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Fundamentals of Real Estate > Unit 5: Consumer Relationships > Flashcards

Unit 5: Consumer Relationships Flashcards

1
Q

What are the 2 types of Laws?

A

Common Law: made by courts based on previous decisions for similar matters (precedence)
Statute Law: passed by provincial/federal gov’t

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2
Q

Non-representation relationships involve a real estate agent working with a party to trade in real estate…

A

but not acting on their behalf (customer-based). Agents would only provide facts and admin support

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3
Q

Representation Relationships involve an agent…

A

acting on behalf of a party for a trade in real estate on behalf of their brokerage (client-based).
Requires much more involvement, responsibilities and discretion

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4
Q

General obligations in Representation Relationship:

A
  • Exercise Care and Skill
  • Act Honestly
  • Perform Mandate
  • Obey Lawful Instructions
  • Act in Person
  • Disclose Info
  • Negotiate Favorable Terms
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5
Q

Fiduciary duties in Representation Relationship:

A
  • Utmost Loyalty
  • To Account
  • Handle Confidential Info Properly
  • Avoid and Disclose Conflicts of Interest
  • Not may secret profits
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6
Q

The Rules stipulate that written disclosure is needed …

A

whenever an agent receives or is about to receive confidential info from a consumer.

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7
Q

Written disclosures must include:

A
  • whether the agent is in a representation relationship with another party
  • The services they will supply
  • Conflicts of Interest
  • Any additional info that may alter their decision to move forward
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8
Q

Customer Acknowledgement Forms are for …

A

non-representation relationships (customer)

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9
Q

Written Service Agreements are for…

A

representation relationships (client)

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10
Q

What are the 5 Ds of Role Clarity and Consistency?

A

1) Discuss (types of relationships)
2) Determine (representative capacity)
3) Document (that capacity)
4) Disclose (that capacity)
5) Do (actions within that capacity)

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11
Q

What are the 4 circumstances when a consumer should be considered a customer?

A

1) When the consumer is on the opposite side of the transaction
2) When they are party to a transaction that the agent is already representing the client for
3) CoI - Buyer and seller represented by same agent
4) Consumer would like to represent themselves

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12
Q

Professional Standards come from requirements set out in the…

A

Real Estate Act

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13
Q

Professional Norms and Practices come from…

A

general consensus across profession

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14
Q

Ways to meet the Standard of Care include:

A
  • Being a lifelong learner
  • Seeking advice when appropriate
  • Being aware of market / practice issues
  • Making reasonable efforts to confirm info
  • Exercising due care when prepping documents
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15
Q

An agent becomes liable to a customer when:

A
  • they fail to disclose their role in a transaction
  • they act but authority wasn’t granted for that action
  • they cause a tort - omission or commission (civil wrong)
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16
Q

In Non-Representation Relationships, agents can:

A
  • provide stats / info on comparable properties
  • provide and complete standard forms / agreements
  • provide names of other industry professionals / service providers without recommending one
  • Deliver offers / counter-offers in a timely manner
  • Communicate info to clients
  • Keep customer informed about transaction progress
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17
Q

In Non-Representation Relationships, agents cannot:

A
  • give confidential advice
  • perform a service that requires discretion or judgement
  • advocate or represent the customer’s interests
18
Q

In agency, the party being represented by another party is known as the __________

A

Principal

19
Q

___________ is the party acting on the principal’s behalf and agreeing to be under the control of the principal.

A

An Agent

20
Q

What are the 3 types of authority that an agent may hold?

A

1) Express Authority: oral or written description
2) Implied Authority: actions related to carrying out express authority
3) Customary Authority: performing actions that are customary for an agent to perform

21
Q

What are the limits on Authority capacity to contract?

A
  • Capacity to delegate (if agreed in contract, but original agent still responsible)
  • Capacity to incur expenses (can only seek reimbursement if express written authority from principal)
22
Q

What are the 5 elements in all Representation Relationships?

A

1) Creation of Law (determined by courts based on actions)
2) Consensual (can be written, verbal or implied)
3) Controlled by Principal (agents must follow all lawful instructions)
4) Usually involved Fiduciary Duties (legal duty to act in best interest of principal)
5) Affects Principal’s Legal Position (principal liable for agent actions - as long as within scope of authority granted)

23
Q

5 Ways that a Representation Relationship can be established:

A

1) By Agreement - written or oral
2) By Implication - based on conduct of parties
3) By Ratification - agent acts without or in excess of authority
4) By Estoppel - principal’s actions make 3rd party believe the agent has authority
5) By Operation of Law - agent takes immediate action to save property

24
Q

_____________ gives a brokerage the sole right to represent a client.

A

Exclusive Representation Relationship

25
Q

_______________ allow multiple brokerages to act on behalf of a client. (they are not bound to only one particular brokerage)

A

Non-exclusive Representation Relationship

26
Q

Conflicts of Interest arise from 3 circumstances:

A

1) Competing Interests (2 buyers, one brokerage, 1 property)
2) Opposing Interests (buyer + seller from same brokerage)
3) Brokerage Interests (agent or business contact wants to buy client property)

27
Q

There are 4 categories of services that a brokerage can offer:

A

1) Mere Posting Services (via MLS)
2) Limited Brokerage Services
3) Full Brokerage Services (all transaction-related activities)
4) Property Management Services (operating/maintaining property for client)

28
Q

The most comprehensive services offered by a brokerage are __________

A

Property Management Services

29
Q

Responsibilities of clients in service agreements:

A
  • Indemnification of costs (repay agents for liabilities)
  • Remuneration of services (fee payment)
  • Disclosure of relevant info (facts, details, changes)
30
Q

3 Ways a Representation Relationship can be terminated:

A

1) By agreement (mutual consent, expiry, completion)
2) By Revocation (not fulfilling obligations)
3) By Operation of Law (Impossibility, illegality, death, mental incapacity, bankruptcy)

31
Q

5 Methods for terminating a relationship through Operation of Law:

A

1) Impossibility
2) Illegality
3) Death
4) Mental Incapacity
5) Bankruptcy

32
Q

6-Step Process for Managing Conflicts of Interest

A

1) Recognize the conflict
2) Avoid the conflict
3) Disclose the conflict
4) Seek client’s direction
5) Obtain client’s consent
6) Terminate if cannot resolve

33
Q

Disclosure of Conflict of Interest should include:

A
  • Nature of conflict
  • How it prevents brokerage from fulfilling responsibilities
  • Implications / consequences of possible actions
  • Independent advice (legal) possible
34
Q

Do opposing interests also include former and current clients involved in the same transaction?

A

Yes

35
Q

Direct Conflict of a Brokerage can come from 2 situations:

A

1) Referrals
2) Personal Trades

36
Q

First-degree relatives of an agent would be their…

A

spouse, parents, siblings, or children

37
Q

Second-degree relatives of an agent would be their…

A

grandparents, grandchildren, aunts, uncles, nephews, nieces, half- or step-siblings

38
Q

Third-Degree relatives of an agent would be their…

A

cousins, great-grandparents, or great-grandchildren

39
Q

Ways to ensure confidentiality compliance for designated agencies:

A
  • Discussions with clients are in private locations
  • Strong passwords / encryptions
  • Shared electronics have password protection
  • Shared networks have access restrictions
  • Clients confidential info is kept secret
  • Home offices are secured
40
Q

_________ is a means to resolve conflict of interest that occurs in transactions when an agency represents clients with opposing interests.

A

Transaction Brokerage

41
Q

When acting as a transaction facilitator, the agent …

A

continues to represent clients in the same transaction by assisting them to reach a mutually acceptable trade

42
Q

Questions that require prior discussion with seller before agent can respond:

A
  • Past Offers (when, how many, etc)
  • Multiple Offers (how many, for how much)

Fundamentals of Real Estate (19 decks)

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