L4: Authorized Relationships, Duties & Disclosures Flashcards
Relationship: Agent/Customer
Agent is an individual with authority to act on behalf of another.
Agents acting as agents have customers.
Relationship: Fiduciary/Client
Fiduciary is an individual upon whom is placed the highest level of trust and confidence when acting on behalf of another.
Agents acting as fiduciaries have clients (principals).
Agency relationship
A relationship where one party authorizes another to represent their interests and the second party accepts the given responsibility
3 Types of Agency Relationship based on Scope of Authority Granted
1) Special Agency, a.k.a. limited agency - restricted
2) General Agency - for specified area
3) Universal Agency - all business matters (power of attorney)
(Types of agency scope of authority 1/3)
Special Agency
AKA, limited agency
Scope of authority of agent is restricted to specific acts, no binding authority.
It normally ends one goal is reached
Ex. Relationship between broker and customer the represent.
(Types of agency scope of authority 2/3)
General Agency
Scope of authority: Agent is authorized to manage all party’s affairs within specified areas
It is usually ongoing within the business needs
It has binding authority (ex. sales agent binds broker to customer)
Example of agency: relationship between broker and sales associate
(Types of agency scope of authority 3/3)
Universal Agency
Scope of authority: agents have the power to act on behalf of the party and make decisions on behalf of the party in all business matters of concern
It is the most broad type of agency and the most rare in RE
It is normally granted via power of attorney
Essential components of creation of agency
1) Consent —> creation of agency requires mutual consent
2) Control —> agent must have authority to act on behalf of customer/client
(Way in which and agency can be created 1/6)
Express agency
When A party explicitly appoints an agent to act on their behalf (written or oral form)
(Way in which and agency can be created 2/6)
Implied Agency
When agency is entered without explicitly been stated
(Way in which and agency can be created 3/6)
Gratuitous Agency
Agency in which there is no compensation
(Way in which and agency can be created 4/6)
Agency by ratification
When an agent takes an unauthorized action on behalf of a party which is accepted after the fact by the party
(Way in which and agency can be created 5/6)
Ostensible agency
Agency created when actions of an individual lead a third-party to believe agency exists when it actually doesn’t, and parties fail to take action to correct such impression
(Way in which and agency can be created 6/6)
Agency by estoppel
Agency imposed by law and used to give legal accountability for agent or individual responsible for creating the impression of agency
Agent or individual can be held liable for financial injury
3 Types of Authorized Brokerage Relationship (FL)
1) Transaction broker relationship
2) Single agent relationship
3) No brokerage relationship
(Types of authorized brokerage relationship 1/3)
No Brokerage Relationship and its duties
Working relationship: agent/customer
AKA, non representation
It provides no representation to customer
Cannot negotiate for a customer
Requires written disclosure pre-representation (no brokerage relationship notice)
Agent can “represent” to parties
Duties:
- deal honestly and fairly
- disclose all known facts
- account for all funds and trusted to licensee
(Types of authorized brokerage relationship 2/3)
Transaction broker relationship and its duties
Working relationship: Agent/Customer
Provides limited degree of representation
Is the presumed relationship in Florida and doesn’t require disclosure
Allows for in-house transaction as long as a different agent represents the seller and the buyer
Duties (7)
- deal honestly and fairly
- disclose all known facts
- account for all funds and trusted to licensee
- employ skill, care and diligence
- present all offers and counters
- exercise limited confidentiality
- fulfill any additional duties agreed-upon
(Types of authorized brokerage relationship 3/3)
Single agent relationship and its duties
Working relationship: Fiduciary/Client or Principal
Provides exclusive, fiduciary level representation to ONE party
Requires written disclosure pre-representation (Single agent notice)
Duties (9)
- deal honestly and fairly
- disclose all known facts
- account for all funds and trusted to licensee
- employ skill, care and diligence
- present all offers and counters
- confidentiality forever
- obedience except when illegal or unethical
- loyalty
- disclosure beyond basic material
Components of a relationship
1) Two parties
2) An agreement
3) A duty
Consent to transition to Transition Broker
Form that allows switching the type of relationship from single agent to transaction broker
It is frequently signed in conjunction with the Single Agent Notice in case of an in-house transaction
What is a residential transaction sale in Florida
It is the sale of residential property (improved or not) of 4 or less units (real or intended)
AND
Sale of agricultural property of 10 acres or fewer
Allowed in house transaction relationship combinations (residential property)
A) Single agent + no brokerage
B) Transaction broker + transaction broker
C) No brokerage + any type of relationship
Non-residential transaction relationships
1) No Brokerage
2) Transaction Brokerage
3) Single Agent Brokerage
4) Designated Sales Associate
Designated Sales Associate
Non-residential only
4th type of Brokerage Relationship only allowed in non-residential transactions
Allows for fiduciary representation of both sides in house, but broker must remain neutral with no contact with client (can only facilitate a transaction)
Requirements:
- both parties have $1 million in assets
- both parties consent to two different sales associate that act like single agents
- both parties sign Designated Sales Associate Notice Disclosure
- each sales associate signs Single Agent Notice Disclosure
