Key Terms Chapter 2

Question 1

Agent

Answer 1

One who undertakes to transact some business or to manage some affair for another by authority of the latter.

Question 2

Broker’s Agent

Answer 2

A broker’s agent is an agent that cooperates or is engaged by a listing agent or a buyer’s agent (but does not work for the same firm as the listing agent or buyer’s agent) to assist the listing agent or buyer’s agent in locating a property to sell or buy, respectively, for the listing agent’s seller or the buyer agent’s buyer.

Question 3

Buyer Agent

Answer 3

An agent who represents the buyer of real property.

Question 4

Client

Answer 4

The one by whom a broker is employed.

Question 5

Implied Agency

Answer 5

Form of agency that occurs when the words and actions of the parties indicate that there is an agency relationship.

Question 6

Landlord’s Agent

Answer 6

A person who has oral or written authority, either express or implied, to act for or on behalf of a landlord.

Question 7

Principal

Answer 7

The employer of an agent or broker; the broker’s or agent’s client.

Question 8

Seller’s Agent

Answer 8

An agent who represents the seller of real property.

Question 9

Sub-agent

Answer 9

An agent of a person already acting as an agent of a principal.

Question 10

Tenant’s Agent

Answer 10

A licensed real estate agent who acts on behalf of a tenant in a commercial property transaction.

Question 11

Confidentiality

Answer 11

An agent is obligated to safeguard his/her principal’s lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal’s bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold know material facts about the condition of the seller’s property from the buyer, or to misrepresent the property’s condition. To do so constitutes misrepresentation and may impose liability on both the broker and/or the seller.

Question 12

Disclosure

Answer 12

The release of relevant information about a property that may influence the final sale, especially if it represents defects or problems.

Question 13

Fiduciary

Answer 13

A person who on behalf of or for the benefit of another transacts business or handles money or property not the person’s own; such relationship implies great confidence and trust.

Question 14

Fiduciary Duties

Answer 14

The legal duty of a fiduciary to act in the best interests of the beneficiary. One common duty includes confidentiality.

Question 15

Obedience

Answer 15

The fiduciary relationship obligates the agent to act in good faith at all times, obeying the client’s instructions in accordance with the contract.

Question 16

Undivided Loyalty

Answer 16

The fiduciary duty that prohibits the agent from advancing any interests adverse to the principal’s interest or conducting the principal’s business in such a way as to benefit a customer, a sub-agent, the agent or any other party to the detriment of the principal’s interest unless required by statute, regulation or common law – e.g., disclosing material facts and defects of a property.