General - Chapter 4 Lesson 5 Flashcards
The most desirable way to create an agency relationship between a real estate brokerage and a client
written brokerage agreement (express agency)
Sellers secure the services of a broker through a…
listing agreement
Buyers secure the services of a broker through a…
buyer agency agreement
Property owners secure the services of a licensed property manager through a…
property management agreement
A person who hires another individual to act for them is called the:
Principal
How it could end…
accomplishment of purpose, expiration, operation of law, mutual agreement, renunciation by the agent, revocation by the principal
Sometimes the termination of an agency results in…
breach of the agency agreement
Accomplishment of Purpose
Most common, purpose was accomplished and no more need
Expiration
term expires without successful conclusion
Operation of Law
Principal dies or seriously incapacitated
Broker dies or incapacitated (affiliated licensee dies, it doesn’t matter)
Seller declares bankruptcy
Brokerage firm declares bankruptcy
Brokerage firm loses its license
Property is destroyed
Property condemned
Eminent Domain
Government’s constitutional power to take private property for public use, as long as the owner is paid just compensation. Condemnation is the action; eminent domain is the right
Mutual Agreement
If both parties agree to terminate the relationship, they can at any time
Renunciation
occurs when someone who has been granted something or has accepted something later gives it up or rejects it
Agent can renounce (quit)
at any time, but they may be liable for any damages caused by the renunciation
Revocation
occurs when someone who granted or offered something withdraws it
Firing
Principal can usually revoke the agency relationship w/o liability
Renunciation/Revocation
even if circumstances seem clear, there’s a possibility that the issue could end up in court
Agency coupled with an intrest
agent holds an ownership interest in the property being sold
ROAMER
Renunciation
Operation of Law
Accomplishment of Purpose
Mutual Agreement
Expiration
Revocation
Most likely to cause breach of contract
Renunciation and revocation
Broker Harold of Ace Realty has a listing with seller Stella. The ideal way for this agency relationship to end is if Harold finds a buyer for Stella’s property.
True - ideal
Agent Hans has a 120-day listing contract with Gretel to sell her cottage. Gretel had hoped that Hans would find her a buyer quickly so that she could avoid declaring bankruptcy, but that is not the case. With 20 days left in the listing period, Gretel declares bankruptcy. Does this terminate their agency agreement? If so which way?
Yes - operation of law
Agent John has a 60-day listing agreement with seller Sue. The agreement states that John will market the property in multiple outlets and schedule three open houses. John puts a sign in the yard but does not advertise or submit the listing to the multiple listing service. Sue feels abandoned and terminates the listing agreement. This is an example of renunciation.
False - revocation
Andy, an affiliated licensee at Big Top Realty has a listing agreement with seller Sylvia. When Andy dies, their agency relationship is terminated by operation of law.
False - contracted w/ brokerage not agent
Ben is a licensee at Blue Sky Realty and secures a listing agreement with Matt. Ben then shows Matt’s house to buyer customer Donna, who makes an offer. Ben’s agency relationship can be terminated legally if Donna dies before the sale closes.
False - relationship is between Blue Sky Realty and Matt (not Donna)
Carlos is planning to sell his house and signs a 90-day exclusive listing agreement with Anna, a real estate broker. Two weeks later, Carlos starts dating a real estate licensee and decides to change the listing to her brokerage. Carlos tells Anna that he’s revoking the agency. Can Carlos make a change like this without any repercussions?
No - breach of contract
Which methods of terminating an agency relationship could MOST LIKELY lead to a breach of contract? Select all correct responses.
Revocation and Renunciation
Which duty survives after the agency relationship
Confidentiality
If a agreement expires after contract but before closing, when do agent’s duties end?
At closing
What’s a reason an agent might owe a principal a duty
brokerage agreement includes express promise to perform specific duty
Properly accounting any remaining funds may require an agent to continue with duties because of…
an implied obligation
An agent who breaches their duties can face…
administrative discipline, civil liability, and criminal liability
Each state has an…
administrative agency
What might these commissions impose
fines or reprimands - suspend or revoke license
Tort
violation of the standards of reasonable conduct imposed by law that causes harm to another person
Civil Liability
agents may go to civil court for breach of duty, may owe compensatory or punitive damages
Principal could be held civilly liable for conduct of real estate licensee through…
Vicarious liability
Vicarious liability
legal concept that a principal can be held responsible for the wrongful act of their agent if such acts occur within the scope of the agency relationship
If a breach is more serious it could lead to
criminal liability
Criminal liability
can be given IN ADDITION TO civil liability
Buyer Rebecca learns from a friend that the house she’s interested in buying is owned by her buyer’s agent Tim. She revokes the buyer agency agreement and engages a different brokerage to represent her in the purchase. Do you think Rebecca would be liable for damages by terminating her relationship with Tim?
No - Rebecca’s agent Tim had a clear conflict of interest. He also breached his fiduciary duty to disclose his interest in the property Rebecca wanted to buy. Even though Rebecca terminated the buyer agency relationship before it expired, Tim would have no cause of action against her.
Agent Carrie took a listing for Jorge’s house. She put a sign in his yard and then went on vacation. While she was gone, inquiries and offers piled up in her email and voicemail, but she did not address them. Jorge sent her a letter terminating the listing, and then filed a complaint with the state real estate commission. The real estate commission could suspend Carrie’s license for breaching her duties to her client.
True - Most state real estate commissions have the authority to impose administrative discipline against licensees who violate the law or breach their duties. Sanctions could include fines, reprimands, license suspension, or even license revocation for serious infractions. If Jorge suffered a loss because of Carrie’s actions, he could also sue her in civil court to claim damages.
Buyer John renounces his buyer agency agreement with agent Alison when he realizes that she has misappropriated his earnest money deposit. The most severe consequence Alison could face is a civil lawsuit.
False - This is a serious crime, and Alison could face criminal charges in addition to a civil lawsuit or administrative discipline from her state real estate commission.
Never give what kind of advice
legal
How might an agent stray into practice of law by not using pre-printed purchase agreements and leases
Drafting contracts from scratch
How might an agent stray into practice of law by offering opinions on title
Advising on legal title issues
How might an agent stray into practice of law by expressing opinion about legality
Expressing a legal opinion
How might an agent stray into practice of law by expressing an opinion about rights to property
Expressing an Opinion About Property Rights
How might an agent stray into practice of law by offering opinion about what contracts are valid
Offering an opinion about contract validity
Which remedy would be available to a principal whose agent a court has determined breached their fiduciary duties? Select all correct responses.
Compensatory damages, incarceration of the agent, loss of real estate commissions earned, punitive damages
