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Real Estate I > Unit 9: Agency > Flashcards

Unit 9: Agency Flashcards

1
Q

What is the definition of Agency?

A

Agency is the word used to describe the relationship between a licensee and the person he or she represents.

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2
Q

_____ is the word used to describe the relationship between a licensee and the person he or she represents.

A

Agency

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3
Q

What is the Law of Agency

A

The law of agency is a common law concept that defines the rights and duties of the principal and the agent in a real estate transaction.

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4
Q

Creation of an Agency Relationship:

The two types of formal agreements

A

A formal agreement (Express Agency) or by the actions of the licensee (Implied Agency)

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5
Q

What is Express Agency:

A

In an express agency relationship, the parties have formally executed a written listing agreement or buyer agreement that defines the terms of the agreement.

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6
Q

In a(n) express __________ relationship, the parties have formally executed a written listing agreement or buyer agreement that defines the terms of the agreement.

A

Express agency

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7
Q

What is Implied Agency:

A

An implied agency agreement exists when the parties actions indicate that they have an agency relationship.

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8
Q

A(n) _________ agreement exists when the parties actions indicate that they have an agency relationship.

A

Implied Agency

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9
Q

Legal Terms:

Agent

A

Relationship in which a real estate brokers owes fiduciary duties to a Principle.

The agent advocates and negotiates on behalf of the Principle (buyer or seller).

Such a relationship requires a written agency agreement

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10
Q

Legal Terms:

Advocate

A

To promote the interests or negotiate on behalf of a buyer or seller

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11
Q

Legal Terms:

Dual Agency

A

Relationship in which a real estate broker is an agent for and provides agency duties on behalf of both the buyer and the seller in a real estate transaction.

Dual Agency was abolished in Colorado with the enactment of the Designated Brokerage in Real Estate Act in Jan. 2003

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12
Q

Legal Terms:

Fiduciary Duty

A

Set of legal duties which are put in place when an agency relationship between a real estate broker and a buyer or seller is established.

These responsibilities include:
Loyalty and Obedience

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13
Q

Legal Terms:

Loyalty

A

A real estate broker is obligated to act at all time in the best interests of the Principle, and place the interests of the buyer or seller above those of the real estate broker.

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14
Q

Legal Terms:

Obedience

A

A real estate broker is obligated to efficiently and promptly obey all lawful instructions from the Principal that conform to the purpose of the agency agreement.

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15
Q

Legal Terms:

Disclosure:

A

A real estate broker is obligated to disclose to the principal all relevant and material information known by the broker with respect to the property, its value and desirability, and information about the transaction including the bargaining position of the other party and their willingness to accept terms other than those offered.

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16
Q

Legal Terms:

Confidentiality:

A

A real estate broker is obligated to safeguard the confidential secrets of the principal which includes all information regarding the Principal’s motivations and willingness to accept terms other than those offered. This confidentiality does not include material information about the property or the buyer’s ability to financially perform on the contract.

17
Q

Legal Terms:

Reasonable Care and Diligence:

A

An agent is to use superior skill and expertise when attending to the affairs of the principal. This duty does not include those matters which are outside the knowledge or expertise of the real estate agent.

18
Q

Legal Terms:

Accounting:

A

The real estate agent is obligated to properly account for all monies, property, and documents entrusted to the agent.

19
Q

Legal Terms:

Imputed Knowledge:

A

Premise that confidential information conveyed by the Principal to his/her agent is known by all others in the Agent’s real restate brokerage.

20
Q

Legal Terms:

Informed Consent:

A

Consent by a buyer or seller in real estate transactions which it’s clear that the buyer/seller understands all potential consequences (negative and positive), which consent impies

The seller allows a seller agent to tell a potential buyer that they are in the middle of a divorce.

21
Q

Legal Terms:

Principal:

A

A party in real estate transactions to whom the Agent owes fiduciary duties.

22
Q

Legal Terms:

Sub-agency:

A

A brokerage relationship in which the seller agency relationship was extended to other brokers, including those of other brokerages.
e.g. a broker shows a Legal Terms:
listed by another broker to a buyer with whom he has no buyer agency relationship.

In this case, the agent showing the property was a sub agent and was not working on behalf of the buyer.

This form of agency was abolished in the Designated Brokerage Relationships in Real Estate Act.

23
Q

Legal Terms:

Vicarious Liability:

A

In an agency relationship, the Principal is legally responsible for the acts, misrepresentations or omissions of his/her Agent when acting in the context of the agency relationship.

The Designated Brokerage Relationship in Real Estate Act has limited the Principal’s vicarious liability to those acts or omissions in which the Principal has directed/instructed

24
Q

Legal Foundations:

What is the Brokerage Relationships in Real Estate Act of 1994 (SB 223):

A

Codified much of agency law with respect to real estate.

Defined Buyer Agency, Seller Agency and Transaction Brokerage

Established general duties, obligations and responsibilities of real estate brokers in a real estate transaction.

25
Q

What is the Designated Brokerage Relationships in Real Estate Act (SB 196)

A

Amended the Real Estate Brokerage Relationship Act of 1994

Went into effect January 1, 2003

Abolished Sub-Agency and Dual Agency

Limited vicarious liability of a buyer or seller for misrepresentations or omissions by the real estate broker to those items in which the Principal specifically instructed the agent or knew of the misrepresentation or omission and did nothing.

Allowed for those circumstances where we can have one real estate broker working as a selling agent for a seller and another broker working as a buyer agent.

The real estate broker(s) designated maintains the motivational information of the seller or buyer as confidential and this information is not shared with anyone in the office with the exception of managing broker for the purpose of supervision.

26
Q

Duties of Agents and Transaction Brokers:
The Exclusive Right to Buy Contract Sections 4 and 5
The Exclusive Rights to Sell Listing Agreements Sections 4 and 5

Assist the buyer, seller, or both throughout a real estate transaction by:

A
  1. Performing the terms of a contract
  2. Fully informing the parties throughout the transaction.
  3. Presenting all offers and assisting with any contracts including the closing of a transaction
  4. Accounting for monies and properties received in a timely fashion.
  5. Advising the parties to seek expert advice regarding matters which are known by the broker but the specifics are beyond expertise of the broker
    (Example: A property has a heaving basement slab)
27
Q

Buyer Agents Duties:

A
  1. Advocates for and negotiates on behalf of the buyer to obtain more favorable pricing and terms for the buyer.
  2. Has fiduciary duties to the buyer including to promote the interests of the buyer with the utmost good faith, loyalty and fidelity.
  3. Relationship is exclusive during the priod in which is the Exclusive Right to Buy Contract is in Effect
  4. Limited vicarious liability
28
Q

Seller Agents Duties:

A
  1. Advocates for and negotiates on behalf of the seller to obtain more favorable pricing and terms for the seller.
  2. Has fiduciary duties to the seller including to promote the intersts of the seller with the utmost good faithm loyalty and fidelity.
  3. The relationship is exclusive during hte priod in which the Exclusive Right to Buy Contract is in effect.
  4. Limited vicarious liability
29
Q

Transaction Broker Duties:

A
  1. Transaction Broker is not an advocate or agent for the parties.
  2. Relationship is NOT exclusive unless an Exclusive Right to Buy (Sell) Transaction Broker contract is in writing and is in effect for the defined period of time
  3. NO viarious Liability

NOTE: While you may begin working wiht a buyer as a Transaction Broker, it is possible to later become a Buyer Agent for that buyer.

30
Q

Differences between Buyer and Seller Agents and Transaction Brokers

A

Advocates does not equal Bully-

You can advocate for your Principle in a positive and professional manner.

Use finesse and diplomacy and remember:
The Buyer wants to Buy and the Seller wants to Sell.

31
Q

Disclosure Requirements:

A
  1. Prior to, or at the same time that a Seller/Buyer begins discussing their needs (willing to spend, etc) the broker has to disclose to seller/buyer the various ways a broker can work with a buyer/seller
  2. Disclosure from commonly used is the Definitions of Working Relationships form approved by the Colorado Real Estate Commission
  3. The Buyer/Seller should sign the acknowledge receipt.
  4. The definitions of working relationships form is NOT a contract.
  5. If the buyer is unwilling to sign the Definitions of Working Relationships form, the agent should note that fact and date. The document should then be filed for future reference.
  6. A signed Buyer Agency, Seller Agency, or Transaction Broker Agreement can be substituted for the Definitions of Working Relationships form.
  7. Buyers and Sellers may choose how they want to work with the Real Estate Broker.
32
Q

A Real Estate Broker Must/Should Act As an Agent for:

A
  1. Yourself
  2. Immediate Family
  3. Close Business Associates and Partners
  4. Very Close Friends

Reason: There is an expectation that you would advocate for anyone with a close relationship.

Check your Errors and Omissions Insurance to determine coverage on the purchase of your own property.

Real Estate I (17 decks)

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