Unit 9: Real Estate Agency

Question 1

This is the individual who hires the agent and delegates to that agent the responsibility of representing their interests.

Answer 1

Principal

Question 2

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

Agency relationships in real estate transactions are governed by three kinds of law:

Answer 4

1. Common laws- rules established by tradition and court decision
2. Statutory law- the laws enacted by the legislature, and
3. Administrative law- rules and regs. created by real estate commissions and departments as authorized by the legislation.

Question 5

In the 1950’s, the common law doctrine of “caveat emptor” was the norm, meaning this

Answer 5

Let the buyer beware

Question 6

A formal expression on intention to establish an agency and state its terms and conditions

Answer 6

Express agreement- can be either oral or written

Question 7

An agency relationship between a real estate seller and a broker is generally created by a written employment contract commonly called a

Answer 7

Listing agreement

Question 8

An express agency relationship between a buyer and a broker is created by a:

Answer 8

Buyer representation agreement

Question 9

The agency agreement between a broker and client usually authorizes the broker to act on the principal’s behalf giving them these:

Answer 9

Fiduciary responsibilities which are:
Obedience- you may not agree with the seller but you must abide by their wishes.
Loyalty- Once hired, your loyalty is to the seller above and beyond anyone else
Disclosure- Agent’s duty to keep the principal informed of all facts or information that might impact a transaction
Confidentiality- must not disclose the principal’s personal information i.e. price they will accept is lower than listing etc.
Accounting- must keep accurate records of funds received
Reasonable Care- Use your skills and expertise in real estate matters.

Question 10

Real estate professionals are required to share this about the parties they represent

Answer 10

Disclosure of agency

Question 11

When the agent represents only one party to a transaction

Answer 11

Single agency

Question 12

When the agent represents two principals in the same transaction

Answer 12

Dual agency

Question 13

Two sales associates of the same broker may be assigned to a client

Answer 13

Designated agency

Question 14

When does termination of agency occur?

Answer 14

1. Completion, performance, or fulfillment of the purposed occurs.
2. Death or incapacity of either party.
3. Destruction or condemnation of the property.
4. Expiration of the terms of the agency.
5. Mutual agreement by all parties to cancel the contract.
6. Breach by one of the parties.
7. By operation of laws such as bankruptcy of the principal

Question 15

Exaggeration of a property’s benefits is called

Answer 15

Puffing- legal

Question 16

The intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person

Answer 16

Fraud

Question 17

A property that has been found to be undesirable because of events that occurred there or because of proximity of the property to a known nusiance

Answer 17

Stigmatized property- should disclose known facts

Question 18

Federal legislation requires state registration systems to maintain residential information on every person who kidnaps, commits sexual crimes against children, or commits sexually violent crimes, known as:

Answer 18

Megan’s Law