Unit 3 Module 1 - Agency Basics Flashcards
What are examples of information that are NOT a Material Fact?
A property may be stigmatized however in NC it is not considered a material fact. Murder, death, suicide, gang activity, haunted house, or sex offender lives nearby are not a material fact. A broker cannot disclose if the past owner or tenant had HIV/AIDS as this is a violation of Federal Fair Housing (handicap).
A seller asks the listing broker what type of deed should they provide to the buyer in order to have the least liability. What should the broker do?
Good Faith - Don’t lie. While a broker may know that a quitclaim deed offers no warranted whatsoever, the broker should refer the seller to an attorney and have the attorney advise the seller. Compensation - pay us.
What are the duties that the broker owes to his/her client?
O.L.D.C.A.R.
Obedience - Follow lawful instructions
Loyalty - Client’s interest above all others
Disclosure - Disclose material facts and all information obtained (unless prohibited).
Confidentiality - Conceal personal/confidential information (unless a material fact).
Accounting - Keep accurate records / safeguard money and property.
Reasonable skill, care, and diligence - Be an expert in the area you practice.
What is exclusive representation?
Where the firm only represents one party - buyer or seller in the sales transaction/tenant or landlord in a lease transaction
Explain Universal, General, and Special Agency. When do they arise?
Universal - Ability to sign on behalf of a person. Power of attorney or attorney in fact.
General - Ability for the agent to sign on behalf of the firm. Property management agreement /Affiliation with a brokerage.
Special - Ability to gather information to assist the principal. No authority to bind transactions. Represents buyer/seller/tenant
How does designated dual agency arise? Any limitations?
Is a form of dual agency. Arises when the firm represents the buyer and the seller in the same transaction. NO BIC and PB and no P&C.
What is First Substantial contact? What does it trigger?
Point in time that the conversation shifts from facts about the property to information that is personal/ confidential and may weaken a party’s bargaining position. Requires WWREA - Where the agency is explained and the customer/clients decide how to proceed.
What duties does a broker owe a customer?
H.F.D
Honesty, Fairness, and disclosure of material facts
What is the difference between willful omission and willful misrepresentation?
Willful Omission is purposely not disclosing something known about the property that is a material fact.
Willful Misrepresentation is lying. The broker knows that the statement that they have made is a lie.
A broker learns that the buyer is willing to pay more than the amount that they have offered to the seller. When must a broker disclose this information? When must it be concealed?
Broker must disclose when the broker exclusive agent of the seller, designated dual agent of the seller, or subagent of the seller.
Broker must keep it confidential when the broker is the exclusive agent of the buyer, designated dual agent of the buyer, designated dual agent of the buyer, or acting as a dual agent in the transaction (representing both the buyer and seller).
The listing broker is aware that the seller is behind on the mortgage. Must the listing broker disclose this to potential buyers? Is the agent guilty of willful omission?
No, the seller being behind on the mortgage is not a material fact. The listing agent has a duty to conceal this information unless a foreclosure notice has been received.
What is Caveat Emptor?
Means “let the buyer beware.” There are very few items for which the seller must disclose and the duty of disclosure falls to the licensed real estate agents. The seller cannot conceal problems (making it impossible to discover), but they can choose to make “no representation.”
What is dual agency? Any limitations on who can practice?
Dual agency - when one brokerage represents both the buyer or the seller in the transaction. May be one or multiple licensees. No limit when all parties expressly consent to dual agency. Act as a referee…cannot advocate for one property over the other.
What duties does the principal owe to the firm?
Good faith - Don’t Lie. Compensation - pay us.
What is the Working with Real Estate Agents Brochure?
A consumer protection form - it is the real estate version or the Miranda warning - anything you say can and will be used against you unless you are my client.
