Module 1 - Agency Flashcards
Agency is a legal concept that _____________
Agency is a legal concept that authorizes one person to act on behalf of another person.
Agent:
Broker:
Realtor:
Agent: A person authorized to act on the behalf of another
Broker: A person who has met the requirements and is licensed to practice real estate
Realtor: A broker who is a member of the NAR
Common Law is based on
Findings and verdicts in court cases
Statutory Law is based on
Laws enacted by the Legislature
Exclusive Listing Agent
Agent with the sole right to list a property
Exclusive Right to Sell Listing
Agent has a right to list and will get paid regardless of who sells a property.
Fiduciary Duties
Accounting
Care and Skill
Confidentiality
Obedience
Loyalty
Disclosure
Licensee:
In Oregon these are also called:
Individual who holds a real estate license
Principle Broker, Broker, or Property Manager
A BUYERS AGENT can also be referred to as the SELLING AGENT because
They are bringing the buyer to the property sale.
A SELLOR’s agent is also known as the LISTING AGENT.
Define Subagent
Agent of an Agent…
The Principal Broker is the agent of the client. The Broker is the subagent of the of the Principal Brokers client.
Disclosed Limited Agent (Oregon) or Disclosed Dual Agent:
A agent that has disclosed and received permission to act as an agent for two parties.
It could be the buyer and seller, or two buyers competing for the same property.
What is a Designated Agent, or Appointed Agent
When an agency is acting as an agent for a buyer and a seller, the agency can appoint a licensee to act for each.
Transaction Broker or Transaction facilitator
in some states its allowed to have a non-agency relationship with the public
Principal
The person who hires the agent to represent their interest. Could be a seller, buyer, landlord, or tenant.
There could be three types of Principles in an agency relationship. They are:
Disclosed, Undisclosed, and Partially disclosed.
An Undisclosed Principal is:
When the clients identity is kept secret.
Example: Famous individual or large company who wants to remain anonymous so that they are not taken advantage of. The agent is thought to be the buyer or seller in this scenario
Partially Disclosed Principal
Third parties know the principal exists but don’t know the identity of them. In this case the agent lets the third party know they are representing someone.
Disclosed Principal
The identity and existence is known to the third party.
The three types of Agents are:
Universal, General, and Special
What is a Universal Agent?
A Universal Agent represents the principal in all matters that can be delegated to them. A Universal Agent can enter into contracts on behalf of the principal. A power of attorney or court order gives authority to a Universal Agent.
Example: Wealthy person allows an individual to act on their behalf in all matters while they are out of town.
What is a General Agent?
A General Agent represents a principal in matters of a particular type, range, or place. A General agent can enter into contracts when within the scope of their authority. This can be done by a general power of attorney.
A person hires a person as a financial manager, who is authorized to act on behalf of that person in financial matters.
What is a Special Agent?
A Special Agent has limited and specific authority to represent a principal in a specific transaction. The final authority to enter into a contract is with the principal.
A person wants to buy a house and hires Elizabeth to act as their real estate broker. Elizabeth finds and negotiates the purchase but the contact is signed by the person who hired Elizabeth.
In Real Estate, a Power of Attorney is:
A method used to appoint an agent who will be able to sign contracts on their behalf. This person is also known as an attorney-in-fact.
Spencer and Elizabeth want to buy a house. Spencer will be an SFO and leaves Elizabeth a power of attorney so Elizabeth can buy the house (with a hangar).
What would make someone an Attorney-in-fact?
A power of attorney
A real estate broker is the _________ of the Principal Broker and the __________ of the Principal Broker’s client..
Agent, Subagent.
In regard to agency, when a person hires a broker to buy a house:
The Broker is the ___________
The Buyer is the __________
and the Seller is the __________
Broker: Agent
Buyer: Client
Seller: Third Party
A Third Party is:
Someone effected by the transaction but not represented by the agent, nor are they a principal.
Could be a seller or a buyer on the other side of the transaction but also is the inspector, escrow, lender, etc.
A Customer is:
Not represented by the agent but is still owed the duties of:
Honesty and Fair Dealing
Reasonable Care and Skill
Disclosure of known material facts not apparent or readily ascertainable to a party.
True or False:
Under the statute of frauds, the following express agreements must be in writing to be enforceable:
Listing agreement
Real Estate Sale Agreement
Property management agreement
Right to lease property agreement
True
What is Implied Agency?
An implication creates an agency and thus parties act as though they are in an agency agreement.
An agent does not explain that they are representing the seller. A third party reveals confidential information to the agent of a seller and asks the agent to write up an offer. In order for this agent to represent both sides they must disclose this to both of them to prevent a conflict of interest. A limited representation agreement must be signed in order to continue work for them both.
Does a Buyer Broker Agreement have to be in writing?
Yes in WA, In OR no BUT July 1st,Ex yes.
Does an express agreement have to be in writing?
No. It can be in verbal or written.
Implied agency can be accidental. True or False?
True.
Define Agency by ratification
A principal ratifies previously unauthorized acts of an agent who didn’t have the authority to act for the individual.
Elizabeth is a listing agent for Bob. Bob leaves his house. Someone reports a water leak in Bobs house. Elizabeth hires a plumber and when Bob returns they pay the plumber, thereby ratifying the actions of Elizabeth.
Agency by Estoppel
Bars a person from denying someone is their agent after they have implied they are.
Bob tells a buyer that Elizabeth is their agent and will show a home in their absence. The buyer decides to buy the house but Bob says that Elizabeth is not their agent after the fact.
Agency by Necessity
When an occurrence causes an agent to act on behalf of the principal without their consent. This would happen when the situation could harm the principal had the agent not acted.
Elizabeth called a plumber when a home she was selling for Bob had a pipe burst and he was out of town.
(it becomes ratified when Bob pays for the plumber)
What is a gratuitous agent?
An agent that works for free.
Does a gratuitous agent still owe fiduciary duties to the principal?
Yes
An agent that agrees to work without compensation is called..
Stupid.
Family.
Ok fine… A gratuitous agent
T/F, fill in the blank
An agent has disclosed a relationship with both a Seller and a Buyer and has received written consent. The agent is ___________ agent. The agent still owes fiduciary duties to both parties with the exception of full disclosure and undivided loyalty.
Dual, True
T/F
If a seller agrees in the listing agreement to pay a commission to the licensees involved in the transaction, that creates an agency relationship with both the listing and the selling agent.
False. A commission does not create agency relationship.
T/F A client and a customer are owed the same fiduciary duties.
False. Client gets all duties
A customer gets honesty and fair dealing, reasonable care, and proper disclosure.
List the fiduciary duties
Loyalty
Obedience
Accounting
Disclosure
Care
Confidentiality
Or
AC is COLD
If you are a fiduciary for a buyer, the buyer is your…
Principal or client
The essential foundation of the agency relationship involves
Trust, Confidence, and Good Faith
T/F
In addition to compliance with terms of the agreement, the licensee owes fiduciary duties to the principal.
True
Good Faith is defines as:
An assumption that the contracting parties will deal fairly with each other.
A fiduciary is:
A) Someone owed duties
B) A Third Party
C) A Customer
D) An Agent
D) Agent
The duty of Accounting means?
The agent must not commingle funds. Trust funds must go into a designated trust account. Proper handling of monies and documents.
Depositing funds related to a transaction into a personal account is known as:
Commingling
Conversion, in regard to the duty of accounting is:
Using funds or property belonging to the principal for personal use.
In regard to a buyers agent, the duty of Care includes the requirement to:
Provide a CMA, advise of repairs, properly market the property using tools commonly used.
The requirement to safeguard information that could weaken the principals bargaining position is called the duty of…..
Confidentiality
A listing agent telling a buyer that the seller can sell at a price lower than the listed price is a violation of:
Confidentiality
T/F
Failing to tell a buyer that a client cooked meth in the basement of a listed home would be a violation of confidentiality.
True. Despite it harming the seller, you must disclose material fact that could harm someone. If the client tells the agent not to disclose that fact the agent must resign.
They duty of Obedience says:
An agent must act as instructed provided the acts and instructions are legal
If a client is found to be inaccurate on disclosures the agent must disclose these inaccuracies because the information was not correct. This is not a violation of….
Obedience
What does the duty of Loyalty require?
Requires an agent to act solely in the principals best interest.
T/F
An agent buys a property and then resells it at a profit. This is illegal and a breach of Loyalty
False. Unless the property is that of their principal.
The duty of disclosure requires:
An agent to keep the principal aware of all material facts that the agent knows or might affect the choosing of a course of action wether the facts are favorable or unfavorable/.
The purposeful misstatement of material fact is an example of:
Intentional misrepresentation
A purposeful concealment of material fact is:
Intentional omission
A unintended misstatement that an agent should have known is:
Negligent misrepresentation
An unintended concealment that an agent should have known is:
Negligent omission
What fiduciary duties are owed to a third party?
Reasonable Care and Skill
Honest Fair and Dealing
Proper disclosure of material facts
Reasonable Care and Skill owed to a third party is:
Diligence, persistence, thorough, and exercising care and skill. Disclosure of facts and or knowledge the seller has a legal obligation to disclose.
Honest and Fair Dealing owed to a third party is:
Must not attempt to conceal information intended to misrepresent or defraud. Cannot refrain from doing something that harms a third party or act in bad faith.
Proper Disclosure of Material Facts owed to a third party is:
Must disclose material facts known or that could have been known from exercising due diligence.
The agency disclosure pamphlet is given to all contacts EXCEPT those who are:
- Already represented
- State they are not seeking representation.
The agency disclosure steps are:
(5)
1) Pamphlet at first contact
(Required)
2) Verbal Explanation of agency relationship (not required)
3) Execution of Agency Agreements
(Whichever applies)
A) Listing Agreement
B) Buyer Agency Agreement
C) Disclosed Limited Agency Agreement
4) Acknowledgement of Existing Agency Relationship (usually in agreement for purchase and sale.
An Open Agency Buyer Broker Agreement allows…
A buyer to work with more than one agent. Only the Agent who facilitate the transaction is compensated.
An Exclusive Buyer Agreement allows….
The broker representing the buyer will be compensated if an agent is used to facilitate a transaction. If no agent is used then the broker will still not be compensated.
An Exclusive Right Agency Agreement….
The Buyer pays the broker if any property is bought during the term of the agreement.
The five stages of service for a buyers agent to offer are:
Needs Assessment
Property Selection
Property Viewing
Transaction offer and negotiation
Closing
A real estate contingency in regard to a contract is…
A condition that must be fulfilled otherwise the contract is rendered unenforceable.
A CMA should analyze what sources?
Active listings, Pending listings, Expired listings, Sold listings
How can an expired listing be used for a CMA?
It can be considered as an indicator of what the market will not support. Usually price for the given property is not acceptable.
How far out should a Sold listing be used as far as time goes?
6 months, or less if there are an appropriate number available, or more if not.
What else should be noted, other than price point on a sold listing when being used for a CMA?
Pricing changes and duration on the market. If there were multiple offers.
In a CMA should the term ‘Value’ be used? Appraisal?
No. These are a terms used by appraisers.
