Unit 9: Agency Relationships

Question 1

What is an agency?

Answer 1

One party employs another to act on his behalf.

Question 2

Who are the 3 parties in an agency relationship?

Answer 2

1. Principal
2. Agent/fiduciary
3. Third party

Question 3

Who is the principal in an agency relationship?

Answer 3

The one who employs another to act on her behalf.

Question 4

Who is the agent in an agency relationship?

Answer 4

The one who is employed to represent a principal.

Question 5

Who is the third party in an agency relationship?

Answer 5

The “customer” who is not represented by any broker. A party to a transaction who is not a party to the particular agency contract.

Question 6

What are the 6 agent fiduciary duties to the principal?

Answer 6

1. Obedience
2. Loyalty
3. Disclosure
4. Confidentiality
5. Accounting
6. Reasonable Skill & Care

Question 7

What does obedience mean between agent and the principal?

Answer 7

An agent must obey the lawful directions of the principal.

Question 8

What does loyalty mean between agent and the principal?

Answer 8

An agent must place the interest of the principal above all others and act as an advocate for the principal.

Question 9

What does disclosure mean between agent and the principal?

Answer 9

An agent must disclose all material facts to both the principal and the other parties.

Question 10

T/F An agent needs to disclose all knowledge about the transaction to the principal.

Answer 10

True

Question 11

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.

Answer 11

True

Question 12

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.

Answer 12

False. Buyer’s agents SHOULD share with the buyer concerns about the property’s conditions.

Question 13

What is confidentiality between agent and the principal?

Answer 13

An agent must keep the principal’s confidential information private such as price, term, and motivation.

Question 14

When can an agent release confidential information?

Answer 14

With written permission from the principal.

Question 15

What does accounting mean between agent and the principal?

Answer 15

Account for any money or personal property entrusted to the agent.

Question 16

What are the 3 duties of an agent to third parties?

Answer 16

1. Disclosure
2. Accounting
3. Honesty and fair dealing

Question 17

What does disclosure mean between an agent and a third party?

Answer 17

At first contact with customers, you must inform them to not share confidential information with agents.

Question 18

T/F If the principal does not want a material fact disclosed, the agent does not need to disclose it to the customer.

Answer 18

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.

Question 19

What are the 3 kinds of agency relationships?

Answer 19

1. Special Agency
2. General Agency
3. Universal Agency

Question 20

How is special agency created?

Answer 20

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

Question 21

How is general agency created?

Answer 21

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

Question 22

What agency relationship exists if the agent has become the power of attorney for their principal?

Answer 22

Universal Agency

Question 23

Which agency relationship does the agent have limited ability to bind the principal?

Answer 23

General Agency

Question 24

T/F Agency is determined by who employs the agent, not who pays the agent.

Answer 24

True

Question 25

What is another name for an express contract?

Answer 25

Fiduciary Agreement

Question 26

What is single/dual agency?

Answer 26

When a broker represents more than one party to a transaction.

Question 27

What is required of both parties if there is dual agency?

Answer 27

Disclosure and written consent

Question 28

What is brokerage relationship disclosure requirement?

Answer 28

A brokerage relationship disclosure form needs to be provided to the consumer at first substantive contact and before the agent receives any confidential information.

Question 29

T/F A broker or salesperson do not need to disclose if they are a principal or have any interest in the property.

Answer 29

False. A broker or salesperson MUST DISCLOSE if they are the principal or have any interest in the property.