UNIT 16 AGENCY IN R.E. Flashcards
TEST:
FIDUCIARY RESPONSIBILITY (PG 295)
ACRONYM COALD
Fiduciary responsibility are moral, ethical &
the law
The common law of agency or the statutory law
governing R.E.
Under the common law of agency, an agent owes the
principal the six fiduciary duties of
COALD: Care Obedience Accounting Loyalty Disclosure & the sixth listed is confidentiality ** has 5 in the gray box & 6 in bottom paragraph??? On pg 295
AGENCY RELATIONSHIPS (PG 300) EXPRESS AGENCY LISTING AGREEMENT BUYER AGENCY AGREEMENT IMPLIED AGENCY
EXPRESS AGENCY
- oral or written
- formerly expresses the intentions & states terms &
conditions
LISTING AGREEMENT
-a written employment contract between the
SELLER & AGENT which authorizes the broker to
find a buyer/ tenant for the owners property
BUYER AGENCY CONTRACT
- an express agency contract between BUYER &
BROKER ( the other side of the agreement
between buyer & agency)
- stipulates the activities & responsibilities the buyer
expects from the broker to find the appropriate
property for purchase / rent
IMPLIED AGENCY
- when the actions of the parties indicate that they
have mutually consented to an agency
-Even though the licensee may not have consciously
planned to create an agency relationship
nonetheless, the parties can create one
UNINTENTIONALLY, INADVERTENTLY, OR
ACCIDENTALLY by their actions
EX: WITHOUT having customers sign a written
agency agreement, the sales person drives them
to the house. Through the actions of the sales
person, the customers THINK they are being
represented.
GRATUITOUS AGENCY (PG 301)
-an agency that exists when no fee is
involved.
- Example a SELLER might agree to pay a
commission to the BUYERS agent, even though
the agent is representing the BUYER. The written
agency agreement should state how the agent is
being compensated and to explain all alternatives
TERMINATION OF AGENCY (PG 301)
7 LISTED
- expiration of the terms of the agency
-breach by one of the parties
-completion, performance, or fulfillment of the
purpose for which the agency was created - death or incapacity of either party
- destruction or condemnation of the
property - mutual agreement by all parties to cancel the
contract - by operation of law as in bankruptcy of the principal
(bankruptcy terminates agency contract & title
transfers to a court appointed receiver)
TYPES OF AGENCY RELATIONSHIPS (PG 301)
- UNIVERSAL AGENT
- GENERAL AGENT
- SPECIAL AGENT
UNIVERSAL AGENT
– A person empowered to do anything the
principal could do
– unlimited authority
– this typically DOES NOT happen
GENERAL AGENT
- A broad range of responsibilities to a particular
business or activity
– it is done within the scope of the agents authority
– a PROPERTY MANAGER is typically a general
agent for the owner
–MOST real estate sales persons are general agents
for their broker
SPECIAL AGENT
-authorized to represent the principal in one specific
act or business transaction only a real
- estate broker is usually a special agent
– if HIRED BY THE SELLER, the broker is limited to
finding a ready, willing, and able buyer for the
property
– a special agent FOR THE BUYER would have the
limited responsibility of finding a property that fits
the buyers criteria
– special agent, the real estate broker MAY NOT
BIND the principal to any contract (no binding
contract)
PENNSYLVANIA R.E. LICENSING & RELRA
PERMITS A BROKER TO DO THE FOLLOWING (PG 302)
-acts as an agent of the buyer/tenant
– acts as an agent of the seller/landlord
– a dual agent for the seller/landlord and buyer/
tenant in the same transaction
– a transaction licensee, a non-agent who provides
only CUSTOMER level service for either or both
the buyer/tenant and seller/landlord in the
transaction.
NOTE: RELRA permits the broker to do all of the
following HOWEVER ACCORDING TO THE LAW
the broker DOES NOT HAVE TO do all of these
- Regardless of which services the brokers firm
offers, licenses are required to disclose all
relationships permit it by state law so that the
consumers are aware of their options
– It is provided in the consumer notice
SINGLE AGENCY ( PG 302)
– The agent represents only one party in any
single transaction
- The customer is the party not represented
by the agent
– a SINGLE AGENCY BROKER might represent both
the seller and buyers, but they they CAN NOT
represent them both in the same transaction and
REMAIN A SINGLE AGENT
-this avoid conflicts and creates loyalty to only one
principal
– On the other hand it’s traditionally rules out the sale
of an in-house listings to perspective buyers
AGENCY CONCEPTS (PG 294 & PG 303)
-The law of agency defines the rights and
duties of the principal and the agent
– applies in a variety of business relationships
– it can be between licensees in their clients
– or it can be between the licensees and their broker
UNDISCLOSED DUAL AGENCY (PG 305)
If it is NOT disclosed that it is a dual agency it – violates licensing laws
– can result in the recission of the sales contract
– forfeiture of the commission
– lawsuit for damages
– a possible license problem
DESIGNATED AGENCY (PG 305)
-One or more licensees designated by the
employing broker with the consent of the
principal to act exclusively as the agent/s on
behalf of the principal
-excludes all other licensees within the brokers
employ (PG 241 UNIT 13)
(PG 305)
- the broker designates one licensee to represent the
seller
– one licensee to represent the buyer
– the broker is still the dual agent
- disclosure is required
TRANSACTION LICENSE (PG 305-306)
- a licensed broker or salesperson who
provides communication or prepares
documents performs acts described under the
definition of broker or salesperson‘s for which a
license is required, without being an agent or
advocate of the consumer (PG 241)
(PG 306) - AKA transactional broker, facilitator, coordinator, or
contract broker
– is not an agent of either party
– a non-agents job is to help both buyer/seller
w/ necessary paperwork & formalities involved in
transferring ownership of real property
– buyer/seller negotiate the sale without
representation
– non-agents are equally responsible to both parties
and must disclose known defects in a property
– may not negotiate on behalf of either the buyer or
seller
– MUST NOT disclose confidential information to
either party
PENNSYLVANIA LAW
- transaction licensee is permitted in PA
- A broker or salesperson provides communications,
document preparation services, and assists both
parties
– they are not an agent or an advocate of either party
- required to advise the consumer that they ARE
NOT acting as an agent & should NOT BE
PROVIDED with confidential information
- can not disclose price negotiations on either side
- not very common
……….(continue pg 306)
DISCLOSURE NOTICE(PG 306)
-Mandatory in every state
– required to disclose to parties with who the
agent works with the scope of the services the
party can expect from the agent
– the INTENT OF THE DISCLOSURE is to educate
consumers so that they make an informal
decision
PENNSYLVANIA CONSUMER NOTICE
PG 306-307
-A disclosure summary MUST BE discussed
prior to the purchase or sale of
residential/commercial R.E., or for lease of
residential/commercial are R.E.
– A different disclosures required for the lease of
residential/commercial R.E., when the licensee is
working on behalf of the owner.
-No disclosure is required when the transaction is for
the sale or lease of commercial property to
consumers who are not individuals such as
corporation
MAJOR PROVISIONS OF THE CONSUMER NOTICE: (PG 306-307)
-advises the party (signature of written
agreement or will not represent) that a
licensee is not representing the consumer unless
an agency relationship is selected by
signing a written agency agreement
– GENERAL DUTIES the licensee owes all
consumers, regardless of the nature of the
business relationship
– descriptions of the BUSINESS RELATIONSHIPS
permitted in Pennsylvania:
seller agency, buyer agency, dual agency,
designated agency, and transaction licensee
– CONTRACT / contractual terms that must be
included in all agreements
– a statement about the R.E. Recovery fund
CONSUMER NOTICE
PENNSYLVANIA LAW STATES THAT LICENSEES MUST: (PG 307)
-WHAT DOES THE BROKERS R.E.FIRM NEED TO ESTABLISH ASIDE FROM THE CONSUMER INFORMATION
CONSUMER NOTICE SHOULD BE DONE FIRST…. BEFORE ANY DISCUSSION/ CONFIDENTIAL INFORMATION IS GIVEN/ AN AGREEMENT IS DONE ETC
– Discuss notice at the INITIAL INTERVIEW or the
FIRST CONTACT where a discussion about real
estate occurs
- must be done BEFORE the licensee provides
any services or ENTERS INTO AN AGENCY
AGREEMENT or agreements for sale
– good practice is to have the discussion BEFORE
any confidential information is disclosed about an
individual’s motivation or financial situation
– licensees should explain what agency alternatives
there are
– licensee is to retain a copy of the signed/refused
acknowledgments for six (6) months and provide
consumer with a copy of entire disclosure
***The disclosure statement helps the consumer be
aware that they may be divulging personal
information to a licensee who is not & may never
be their agent.
***OUTSIDE & ASIDE OF THE DISCLOSURE STATEMENT THE BROKER OF THE R.E. FIRM MUST ESTABLISH PROCEDURES FOR DISCLOSING
- specific types of services the firm provides
– the party the licensee represents in a specific
transaction
– company policies regarding two agencies and
designated agency‘s
- company policies regarding cooperation with other
brokers
