Real Estate Laws of Agency Flashcards
affiliated business
arrangement
Referral of a client to a financially controlled
business whose earnings are shared with the
broker. [See RPI Form 205 and 519]
fiduciary duty
That duty owed by an agent to act in the
highest good faith toward the principal and not
to obtain any advantage over the latter by the
slightest misrepresentation, concealment, duress
or pressure.
conflict of interest
When a broker or agent has a positive or negative
bias toward a party in a transaction which is
incompatible with the duties owed to their client.
[See RPI Form 527]
trust funds
Items which have or evidence monetary value
held by a broker for a client when acting in a
real estate transaction.
dual agency
The agency relationship that arises when a
broker represents both parties in a real estate
transaction. [See RPI Form 117]
Equal Credit Opportunity
Act
A federal law enacted in 1974 prohibiting lenders
from discriminating against borrowers from a
protected class.
steering
The discriminatory practice of restricting the rental or ownership of a property to a specific class of people to perpetuate segregated housing.
agency
The relationship between principal and the
principal’s agent which arises out of a contract,
either expressed or implied, written or oral,
wherein the agent is employed by the principal
to do certain acts dealing with a third party. [See
RPI Form 305]
protected group
A class of people who receive special protections by a law due to their distinguishing factors.
power of attorney
A temporary authority granted to an individual to
perform activities during a period of the owner’s
incapacity or travel. [See RPI Form 447]
double-end
When the seller’s agent receives the entire fee
in the transaction as there is no buyer’s agent to
split the fee with.
redlining
In the United States, redlining is a discriminatory practice in which services (financial and otherwise) are withheld from potential customers who reside in neighborhoods classified as ‘hazardous’ to investment;
Real Estate Recovery Fund
Funds available to individuals who have obtained
a final-court judgment against a licensee and
are unable to recover the judgment from the
licensee. Also known as the Consumer Recovery
Account.
implicit discrimination
Actions which are not openly discriminatory but
yield discriminatory results.
licensed activities
Dealing with members of the public to offer,
contract for and render brokerage services for
compensation.
ethics
That branch of moral science, idealism, justness,
and fairness, which treats of the duties which
a member of a profession or craft owes to the
public, client or partner, and to professional
brethren or members. Accepted standards of
right and wrong. Moral conduct, behavior or
duty.
discriminatory practices
Unequal treatment given to members of a
protected group.
Advance Costs
Deposits handed to a broker to cover out-ofpocket
costs incurred on behalf of the depositor
while performing brokerage services.
kickback
A fee improperly paid to an agent who renders
no service in exchange for a referral fee beyond
the referral itself when the agent is already
providing another service for a fee.
Agency Law Disclosure
Restatement of agency codes and cases which
establish the conduct of real estate licensees. It
is delivered to all parties in targeted transactions.
[See RPI Form 305]
Federal Fair Housing Act
A collection of policies designed to prevent the
arbitrary restriction of access to housing based
on an occupant’s inclusion in a protected class.
commingling
The mixing of personal funds with client or other
third-party funds required to be held in trust.
contingency fee
A contingent fee is a fee that someone must pay if and when a certain event happens. A very common example of this is the fee earned by an agent upon closing a real estate transaction.
trust account
An account separate and apart and physically
segregated from broker s own funds, in which
broker is required by law to deposit all funds
collected for clients.
Unruh Civil Rights Act
A California law which prohibits discrimination
by a business establishment based on sex, race,
color, religion, ancestry, national origin, disability
or medical condition.
referral fee
A fee paid by one service provider to another for
referring a client to them. Controlled by the Real
Estate Settlement Procedures Act when financing
a one-to-four units residential property.
general duty
The duty a licensee owes to non-client individuals
to act honestly and in good faith with upfront
disclosures of known conditions which adversely
affect a property’s value. [See RPI Form 305]
California Bureau of Real
Estate (CalBRE)
A government entity which oversees, regulates,
administers and enforces California real estate
law as practiced by licensees.
