General Principles of Agency

Question 1

someone who uses or purchases a product or service.

Answer 1

consumer

Question 2

someone who’s working with a real estate licensee but who isn’t represented by that licensee (nor owed the full range of agency responsibilities); the customer may or may not be represented by another licensee.

Answer 2

customer

Question 3

usually the party to the transaction who is represented (the client).

Answer 3

principal

Question 4

someone who’s represented by a real estate licensee (and owed certain agency responsibilities).

Answer 4

client

Question 5

someone in a position of trust who owes loyalty to another.

Answer 5

fiduciary

Question 6

someone who acts on behalf of someone else.

Answer 6

agent

Question 7

has broad authority to act for the principal, such as someone who has power of attorney.

Answer 7

universal agent

Question 8

has limited authority to act on a client’s behalf, such as a real estate agent or an escrow officer. This type of agent can’t bind a client to a contract.

Answer 8

special agent (aka limited agent)

Question 9

responsible for handling all dealings in a given area for a client, such as a property manager. This type of agent may bind a client to a contract.

Answer 9

general agent

Question 10

when a licensee represents one party, either the buyer or the seller, in a transaction.

Answer 10

Single agency

Question 11

the representation of both the buyer and the seller in the same transaction.

Answer 11

Dual agency

Question 12

when two separate licensees from a single firm each represent one party (buyer or seller) in the same transaction.

Answer 12

Designated/appointed agency (aka dual-license dual agency)

Question 13

traditionally been recognized as a situation in which a licensee brings an unrepresented buyer to a transaction.

Answer 13

Sub-agency

Question 14

relationships in which the licensee doesn’t represent the consumer in an agency capacity but instead provides non-agency assistance that doesn’t require the licensee to exercise judgment or discretion.

Answer 14

Non-agency relationships (aka transactional or facilitator roles)

Question 15

what is a licensee’s fiduciary responsibilities?

Answer 15

Old Car

Obedience
Loyalty
Disclosure

Confidential
Accounting
Reasonable skill and care

Question 16

a legal document that grants legal rights and powers from one person (the principal) to another (the agent or attorney-in-fact) to make decisions on behalf of the principal.

Answer 16

power of attorney (POA

Question 17

an agency relationship that’s understood and agreed to by the parties.

Answer 17

Express agency

Question 18

an agency that should be avoided

refrain from making statements that may be taken as your expert opinion.

Answer 18

implied agency

Question 19

acceptance after the fact, either through signing paperwork or through the parties’ actions.

Answer 19

Ratification

Question 20

prevents one party from suing another, because the party’s actions or statements implied that he or she agreed with the other party

Answer 20

Estoppel

Question 21

the broker contracts with the seller to receive all net proceeds from a sale above a specified sale price.

Answer 21

net listing

Question 22

An agency agreement that allows only one brokerage to market and sell the property.

Answer 22

Exclusive agency

Question 23

An agency agreement that provides the listing agent with a commission no matter who brings the buyer to the transaction.

Answer 23

Exclusive right-to-sell

Question 24

Allows the seller to work with multiple agents.

Answer 24

Open listing

Question 25

This agency agreement allows the buyer to work with many agents during the home search process.

Answer 25

Non-exclusive/open buyer representation

Question 26

the agent has some form of ownership of, security interest in, or possession of the principal’s property.

Answer 26

Agency coupled with interest

Question 27

The agency relationship will end if the agency agreement between agent and client expires.

Answer 27

Expiration

Question 28

If the real estate transaction with which the agent was assisting closes, then the agency relationship terminates.

Answer 28

Completion/performance

Question 29

Force of law terminations include events that are beyond the control of the parties, such as bankruptcy of the broker or principal, property destruction, or incapacitation of the agent or principal.

Answer 29

Termination by force of law

Question 30

If the property is destroyed, or if the broker or principal dies or becomes incapacitated, then the agency relationship ends.

Answer 30

Destruction of property/death of principal

Question 31

The principal(s) and agent may mutually agree to terminate an agency agreement.

Answer 31

Mutual agreement