Unit 9: Agency Relationships Flashcards
What is an agency?
One party employs another to act on his behalf.
Who are the 3 parties in an agency relationship?
- Principal
- Agent/fiduciary
- Third party
Who is the principal in an agency relationship?
The one who employs another to act on her behalf.
Who is the agent in an agency relationship?
The one who is employed to represent a principal.
Who is the third party in an agency relationship?
The “customer” who is not represented by any broker. A party to a transaction who is not a party to the particular agency contract.
What are the 6 agent fiduciary duties to the principal?
- Obedience
- Loyalty
- Disclosure
- Confidentiality
- Accounting
- Reasonable Skill & Care
What does obedience mean between agent and the principal?
An agent must obey the lawful directions of the principal.
What does loyalty mean between agent and the principal?
An agent must place the interest of the principal above all others and act as an advocate for the principal.
What does disclosure mean between agent and the principal?
An agent must disclose all material facts to both the principal and the other parties.
T/F An agent needs to disclose all knowledge about the transaction to the principal.
True
T/F As a fiduciary duty, the listing agent must share with the seller concerns about the buyer’s ability to qualify for a loan.
True
T/F A buyer’s agent sharing with the buyer concerns about the property’s conditions is a violation of the agent’s fiduciary duties.
False. Buyer’s agents SHOULD share with the buyer concerns about the property’s conditions.
What is confidentiality between agent and the principal?
An agent must keep the principal’s confidential information private such as price, term, and motivation.
When can an agent release confidential information?
With written permission from the principal.
What does accounting mean between agent and the principal?
Account for any money or personal property entrusted to the agent.
What are the 3 duties of an agent to third parties?
- Disclosure
- Accounting
- Honesty and fair dealing
What does disclosure mean between an agent and a third party?
At first contact with customers, you must inform them to not share confidential information with agents.
T/F If the principal does not want a material fact disclosed, the agent does not need to disclose it to the customer.
False. Agents must disclose material facts that are known or should be known even if the principal asks the agent to lie or keep silent.
What are the 3 kinds of agency relationships?
- Special Agency
- General Agency
- Universal Agency
How is special agency created?
When an agent is authorized to perform 1 particular act without the ability to bind the principle.
Brokerage firm to seller
Brokerage firm to buyer
How is general agency created?
When an agent is authorized to perform a series of acts associated with the continued operation of a particular business.
Salesperson to employing brokerage firm
Property manager to property owner
What agency relationship exists if the agent has become the power of attorney for their principal?
Universal Agency
Which agency relationship does the agent have limited ability to bind the principal?
General Agency
T/F Agency is determined by who employs the agent, not who pays the agent.
True
What is another name for an express contract?
Fiduciary Agreement
What is single/dual agency?
When a broker represents more than one party to a transaction.
What is required of both parties if there is dual agency?
Disclosure and written consent
What is brokerage relationship disclosure requirement?
A brokerage relationship disclosure form needs to be provided to the consumer at first substantive contact and before the agent receives any confidential information.
T/F A broker or salesperson do not need to disclose if they are a principal or have any interest in the property.
False. A broker or salesperson MUST DISCLOSE if they are the principal or have any interest in the property.
