Law of Agency Flashcards
1
Q
TRELA established when?
A
1939
2
Q
TREC established when?
A
1949?
3
Q
REALTOR
A
is a licensed sales agent who is a member of the National Association of REALTORS® (NAR
4
Q
four major types of agency acts:
A
listing, buying, property management, leasing
5
Q
These are the four components required to form an agency relationship
A
Agent
Principal
Mutual agreement
Fiduciary obligation
6
Q
agency by actual authority
A
refers to actions an agent has been authorized to complete on behalf of a princcipal
7
Q
2 types of authority
A
express and implied
8
Q
agency by ratification
A
is when a license holder acts without authorization on behalf of a principal and the principal accepts those actions after the fact, thus affirming the actions taken and creating retroactive agency.
9
Q
ostensible agency
A
occurs when a principal allows a license holder to act in such a way as to cause a third party to believe that license holder is the principal’s agent.
10
Q
agency by estoppel
A
is agency that is imposed by law when it is determined that ostensible agency existed.
11
Q
agency coupled with an interest
A
When a license holder is participating in a real estate transaction for which they have a personal interest,
12
Q
types of agencies
A
general, special, universal
13
Q
IABS informs clients of:
A
a broker’s minimum duties required by law; how a license holder can represent a party in a real estate transaction, the types of real estate license holders
14
Q
SDN
A
Sellers disclosure notice
15
Q
3 types of misrepresentation issues:
A
innocent, negligent, fraudulent
16
Q
3 types of disclosure
A
required disclosures, permitted disclosures, unlawful disclosures
17
Q
If the seller does not provide the buyer with a completed Seller’s Disclosure Notice before signing the contract, the buyer has a legal right to:
A
terminate the contract within 7 days of receiving the notice
18
Q
defect
A
is an item that was installed or is attached to the home that has an imperfection.
19
Q
malfunction
A
is when something is designed or built to perform a certain function and no longer does so.
20
Q
Guerrero v. Sanchez
A
stigmatized properties should be disclosed
21
Q
types of listing agreements
A
open listing, net listing, exclusive agency, exclusive right to sell listing
22
Q
open listing
A
multiple real estate brokers (and the owners themselves) have the right to sell the property
23
Q
net listing
A
the broker’s commission comes from the difference between the seller’s established minimum price and the price that the buyer is willing to pay. legal in texas
24
Q
exclusive agency
A
the seller agrees to list their property with only one broker during the listing term. However, the seller still has the right to sell the property themselves, without having to pay the broker a commission (or they can agree to a reduced commission
25
exclusive right to sell
It prohibits the seller from listing the property with another agent AND states that the seller must pay the listing agent commission even if the seller finds the buyer themselves
26
Exclusive Agency Addendum to Listing (TAR 1403)
allows the seller to name excluded prospects and to designate how much (if any) the seller will owe the listing broker if the excluded prospect purchases the property.
27
CMA
comparative market analysis
28
MLS
multiple listing services
29
sold listings
houses sold within 6 months; considered comparable and are used by appraisers
30
you cannot post listing on social media unless
you have written consent from seller
31
In a seller subagency, who does the subagent represent?
the seller
32
Which of the following IS a major reason why many listing brokers prefer to collaborate with buyer's agents more than subagents?
subagency presents listing brokers with the liability of sales agents they have not trained
33
SC:0
subagent commission is one
34
BC
buyer representative commission
35
substantive communications
is communication that involves a substantive discussion relating to specific real property
36
payable compensation
when an offer that meets all parameters set out in listing agreement is made, but the seller rejects the offer
37
TXR 1410, Termination of Listing.
realtors use this to provide written notice to owner that a listing agreement is terminated
38
seller agency
is the relationship between a real estate agent and the seller in the brokerage of homes.
39
earned commission
either when seller accepts an offer from buyer or if the seller breaches the listing agreement
40
term
is the span of time for which this contract will be enforced
41
market areas
geographic regions in which similar homes compete for buyers
42
protection period
a period of time after the buyer's representation term ends in which the agent can still get compensation for their role in a transaction
43
single agency
the agent represent only one side of the transaction
44
dual agency
illegal in texas; agent represents both buyer and seller
45
exclusive broker agreement
binds the buyer into working only with that broker/agent for the specified duration of the contract.
46
non-exclusive broker agreement
leaves the buyer free to work with other agents to acquire a home.
47
Which of the following is TRUE of a relationship created between a buyer and an agent?
Agency can be expressly stated by the agent and buyer or implied by their actions. The existence of the agency relationship relies heavily on the intent of both the buyer and the agent. While a contract is not required, it is in the best interests of both the buyer and agent to have one.
48
actual agency
Refers to actions an agent has been authorized (orally or in writing) to complete on behalf of a principal.
49
Apparent or ostensible agency
When a principal allows a license holder to act in such a way as to cause a third party to believe that the license holder is the principal’s agent. (Agency by estoppel protects third parties harmed by ostensible authority.)
50
agency by ratification
When the principal accepts an agent's actions after the fact, thus affirming the actions taken and creating retroactive agency.
51
syndicate
is a financial services group formed to handle large transactions that would be too hard or impossible for an individual person or entity to handle.
52
1031 Exchange
lets an investor sell a property, reinvest the proceeds in a brand new property, and defer all capital gain taxes.
53
limited dual representation
form for dual representation
54
undisclosed dual agency
s an action taken by unscrupulous agents in order to take advantage of under-informed clients. When this situation occurs, the agent is treating both parties like clients, but without the proper notice.
55
creation of agency requires two essential components:
consent and control
56
Is implied agency a form of accidental agency?
yes
57
2 categories of sales:
cooperative and in-house
58
cooperative sale
most common of 2 types of sales. - involves a seller (and their representative) and a buyer (and their representative).
59
subagency
is a license holder, not affiliated with the seller’s broker, who brings an unrepresented buyer to the transaction via a cooperative agreement with the seller’s broker.
60
mutual rescission
both parties terminate
61
revocation
client terminates
62
renunciation
agent terminates
63
unilaterally terminate
they can terminate the relationship without getting permission from the client.
64
operation of law
If there has been a change in law that affects the property involved in the agency agreement, that can be cause for termination of the relationship- such as rezoning of property
65
independent contractor
is someone who is bound by contract to perform a certain job, but who is not considered an employee for federal or state income tax purposes.
66
IRS Code Section 3508(b) says that sales agents must be licensed to be considered independent contractors.
true
67
Revenue Act of 1978
is known as safe harbor — a place of refuge for those industries Congress felt were victims of an overly aggressive IRS practice of attempting to reclassify independent contractors as employees (federal level)
68
TEFRA
Tax Equity and fiscal responsibility of 1982
69
IRS 20 factor test
determines if entity has more/less control which determines if worker is an independent contractor or employee
70
three buckets for 20 factor test
behavioral control, financial control, type of relationship
71
behavioral control
refers to whether there is a right to direct or control how a worker does their work.
72
How many categories can behavioral control factors fall into?
four categories: degree of instruction, training, evaluation systems, and type of instructions given.
73
The factors of significant investment, unreimbursed expenses, and opportunity for profit or loss are all part of what's known as:
financial control
74
These factors (from the 20-Factor List) go into the "type of relationship" bucket:
Written contracts
Employee benefits
Permanency of the relationship
Services provided as key activity of the business
75
what is the biggest factor when deciding whether a worker should be classified as an employee or an independent contractor.
control
76
special agency
is a form of agency relationship in which agents are limited in scope and are only authorized to perform acts permitted by their principal (i.e, broker-client).
77
general agency
is a form of agency relationship in which the principal is responsible for the acts of their agent as long as the agent is acting within the scope of their duties (i.e., broker-sales agent).
78
The duties a principal owes a broker in an employment agreement are these:
Compensation
Availability
Performance
Reimbursement
Indemnification
79
direct activities
are activities (that usually require a license) in which a person directly helps another buy, sell, or lease real property.
80
indirect activities
are day-to-day activities that are influential, but more difficult to classify as to whether a license is required.
81
restricted special agency
The relationship is limited to one transaction at a time.
| The TAR listing agreement provides opportunity to get principal permission for this type of agency relationship.
82
The sales agent doesn't receive commission directly from the listing broker but from the cooperating broker.
broker with cooperating brokers sales agent
83
The agent is usually operating as an independent contractor and not an employee.
The acts the agent can perform independently are often more restricted at the beginning of the relationship.
The broker is responsible for all brokerage acts performed by the agent.
general agency
broker with sponsored agent
84
Which of the following describes a condition that must exist in order for a licensed broker to share earned commissions with a foreign broker?
A texas license holder must conduct negotiations within texas
85
to solve for the part, you need to multiply the total by the
percentage
86
what is the difference between morals and ethics
ethics is external and standardized; morals is internal
87
FFHA
Federal fair housing act protects people from discrimination; redlining is prohibited
protects people from discrimination when they are renting, buying, or securing financing for housing
88
redlining
refusing to offer mortgages for homes in a specific area in the city
89
Concerning requirements for new buildings, if state or local laws demand more than the requirements of the federal law, people must:
comply with the more stringent state or local laws
90
ADA
americans with disabilities act: 1. identified and defines protected disabilities 2. public access building codes
91
TILA
Truth in Lending Act: requires lenders to provide consumers with loan cost information so that consumers can comparison shop for certain types of loans
92
RESPA
real estate settlement procedures act: requires lenders to provide good faith estimates of closing and settlement costs; reduces unnecessarily high settlement costs
outlaws kickbacks, referral fees, and unearned fees
93
SEC
securities and exchange commission protects investors, maintain fair, orderly, and efficient markets and facilitate capital formation
94
Sherman Antitrust Act
passed in 1890 prohibiting the formation of trusts or monopolies in the marketplace
95
group boycott
is an agreement among two or more competitors not to do business with another competitor for the purpose of inducing the other competitor to change its business practices.
96
6 canons
fidelity, integrity, competency, consumer information, discriminatory practices, IABS; rules for the conduct of license holders in the practice of real estate
97
What form does the Canons of Professional Ethics and Conduct say must be on display in a readily noticeable location in each of the real estate brokers places of business?
consumer protection notice 1-2
98
SES
standards and enforcement services will notify the license holder if it intends to initiate disciplinary proceedings
99
complaint outcomes for license holders end in
TREC advisory letter, refund to consumer or temporary suspension
100
The NAR Code of Ethics consists of a
preamble and 17 articles
101
ADR
alternative dispute resolution ex. mediation
102
Which of the following is NOT true about mediation?
mediators decide who is correct and who is wrong
103
ministerial duties
duties of honesty and fairness and accounting and reasonable skill and care (clients and customers alike)
104
texas protected classes
Race
Color
Religion
Sex
National origin
Ancestry (state not federal)
Familial status
Disability
105
arbitration
as a forum where parties and counsel present their positions before an impartial third party who renders a specific award.
106
3 types of misrepresentation
innocent, negligent, fraudulent
107
How long does a consumer have to file a DTPA lawsuit?
within 2 years after the date on which the violation occurred
108
Penalty violations from DTPA
$20,000 per violation; up to $250,000 more for consumers over 65
109
Public remedies
are those enforced by the Texas attorney general's office
110
Private remedies
are civil lawsuits brought by consumers against the alleged violators
111
3 things license holders can do to avoid DTPA violations
1. ensure anything you publish is accurate 2. do not talk about the condition of the property 3. leave condition comments to the seller
112
Most lawsuits brought against texas real estate professionals are under the:
TDTPA- Texas Deceptive Trade Practices Act
113
If an agent has taken unfair advantage of another person because of their lack of knowledge and experience to a grossly unfair degree, the court will say the agent is guilty of?
an unconscionable action
114
Texas DTPA
established in 1973-primary consumer protection law in Texas
115
Tort Reform
is a judicial movement that tries to limit the amount of recourse and awards that can go to a complainant
116
Duties a principal owes a broker:
CAPRI: compensation, availability, performance, reimbursement, indemnification
117
What should come first in an agency policy outline for a brokerage company manual?
a general statement of agency philosophy
118
Which of the following fiduciary duties survive agency termination?
accounting and confidentiality
119
Which of the following fiduciary duties never terminates?
duty of confidentiality
120
appointees
the agents representing the buyer and/or seller in an intermediary relationship
121
A broker may appoint themselves as the appointed license holder in an intermediary relationship
FALSE
122
according to the Residential Real Estate Brokerage industry, ______ of buyers who dealt with a cooperating broker were under the false impression that their broker was representing them in a sales transaction.
71%
123
In 2005, Texas made changes to policies regarding dual representation by:
allowing dual representation to only be offered by brokers via intermediary process
124
What did Senate Bill 489 do?
Introduce intermediary practice as an option
125
Who can make real estate disclosures through verbal statements?
both the seller and the agent
126
Who determines the brokerage fee charged by a listing broker?
the principal and the broker
127
exclusive right to represent
buyer is exclusively represented by the agent and pays the agent commission
128
non-exclusive right to represent
buyer is free to work with other agents, agents liability is limited, and agent can be compensated if they find the home
129
non-exclusive not for compensation
buyer is free to work with other agents and not required to compensate
130
Which of the following statements about pre-qualification and pre approval are true?
pre qualification involves figuring out appropriate home prices for the buyer, and pre-approval involves determining if a buyer is credit worthy
131
A consumer wishing to pursue a DTPA claim must provide _________ written notice before filing suit. This is how long the agent has to respond to the complaint.
60 days
132
rescission
means the contract is canceled and the parties are restored legally and financially to the position they were in before entering the contract
133
A seller is obligated to disclose prior water penetration – even if the defect has been cured – due to possible residual damage.
False
134
The Residential Lead-Based Paint Hazard Reduction Act of 1992, also known as ______________, was meant to protect families from exposure to lead from paint, dust, and soil.
Title X
135
Is a paint inspection or risk assessment for lead-based paint/hazards mandatory?
No, a homebuyer may waive the inspection opportunity.
136
Notice of Information from Other Sources
is a helpful tool and may be utilized by TAR members when communicating with potential buyers about property conditions or information from other sources.
137
Which of the following is a true statement about puffing?
puffing is simply marketing and an opinion
138
BPO
brokers price opinion and similar to CMA
139
earnest money must be deposited within
a reasonable time ( two business days)
140
GFE
good faith estimate
141
Agents can specialize in things such as:
clients, property types or services provided
142
REO
real estate owned- describes property that is owned by a lender as the result of a failure to find a third-party buyer at a foreclosure auction.
143
backup offer
is an offer made on a property already under contract
144
equitable title
is the contractual right of the purchaser to conveyance of a property once all terms and conditions of the contract are met (also known as equitable interest)
145
tortious interference
someone is submitting an amazing offer to intentionally interfere with the transaction
146
senate bill 2212
agents need to disclose who they are representing - equitable interest
147
Which of the following is most likely covered by an E&O insurance policy?
negligence claim
148
Dodd-Frank Act
installed stricter financial regulation to address predatory lending practices such as providing easy to obtain loans for least qualified buyers
149
3 main antitrust acts
Clayton Act, Sherman Antitrust Act, Federal Trade Commission Act (FTC Act)
150
Per se violations are acts that are inherently illegal; they’ve been proven illegal over and over again.
TRUE
151
ACTR
ACT to lessen Risk: avoid control transfer and retain
