Law Of Agency

Question 0

What authority does a General Agent have?

Answer 0

A General Agent has authority to represent the principal (client) in a broad range of matters as specified, usually as part of a long term relationship, such as a property manager who represents a property owner.

Question 1

What authorization does a Universal Agent have?

Answer 1

A Universal Agent is authorized to do anything that can be lawfully delegated to a representative.

Question 2

What authority does a Special Agent have?

Answer 2

A Special Agent has a limited authority to do a specific task or conduct a specific transaction. This is generally a short-term relationship, such as a real estate licensee listing a client’s (principal’s) property for sale.

Question 3

What is an Broker-Client Agency Relationship?

Answer 3

It is an Agency Relationship between an Agent/Broker & the Client/ Principal. It does not include a third person called the customer.

Question 4

What is Expressed (or Actual) Authority?

Answer 4

It is the power or permission given intentionally for a specific act or outcome communicated by the principal (client) to the agent (broker).

Question 5

What is Implied (or Incidental) Authority?

Answer 5

It is the power or permission to do everything reasonably necessary to carry out the principal’s (client’s) actions, rather than by the principal’s express words.

Question 6

How is an Agency Relationship created?

Answer 6

By Written Contract.

Question 7

How is an Agency relationship implied?

Answer 7

An Agency relationship is implied from the acts of the parties; may not be enforceable.

Question 8

What is an Apparent (ostensible) Agency Relationship?

Answer 8

An Apparent Agency is someone who has not been authorized to represent another acts as if he or she is that person’s agent. Apparent agency can also occur when an agent acts beyond the scope of his or her authority, giving a third party the impression the acts are authorized. (Also called ostensible agency).

Question 9

What is an Agency by Ratification?

Answer 9

An Agency by Ratification is the later confirmation or approval of an act that was not authorized when it was performed; agency relationship can arise “after the fact”.

Question 10

What is Agency by Estoppel?

Answer 10

An Agency by Estoppel is “created” when an agent accepts the rewards of the relationship, and therefore must assume the responsibilities, even though there was no formal agreement.

Question 11

What is a Fiduciary relationship?

Answer 11

A fiduciary relationship is a relationship of trust and confidence in which an agent owes his or her principal (client) loyalty and a higher standard of good faith.

Question 12

Who does the agent (licensee) owes his or her fiduciary duties to?

Answer 12

An agent (licensee) owes his or her fiduciary duties ONLY TO THEIR CLIENT, either to the buyer or the seller as the case may be, but an agent is NOT a fiduciary in relation to a third party, such as a customer in a real estate transaction.

Question 13

What does the fiduciary duty of Obedience mean?

Answer 13

It means an agent must follow the (legal) directions of the principal (client), obey the restrictions of the agency relationship, and not stray beyond the scope of his or her authority.

Question 14

What does the fiduciary duty of Loyalty mean?

Answer 14

The fiduciary duty of Loyalty means an agent must put the principal’s (client’s) interest above all others, including the agent’s own.

Question 15

What does the fiduciary duty of Disclosure mean?

Answer 15

The fiduciary duty of Disclosure means an agent must make a complete disclosure of all material information, including defects, and be sure not to conceal anything from their clients, including:

• true property value
• all offers to purchase
• financial condition of prospective buyer, if known
• any relationship between the buyer and the broker

Question 16

What does the fiduciary duty of Confidentiality mean?

Answer 16

The fiduciary duty of Confidentiality means all information given by the client to the agent or gained by the agent from other sources must be kept confidential forever.

Question 17

What does the fiduciary duty of Accountability mean?

Answer 17

The fiduciary duty of Accountability recognizes that money received in an agency relationship belongs to the principal (client) not the agent.

Question 18

What does the fiduciary duty of Reasonable Care mean?

Answer 18

The fiduciary duty of Reasonable Care means that reasonable care and skill must always be used by an agent when acting on behalf of a client. Agents should always be working in their clients’ best interest.

Question 19

When does the termination of agency occur?

Answer 19

1. Accomplishment of Purpose
2. Expiration
3. Operations of Law
4. Mutual Agreement
5. Renunciation (grantee/agent/broker)
6. Revocation (grantor/principal/client)

Question 20

What does Accomplishment of Purpose mean?

Answer 20

Accomplishment of Purpose means the agency ends when the reason for the relationship no longer exists, as when a house is sold; most common reason for termination of an agency relationship.

Question 21

When does an Expiration of agency occur?

Answer 21

Expiration of an agency ends automatically when the term of agreement expires.

Question 22

What has occurred when the Termination of Agency ends due to operations of law?

Answer 22

Operation of Law means the termination of Agency (contract) ends automatically, ad a matter of law, if certain events occur:

• the broker or client dies or becomes incapacitated
• the broker or client goes bankrupt
• the broker loses his or her license
• the property that’s the subject of the agency is destroyed or condemned

Question 23

Termination of Agency occurs by Mutual Agreement - what does this mean?

Answer 23

Termination of Agency occurs by Mutual Agreement when both the principal and the agent agree to terminate without liability.

Question 24

What does Renunciation mean?

Answer 24

Renunciation means the grantee (agent) rejects the agreement; could be considered breach of contract if renounced prior to termination date of the contract.

Question 25

When can Renunciation be considered a breach of contract?

Answer 25

Renunciation means the grantee (agent) rejects the agreement; could be considered breach of contract if renounced prior to termination date of the contract.

Question 26

Who initiates Renunciation?

Answer 26

Renunciation means the grantee (agent) rejects the agreement; could be considered breach of contract if renounced prior to termination date of the contract.

Question 27

What does Revocation mean?

Answer 27

Revocation is when the grantor (principal) withdraws the contract; could be considered breach of contract if done after the offer was accepted by the agent.

Question 28

When can Revocation be considered a breach of contract?

Answer 28

Revocation is when the grantor (principal) withdraws the contract; could be considered breach of contract if done after the offer was accepted by the agent.

Question 29

Who initiates Revocation?

Answer 29

Revocation is when the grantor (principal) withdraws the contract; could be considered breach of contract if done after the offer was accepted by the agent.

Question 30

Who is the grantor of the contract?

Answer 30

The principal/client is the grantor of the contract.

Question 31

Who is the grantee of the contract?

Answer 31

The agent/broker is the grantee of the contract.

Question 32

What are the three tenants of the relationship with the customers?

Answer 32

The three tenants of the relationship with the customers is:

1. Honesty - mostly concerns material facts
2. Integrity- deals with ethical behavior to all parties without violating the duties of loyalty and confidentiality to the client
3. Fair Dealing invokes obeying the law

Question 33

What is Unauthorized Practice of Law?

Answer 33

The Unauthorized Practice of Law is giving legal advice or performing any acts that require a lawyer’s expertise. Agents should NEVER do this.