Laws Of Agency

Question 1

Common Law Obligations to Third Parties

Answer 1

Honest and fair dealing: due care, skill, and knowledge

*Disclose material adverse facts about the property.

Question 2

Fiduciary

Answer 2

A person holding the character of a trustee and having the duty to act primarily for another person’s benefit.

Agents are fiduciaries to their principals, and relationship is based on confidence and mutual trust.

Question 3

OLD CAR

Answer 3

Obedience-to lawful instructions
Loyalty-client’s interest above self
Disclosure-all details that could affect outcomes

Confidentiality-about the client
Accounting-for money, documents, and property
Reasonable care and diligence

Question 4

Clients lose “O” of OLDCAR when?

Answer 4

When in a dual agency representation

Question 5

Confidential information disclosure circumstances

Answer 5

1. The client grants written consent to disclose the information
2. Disclosure is required by law
3. Disclosure is necessary to defend the licensee in an investigation
4. The information has become public knowledge from another source.

Question 6

Universal agent

Answer 6

Can do all acts that a principal can do; created by a power of attorney

Question 7

Power of attorney

Answer 7

A document authorizing one person to act for another

Question 8

An attorney in fact

Answer 8

A person authorized by power of attorney to perform certain acts such as sell as property or sign a contract.

It can be a conflict of interest for anyone to be a universal agent at a brokerage.

Question 9

Special agent

Answer 9

Hired for a specific service with limited authority and does not have continuous service.

Question 10

General agent

Answer 10

Broad authority and an associated licensee is a general agent/sub agent of Their BIC.

Question 11

Property manager agency

Answer 11

Usually general agents; but if all they do is find tenants get a lease signed, they are a special agent.

Question 12

Subagent

Answer 12

An agent of an agent

I.E. Associated licensees

Question 13

FSBO agency

Answer 13

A brokerage helps a buyer principal/ client buy from a FSBO.

Question 14

Dual agency conditions

Answer 14

Same office has both clients

The brokerage must have prior written consent of both clients to act as a disclosed dual agent.

Under the common law, dual agency is not allowed.

Question 15

Disclosed dual agency agreement

Answer 15

Must be signed before buyer writes offer, and seller accepts offer

Question 16

Effect of dual agency on licensee duties

Answer 16

Must remain neutral and lose “OLD”:

Obedience, Loyalty, Disclosure

Must keep: Confidentiality, Accounting, Reasonable Care

Question 17

Designated Agent

Answer 17

A designated agent is one of the individual associated licensees in a brokerage who is designated by the BIC to represent only one client in a specific “in house” transaction that would be a dual agency if designated agency did not exist.

Note: cannot be the BIC!

*One designated licensee designated by the BIC represents the buyer, and another for the seller!

Question 18

Express vs Implied agency

Answer 18

Express is written agency, and implied is verbal

Question 19

In order to be valid SC requires contracts

Answer 19

To be written

Question 20

Buyers representation agreements

Answer 20

A contract between the buyer and the brokerage for fiduciary representation.

Question 21

Exclusive right to sell

Answer 21

Listing brokerage gets paid if the listed property is sold by anyone.

Question 22

Exclusive agency

Answer 22

Listing brokerage does NOT get paid if owner sells property.

Question 23

Open listing

Answer 23

A property could be listed with multiple brokerages, but the broker that sells the property gets the commission whether it be the seller or the broker.

Question 24

Broker protection clause

Answer 24

I.E. The safety clause

Obligates the seller to pay the commission if the property is sold to a registered buyer after the listing expires.

Question 25

Exclusive right to represent

Answer 25

Buyer’s brokerage gets paid if property is bought.

Question 26

Open right to represent

Answer 26

Buyers brokerage only gets paid if directly involved in the purchase.