PSI Exam Prep: General Principles of Agency Flashcards
it is someone who uses or purchases a product or service.
A consumer
it is someone who’s working with a real estate licensee but who isn’t represented by that licensee (nor owed the full range of agency responsibilities)
A customer. the customer may or may not be represented by another licensee.
it is usually the party to the transaction who is represented
A principal (the client)
it is someone in a position of trust who owes loyalty to another.
A fiduciary
it is someone who acts on behalf of someone else.
An agent
he/she has broad authority to act for the principal, such as someone who has power of attorney.
A universal agent
she/he has limited authority to act on a client’s behalf, such as a real estate agent or an escrow officer. This type of agent can’t bind a client to a contract.
A special agent (aka limited agent)
she/he is responsible for handling all dealings in a given area for a client, such as a property manager. This type of agent may bind a client to a contract.
A general agent
it is when a licensee represents one party, either the buyer or the seller, in a transaction. it don’t permit licensees to engage in dual agency, even if the state permits it.
Single agency
it is the representation of both the buyer and the seller in the same transaction.
Dual agency
it is when a single licensee represents both the buyer and the seller in the same transaction.
Single licensee dual agency
it is when two separate licensees from a single firm each represent one party (buyer or seller) in the same transaction.
Designated/appointed agency (aka dual-licensed dual agency)
What are the two duties almost impossible to deliver in a dual agency situation?
Loyalty and confidentiality
a licensee who provides real estate services to a buyer while actually representing the seller in a real estate transaction.
Sub-agent (sub-agency)
the licensee doesn’t represent the consumer in an agency capacity but instead provides non-agency assistance that doesn’t require the licensee to exercise judgment or discretion
Non-agency relationships
What are other names for non-agency relationship?
transactional or facilitator roles
What are the 6 fiduciary responsibilities a licensee have? (OLD CAR)
Obedience, Loyalty, Disclosure, Confidentiality, Accountability, Reasonable skill and care
it means following a client’s lawful instructions. Licensees may not obey a client’s illegal or unethical instructions.
Obedience
it means putting your client’s interests ahead of others, including your own. It also means working in the client’s best interests.
Loyalty
any information that could harm your client’s negotiating position in a transaction. This includes your client’s motivations, time frames, willingness to settle for terms/price other than those offered, and any other information your client deems confidential (unless disclosure is required by law).
Confidentiality
it means that you must disclose to your client any facts that are relevant to the transaction (aka material facts; e.g., any information, including agency-related information, that might have an impact on the transaction).
Disclosure
it means proper handling of client property, which includes keys, funds, paperwork, and the property itself. This means no commingling or conversion of the earnest money, among other requirements.
Accounting
it requires agents to operate within the scope of their expertise and advise clients to seek expert advice on matters that are outside of the agent’s scope of knowledge
Reasonable skill and care
What are the two duties that continues even after the agency relationship terminates?
Confidentiality and Accounting
is an agency relationship that’s understood and agreed to by the parties. Spoken or written words create this agency.
express agency
Actions of the parties may create this type of agency. It should be avoided
Implied Agency
it is acceptance after the fact, either through signing paperwork or through the parties’ actions.
Ratification
prevents one party from suing another, because the party’s actions or statements implied that he or she agreed with the other party; In other words, so that later on no one can deny you were in an implied agency
Estoppel
When does agency is created?
solely through the agency agreement—not through compensation
it is one in which the broker contracts with the seller to receive all net proceeds from a sale above a specified sale price. these listings are illegal in most jurisdictions because they create a conflict of interest and encourage unethical behavior such as trying to sell a property for more than its value.
net listing
it allow only one brokerage to market and sell the property. However, if the seller finds her own buyer, she doesn’t pay commission to the brokerage.
Exclusive agency agreements
provides the listing agent with a commission no matter who brings the buyer to the transaction. it includes definite start and end dates.
Exclusive right-to-sell agreements
it allow the seller to work with multiple agents. They don’t always result in a listing agent earning a commission, as only the agent who successfully brings a buyer will be paid.
Open listing agreements
it allow the buyer to work with many agents during the home search process. If a buyer enters into an exclusive agreement with a broker, any open agreements are terminated.
Non-exclusive/open buyer representation agreements
it means that the agent has some form of ownership of, security interest in, or possession of the principal’s property. The agent’s compensation depends on continuance of the agency agreement
Agency coupled with interest
What four duties do you owe to other people? (other than your clients)
honesty, integrity, fairness, and accounting.
what are two major duties you owe to third parties?
cooperating and disclose material facts
How agency contracts be terminated?
expiration, completion, force of law, through destruction or death, and by mutual agreement.
it is a situation where a single licensee represents both the buyer and seller in a given transaction with informed consent in place, the broker’s permission, and the state’s blessing.
single license dual agency
can principal brokers let anyone use their license even with a POA?
NO!!
What are the similarities between an open and exclusive agreement?
If the seller finds the buyer, commissions will not be owed to the broker
You represent the buyer in one transaction and the seller in a different transaction. What type of agency relationship do you have with the buyer?
Buyer agency
Bernie represented Oscar in the sale of Oscar’s home. They signed an exclusive right-to sell-listing agreement. If Oscar were able to find his own buyer, would he owe Bernie a commission?
Yes, because “exclusive right to sell” means Bernie gets paid no matter who finds the buyer.
Which type of agent is an escrow officer?
An escrow officer works in limited agency capacity.
Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann’s options for accepting an agency relationship after the fact?
Prepare an agency agreement or continue to assist Carly with the purchase.
Describe the type of agents
Universal Agent: Power, usually appointed by courts
General Agent: Ongoing business, businesswise
Special Agent: Limited to certain role
You represent the buyer and seller in the same transaction. What type of agency relationship do you have with your clients?
Disclosed limited agency
Ratification means
“affirming something after the fact”
Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers?
Multiple listing clause
Which of the following is a common element of a buyer representation agreement?
Description of the property being sought
Which of the following is the most common type of buyer representation agreement?
Exclusive right-to-represent agreement
Licensee Kennie Mae’s neighbor, Buzz, wants to sell his house but doesn’t want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn’t present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn’t have an agency agreement with Buzz, she wasn’t required to perform all fiduciary duties. What legal principle applies here?
The doctrine of estoppel prohibits an individual from making an assertion that’s in opposition to actions or to a previous statement. Kennie Mae acted as if she was Buzz’s agent, so she can’t later disavow that behavior.
