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41 Cards in this Set
- Front
- Back
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Principal in an Agency Relationship |
One who employs another to act on their behalf |
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Agent/Fiduciary |
One who is employed to represent a principal |
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Third Party |
A party to a transaction who is not a party to the particular agency contract * A consumer 3rd party is a customer |
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Facilitator or Transaction Broker |
Provides services, not representation a) no agency relationship b) licensee will not provide fiduciary duties or will not negotiate other than those required by state law c) Not an option in all states |
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Common law of agency specifies fiduciary duties to principal. |
OLDCAR O - obedience L - loyalty D - disclosure C - confidentiality A - accounting R - reasonable skill & care |
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Obedience |
1. Agent must only the lawful directions of the principal 2. Agent should decline listing if principal asks to do something unlawful |
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Loyalty |
1. Agent must place the interest of the principal above all others a) acts as an advocate for the principal |
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Disclosure |
1. Disclose to the principal and all parties all know material facts about property 2. Full disclosure w/ principal of all knowledge about transaction a) must share buyers ability to qualify for a loan b) buyer agent share w/buyer concerns about properties condition and recommend expert evaluation |
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Confidentiality |
1. Must keep principal’s confidential info private a) price, terms, motivation must be confidential forever 2. Release confidential info upon written permission from the principal |
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Accounting |
Account for any money or personal property entrusted to agent |
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Reasonable Skill & Care |
Use common sense |
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Agent’s duties to 3rd party, customer, or consumer |
DAH D - Disclosure A - Accounting H - Honesty & fair dealing |
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3rd Party Disclosure |
1. At first substantive contact, inform customer to not share confidential info w/ the agent 2. Must disclose material facts that are know Or should be known even if the principal asks agent to lie or keep silent a) disclosure requires for “as-is” property sales |
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3rd Party Accounting |
Accounting for all funds or personal property in the agent’s possession |
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3rd Party Honesty & Fair dealing |
Agent must not lie to the customer or misrepresent information |
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Special Agency |
Agent is authorized to perform a particular act without the ability to bind the principal contractually Example: Listing brokerage firm to seller Buyer brokerage firm to buyer |
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General Agency |
1. Agent is authorized a series of acts associated with the continued operation of a particular business 2. Agent has limited ability to bind the principal Example: Salesperson or broker-associate to employing broker Property Manger to property owner |
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Universal Agency |
Agent is authorized to perform in place of principal. Agent has unlimited ability to bind the principal a) authority come from POA: POA appoints attorney on fact b) agent legally replaces the principal c) can accept/reject offers & sign for principal |
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How do special or general agents become a universal agent? |
With a written POA from the principal |
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How is an agency determined? |
Determined by who employs the agent, not who pays the agent |
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How is an agency created? |
Created by an express representation contract Contract is a fiduciary agreement |
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Implied Agency |
Created through an agent actions |
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Ostensible Agency |
Agency relationship created by the actions of the parties involved |
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Dual Agency |
Occurs when a brokerage firm represents more than one party to a transaction Requires disclosure as written concern from both parties |
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When should agency relationships disclosure forms be proved to the consumer? (Potential seller or buyer) |
At first substantive contact a) before receiving any confidential info such as price, terms, and motivation |
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Where are trust friends places and what are some examples of these funds? |
Places in trust account Earnest money, rent, security deposits |
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What is the purpose of a trust account? |
To segregate trust funds from brokerage funds. |
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Who is required to maintain an account for depositing trust fund? |
The brokerage firm/ employee broker * broker associate/salespersons May NOT open a trust account |
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Licensees must deliver earnest money checks to the ________ per the terms of the purchase contract or determined by state law. |
Listing brokerage firm |
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The trust account must be a demand account. What does a demand account allow you to do? |
Freely allows deposits and withdrawal of funds |
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What is commingling? |
Mixing personal funds or the firms funds with trust funds. |
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What is conversion? |
Illegal use of trust funds Like theft or stealing |
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Sellers of residential property may be required to complete what kind of statement? |
A sellers property disclosure |
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Who completes the sellers disclosure? |
The seller, not the agent Seller must complete it to the best of their current knowledge |
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What must the seller and licensee disclose? |
Visible and latent material defects or fact to all buyers |
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A material fact or defer is one that, if known, ____________. |
Might change a decision. |
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Latent Defect |
Hidden defect that is not easily discovered by an inspection |
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Most states require brokers to visually inspect the property. Listing agent la must do what? |
1. Disclose all known material defects and immediately disclose to the client and all parties to the transaction |
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If a seller misrepresents a latent defect in the sellers disclosure and the broker performed a visual inspection not finding any obvious defects, who is liable for misrepresentation? |
The seller could be held responsible for misrepresentation |
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Megan’s Law |
1. Requires registration of sex offenders 2. Real estate professionals should inform buyers to contact local law enforcement offices if they are concerned about registered sex offenders |
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Errors & Omissions Insurance |
1. Covers liability for errors, mistakes, & negligence in real estate activities 2. Does not cover criminal acts, fraud, failure to disclose material defects, or violations of civil rights and antitrust laws |
