Unit 6: The Law of Agency Flashcards
Agency
The act of representing someone else
Agent
Represents the principal and has a fiduciary duty (Broker)
Special Agent
Appointed to carry out a single act or transaction (Real Estate Agents)
General Agent
Has broad authority to act on behalf of the client
MLS
Multiple Listing Service
Pocket Listing
A listing that is deliberately withheld from the MLS. This is a violation of the MLS rules.
Cooperating Brokers
(Buyers Agent) Agents who try to sell a property that is currently listed for sale by a broker but who work for someone other than the listing broker.
Cooperating split
The cooperating broker’s share of the commission.
Salesperson Employment Status
- For Tax, Compensation, and Work Hour Requirements real estate salespeople are generally treated as Independent Contractors.
- In the eyes of the law or the department of real estate, salespersons are considered employees of the Broker.
Single Agency
An agent represents only one principal.
Dual Agency
The same agent represents two principals in the same transaction.
Fudiciary Duty
Duty of highest good faith and loyalty
3 Steps for Dual Agency
Disclose- That I am acting as a dual agent.
Elect - Choose consent
Confirm- Sign
Ratification
When your actions extend your existing relationship
Estoppel
Actions that prevent denial
Listing Agreements
An agreement establishing an agency relationship between the Broker and the Seller
Exclusive Authorization and Right to Sell listing
The most common contract in real estate. Protects the agent for payment. Regardless of who finds the buyer, the agent gets paid.
Exclusive Agency
Allows the owner to sell the house on their own and not pay a commission.
Open Listing
(procuring cause) A nonexclusive listing provides for a commission to the broker if the broker is the procuring cause of the sale.
Net Listings
The broker’s compensation is whatever amount the property sells for over a previously agreed (net) amount.
Option listing
An option listing gives the broker the right to purchase the property.
Option Listing Disclosures
- No longer just acting as an agent, acting as a principal also.
- Other offers
- Anticipated Profits
All exclusive listings must include
A definite termination date
The commission is earned when:
When the real estate broker finds a buyer who is ready, willing, and able to purchase a property.
The commission is paid when:
Escrow is closed
Duties to third persons
Full disclosure of material facts.
Death on Property
- Within the last 3 years, must disclose
- Beyond 3 years, disclose upon inquiry
Unnecessary Death Disclosure
Do not disclose HIV or AIDs causes of death
Easton vs. Strassburger
The case led to an inspection requirement. Every time you sell a house, both agents are required to conduct a visual inspection of normally accessible areas of the property. Only applies to residential 1-4 unit properties.
Recovery Account
Protects the public and helps compensate victims of fraud, misrepresentation, deceit, or conversion of trust funds when they cannot collect a court-ordered judgment against a real estate licensee. Funded by 5% of all real estate license fees collected. Amount paid is limited to $50,000 per transaction and $250,000 per licensee.
Termination of an Agency
- Performance- Fulfillment of agreement
- Expiration of term
- Death of Agent or Principal
- Destruction of property
- Incapacity of seller or principal
- Bankruptcy
- Agreement of the parties
Generally, an agent works for:
the principal
A minor:
Is anyone younger than 18 years of age
Somone appointed to carry out a particular transaction is:
A Special Agent
An independent contractor is distinguished by:
Responsibility for Social Security and other payments.
The California Real Estate Law treats a real estate salesperson as:
An employee of the broker
A salesperson is a broker’s:
Agent
An agency agreement to perform an act that requires a writing:
must itself be in writing
To be enforceable, all real estate sales contracts:
Must be in writing
As a contract, a real estate agency agreement:
Must meet the requirements for a valid contract
Real estate commission rates:
Are not fixed by law
All real estate agency agreements must:
Be in writing
The MOST commonly used form of real estate listing agreement is:
The exclusive authorization and right-to-sell listing
A real estate agent owes duties to:
The principal, the third person, and the subagent.
The agent owes the principal the duty of:
Loyalty
A real estate agent must make full disclosures of:
Material facts that are known by the agent or that would be revealed by a reasonable inspection of the property.
The principal owes the agent
The duty of care.
A real estate seller must disclose
Material facts concerning the property’s value or desirability.
Exaggerating a property’s value or desirability:
is never permitted.
The recovery account is available to:
people victimized by a real estate licensee.
An agency relationship may NOT be terminated by:
Someone Outside the agency relationship.
