General Principles of Agency

Question 1

Person who employs a broker, lawyer or other professional. Real estate clients can be sellers, buyers, or both.

Answer 1

Client

Question 2

A party in a transaction to whom an agent does not have a fiduciary duty or relationship, but to whom an agent must still be fair and honest.

Answer 2

Customer

Question 3

An agent of an agent; a person that an agent has delegated authority to, so that person can assist in carrying out the principal’s orders.

Answer 3

Subagent

Question 4

A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties.

Answer 4

Agency

Question 5

An agency relationship in which a licensee represents both buyer and seller (or both landlord and tenant) in the same transaction. Requires the informed written consent from both parties.

Answer 5

Dual Agency

Question 6

Illegally mixing personal or business funds with money held in trust on behalf of a client.

Answer 6

Commingling

Question 7

An intentional or negligent misrepresentation or concealment of a material fact; making statements that a person knows, or should realize, are false or misleading.

Answer 7

Fraud

Question 8

An agent authorized to handle all of the principal’s affairs in one area or in specified areas.

Answer 8

General Agent

Question 9

Person in a position of trust, held by law to high standards of good faith and loyalty.

Answer 9

Fiduciary

Question 10

Superlative statements about the quality of a property that should not be considered assertions of fact. ‘The best buy in town,’ or ‘A fabulous location’ are examples of puffing.

Answer 10

Puffing

Question 11

1. Misappropriating property or funds belonging to another. 2. Changing an existing rental apartment building into a condominium.

Answer 11

Conversion

Question 12

1. A person who grants another person (an agent) authority to represent them in dealings with third parties. 2. One of the parties to a transaction (such as a buyer or seller), as opposed to those who are involved as agents or employees (such as a broker or escrow agent). 3. With regard to a loan, the amount originally borrowed, as opposed to the interest.

Answer 12

Principal

Question 13

A false or misleading statement.

Answer 13

Misrepresentation

Question 14

The system in which things of value (e.g. money or documents) are held on behalf of the parties to a transaction by a disinterested third party (called an escrow agent), until the specified conditions have all been complied with.

Answer 14

Escrow

Question 15

When a real estate broker acts as an agent to only the seller or only the buyer

Answer 15

Single Agency

Question 16

An agent with limited authority to do a specific thing or conduct a specific transaction.

Answer 16

Special Agent