GENERAL PRINCIPLES OF AGENCY Flashcards
Exchanging like-kind property for like-kind property, resulting in a deferral of capital gains tax; also called a tax-free exchange
1031 EXCHANGE
A client level duty relating to account of earnest money, actions, etc.
ACCOUNTING
A customer level duty relating to disclosure of all material defects (including latent or hidden defects) to any customer; e.g., leaky roofs, leaky basements, etc.
ACCURATE
One who is hired to represent another
AGENT
A total transfer of rights in a lease where the original tenant and new tenant are both liable to the landlord for the lease payments
ASSIGNMENT OF LEASE
The title given to someone who has the power of attorney; can sign on others behalf
ATTORNEY-IN-FACT
Where a party to a contract does not perform according to the terms of the agreement
BREACH
Profit made on an investment item, such as real estate
CAPITAL GAIN
A client level duty exercising knowledge and skill
CARE
A client level duty relating to maintaining confidential information of the client
CONFIDENTIALITY
In leasing, a situation where the landlord constructively evicts the tenant by not maintaining the premises; e.g., no heat in the wintertime; lessee or tenant must actually leave the premises and is released from lease obligations
CONSTRUCTIVE EVICTION
A client level duty relating to disclosing to a client all materials facts regarding the transaction
DISCLOSURE
A situation where a broker represents both buyer and seller at the same time; must have written prior permission from both parties and informed consent
DUAL AGENCY
Liability insurance for real estate agents that protects against claims of failure to perform duties or mistakes being made
ERRORS AND OMISSIONS INSURANCE
A lease clause allowing a landlord to pass increased costs along to tenant; i.e., can raise rent to tenant if landlord`s costs go up
ESCALATION CLAUSE
Only for owner-occupied properties; a person can write off up to $250,000 of capital gains if single, $500,000 if married; must have been your personal residence for 2 of the past 5 years; can use exclusion repeatedly, not just once in a lifetime
EXCLUSION ON HOMES
A type of listing where the owner and one broker are authorized to sell and receive a commission
EXCLUSIVE AGENCY LISTING
A type of listing where only one broker is authorized to sell and receive a commission
EXCLUSIVE RIGHT TO SELL LISTING
Refers to a contractual obligation where all parties have clearly stated their intentions
EXPRESSED
A customer level duty relating to treating all customers fairly
FAIR
Loyalty and trust; what an agent owes to a principal (client)
FIDUCIARY
A person who represents someone else in several areas on an ongoing basis; e.g., property manager to owner; also salesperson to broker
GENERAL AGENT
Insurance a real estate brokerage can obtain to protect against someone being harmed or injured on the brokerage premises
GENERAL LIABILITY INSURANCE
A lease where the payments can go up or down, but are pre-determined
GRADUATED LEASE
A lease where the landlord pays taxes, assessments, insurance, etc.
GROSS LEASE
A lease for ground; usually long-term; e.g., farmers, gas stations, etc.
GROUND LEASE
Insurance a real estate brokerage can obtain on business property to protect against vandalism
HAZARD INSURANCE
A customer level duty relating to being honest with customers
HONEST
Refers to a contractual obligation that is created by one`s actions
IMPLIED
A lease where the payments can go up or down but are based on some type of index, such as the consumer price index
INDEX LEASE
(Fiduciary) A client level duty relating to doing what is in your client`s best interest
LOYALTY
A lease where the tenant pays all or part of taxes, assessments, insurance, etc. Taxes paid by tenant would be tax deductible for the tenant.
NET LEASE
Normally illegal; this is where the real estate commission is the sale price less the seller`s required proceeds
NET LISTING
A clause in a lease and lending document allowing for continuation of a lease even if the property is foreclosed on
NON-DISTURBANCE CLAUSE
(Performance) A client level duty following instructions of a client
OBEDIENCE
A type of listing where everyone is authorized to sell and receive commission, including the owner; the only one who gets paid is the one who is the procuring cause (found the buyer)
OPEN LISTING
Costs incurred in a property management situation, such as utilities and repairs; does not include vacancies
OPERATING COSTS
Refers to a contractual obligation that is created by what appears to be; similar to implied
OSTENSIBLE
A lease where the rent is based on a percentage of sales; normally used in retail leases
PERCENTAGE LEASE
A written document authorizing one to sign legal documents on behalf of another
POWER OF ATTORNEY
One who hires an agent for representation
PRINCIPAL / CLIENT
An agreement between an owner and property manager that shows basic duties of the property manager; generally this agreement does not contain a vacancy rate
PROPERTY MANAGEMENT AGREEMENT
Protects broker in case negotiations extend past the expiration date of listing; this clause is normally standard in an agency agreement
PROTECTIVE PERIOD CLAUSE
A federal law that prohibits groups of brokers setting a fixed price for services
SHERMAN ANTI-TRUST LAWS
A person who represents someone else one time in one area; e.g., broker to seller
SPECIAL AGENT
An agency situation where one agent is authorized to use another agent to represent the client; historically, this is where two brokers, the listing and selling broker, both represent the seller; buyer is a customer and is unrepresented
SUB-AGENCY
A partial transfer of rights in a lease where just the original tenant remains liable for the lease payments; the new tenant is a lessee of the original tenant
SUBLEASING
Exchanging like-kind property for like-kind property, resulting in a deferral of capital gains tax; also called a 1031 exchange
TAX-FREE EXCHANGE
