Unit 9: Agency

Question 1

• common law, the rules established by tradition and court decisions;
• statutory law, the laws enacted by the legislature; and
• administrative law, the rules and regulations created by real estate commissions and departments, as authorized by the legislature.

Question 2

The fiduciary relationship between the principal and the agent by which the agent is authorized to represent the principal in one or more transactions.

Answer 2

Agency

Question 3

-the relationship in which the agent is held in a position of special trust and confidence by the principal.

Answer 3

Fiduciary

Question 4

The principal in a real estate transaction for whom a real estate broker acts as agent. The term client is also used when a broker represents someone in a relationship other than
an agency.

Answer 4

Client

Question 5

The third party or nonrepresented consumer who is not a principal but for whom some level of service may be provided and who is entitled to fairness and honesty. The customer may be represented by a separate agent.

Answer 5

Customer

Question 6

-(also referred to as a facilitator, intermediary, transactional broker, transaction coordinator, or contract broker) someone who works with a buyer and a seller (or a landlord and a tenant), assisting one or both parties with the transaction without representing either party’s interests. Nonagents are often subject to specific statutory responsibilities. A broker may be considered a nonagent when dealing with a customer (someone other than the person the broker represents).

Answer 6

Nonagent

Question 7

—the individual who is authorized and consents to represent the interests of another person in dealings with a third person. Many different agency relationships are possible in a real estate transaction. The sales associates of a real estate broker act as agents (representatives) of the broker. In a real estate transaction, a firm’s broker will be the agent of a client and may share this responsibility with the sales associates who work for the firm. As agents of the broker, the sales associates historically have had the same relationship to a client of the firm that the broker does. Because of the number of transactions that are “in-house” (the same firm dealing with both seller and buyer), it is now possible for a sales associate to represent a buyer as the buyer’s designated agent, even when the sales associate’s firm also represents the seller in the transaction.

Answer 7

Agent

Question 8

the individual who hires the agent and delegates to that agent the responsibility of representing the principal’s interests. In a real estate transaction in which an agency relationship is established, the principal is the buyer or the seller or the landlord or the tenant.
The broker is the principal in dealings with sales associates.

Answer 8

Principal