Unit 8 &9/Class 8 Flashcards
The law of agency defines the ______, ________, _________, and _________ of the parties to a real estate transaction
obligations
duties
rights
and responsibilities
In a principal/agent relationship, who is the principal and who is the agent?
You are the agent
The principal is your client: buyer, seller, tenant, landlord…
What is an agent?
Someone who acts on behalf of or in place of others
In a real estate transaction, the ______ is the agent of the principal/client
broker
you are a subagent for your broker
What is a subagent?
An agent of a principal’s agent .
I am an agent of my broker
What is a principal?
The client that the agent represents
A ___________ is a third party in a transaction that has no representation or is represented by someone other than the principal’s agent.
Customer
An agent works for a principal, and with a customer
What kind of relationship does an agent have with their client?
A fiduciary relationship
A Fiduciary relationship of trust imposes certain duties upon an agent. These duties include
OLDCAR
Obedience Loyalty Disclosure Confidentiality Accounting Reasonable Care
What does it to be “loyal” in a fiduciary relationship?
To place the client’s interests above all others.
In Kentucky, deposits held by a broker must be placed in the broker’s escrow account within ____ business days from the creation of an executory contract
3
Agency relationships that are created by agreement between the parties are called ___________
express agencies
What are examples of express agencies?
listing contracts
buyer agency contracts
property management contracts
Agency agreements can be oral if they are less than _________ year in length. However, they are not recommended
1
NOTE: In Kentucky, a broker cannot force through court action the payment of a commission with an oral listing agreement
Explain Implied Agency
An agent says something that leads a buyer to believe the agent is representing the buyer.
A buyer calls an agent and asks what he should do about an offer he is going to make to a for-sale by owner. the agent answers the buyers question and the buyer now thinks the agent is his agent. Agency relationships may be created without the payment of a commission
There are 9 methods of terminating an agency relationship. Name them.
8 of the 9 have no liability. Which one does have liability?
Breach of Contract (LIABILITY) Death of Broker Destruction of the property incapacity operation of law mutual agreement performance expiration of the contract bankruptcy
A _________ agent is one who can legally do anything a principal can do. They have been given a general power of attorney (in writing). The party appointed to use the power of attorney is called an _________. Real estate licensees do not act in this capacity on behalf of their client.
Universal agent
attorney-in-fact
A __________ agent is one who acts for another in an ongoing relationship. Continuity of service is a key feature of this type of agency. An example of this agent would be a property manager, or the relationship between a broker and his sales associates
general
Most real estate licensees act as _______ agents. This agent is one who acts for another in a one-time transaction, such as marketing a property for sale.
Special
NOTE: in Kentucky, a broker who designates an associate to represent a buyer or seller in an in-house transaction remains a dual agent
A _______ agent represents only one side of a transaction.
Single
we are _______ agents of the broker in the selling of a property.
sub-agents
Dual agency requires what?
SIGNED permission from both sides
Duties to a customer: there are three basic things that an agent owes to a customer. What are they?
reasonable care
fair and honest dealings
disclosure of property defects
Puffing vs. Misrepresentation that leads to fraud
Puffing - an exaggerated comment; legal
Misrepresentation - misstatement about a fact; illegal; Fraud occurs when the misrepresentation is intentional and was made with the intent to deceive. Misrepresentation may allow a party to back out of a contract
*The difference is the intent
Latent defects vs. patent defects
Latent defects - Hidden defects (i.e. painting over mold)
Patent defects - one that can be found by a reasonable inspection of the proeprty
When should a stigma be revealed to a buyer?
When it is material to the buyer
An agent is writing an offer for a buyer client. The buyer client informs the agent that he has had credit problems in the past and he is not sure how that would affect his loan application. After receiving this information from the buyer, the agent would be obligated to…
tell the seller about the buyer’s credit history
A seller who will be out of the country for six months has appointed his agent as his lawful attorney-in-fact to sell and transfer the title to his property. The seller’s agent is acting as a:
Special agent
When is subagency most likely to occur?
When a broker from one company sells a property listed by another company.
A real estate agent who fails to relay information to a buyer client that resulted in a financial loss to the buyer is most likely guilty of
negligent misrepresentation
One month after listing his home with a broker, a seller decides he does not want to sell his property and he calls the broker to withdraw his listing. In this situation….
The broker may sue the seller for his expenses
What are the three ways a broker can be compensated
commission
hourly fee
flat fee
When does a broker earn his commission?
When the seller accepts an offer from a ready, willing, and able buyer prepared to buy on the seller’s terms and ready to take positive steps towards consummation of the transaction
Sales associates who are paid in a lump sum and who are personally responsible for paying their own taxes are probably treated for tax purposes as…
independent contractors
Two real estate professionals were found guilty of conspiring with each other to allocate real estate brokerage markets. A seller sufffered an estimated $90,000 loss because of their activities. If the seller brings a civil suit against the two real estate professionals, what can the seller expect to recover?
$270,000 plus attorney’s fees and costs
3 x the actual damage
Two sales associates who work for the same firm agree to divide their town into a northern region and a southern region; one sales associate will handle listings in the north, the other will handle listings in the south. this SOUNDS like it would violate the Sherman Anti-Trust laws re: allocation of customers, but it does NOT violate it. why?
Because the two individuals work in the same firm.
NOTE: rules and regulations have the same force and effect as the license law itself
A REALTOR is best described as an individual who..
is a real estate licensee and a member of the National Association of Realtors
(remember you have to be licensed and belong to an association to be a realtor)
The federal law that makes contracts originated, negotiated and executed over a combination of computer and cell phone enforceable is
UETA
(Uniform Electronic Transactions Act)
The amount of commission paid to a sales associate is determined by…
mutual agreement with the broker
A real estate broker was responsible for a chain of events that resulted in the sale of a client’s property. This is called…
procuring cause
The rules established by tradition and court decisions….
common law
The laws enacted by the legislature….
statutory law
The rules and regulations created by real estate commissions and departments, as authorized by the legislature
Administrative laws
An agency relationship may be created by an oral or written agreement between the parties, which is ________. An agency relationship may also result from the parties’ behavior, creating an ________-
express agency
implied agency
A negligent misrepresentation occurs when a real estate professional…..
should have known that a statement about a material fact was false and the real estate professional’s misrepresentation was due to culpable (careless) negligence rather than simple (accidental) negligence
The relationship between real estate broker and seller is generally what type of agency?
Special
because its for a specific task
