Fiduciary Duties Flashcards
What actions demonstrate exercising care when representing a buyer?
Helping the buyer locate appropriate housing
Evaluating property values and property conditions
Determining financing alternatives
Presenting offers and counteroffers with the buyer’s interests in mind
What exception exists to the duty of obedience when working with a client?
An agent is not bound by the duty of if the principal’s directions are not legal.
An agent’s fiduciary responsibilities to a client usually end when the transaction closes. This is not true of which duty?
Confidentiality. This duty extends beyond the termination of the relationship. No personal information gained during the term of the agreement can ever be disclosed to another party.
What is the name of the Texas’ disclosure statement?
Seller’s Disclosure of Property Condition
What can a licensee not provide to a customer?
Avice and counsel to the customer.
List at least three things that an agent for a seller must disclose?
Purchase offers
Who the prospective purchasers are and if the agent has a relationship with them in any way
Ability of the purchaser to complete the transaction
Ability of the purchaser to offer a higher price
Purchaser’s intention to resell the property for a profit
What are the three disclosure requirements of a principal?
Availability
Information
Compensation
List three actions a broker is not usually authorized to do?
Signing contracts for the seller
Initialing changes to an offer
Permitting early occupancy
In what point type must a Texas Agency Disclosure be printed?
10 Point
Why should the listing agent disclose an existing relationship with a buyer, to the seller?
Perceived conflict of interest
What disclosure action should the licensee take, when more than one offer comes in on the same listing?
The listing agent should disclose to all buyers about the existence of the other offer or offers.
Why is a seller not allowed to counter offer at the same time to all competing bids.
If all buyers accept, the property would be sold more than once.
The duties that the agent owes his or her principal are:
Care (Reasonable care) Obedience Accountability Loyalty Disclosure or Notice
COALD or COALN.
an agent is bound to
inform the client of all facts that might affect the client’s interests in the transaction. This includes the reason for the sale as well as both the facts that the agent knows and those that the agent should have known.
Agent can be liable for….
damages if he or she failed to disclose such information.
Just as an agent owes duties and responsibilities to his or her principal……
so does the principal owe duties to the agent: availability, information, and compensation.
Texas law requires that seller agents provide to a party to a real estate transaction at the time of the first substantive dialogue
a “written statement” that explains in general terms the positions of seller representation, subagency, buyer representation, and the intermediary position. This statement does not require any signatures, dates, or licensee names. However, it must be printed in at least 10-point type.
Approved Form
Information About Brokerage Services (IABS)
When more than one offer comes in on the same listing…..
the listing agent must inform all buyers about the existence of the other offer or offers, but not reveal their content. This will give the buyer who made the offer a chance to improve his or her bid.
Brokers are required
to tell their clients about how a commission will be split. This is not the split between the broker and his agents. This is the split between the broker and other brokers.
Licensees are required to tell all buyers and sellers…..
that they should retain an attorney.
This is done when filling out the earnest money contract while making an offer. There is a line for the buyer’s attorney and that will remind the licensee to ask the buyer if she wants an attorney.
The law expects an agent to do his or her job with
a reasonable degree of care, skill and diligence. Since the principal hires an agent because of his or her expertise in the field, the principal expects the agent to use that expertise on the principal’s behalf.
If the agent represents the seller, exercising care and skill includes:
Helping the seller set a realistic asking price
Discovering and disclosing facts that affect the seller
Presenting contracts properly
Marketing the property effectively
Helping the seller evaluate purchase offers
If the agent represents the buyer, exercising care and skill includes:
Helping the buyer locate appropriate housing
Evaluating property values and property conditions
Determining financing alternatives
Presenting offers and counteroffers with the buyer’s interests in mind
If an agent fails to exert reasonable efforts to represent his client’s interest…
the agent could be found guilty of negligence in court. An agent is liable to the principal for any loss that results from carelessness or negligence.
Obedience
requires that the agent act in good faith and obey the principal’s directions as outlined in the contract, as long as they are legal.
Accountability
an important duty owed to clients. An agent must be able to account for all monies, documents and other property he or she receives from the principal.
Brokers must also give copies of documents to everyone who is affected by them and retain these documents for at least three years.
Loyalty
requires the agent to place the client’s interests above those of all others, including his or her own. An agent must negotiate agreements without considering the amount of compensation he or she will receive. In addition, a licensee is required to disclose any personal interest he or she has in a property.
Confidentiality
Important aspect of loyalty
If the agent represents the seller, he or she may not disclose without the seller’s express permission such things as:
Client’s willingness to accept an offer lower than asking price
Client’s anxiousness to sell
If the agent represents the buyer, he or she may not disclose without the buyer’s express permission such things as:
Client’s willingness to pay more than asking price
Client’s need or desire to move quickly
Note: The duty of confidentiality extends bey
An agent for a seller has a duty to disclose such things as:
Purchase offers
Who the prospective purchasers are and if the agent has a relationship with them in any way
Ability of the purchaser to complete the transaction
Ability of the purchaser to offer a higher price
Purchaser’s intention to resell the property for a profit
An agent for the buyer has a duty to disclose such things as:
Deficiencies in the property
Any contract provision of financing terms that don’t suit the buyer’s interests
How long the property has been listed
Why the seller is selling
Just as an agent owes duties and responsibilities to his or her principal
so does the principal owe duties to the agent.
Availability
Information
Compensation
Availability
In a special agency, the power and decision-making authority of the agent are limited. Therefore, the principal must be available for consultation, direction, and decision-making. Otherwise the agent cannot complete the job.
Information
The principal must provide the agent with a sufficient amount of information to complete the desired activity. This may include property data, financial data, and the client’s timing requirements.
Compensation
If an agreement includes a provision for compensating the agent and the agent performs in accordance with the agreement, the client is obligated to compensate the agent. However, the agency relationship itself does not necessarily include compensation.
A broker is authorized by the client to find a ready, willing and able buyer, but this authorization usually does not include authority to perform such actions as:
Signing contracts for the seller
Initialing changes to an offer
Permitting early occupancy
The authority granted to the broker is outlined in the listing agreement, which typically authorizes the broker to perform these actions:
Place a sign on the property Advertise the property Show the property Cooperate with other brokers Use a multiple listing service (MLS) Accept earnest money deposits
