Unit 9 Flashcards
What is brokerage?
Brokerage is simply the business of bringing parties together. A realestate brokeris licensed to buy, sell, exchange, or lease real property for others and to charge a fee for those services.
sales associate
A sales associate might be licensed as a real estate salesperson or be a licensed real estate broker who simply chooses to work for another broker rather than set up an independent brokerage office.
In the traditional definition, a real estate sales person is licensed to perform real estate activities on behalf of a licensed real estate broker. The broker for whom the sales person works is called the employing broker, and both will be subject to the terms of an employment agreement.
A sales associate can carry out only those responsibilities delegated by the employing broker and can receive compensation only from that broker.
broker’s compensation
The broker’s compensation is specified in the contract with the client. The real estate license law (or statute of frauds) usually will require that there be a written agreement to establish the compensation to be paid.
Compensation can be in the form of a commission or broker’s fee, a flat fee, or an hourly rate.
Even subtle attempts to impose uniform commission rates in an area are clearly a violation of state and federal laws.
procuring cause
To be considered the procuring cause of a sale, the broker must have started or caused an uninterrupted chain of events that resulted in the sale.
For example, procuring cause may include activities such as conducting an open house, placing an advertisement in the local real estate advertising magazine, making the property listing available on the internet, and showing the house to the buyer.
If the transaction is not consummated, the real estate broker may still be entitled to a commission if the seller…
- has a change of mind and refuses to sell,
- has a spouse who refuses to sign the deed,
- has a title with uncorrected defects,
- committed fraud with respect to the transaction,
- is unable to deliver possession within a reasonable time,
- insists on terms not in the listing (e.g., the right to restrict the use of the property), or
- has a mutual agreement with the buyer to cancel the transaction.
Price-Fixing
Price-fixing is a practice in which competitors agree to set prices or other terms and conditions for products or services rather than letting competition in the open market establish those prices.
In real estate, price-fixing occurs when competing brokers agree to set sales commissions, fees, or management rates. Price-fixing is illegal.
Group boycott
A group boycott occurs when two or more businesses conspire against another business or agree to withhold their patronage to reduce competition.
A group boycott is illegal under antitrust laws.
Allocation of Customers or Markets
Allocation of customers or markets involves an agreement between real estate brokers to divide their markets and refrain from competing for each other’s business. Illegal.
Tie-in Agreements
Tie-in agreements (also known as tying agreements) are agreements to sell one product only if the buyer purchases another product as well.
Sherman Antitrust Act
Under the federal Sherman Antitrust Act, the penalty for fixing prices or allocating markets is a maximum $1 million fine and 10 years in prison.
For corporations, the penalty may be as high as $100 million.
UETA
Two federal acts govern electronic contracting: the Uniform Electronic Transac- tions Act (UETA) and the Electronic Signatures in Global and National Com- merce Act (E-Sign).
The Uniform Electronic Transactions Act (UETA) was created by the National Conference of Commissioners on Uniform State Laws.
At present, UETA has been adopted by all but three states (Illinois, New York,and Washington). The law sets forth basic rules for entering an enforceable contract using electronic means.
E-Sign
The Electronic Signatures in Global and National Commerce Act (E-Sign) was passed by Congress in 2000.
E-Sign functions as the electronic transactions law in states that have not enacted UETA, and some sections of E-Sign apply to states that have enacted UETA.
The purpose of E-Sign is to make contracts (including signatures) and records legally enforceable, regardless of the medium in which they are created.
