Key Terms - Chapter 7

Question 1

agent

Answer 1

the party who acts on behalf of the principal

Question 2

apparent authority

Answer 2

occurs when an agent gives the impression that she holds certain authority that a third party might rely upon, when in fact the agent does not actually hold such authority

Question 3

breach of duty

Answer 3

agency can be terminated by either the principal or the broker for breaches of duty

loyalty
obedience
confidentiality
skill, care, and diligence
disclosure of information
accounting

Question 4

buyer agency agreement

Answer 4

the buyer is the broker’s principal (client)

the agency relationship is between the buyer and the broker

Question 5

caveat emptor

Answer 5

Literally “let the buyer beware:’ Does not relieve agent’s obligation of disclosing material facts.

Question 6

civil penalty

Answer 6

Payment or redress for a private civil wrong imposed by a civil, not a criminal, proceeding.

Question 7

client

Answer 7

The principal, to whom the agent owes fiduciary duties.

Question 8

customer

Answer 8

the person the agent does not represent

Question 9

disclosure of information

Answer 9

The prompt and total communication to the principal by the agent of any information that is material to the transaction for which the agency was created.

Question 10

dual agency agreement

Answer 10

the firm represents both buyer and seller

Question 11

employment authority

Answer 11

A document or contract giving a real estate agent the right to act for a principal with certain specific guidelines in a real estate contract (i.e., a listing contract or a buyer’s agency contract).

Question 12

estoppel

Answer 12

occurs when an individual claims incorrectly that a person is his agent and a third party relies on the incorrect information

the person making the incorrect statement is stopped and prohibited from later claiming that the agency relationship does not exist

Question 13

express agency

Answer 13

when the actions of the principal and the agent indicate that they have an agency agreement

Question 14

facilitator

Answer 14

not allowed in NC

the licensee assists buyers and sellers in a transaction but does not actually represent either party

Question 15

fiduciary

Answer 15

the agent is entrusted to represent the best interest of the principal client

Question 16

first substantial contact

Answer 16

A flexible standard that typically occurs when an agent and a prospective buyer discuss in any detail the buyer’s interest in purchasing property.

Question 17

general agency

Answer 17

Full authority over one particular field of business or aspect of personal affairs of the principal (e.g., a property manager managing an apartment complex for the owner).

Question 18

implied authority

Answer 18

based on custom and may very well be the result of an expressed agreement

Question 19

loyalty

Answer 19

An absolute duty of an agent to a principal to serve the best interest of the principal.

Question 20

misdemeanor

Answer 20

A criminal violation punishable by a fine and/or imprisonment. It is not considered as severe an offense as a felony

Question 21

negligent misrepresentation

Answer 21

An unintended misrepresentation of a material fact that the party did not make knowingly but should have known the truth by exercising due skill, care, and diligence

Question 22

negligent omission

Answer 22

An unintended failure to communicate a known material fact. An unintended failure to communicate unknown material fact by a person responsible for disclosing it because this person did not exercise the due skill, care, and diligence that would have revealed the fact.

Question 23

omission

Answer 23

The failure to disclose information.

Question 24

principal

Answer 24

the person for whom the agent acts

Question 25

special or

limited agency

Answer 25

limited to one well-defined task one time

Question 26

subagent

Answer 26

the agent of the agent

Question 27

third party

Answer 27

the party that you do not represent

Question 28

transactional broker

Answer 28

Not allowed in North Carolina

a type of “nonagency” relationship in which the licensee assists buyers and sellers in a transaction but doesn’t represent either party

Question 29

universal agency

Answer 29

provides for an agent to have all-encompassing powers to make decisions and act on behalf of the principal

Question 30

willful misrepresentation

Answer 30

A deliberate false statement concerning a material fact by one who knows the true fact and is responsible for disclosing it.

Question 31

willful omission

Answer 31

A deliberate failure to inform a party of a known material fact when one has an obligation to that party to relay all material facts.