Chapter 12 - Law of Agency

Quantum Merit

"as much as he deserves" Doctrine: no one who benefits by the labour and materials of another should be unjustly enriched thereby; under those circumstances the law implies "a promise to pay a reasonable amount for the labour and materials furnished, even though a specific contract price may not have been agreed to."

Dual Agency

- Agent represents both seller and buyer or buyer & buyer -Both Clients must agree to limit agent's role to make negotiations more workable around "duty to disclose all of information" "best interest of client".

Termination of Authority

- End of legal agent/client relationship - can be revoked orally or by conduct - principal may still be required to pay commission even if the agent did not sell it, i.e. exclusive right to sell. - Agent continues to act on behalf of client after authority has been revoked than they are in breach of warranty of authority. - principal is obligated to give notice to third party with whom the agent has been dealing of the termination of the agent's authority. - terminated by operation of law: death, insanity or bankruptcy of either principal or agent. - doctrine of frustration: house burnt down.

Frustration

- House burnt down. - Property is destroyed

Licensees Signing Contracts on behalf of Clients

- No oral permission - Written Authorization Only; prior to signing - Under Separate Form from Listing Contract - Written Instructions from client's about Agent's scope of authority in the transaction

Open Listing

- Often Used in Commercial Real Estate - Owner's promise to pay commission is the agent's finding a ready, willing and able buyer. - authorizes a real estate brokerage through its Designated Agent to sell the property; however, it does not prevent the seller from employing a number of other brokerages to do the same. - If Owner find the buyer, no commission is paid to anyone.

Exclusive - Right to Sell

- Sole authority to "sell" the property for a specific period of time - owner could be liable to pay commission to two real estate brokerages if they sign contract w/o agent's knowledge, and no prior "cooperate" agreement between agents to share the commission.

Employee or Agent

- The contract which exists between the alleged agent and the alleged principal - The degree of control the alleged principal has over the alleged agent - The method of remuneration of the alleged agent.

Multiple Listing

- an exclusive right to sell - on MLS - pay commission regardless - Client(s) must each receive their own "true copy" of the executed service agreement immediately upon signing, otherwise the contract could be void. Two copies, regardless of if they are married.

British Columbia Real Estate Association - BCREA

- created the standard listing agreement - standard form contract do not grant Agents authority to sign on behalf of their clients.

Real Estate Agent

- must be licensed under the Real Estate Service Act (RESA). - be 19yrs of age

Assumed Seller Sub-Agency

- prior to 1995 the seller sub-agency was called selling agent. Some Province may assume buyers agents are sub agents of the seller.

Exclusive Listing

- the brokerage firm, Designated Agent, has an exclusive right to market, but not sell the property - subject clause, the client can find its own buyer and not pay any commission to the agent.

Exclusive Buyer's Agency Contract

-Common in Commercial Real Estate, but also used in residential. -the buyer agrees with the buyer's brokerage appointing the Designated Agent as the buyer's only representation to help find and negotiate the purchase of a suitable property. - The buyer agrees to pay the buyer's brokerage a commission upon the purchase of any property during the agency. - Buyer's brokerage commission will be reduced to the extent that the buyer's brokerage can recover a share of commission from the listing brokerage in the transaction.

Types of Authority

1) Actual given to the Agent by the Principal in their agency agreement. a. Express Authority - limited to contract b. Usual Authority - Customary, part of the job c. Implied Authority - by the 1st Action 2) Apparent - by estoppel assumption of Authority

Agency Disclosure

1) Agent Presents to Sellers/Buyers "Working with a Realtor" 2) Listing Contract or Buyer's Agency Contract 3) Parties to the transaction acknowledge and disclose the applicable agency relationships on the Contract of Purchase and Sale.

Agent's Authority: Creation

1) Express (written or oral) service agreement 2) Implied Agency (by action and/or conduct) 3) Ratified (granted retroactively) 4) Estoppel ( principal "client" leads the 3rd party to believe an agent has authority to act on their behalf)

Types of Listing Agreements

1. Exclusive - Not on MLS 2. Multiple - Goes on MLS 3. Open - Open to many, but you only pay the agent with the buyer

Duties: Principal to the Agent

1. Indemnify the agent (repay Expenses) 2. Pay a commission (Fee)

Duties: Agent liable to a third party

1. fails to disclose he or she is an agent 2. no authority to act as an agent 4. commits a tort (private wrong or injury) * principal can be held liable for an agent's fraud.

Agency Relationship

Agent has the authority to represent and act for the principal in dealings with others.

Warranty of Authority

An agent acting outside of the scope of authority breaches the warranty of authority. An agent's promise or guarantee to third parties that his or her actions fall within the scope of authority given by the principal.

Conditional Release

Client cannot terminate the contract early and list with another agent.

Buyer's Licensee

Designated Agent of the buyer

Listing Licensee

Designated Agent of the seller

Duties: Agent to Principal "Common Law"

Fiduciary Duties Loyalty (confidential & disclose everything) Instructions (Lawful) Skill/Care (Advise Accept/Highest Price) Account for Monies

Principal Adopts a Contract After the Fact

Ratified: the agent is given authority retroactively to enter into that contract.

What is an Agent

Someone authorized to act for another principal "client". - They have capacity to act as an agent "authority". - a minor of sound mind may act as an agent and may bind a principal to a contract, despite the limited ability of minors to enter contracts on their own behalf.

estoppel

a legal principle that prevents someone from denying or contradicting a set of facts that he or she has previously expressly or impliedly asserted to be true.

Agency Contract

an agreement under which the agent is given authority to perform actions on behalf of the principal, in return for remuneration.

Agent's Authority - Scope

how a principal is represented in any transaction depends on two factors: (1) the particular authority give in the agency contracts; (2) the circumstances surrounding the transaction

What is a Client

legal term principal

Designated Agent

licensee(s) appointed by the brokerage for a buyer or seller.

Limited Dual Agency

modify the Designated Agent's relationship with both clients, ie. rather than to fully disclose all matters to both sides, the seller and buyer or competing buyers may allow the Designated Agent to limit its responsibilities in the following areas: - the price a client is willing to accept or pay; - the motivation of either client; and - either client's personal information * Agreement must be signed by both parties prior to entering into negotiation, presenting offers, etc.

Market Evaluation

presentation by a realtor to client

Performance

the court, rather than granting damages in lieu of performance, orders that the terms of that contract be carried out by the party in default.

Revocation

the term for the cancellation of an offer communicated by the offeror to the offer prior to acceptance

Disclosure

to ensure the principal has all necessary information to decide whether he or she want to go ahead with the transaction - Common Law duty to disclose, RESA, provides that every licensee who is to directly or indirectly buy or sell real estate, must give to the seller or purchaser a special disclosure form approved by the Council. * Beware: a license who give his or her client disclosure form is not relived of all other common law disclosure duties to client.

Commission

two things need to occur to collect commission: 1) enforceable contract of purchase and sale 2) A Buyer ready, willing, and able to complete the sale * listing contract contains a clause which provides that a commission will be paid if an offer to purchase is obtained even the seller refuses to sign the offer to purchase. * Seller could be in breach of their listing contract if a seller is introduced to a buyer by the agent and they both wait until the listing agreement expires to conclude the transaction to save paying commission.