Unit 3.1 - Agency (LTP Flashcards)
What is caveat emptor?
Means “let the buyer beware”.
NC is caveat emptor state.
This means that seller’s need not disclose some information (“no representation” of information). However, if the agent is aware of them, he/she must disclose.
What is first substantial contact? What does it trigger?
First time when information exchanged is personal.
Triggers the need for working with real estate agent’s brochure.
For a buyer, might be anytime up to broker showing a home, where the broker is opening the door for the buyer.
For a seller, it can occur anytime up to the listing presentation, where the broker is actively seeking the listing.
What is the working with real estate agents brochure?
A consumer protection form. Miranda warning. Anything you say can/will be used against you unless you are my client.
Not a contract, just explains agency.
Broker must discuss agency options – exclusive, dual, designated dual and subagency.
Customer/client can refuse to sign, but broker must note it on the signature page of the form.
What is exclusive representation?
When the firm only represents one party (buyer or seller, landlord or tenant)
What’s the difference between working WITH a buyer and working FOR a buyer?
WITH a buyer means no agency agreement (you are the listing agent/subagent, representing the seller)
FOR a buyer means you have agency agreement (you are representing the buyer, oral or written agreement)
What are the duties that a broker owes their client?
OLDCAR
Obedience (follow law)
Loyalty (client’s best interest)
Disclosure (material facts and all information, unless prohibited)
Confidentiality (conceal personal/confidential information, not material facts)
Accounting (keep records, money, property)
Reasonable skill (expertise in your area)
If a broker learns that the buyer is willing to pay more than the amount they offered to the seller…
When must this be disclosed?
When must this be concealed?
Disclose: When broker is exclusive agent, designated dual agent or subagent of SELLER.
Conceal: When broker is exclusive agent, designated dual agent of BUYER or dual agent representing both BUYER and SELLER.
The listing agent is aware the seller is behind on their mortgage. Does this need to be disclosed to potential buyers? Is not disclosing this willful omission?
No, this is not a material fact and will not be material fact until point in time when foreclosure notice has been received.
No, the agent is not guilty of willful omission. This is only present when it pertains to material facts.
What is a material fact?
ANY fact about the property (OR transaction) that would affect someone’s decision or standpoint regarding purchasing or taking ownership of that property.
A provisional broker lists a property for sale. How will dual agency arise? What are the limitations on brokers practicing dual agency?
If the broker (or any other broker in their firm) represent a buyer interested in the listing. Buyer and seller must consent to dual agency representation.
No limitations on who can act as dual agent – PB, NPB, BIC
How does designated dual agency arise? What are the limitations?
Starts with DUAL AGENCY (buyer and seller are represented by the same firm). BIC then appoints a designated agent to represent the buyer and a designated agent to represent the seller. The brokers are now able to act in the same capacity as exclusive agency.
BICs and PBs are not allowed to act as designated agents because the BIC is overseeing the PB, therefore, the BIC may become aware of information that could be harmful to the PB’s client.
Brokers acting as designated dual agents are not allowed to have any personal and confidential information about the other side prior to designation.
What is NOT material facts?
Stigmatized, murder, death, illness, suicide, gang activity, haunted house, sex offender.
What duties does the principal owe to the firm?
Good faith – don’t lie
Compensation – pay us! ;)
When a seller asks the listing broker what type of deed they should provide to the buyer in order to have the least liability, how should the agent respond?
While a broker may know the quit claim deed offers no warranties whatsoever, the broker should refer the seller to an attorney for advise.
Good faith – don’t lie
Compensation – pay us!
How does agency terminate?
Completion (close on property) Expiration Mutual agreement Breach by agent / principal Operation of law (bankruptcy) Destruction or condemnation of property Death of client or brokerage (if brokerage, reassigned within firm)
