse clause that downplayed it’s significance and advised clients not to consult an attorney. A broker should never discourage a client from hiring a lawyer. If the client’s interest would be best served by hiring a lawyer then encourage it. Legal advice + lack of encouragement to seek lawyer = negligence. Incorrect explanations (legal advice) = lawsuit.
31
What happened in Douglas v. Visser (2013)? (Q/TB)
Buyer who has notice of defects has duty to further investigate. Buyer beware – caveat emptor. Additionally, the Douglases cannot rely on the seller-disclosure statement to prove that they made further inquiries of the Vissers, because many of the questions posed in the disclosure statement were not addressed by the Vissers.
32
What is the traditional rule of when brokers earn their commissions? (Emanuel)
The traditional rule is when customer is found: The broker earns his commission when he procures a ready, willing, and able buyer at terms acceptable to the seller.
33
What is the new rule of when brokers earn their commissions? (Emanuel)
The new rule is that there is an implied condition that the sale must close: A growing trend is to imply the condition that the sale must close in order for the broker to earn the commission.
34
What is the contract vs. conveyances test? (Emanuel)
A growing trend is to imply the condition that the sale must close in order for the broker to earn the commission.
35
What is the simple-complex test? (Emanuel)
A broker can complete simple forms.
36
What is the incidental test? (Emanuel)
A broker can complete simple forms.
37
What is the public interest test? (Emanuel)
A broker can complete simple forms.