Unit 4 - Real Estate Agency

Question 1

Agency

Answer 1

The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

Question 2

Agency Coupled With An Interest

Answer 2

An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property).

Question 3

Agent

Answer 3

One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed sponsoring broker to be his agent.

Question 4

Brokerage Agreement

Answer 4

A brokerage agreement is a type of contract wherein one party agrees to act as a sales agent of another, who is called the principal.

Question 5

Buyer Agency Agreement

Answer 5

A principal-agent relationship in which the sponsoring broker is the agent for the buyer, with fiduciary responsibilities to the buyer.

Question 6

Client

Answer 6

A person who is being represented by a licensee; the principal.

Question 7

Commingling

Answer 7

The illegal act by a real estate licensee of mingling client or customer funds with the licensee’s personal funds.

Question 8

Compensation

Answer 8

The valuable consideration given by one person or entity to another person or entity in exchange for the performance of some activity or service.

Question 9

Confidential Information

Answer 9

Information given by a client to a licensee during the term of a brokerage agreement that the client requests (in writing or verbally) the licensee keep in confidence; relates to the client’s negotiating position; or could do damage to the client’s negotiating position if disclosed.

Question 10

Consumer

Answer 10

A person or entity seeking or receiving licensed activities.

Question 11

Conversion

Answer 11

Unauthorized use or withholding of money or property that rightfully belongs to another person

Question 12

Cooperative Commission

Answer 12

In Illinois, an arrangement whereby both the buyer’s and the seller’s real estate agents are paid by the seller.

Question 13

Customer

Answer 13

A consumer who is not being represented by the licensee, but for whom the licensee is performing ministerial acts.

Question 14

Designated Agent

Answer 14

A licensee authorized by a sponsoring broker to act as the agent for a specific principal in a particular transaction.

Question 15

Dual Agency

Answer 15

Representing both parties to a transaction. In Illinois, this is illegal unless both parties agree to it in writing.

Question 16

Express Agency

Answer 16

An agency relationship based on a formal agreement between the parties.

Question 17

Universal Agent

Answer 17

A person empowered to do anything the principal could do personally.

Question 18

Substantive Contact

Answer 18

Dialogue between a licensee and a consumer that moves to consumer’s motives, objectives, financial qualifications, and other confidential information that, if disclosed, could harm the consumer’s bargaining position.

Question 19

Single Agency

Answer 19

The representation of a single principal.

Question 20

Special Agent

Answer 20

One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a special agent authorized to find a ready, willing, and able buyer for a particular property.

Question 21

Puffing

Answer 21

Exaggerated or superlative comments or opinions.

Question 22

Principal

Answer 22

(1) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits.

(2) The original amount (as in a loan) of the total due and payable at a certain date. (

3) A main party to a transaction—the person for whom the agent works.

Question 23

Negligent Misrepresentation

Answer 23

Occurs when the broker should have known that a statement about a material fact was false.

Question 24

Material Fact

Answer 24

Any fact that, if known, might reasonably be expected to affect the course of events.

Question 25

Listing Agreement

Answer 25

A contract between an owner (as principal) and a real estate sponsoring broker (as agent) by which the sponsoring broker is employed as agent to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission.

Question 26

Latent Defect

Answer 26

A hidden structural defect that could not be discovered by ordinary inspection and that threatens the property’s soundness or the safety of its inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects.

Question 27

Implied Contract

Answer 27

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Question 28

Implied Agency

Answer 28

Agency, intentional or otherwise, created by action or deed. AKA ostensible agency

Question 29

General Agency

Answer 29

The relationship of a broker, managing broker, or leasing agent with a sponsoring broker.

Question 30

Fraud

Answer 30

Deception intended to cause a person to give up property or a lawful right.

Question 31

Fiduciary Duties

Answer 31

Certain duties owed by a real estate licensee to a principal, including the duties of care, obedience, loyalty, disclosure, accounting, and confidentiality.

Question 32

Express Contract

Answer 32

An exchange of promises where terms by which the parties agree to be bound are declared either orally or in writing (or a combo of both) at the time it is made.