Level 8 Agency Fundamentals Flashcards
Common Law of Agency
the body of laws affecting agency
that are the result of custom and/or case law, as opposed to statutory law introduced at the state or federal level.
In addition to the
common law of agency, real estate practice in
North Carolina is regulated by:
Contract law: the body of laws affecting
contracts
State license law: North Carolina’s laws
affecting real estate licensing as defined
in G.S. 93A
North Carolina Real Estate
Commission (NCREC) rules: NCREC’s
rules affecting real estate licensing and licensee conduct.
The Principal/Client
Although many in the industry use the terms client and principal interchangeably, a client is not simply a principal. A client is your principal.
agency
the relationship in which an individual is authorized to act on behalf of another
agent
an individual with authority to act on behalf of another; a state license is
required to operate as an agent in real estate
broker
“full” broker who has graduated from provisional broker status after passing
90 hours of post-licensing education; does not need to be supervised by a
broker-in-charge, but in practice, often chooses to work for another broker or
brokerage firm
customer
an individual with whom a license holder has no agency relationship nor owes
fiduciary duties but to whom fairness and honesty are still required
facilitator/transactional broker
an individual who represents neither party in a transaction and treats both
parties as customers; this is NOT ALLOWED in North Carolina
fiduciary
an individual upon whom is placed the highest levels of trust and confidence
when acting on behalf of another
general agent
an agent who is authorized to manage all of a principal’s affairs within certain
specified areas; enjoys broader authority than that of a special agent but less
than that of a universal agent
principal/client
the client of a broker in an agency relationship; the parties to a contract in a
real estate transaction (as opposed to lenders, escrow agents, etc.)
special agent
an agent with a limited scope of authority to act on behalf of their principal;
usually towards a single, specific objective, end, or goal that is not ongoing
subagent
the agent of the agent who owes the agent’s client the same fiduciary duties
third party
any person involved in a real estate transaction who is not your client; includes
not only customers (the non-client principal in a transaction) but also all
other non-client participants in a transaction such as title officers, lenders,
appraisers, etc.
universal agent
agent with the power to act AND make decisions on behalf of the principal in
all business matters of concern; often granted via a power of attorney
Agency Creation (3 ways)
- Express
- Implied
- Agency by ratification
Express agency
created by explicit
appointment of the agent by the principle
in oral or written form
Implied agency
created by actions,
conduct, and words (as opposed to
explicit expression)
Agency by ratification
created
when an individual claims to be an
agent despite there being no express
agreement, and the principal accepts the
conduct of the agent afterward
The only acceptable way to create agency
in North Carolina real estate
is with an
explicit, oral or written agreement
Termination of Agency
Performance: fulfillment of purpose
* Expiration: agreement reaches its
expiration date
* Mutual agreement: both parties agree
to terminate
* Breach of agreement: either party fails
to uphold their duties
* Destruction or condemnation: property
is destroyed or condemned
* Death or incapacitation: firm or client
dies or becomes incapacitated
* Operation of law: either party faces
bankruptcy
Express authority
derived from an agency relationship that is created
either orally or in writing where the principal explicitly appoints the agent to
act on their behalf
implied authority
derived from an agency relationship that is created by the actions, conduct, and words of either or both parties without ever being
expressly requested
apparent authority
derived when an agent takes an unauthorized action on behalf of a principal which the principal then accepts after the fact