unit 1 Flashcards
What actions demonstrate exercising care when representing a buyer?
Helping the buyer locate appropriate housing
Evaluating property values and property conditions
Determining financing alternatives
Presenting offers and counteroffers with the buyer’s interests in mind
What exception exists to the duty of obedience when working with a client?
An agent is not bound by the duty if the principal’s directions are not legal.
An agent’s fiduciary responsibilities to a client usually end when the transaction closes. This is not true of which duty?
Confidentiality. This duty extends beyond the termination of the relationship. No personal information gained during the term of the agreement can ever be disclosed to another party.
A seller’s agent must disclose what kinds of things to the seller?
Purchase offers
Who the prospective purchasers are and if the agent has a relationship with them in any way
Ability of the purchaser to complete the transaction
Ability of the purchaser to offer a higher price
Purchaser’s intention to resell the property for a profit
Typically, what actions are not considered to be part of a broker’s authority?
Such actions as:
Signing contracts for the seller
Initialing changes to an offer
Permitting early occupancy
What obligations do licensees owe to their customers?
Honesty and fair dealing
Reasonable care and skill
Proper disclosure
Describe the difference between active and passive fraud.
Active fraud is an intentional misrepresentation of a material fact for the purpose of gaining an unfair or dishonest advantage over another person.
Passive fraud is an intentional nondisclosure of a material fact.
What could happen if a licensee violates a duty to a client or customer?
Rescission of the listing agreement (causing a loss of a potential commission)
Forfeiture of any compensation that may have already been earned
Disciplinary action by the state license law authorities, including license suspension or revocation
Suit for damages in court
What principles govern an agency relationship?
Both parties must consent to the relationship.
Both parties must agree to form the relationship.
The relationship is fiduciary—meaning the agent owes certain duties to the principal as we have previously discussed.
Define implied agency.
An implied agency is formed when the actions of the parties indicate that they have mutually consented to an agency. The persons involved may not have consciously planned to form an agency relationship. However, their actions may unintentionally, inadvertently, or accidentally form the relationship.
If a transaction doesn’t complete, under what circumstances would the broker still be entitled to a commission?
The broker is still entitled to receive the commission if the transaction does not complete due to the seller’s default.
Describe the difference between constructive notice and actual notice.
Constructive notice is the legal presumption that information is available and can be obtained through due diligence.
Actual notice means that not only is the information available, but someone has been given the information and actually knows it.
What is market allocation? Give an example.
Market allocation is the division of markets by location or price. An example would be two companies getting together and deciding that one company would take one part of town, while the other company takes the other part.
What’s the penalty for violating the Sherman Antitrust Act?
Individual violators of the Sherman Act can be fined up to $1 million and up to 10 years in federal prison for each offense; corporations can be fined up to $10 million for each offense.
The Criminal Antitrust Penalty Enhancement and Reform Act of 2004 increased the maximum criminal penalty for individuals to 10 years’ imprisonment and $1 million fine; and the maximum penalty for corporations to $100 million fine.
What does the Clayton Act allow private individuals to do?
Under the Clayton Act, private individuals are permitted to sue antitrust violators. If the suits are successful, the individuals can recover three times the damages incurred plus court costs and attorneys’ fees.
What kinds of discussions about commission rates are brokers allowed to have that would not violate the Sherman Act?
Brokers may discuss how the commission would be split between the listing broker and the selling broker, in a cooperative transaction. They may also discuss commission rates with their affiliated licensees or with potential employees during an interview.
the term __ is a term that refers to a very precise legal relationship between a licensee and a seller, a buyer, a landlord or a tenant
agent
Agency Law
is a body of law that governs these relationships in very specific ways
An agentis a person who is empowered by contract to represent the interests of a ___, also known as the principal
client
The principal can be a …
seller, a buyer, a landlord, or a tenant
the agent represents the principal in dealings with third parties, who are known as ____
customers
the agency relationship established between the agent and the principal puts in place a set of _____ that an agent owes to the principal
fiduciary duties
A fiduciary relationship is one of…
the utmost trust
Agents ___ have certain duties to customers even though they do not represent them
do
the law expects an agent to:
- do their job with a reasonable degree of care, skill and diligence
- obey the principal’s direction as outlined in the contract, as long as they are legal
- account for all monies, documents and other property they receive from the principal
- be loyal by placing the clients interests above those of all others, including their own
The duty of confidentiality extends….
beyond the termination of the relationship
