Unit 10: Agency and Listings Flashcards
Common law of agency specifies fiduciary duties to principal (OLD CAR)
Obedience - agent must be lawful
Locality- must place interest of principal above all others
Disclosure- all known material facts about property must be disclosed to principal and all parties including benefits of transaction, risks, defects
Confidentiality: keep principal’s confidential information private (PTM…price, terms, motivation)
Accounting: any money or personal property entrusted to agents must be accounted for
Reasonable: skill, care, and diligence
Parties to Agency Relationship
1) Principal : employs another to act on his behalf
2) agent/fiduciary: one who is employed to represent a principal
3) consumer third party- customer not represented by any broker
4) Faculitator/ transaction broker- licensee who provides service w/o being an agent
Broker in charge
Responsible for
1) all contracts, agency, and purchase agreements
2) supervising all salespersons and broker associates
3) has agency relationship with the principal
Salesperson
Employed to represent broker and brokerage firm
Can be employee or independent contractor (must have written agreement)
One who employs an agent to act in his behalf
Principal
Commissions
Charged by brokerage firms for their services.
Set by negotiations
Determined by the brokerage firm
Exclusive right to sell
Listing agreement in which the brokerage firm is paid regardless of who sells the property
Maximum protection to brokerage
Bilateral agreement
Open listing
Listing that allows an owner to list concurrently with more than one broker
Fiduciary Relationship
Relationship of a broker to the principal
Dual Agent
When a broker serves as agent for both the buyer and seller
Typically requires written consent of both parties
Earnest money
Buyer’s broker should deliver to the listing broker immediately when the offer becomes a contract
Boycotting
When a group of agree to not use the services of an inspector, lender, and attorney or agree not to show another firm’s listings
Owns all contracts
Brokerage firm
Employing broker (or broker in charge)
Responsible for:
1) all contracts, agency (employment) and purchase agreements
2) supervises all salespersons and broker associates
3) has the agency relationship with the principal
Salesperson or broker associate
Can be an employee or independent contractor
- if employee, brokerage must withhold taxes. Is not guaranteed vacations, set schedules or established work hours
- if independent contractor, must have a written independent contractor agreement stating that they may set their own work hours and will pay their own taxes and insurance. Not required to own a cell phone, work certain hours or attend sales meetings
Third party
Not a party to the particular agency agreement
Consumer third party is customer and not represented by any broker
OLD CAR (fiduciary duties to the principal)
O: obedience
L: loyalty- place interest of principal above all others
D: disclosure- all known material facts to principal and all parties , benefits of the transaction as well as risks or defects
C: confidentiality- keep principals confidential info private (price terms motivation )
A: accounting- any $ entrusted to agent must be accounted for
R: reasonable skill, care, and diligence
Special agency
Created when an agent is authorized to perform a particular act w/o the ability to bind the principal
Listing brokerage firm to seller
Buyer brokerage firm to buyer
General agency
Created when an agent is authorized to perform a series of acts associated with the continued operation of a particular business. Agents have a limited ability to bind the principal
Salesperson or assoc broker to employing broker
Property manager to property owner
Universal agency
Created when an agent is authorized to perform in place of the principal . Agents have unlimited ability to bind the principal
Agents authority comes from legal form called power of attorney , which creates an attorney -in-fact
Agent legally replaces principal -can accept/reject offers and sign for principal
Agency
Determined by who employs (not pays) the agent
Express agreement is created by direct statement. Oral or written but only written commission agreements are enforceable
Implied agency
Created thru agent’s actions
Advising an un represented third party , such as recommending an offer price
Brokerage Relationship Disclosure Requirements
A brokerage disclosure form must be provided to the consumer (seller or buyer) at first substantial contact and b4 broker receives any confidential information
Buyers agent: disclose to seller/seller agent b4 showing property
Seller agent: disclose to buyer/buyer’s agent before scheduling a property showing
Brokers disclose:
In writing if they are a principal or have any interest in the property
Sherman antitrust act
Price fixing is not allowed. All fees and commissions charged to public are always negotiable
Brokers may not discuss commissions outside of their own firm
Sherman antitrust fines
Up to $100,000 and 3 years in prison for individual infractions
Corporations may be fined up to $1,000,000
Civil liabilities include 3 times the damages plus attorney fees and legal costs
Listing (fiduciary) agreement
An employment contract that appoints a brokerage firm as on owners special agent for the specific purpose of funding a buyer who is ready, willing and able to buy according to the terms of the contract
Parties to a listing agreement
Seller: principal/client
Brokerage firm: agent/fiduciary
Elements to a listing agreement
1) in writing
2) price & terms : listing price/financing terms
3) amount and/or method of compensation: flat fee, %, net listing
4) negotiable commission clause: commissions always negotiable, both parties must agree
5) define beginning and ending date (automatic renewal clause not allowed)
6) MLS clause
7) broker protection/extension/safety/holdover/extender clause : brokerage entitled to commission if prospect buys for a time period after listing expires . Terminates if owner lidt w/ other agency
8) signature from ALL property owners
9) earnest money clause: states listing broker will hold
Exclusive agency
Brokerage paid if property sells UNLESS owner finds buyer
Bilateral agreement
Open/non exclusive agency
Only the brokerage firm that procures the buyer gets paid
Seller can sign agreements with more than 1 firm
Sale to a buyer automatically terminates all other open listings with or without notice
Obligations of broker under listing agreement
Pays fees to only licensed brokers; no fees to unlicensed persons
May pay referral fees to other brokerage firms, never directly to broker associates
Verify that all marketing is correct and truthful
Complete visual assessment of property
Answer 3rd party questions with honesty and clarity
Termination of agency agreements
Full performance, closing or expiration of agreement
Death or bankruptcy of principal or brokerage firm
Destruction of improvements
Breach by either party
Mutual rescission
