Laws Of Agency Flashcards
Common Law Obligations to Third Parties
Honest and fair dealing: due care, skill, and knowledge
*Disclose material adverse facts about the property.
Fiduciary
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.
OLD CAR
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
Clients lose “O” of OLDCAR when?
When in a dual agency representation
Confidential information disclosure circumstances
- The client grants written consent to disclose the information
- Disclosure is required by law
- Disclosure is necessary to defend the licensee in an investigation
- The information has become public knowledge from another source.
Universal agent
Can do all acts that a principal can do; created by a power of attorney
Power of attorney
A document authorizing one person to act for another
An attorney in fact
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.
Special agent
Hired for a specific service with limited authority and does not have continuous service.
General agent
Broad authority and an associated licensee is a general agent/sub agent of Their BIC.
Property manager agency
Usually general agents; but if all they do is find tenants get a lease signed, they are a special agent.
Subagent
An agent of an agent
I.E. Associated licensees
FSBO agency
A brokerage helps a buyer principal/ client buy from a FSBO.
Dual agency conditions
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.
Disclosed dual agency agreement
Must be signed before buyer writes offer, and seller accepts offer
Effect of dual agency on licensee duties
Must remain neutral and lose “OLD”:
Obedience, Loyalty, Disclosure
Must keep: Confidentiality, Accounting, Reasonable Care
Designated Agent
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!
Express vs Implied agency
Express is written agency, and implied is verbal
In order to be valid SC requires contracts
To be written
Buyers representation agreements
A contract between the buyer and the brokerage for fiduciary representation.
Exclusive right to sell
Listing brokerage gets paid if the listed property is sold by anyone.
Exclusive agency
Listing brokerage does NOT get paid if owner sells property.
Open listing
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.
Broker protection clause
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.
Exclusive right to represent
Buyer’s brokerage gets paid if property is bought.
Open right to represent
Buyers brokerage only gets paid if directly involved in the purchase.
