Vocabulary Study Cards Ch. 7

Question 1

Agency

Answer 1

The relationship that exists in which one person is empowered to act on behalf of another.

Question 2

Principal/Client

Answer 2

The principal is the person for whom the agent acts.

Question 3

Agent

Answer 3

The party who acts on behalf of the principal. Can be a person, such as an agent, who actually lists the property on behalf of the firm, or the agent could be the firm itself.

Question 4

Subagent/Subagency

Answer 4

The agent of the agent.

Question 5

Third Party

Answer 5

The party that you do not represent.

Question 6

Fiduciary

Answer 6

A relationship based on trust.

Question 7

Customer

Answer 7

The person the agent does not represent, although the agent may have a relationship with this person.

Question 8

Facilitator/Transactional Broker

Answer 8

Not allowed in N.C. but it is a non-agency relationship in which the licensee assists buyers and seller in a transaction but does not actually represent either party.

Question 9

Universal Agency

Answer 9

Provides an agent the ability to have all-encompassing powers to make decisions and act on behalf of the principal.

Question 10

General Agency

Answer 10

Gives the agent a broad scope of authority on the agent, but the authority is not as broad as the universal agency and is limited to some particular field.

Question 11

Special or Limited Agency

Answer 11

Relationship based on one well-defined task. Once the task or time period has been fulfilled, the agency relationship will no longer exist.

Question 12

Dual Agency Agreement

Answer 12

The firm is actually representing both the buyer and the seller.

Question 13

Express Agency

Answer 13

Any oral or written agreement establishing a trust relationship between a principal and agent.

Question 14

Estoppel

Answer 14

Occurs when an individual claims incorrectly that a person is his agent and a third party relies on the incorrect representation.

Question 15

Implied Authority

Answer 15

Based on custom and may very well be the result of an expressed agreement.

Question 16

Apparent Authority

Answer 16

Occurs when an agent gives the impression that she has certain authority that a third party might reasonably rely upon, when in fact the agent does not actually hold such authority.

Question 17

Buyer Agency Agreement

Answer 17

The buyer is the broker’s principal and the agency relationship is between the buyer and the broker.

Question 18

Breaches Agencies Duties

Answer 18

Termination of a listing agreement based upon an injured party of either the agent or principal.

Question 19

First Substantial Contact

Answer 19

The flexible point in time in which an agent and a prospective buyer discuss in any detail the buyer’s interest in purchasing property.

Question 20

Loyalty

Answer 20

Requires that the agent put the client’s interest above his own.

Question 21

Disclosure of Information

Answer 21

The prompt and total communication to the principal by the agent of any information that is material to the transaction for which the agency was created.

Question 22

Willful Misrepresentation

Answer 22

Intentionally informing the third party of something the agent knows to be false.

Question 23

Negligent Misrepresentation

Answer 23

Unintentionally informing the third party of something that is false but the agent does not know to be false because he did not exercise proper skill, care, or diligence.

Question 24

Willful Omission

Answer 24

Deliberately failing to inform the third party of a known defect in the property regardless of whether the agent was asked or not.

Question 25

Negligent Omission

Answer 25

Unintentionally failing to inform the third party of something that the agent should have known but did not know because he did not exercise proper skill, care, or diligence. The fact the agent was not asked a question is irrelevant.

Question 26

Omission

Answer 26

The failure to disclose information.

Question 27

Caveat Emptor

Answer 27

Let the buyer beware. Does not relieve agent’s obligation of disclosing material facts.

Question 28

Civil Penalty

Answer 28

Results from a suit for monetary damages or injunctive relief. If an agent’s action costs a client any financial loss, the injured party may sue to recover damages.

Question 29

Misdemeanor

Answer 29

A criminal violation punishable by a fine and/or imprisonment. It is not considered as such a severe offense like a felony.

Question 30

Employment Authority

Answer 30

A document or contract giving a real estate agent the right to act for a principal with certain specific guidelines in a real estate contract.