PSI: General Principles of Agency Flashcards
A consumer is someone who
uses or purchases a product or service
A customer is someone who’s working with a
real estate licensee but who isn’t represented by that licensee
A principal is usually the party to the transaction who
represented (the client)
A client is someone who’s represented by a
real estate licensee (and owed certain agency responsibilities)
someone in a position of trust who owes loyalty to another.
fiduciary
someone who acts on behalf of someone else.
an agent
has broad authority to act for the principal, such as someone who has power of attorney.
universal agent
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.
special agent (aka limited agent)
responsible for handling all dealings in a given area for a client, such as a property manager. This type of agent may be able to bind a client to a contract.
general agent
is when a licensee represents one party, either the buyer or the seller, in a transaction. Single agency firms don’t permit licensees to engage in dual agency, even if the state permits it.
single agency
Dual agency is the representation of
both the buyer and the seller in the same transaction.
Single-license dual agency is when a
single licensee represents both the buyer and the seller in the same transaction.
Designated/appointed agency (aka dual-license dual agency) is when
two separate licensees from a single firm each represent one party (buyer or seller) in the same transaction.
As an agent with two clients in the same transaction, you owe fiduciary duties to both parties. One duty that is impossible to provide in dual agency is _______ _________. This is why informed consent is so important.
undivided loyalty
______-_______ has traditionally been recognized as a situation in which a licensee brings an unrepresented buyer to a transaction. In states where this is permitted, that licensee represents and owes fiduciary duties to the seller.
sub-agency
____-________ relationships (aka transactional or facilitator roles) are those in which the licensee doesn’t represent the consumer in an agency capacity but instead provides assistance that doesn’t require the licensee to exercise judgment or discretion. State statutes govern non-agent duties.
non-agency
the terms “facilitator” and “transaction broker” are used interchangeably to describe a _____-agency relationship.
non
A licensee’s fiduciary responsibilities (duties) include (OLD CAR).
obedience, loyalty, disclosure, confidentiality, accounting, and reasonable skill and care
Obedience means following a client’s _______ instructions. Licensees may not obey a client’s illegal or unethical instructions.
lawful
Loyalty means
putting your client’s interests ahead of others, including your own. It also means working in the client’s best interests.
As an agent, your duty of _______ means that you must disclose to your client any facts that are relevant to the transaction (aka _______ _______; e.g., any information, including agency-related information, that might have an impact on the transaction).
disclosure, material facts
You must keep ________ 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).
confidential
_________ means proper handling of client property, which includes keys, funds, paperwork, and the property itself.
accounting
Accounting means no commingling or conversion of the _______ _______, among other requirements.
earnest money
The duty of reasonable skill and care 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. It also refers to the expert performance of a licensee’s tasks.
Licensees should always encourage clients to seek an attorney’s advice before
signing contracts
These duties end with termination of the agency relationship, except for the duties of
confidentiality and accounting
The duty of confidentiality remains
forever
The duty of ________ ends when all transaction-related property for which the licensee was responsible has been properly accounted for.
accounting
The law of ______ describes rules related to agency—the relationship between a real estate professional and the person or persons being represented.
agency
Traditional agency duties that spring from old English common law are the foundation for today’s six fiduciary duties. Thus, the duties are quite similar:
-Act in the principal’s best interests
-Avoid and disclose any conflict of interest
-Disclose any compensation or profit
-Maintain confidentiality
-Act with reasonable care and skill
-Account and care for any property received from or on behalf of the client
-Obey lawful and reasonable instructions from the principal
-Do not delegate authority or duty without the principal’s consent
licensees have many specific duties, including:
-Seek a sale at a price and on terms acceptable to the seller
-Showing buyers properties that meet their criteria
-Ensure that all offers and counter-offers are presented in a timely fashion
-Ensure that clients receive copies of all signed documents
A _______ __ ________ (__) is a legal document that grants legal rights and powers from one person (the -________) to another (the _____ or attorney-in-fact) to make decisions on behalf of the principal.
power of attorney (POA), principal, agent
A general power of attorney gives broad powers to the agent to
act in someone else’s behalf.
A special power of attorney is more narrow in scope and authorizes the agent to act in specific circumstances or transactions. A special power of attorney grants authority similar to that of an _______ ________ between a licensee and a client.
agency agreement
________ agency is an agency relationship that’s understood and agreed to by the parties. Spoken or written words create express agency.
express
Actions of the parties may create ________ agency, which is to be avoided. All agency agreements should be in writing.
implied
Ratification is acceptance after the fact, either through
signing paperwork or through the parties’ actions
Estoppel prevents one party from suing another, because the party’s e.g., if Kara creates an _______ agency relationship with a client and performs agency tasks for the client, estoppel prevents her from later claiming she wasn’t in an agency relationship.
implied
Agency is created solely through the ________ ________—not through compensation. Paying a commission does not create an agency relationship between the payer and the licensee. Licensees who receive compensation from someone other than the client must disclose that to the client.
agency agreement
A net listing is one in which the broker contracts with the seller to receive _____ ______ _______ from a sale above a specified sale price. Net 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.
all net proceeds
________ agency agreements allow sellers who find the buyer and to avoid paying the listing agent a commission.
exclusive
An ________ right-to-sell agreement provides the listing agent with a commission no matter who brings the buyer to the transaction. This agreements include definite start and end dates.
exclusive
_______ listing agreements allow the seller to work with multiple agents.
Open
They don’t always result in a ______ agent earning a commission, as only the agent who successfully brings a buyer will be _____.
listing, paid
Other licensees can’t represent the buyer during the term of an _______ right-to-represent agreement.
exclsuive
Non-exclusive/open buyer representation agreements _______ 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.
allow
_______ ________ _____ ________ 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. For example, a licensee sells an undeveloped acreage for a reduced cash price plus the right to an exclusive-right-to-sell listing agreement on the developed lots.
agency coupled with interest
Agency coupled with interest continues until the interest in the property _____.
ends
Death or incapacitation of the principal doesn’t void an agency coupled with ________ arrangement.
interest
To parties other than your client, you owe the duties of
honesty, integrity, fairness, and accounting.
You owe the duty of cooperating on showings to other licensees who are part of a
transaction
The obligations of fairness and integrity requires licensees to disclose their agency relationship with the client to customers they assist, before the third party reveals anything _______.
confidential
The agency relationship will end if the agency agreement between agent and client expires.
expiration
If the real estate transaction with which the agent was assisting closes, then the agency relationship terminates.
completion/performance
Force of law terminations include events that are beyond the control of the parties, such as bankruptcy of the broker or principal, property destruction, or incapacitation of the agent or principal.
termination by force of law
If the property is destroyed, or if the broker or principal dies or becomes incapacitated, then the agency relationship ends.
destruction of property/death of principal
mutual agreement
The principal(s) and agent may mutually agree to terminate an agency agreement.
