Law of agency Flashcards
What is agency?
An agency exits when one person, the agent, acts for or on behalf of another person, the principal, also known as the client.
What is the relationship of fiduciary.
meaning that it is a relationships based on trust.
The purpose of TRELA
Texas Real Estate License Act (TRELA) is to protect the public against unscrupulous brokers and sales agents.
The Duties of principal to agent
CRIP:
Compensation
Reimbursement
Indemnification
Performance
Compensation
refers to the fact that the agent should be paid on the completion of the agency.
Reimbursement
refers to the fact the pricipal should reimburse the agent for expenses incurred on behalf of the principal, above and beyond the expenses related to the sale itself.
Indemnification
means that the principal will protect the agent from suffering a loss due to the agent’s reliance on informed received from the principal.
Performance
means the principal is expected to perform as promised in the agency agreement.
The most desirable method of creating an agency relationship with a buyer, sellar, landlord, or tenant is to do so in ________.
writting
Agency by estoppel
created when a principal inadequately supervises an agent. The agent takes on power that go beyond the scope of authority given by the principal.
Express authority
a written listing agreement or buyer representation agreement is evidence that the agency relationship exists and provides the agent with express authority.
Implied Authority
Weekend and evening showings are standards practice in residential real estate, and this authority is defined as implied authority.
Fuduciaries
They are held to the highest amount of good faith, are required to exclude all selfish interest, are prohibited form putting themselves in positions where personal interest and representative interest will conflict and must, in any direct
The three Classifications of Agency
Universal Agency
General Agency
Special Agency
Universal Agency
Universal agency is created with a power of attorney.
General Agency
an example is property manager.
Special Agency
The special agent is not able to bind (obligate) the principal because he or she is not allowed to sign or accept any terms or conditions on behalf of the principal. The special agent must only follow the instructions of the principal.
OLDCAR
Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable Care
Obedience
An agent is obligated to follow all of the lawful instructions of a client.
Loyalty
means putting the interests of a client first.
Accounting
If a broker holds any funds for a client or a customer, the funds are held in trust, and the broker must place them in a separate account set up for this purpose.
Commingling
is mixing clients’ funds with a broker’s business, operating, or personal funds, and TRELA prohibits it.
Conversion
More serious offense would be conversion. When a broker spends his or her client’s funds without authorization, that broker is guilty of conversion.
How to secure the buyer
Securing the buyer is the best accomplished by using a buyer’s representation agreement to establish the broker’s agency relationship with the buyer formally.
How to secure a listing
As with the seller, once you represent the buyer, you must disclose that representation at your first contract with any other party. The disclosure may be oral or in writing.
Oral Agency Agreements
They are legal in Texas and is enforceable against the agent.
An oral agency agreement is unenforceable against the client. T/F
True
Subagency Relationship
Two conditions must both be met to have a subagency relationship.
1. The sale must be a cooperative sale, and
2. The buyer must be an unrepresented customer.
At any time can the parties terminate the agreement.
T/F
True by mutual agreement
When is the agency terminated?
-Death or incapacity of either party. If the broker or client dies or is determined to be insane, the agency agreement is terminated.
-Revocation of the broker’s license.
Even though the broker now has a fiduciary duty to the buyer, he also has the on-going duty of confidentiality to the seller because of the former listing agreement. For how long?
The duty of confidentiality lasts forever unless the broker is required by law or a court order to disclose the information.
TREC’s Advertising Rules
-Team names must end in the word “team” or “Group.”
-Do not use Company, brokerage
-Sponsoring Broker’s name requires to be at least 1/2 the size of the largest contact information on the advertisement.
All social media media advertising must contain the required information either on each advertisement or may contain a direct link that leads to the required information. What is the rule?
The rule is one click away.
In Texas, most _____ prepare a Seller’s Disclosure Notice, and the seller is responsible for its accuracy.
sellers
Stigmatized Properties
this type of properties is sold with a deep discount on the sales price.
Murder on the premises
Many buyers object to living on a property where a murder has occurred.
Death on the property
Some buyers will decide against buying a property in which anybody has died for any reason.
Suicide
suicide is in much the same category as a natural death on the property. some ascribe more
Paranormal Activity
Most potential buyers will avoid a property purported to be haunted.
Types of Listing agreements
Open Listing
Exclusive Agency
Exclusive right to sell
Net listing
Open Listing
gives the seller the right to list the property with multiple competing brokers and to sell the property personally without liability for payment of a commission.
Exclusive right to sale
Real estate brokers recommend this listing, which grants and exclusive right to sell the property during the listing term.
