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Law of Agency > Day 1 > Flashcards

Day 1 Flashcards

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1
Q

What is Agency?

A

An agency relationship exists when one person, the agent, acts for or on behalf of another person, the principal, also known as the client.

Agency is the relationship the agent has with his or her principal or his or her broker.

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2
Q

What is the purpose of TRELA?

A

Passed in 1939,The purpose of the act is to protect the public against unscrupulous brokers and sales agents.

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3
Q

What is the purpose of TREC?

A

Created to enforce and administer TRELA in 1949

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4
Q

What is a Subagent?

A

A license holder not associated with the seller’s broker, but who is representing the seller through a cooperative agreement, often through membership in a Multiple List- ing Service (MLS), with the seller’s broker.

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5
Q

What is a client?

A

A person, sometimes called a principal, who engages the professional advice or
services of another, called an agent, and whose interests are protected by the specific duties
and loyalties of an agency relationship. Many of these duties are outlined in a listing or

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6
Q

What is a Cooperative Broker?

A

(Buyers Agent ) A broker selling the listing of another broker. A cooperative broker may complete the transaction as a subagent of the listing broker or may represent the buy- ers under an agency agreement; he or she is also known as the other broker.

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7
Q

What is a customer?

A

A person who receives limited brokerage services without establishing an agen- cy relationship.

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8
Q

What are the Duties of Principal to Agent?

A
  • Compensation
  • Reimbursement
  • Indemnification
  • Performance
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9
Q

What are the license holders two levels of responsibility?

A

Public responsibility: These are the duties to customers (third parties) in a transaction:
a. Honesty
b. Disclosure of material facts
c. Handle all funds with care
d. Be responsible for written or oral statements

Fiduciary responsibility: These are the duties to a client.
a. Put the interests of the client first
b. Give full disclosure to the client (advice and opinions in addition to disclosing all pertinent facts - both material and other)
c. Exhibit trust and honesty
d. Exercise good business judgment
e. Be loyal to the principal
f. Be competent

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10
Q

What is Compensation?

A

Compensation refers to the fact that the agent should be paid on the completion of the agency.

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11
Q

What is Indemnification?

A

Indemnification means that the principal will protect the agent from suffering a loss due to the agent’s reliance on information received from the principal.

For example, if the seller misrepresented the property in a Seller’s Disclosure, the agent will be indemnified if the agent was unaware of the misrepresentation.

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12
Q

Who is the listing agent?

A

The agent who lists a seller’s property for sale is called the “listing agent.”

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13
Q

Who is the Selling Agent?

A

The agent for the buyer is called “the buyer’s agent.” In a real estate office, the agents refer to the buyer’s agent as the “selling agent” because the buyer’s agent actually sold the property by procuring the buyer.

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14
Q

Who is the cooperating agent ?

A

In a cooperative sale, the buyer’s agent is also known as the cooperating agent because the buyer’s agent cooperated in the sale with the listing agent.

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15
Q

How is agency by authority created?

A

Exists when an individual grants express authority to the agent to perform some act.

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16
Q

What is ostensible agency?

A

exists when actions lead another person to assume that one is an agent. For example, a license holder might falsely make public statements that he or she is representing a com- mercial property owner as a leasing agent or property manager.

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17
Q

When is Express Authority given ?

A

A written listing agreement or buyer representation agreement is evidence that the agency relation- ship exists and gives the agent express authority. Express authority also comes from the principal’s specific oral instructions given to the agent.

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18
Q

What is implied Authority?

A

Agency authority, or rights, may also result from “the norm,” or what is considered customary in the business this authority is defined as implied authority.

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19
Q

What are the three categories or types of agency?

A
  1. Universal agency
  2. General agency
  3. Special agency
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20
Q

What is universal Agency?

A

The universal agent has a broad range of authority to act for a principal. This agency relationship comes with a significant amount of responsibility. As a universal agent, an individual has the power to act for the principal in all transactions.

Universal agency is created with a power of attorney.

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21
Q

What is General Agency?

A

As a general agent, an individual has the right to represent his or her principal in a particular type of transaction or business. One common example of a general agent in real estate is the property manager.

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22
Q

What is Special Agency?

A

The special agency relationship is the most limited of all the agency relationships. Sometimes, it is even called “limited agency.” In a special agency relationship, the agent may perform only limited duties for the principal

the listing agreement establishes a special agency relationship between the broker and
a seller or landlord. A buyer/tenant representation agreement will also create a special agency relation-
ship with the broker.

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23
Q

What IS OLD CAR?

A

As agents, our fiduciary duties to clients are specific and can be remembered by using the acronym OLDCAR:
* Obedience
* Loyalty
* Disclosure
* Confidentiality
* Accounting
* Reasonable care

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24
Q

Explain what Obedience mean in OLD CAR

A

An agent must follow all of the client’s lawful instructions. A client may reasonably expect an agent to arrange for certain services to be performed.

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25
Q

How long does Confidentiality last?

A

Forever

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26
Q

What is Commingling ?

A

Mixing clients’ funds with a broker’s business, operating, or personal funds, and TRELA prohibits it.

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27
Q

What is Conversion?

A

When a broker spends his or her client’s funds without authorization, that broker is guilty of conversion. Both commingling and conversion are serious violations of TRELA.

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28
Q

When an agent meets a customer what is the main goal?

A

When meeting a prospect they are the buyer if the prospect is a buyer, the goal is to secure the buyer as a client. Securing the buyer is best accomplished by using a buyer’s representation agreement to formally establish the broker’s agency relationship with the buyer.

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29
Q

How is Agency Terminated?

A

Agency relationships are terminated by any of the following:

  • When the purpose of the agency is completed

*The expiration of the period stated in the listing contract.

  • At any time by mutual agreement
  • Condemnation or destruction of the property.
  • Bankruptcy of either party.
  • Operation of law.
  • Revocation of the broker’s license. If the broker’s license is revoked, all agency agreements with buyers and sellers are terminated.
  • Abandonment by the agent.
  • Revocation of the agreement at any time by the principal.
  • Termination of the agreement at any time by the broker.
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30
Q

When the broker is given notice of termination, the broker must:

A
  1. Cease all marketing activities.
  2. Remove signs and lockboxes.
  3. Remove the listing from websites and other advertising media.
  4. Terminate the listing in the MLS. Note that a “Withdrawal” would not comply with this requirement. The listing must be terminated. In the MLS, a withdrawal removes the listing from the market but does not terminate the listing.
31
Q

What is Assumed business name ?

A

Assumed business name (commonly known as a DBA or trade name) means any name used in business by a broker that meets the requirements of subsection (d), other than the name shown on the broker’s license issued by the Commission, a team name, or an alternate name.

32
Q

What is Team
Name?

A

“Team name” means a name used by a group of one or more license holders sponsored by or associated with the same broker that performs real estate activities under an exclusive collec- tive name other than the broker’s licensed name or assumed business name.

33
Q

What are the rules for team names?

A

Team names:
(1) A team name may not include any terms that could mislead the public to believe that the team
is offering brokerage services independent from its sponsoring broker.

(2) A team name must end with the word “team” or “group.”

(3) Before an associated broker or a sales agent sponsored by a broker starts using a team name in an advertisement, the broker must register the name with the Commission on a form approved by the Commission.

(4) A broker must notify the Commission in writing not later than the 10th day after the date the associated broker or a sales agent sponsored by the broker stops using a team name

34
Q

What are TREC’s rules for Advertisements?

A

The license holder’s name or team name and the broker’s name in at least 1/2 the size of the adver- tisement’s largest contact information must still appear; however, they may be on a separate page of the account or the user’s profile page if the separate page is:

  • readily accessible by a direct link from the social media or text advertisement
  • readily noticeable on the separate page or in the account user profile

The broker’s logo does not generally count as the broker’s name unless it contains either the broker’s licensed name or assumed business name (DBA) in full (not a shortened version of it), and the printed name is 1/2 the size of the largest contact information in the ad.

It is important to make a distinction between the size of the logo and the size of the text. The size of the logo does not count.

35
Q

Who is responsible for the sellers disclosure?

A

In Texas, most sellers prepare a Seller’s Disclosure Notice, and the seller is responsible for its accuracy

36
Q

What is a stigmatized propertY?

A

A property is stigmatized when some adverse event occurs on-site, or people believe that a past event or condition affects it. A property that is either psychologically or physically stigmatized can be challenging to sell.

37
Q

A license holder is not required to inquire about, disclose, or release information relating to What?

A

a previous or current occupant of real property had, may have had, has, or may have AIDS, an HIV-related illness, or an HIV infection as defined by the Centers for Disease Control and Prevention of the United States Public Health Service; or

(2) a death occurred on a property by natural causes, suicide, or accident unrelated to the condition of the property.

38
Q

What other material facts should be disclosed?

A
  • Land/soil conditions
  • Pest infestation, toxic mold, and other interior environmental hazards
  • Structural issues – roof, doors, foundation, windows
  • Condition of electrical and plumbing systems and fixtures
  • Location within Natural Hazard or Specially Regulated areas – nuclear power plant, landfill, Flood plains, Wetlands, Endangered species, etc.
    Potentially uninsurable property
  • Known alterations and additions
  • Public Controls, Statutes, and Public Utilities to be disclosed include:
  • Zoning and planning guidelines
  • School districts, Utility districts, Tax Districts, Flight Paths - Homeowner’s Associations membership
39
Q

What are the requirements for a valid listing agreement?

A

Requirements of a valid listing agreement include:
* The signatures of all of the owners and the listing agent
* A legal description of the property, including the street address
* The list price of the property as set by the seller
* A definite starting (commencement) and ending (termination) date
* The agreement to pay a stated commission (compensation) to the broker, usually a percentage of the sales price
A complete listing package helps agents avoid misunderstanding with their buyers and sellers regarding the critical elements of a transaction.

40
Q

Types of Listing Agreements

A

The four major types of listing agreements are:
1. Open listing
2. Exclusive agency
3. Exclusive right to sell
4. Net listing

41
Q

What is an Open Listing ?

A

Gives the seller the right to list the property with multiple competing brokers and to sell the property personally without liability for payment of a commission. Some sellers believe an open listing better serves their interest, believing that listing with several brokers produces more prospects than a single listing company.

42
Q

What is an Exclusive Agency ?

A

The seller agrees to list the property with only one broker during the listing term, with the provision that the seller can sell the property himself or herself without owing a commission.

43
Q

What is the exclusive right to sell ?

A

The broker receives a commission even if the owner sells the property

44
Q

How up to date should a CMA be?

A

the agent should use data from sales that have closed within the last six months  the more recent the sales data, the better.

45
Q

What is procuring cause of sale?

A

The procuring cause of sale is the individual who, through a series of uninterrupted activities or actions, brought about the completion of a contract.

Most litigation over the payment of real estate commissions arises from disputes over who was the procuring cause of sale.

46
Q

What are Net Listings?

A

the seller establishes a minimum net amount for his/her proceeds at closing. The real estate broker’s commission is the difference between the minimum net established by the seller and the actual seller’s net.

47
Q

How common is subagency?

A

Subagency is rare and tends to show up more often in rural communities

48
Q

What must be included in a listing agreement ?

A

All listing agreements must have a definite termination date.

49
Q

Old car applies in what states ?

A

The duties we know as OLDCAR (obedience, loyalty, disclosure, confidentiality, accounting, reasonable care) apply in all states, and understanding these duties on the highest level establishes the agent’s creditability and competitive standing in the marketplace.

50
Q

Can the buyer rep disclosure be oral?

A

All buyers should be provided with an oral or written disclosure of representation at first contact. That disclosure is normally done orally when the buyer first calls or visits the office. Whatever the method of contact, personal visit, phone, fax, or e-mail, the notice of representation should be given.

51
Q

When should the IABS be given?

A

When the agent and the buyer have a substantive discussion about real estate, the buyer must be provided the Information About Brokerage Services.

52
Q

Are oral agreements enforceable?

A

Oral agreements are not enforceable against the client but are enforceable against the agent.

53
Q

Who can negotiate commission?

A

Only a broker may earn a commission, and only a broker may sue to collect a commission.

54
Q

What are the Agent’s duties to customers?

A

Honest Dealing — An agent may not deceive, defraud, or otherwise dishonestly deal with a customer.

Reasonable Care and Skill in Performance — This means that an agent will be held to the stan- dards of knowledge, expertise, and ethics that are spelled out in the Texas Real Estate License Act.

Disclosure of all Material Facts — The license holder must disclose all facts that he or she knows or should reasonably be expected to know that materially affect the value of or desirability of the property. Facts include disclosure of agency, property condition, and environmental hazards.

55
Q

What is price-fixing?

A

Any attempt by a group of brokers to set the commission rates in their area or between a group of brokerage firms would be considered illegal price-fixing

56
Q

What federal laws have the most significant impact on price fixing?

A

The federal laws that have the most significant impact in this area are the Sherman Anti-Trust Act and the Clayton Act.

The Sherman Anti-Trust Act is very specific concerning this violation. All commissions are negotiable between the broker and his or her client and are not set by any Board of REALTORS® or between competitors, or by TREC.

57
Q

What must be included In the buyer tenant rep?

A

There must be a definite termination date, and the term could be as short as one day or for only one or specifically selected properties.

58
Q

What is Dual Agency?

A

A practice that allows a real estate firm to represent both sides of a transaction (buyer and seller, landlord and tenant) at the same time. In dual agency, the broker represents both parties with their written permission.

Illegal in Texas

59
Q

What is Intermediary ?

A

A process that makes it possible to bring client buyers and sellers together while at the same time representing their best interests. When this type of transaction occurs, the broker becomes the Intermediary.

Since the broker has a personal duty to represent both sides, it is only appropriate that the broker remain neutral and avoid negotiating for either party.

60
Q

What is intermediary without appointments?

A

Sometimes, an agent will have the opportunity to sell his or her own listing.

Agents can go ahead and complete the transaction but cannot give advice and opinions to either party.

61
Q

What is intermediary with appointments?

A

Occurs when Broker appoints agents .

The appointed associates will give advice and opinions (i.e., negotiate) to their respective parties.

62
Q

Who decides when to appoint or not appoint

A

To appoint or not is at the discretion of the broker.

63
Q

When must the representation disclosure be done?

A

At First Contact

64
Q

How should the IABS be presented?

A

At that point, the IABS should be presented. The license holder should take care to provide this information before doing a listing presentation for a seller and before discussing properties, needs, and wants with a potential buyer.

The contact information is required to be filled in at all times. It is a violation to provide a blank IABS without the contact information.

License holders must provide a link to the IABS form in a readily noticeable place on the homepage of their business website, in at least 10-point font, and labeled

“Texas Real Estate Commission Information About Brokerage Services.”

A sales agent or broker must also provide the form at the first substantive communication

with a prospective client by one of the following four methods:

(1) by personal delivery;

(2) by first class mail or overnight com- mon carrier delivery service;

(3) in the body of an email; or

(4) as an attachment to an email, or a link within the body of an email, with a specific reference to the IABS Form in the body of the email.

65
Q

What does Substantive Dialogue Mean?

A

A meeting or written communication that involves a substantive discussion that relates to a specific property.

Substantive dialogue means that once the potential client starts to talk to the agent about specific real property, the dialogue has become specific.

There are some situations, however, that do not apply, such as open houses.

66
Q

When is it too late to provide the IABS?

A

When the Buyer is about to write an offer

67
Q

What can an unlicensed assistant do?

A

Answer Phones

68
Q

What is the virtue approach?

A

Ethics are habits that enable us to act accordingly as persons who are truthful, honest, courageous, compassionate, generous, tolerant, and possess integrity, fairness, self-control, and prudence.

69
Q

What is an Ethical Dilemma?

A

defined as a situation in which individuals may find themselves when they:
* do not know the right course of action
* have difficulty doing what they consider to be right * find the wrong choice very tempting

70
Q

Is commission negotiable?

A

Commission is always negotiable

71
Q

What are the Canons of professional ethics?

A

Competency , Integrity , consumer notice 1-4 (CN1-5)

72
Q

Who can use the term Realtor?

A

Members of NAR( National Association of Realtors

73
Q

Under DPTA is Brokerage a service?

A

Yes

74
Q
A

Law of Agency (1 decks)

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