Real Estate Agency Flashcards
Agency relationships are governed by:
Common law: the rules established by tradition and court decisions
Statutory law: the laws enacted by the legislature
Administrative law: the rules and regulations created by real estate commissions and departments, as authorized by the legislature.
Agent
The individual who is authorized and consents to represent the interests of another person in dealings with a third person. Acts as agents of the broker. Hired by principal to act on their behalf.
Principle
The individual who hires the agent and delegates to that agents the responsibility of representing their interests.
Agency
The fiduciary relationship between the principle and the agents by which the agents is authorized to represent the principal in one or more transactions.
Mud be CONSENSUAL
Fiduciary
The relationship in which the agent is held in a position of special trust and confidence by the principal.
Client
The principal in a real estate transaction for him a real estate broker acts as agent.
Customer
The third party or non-represented consumer who is not a principal but for whom some level of service may be provided and who is entitled to fairness and honesty. They may be represented by a separate agent.
Real estates duties to customers:
-reasonable care and skill in performance
-honest and fair dealings
-disclosure of all facts that the professional knows or should reasonably be expected to know that materially affect the value or desirability of the property
Nonagent
Facilitator, intermediary, transactional broker, transaction coordinator, or contract broker. Someone who works with a buyer and seller assisting one or both parties with the transaction with out representing either party’s interests. Subject to statutory responsibilities.
Express agency
Oral or written agreement between parties to create agency
Implied agency
An agency relationship resulting from the parties behavior
Express agreement
Principal and agent enter a contract in which parties formally express their intention to establish an agency and state its terms and condition. Oral or written.
Listing agreement
An agency relationship between A real estate seller and a broker created by a written employment contract which authorized the broker to fund a buyer or tenant for a he owners property.
Buyer representation agreement
An express agency relationship between a buyer and a broker in which the buyer representation agreement stipulates the activities and responsibilities the buyer expects from the broker.
Implied agreement
This occurs when the parties act as though they have mutually consented to an agency, even if they haven’t entered into a formal agency agreement. They can create a relationship unintentionally, inadvertently, or accidentally by their actions.
SOURCE OF COMPENSATION DOES NOT DETERMINE AGENCY.
Gratuitous agency
Agency that exists with no fee.
Fiduciary relationship
Under common law of agency, an agent owes the principal 6 duties: -care -obedience -loyalty -disclosure -accounting -confidentiality COLD-AC
Conversion
The illegal use of entrusted client monies.
Universal agent
A person empowered to do anything the principal could do personal. Can act on behalf of the principal and is unlimited. I.e.: court appointment guardian etc. Not commonly an agent
General agent
May represent the principal in a broad range of matters related to a particular business or activity. Ie: property manager. A real estate sales associate usually is a general agent of the employing broker.
Special agent aka limited agent
Authorized to represent the principal in one specific act or business transaction only. Usually real estate broker.
Single agency
Agent represents only one party to a transaction. Cannot represent more than the principal.
Dual agency
The agent represents two principals in the same transaction. Requires equal loyalty to two different principals at the same time. It is impossible to maintain both confidentially and full disclosure.
Designated agency
Assigned or appointed agency
Available in some states to accommodate in house sales. Two agents in the same brokerage are designated to represent each party.
Agency terminations
- Completion or fulfillment of duties
- death or incapacity of either party
- destruction or condemnation of property
- expiration of the terms of the agency
- mutual agreement by all parties to cancel contract
- breach by one of the parties
- by operation of law, as in bankruptcy of principal etc
Puffing
Exaggeration of a properties benefits. It’s legal, but must not be fraudulent. It’s considered unethical for REALTORS.
Fraud
The intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person.
Negligent misrepresentation
Occurs when the real estate professional should have known that a statement about a material fact was false.
Latent defect
A hidden structural defect that would not be discovered by ordinary inspection. Buyers may cancel the sales contract or receive damages when a seller fails to reveal known latent defects.
Megan’s law
Federal legislation promotes the establishment of state registration systems to maintain residential information in every person who kidnaps children, commits sexual crimes against children, or commits sexually violent crimes.
This law affects real estate professionals duty of disclosure.
Agency coupled with interest
This cannot be revoked by the principal or terminated upon the principals death.
