Chapter 5 - Agency Relationships

Creation of Agency Relationship

-Agreement -Ratification -Estoppel

Termination of agency relationship

-Full Performance -Expiration of its term -Agreement of all parties -Acts of the parties -Destruction of the property -Death, incapacity, or insanity of the broker or principal -Bankruptcy of the principal

Estoppel

1. A legal doctrine which prevents a person from denying something be true or a fact which is contrary to previous statements made by that same person. 2. Also known as an implied or ostensible agency.

Puffing

1. A statement of opinion about property that is not factual. 2. Exaggerated comments or opinions not made as representations of fact, this not grounds for misrepresentation.

Sales Associate

1.A licensed real estate salesperson or broker whose license is held by an employing licensed broker. 2. Also known as associate licensee.

Subagent

A broker delegated by the listing agent (if authorized by the seller) who represents the seller in finding a buyer for the listed property.

Buyer's Agent

A broker employed by the buyer to located a certain kind of real property.

Listing Agent

A broker who obtains a listing from a seller to act as an agent for compensation.

Procuring Cause

A broker who produces a buyer, ready, willing and able to purchase the property for the price and on the terms specified by the seller, regardless of whether the sale is completed.

Listing

A contract between an owner of real property and and agent who is authorized to obtain a buyer.

Multiple Listing Service (MLS)

A cooperative listing service conducted by a group of brokers (usually members of a real estate association) to provide an inventory of all available properties in the area.

Agency

A legal relationship in which a principal authorizes an agent to act as the principal's representative when dealing with third parties.

Net Listing

A listing agreement in which the commission is not definite. The broker receives all the money from the sale of the property that is in excess of the selling price set by the seller. The broker must disclose the selling price to both buyer and seller within 30 days after the transaction.

Open Listing

A listing agreement that gives any number of brokers the right to sell a property.

Agreement

A mutual exchange of promises (either written or oral). Although often used as synonomous with contract, technically it denotes mutual promises that fail as a contract for lack of consideration.

General Agent

A person authorized by a principal to perform any and all tasks associated with the continues operation of a particular project.

Special Agent

A person employed to perform a specific task.

Agent

A person who acts for and in the place of another, called a principal, for the purpose of affecting the principal's legal relationship with the third persons.

Ready, willing and able buyer

A person who is prepared to enter into a purchase contract, really wants to buy, and meets the financing requirements of purchase.

Third Party

A person who may be affected by the terms of an agreement but who is not a party to the agreement. - Considered the customer in a real estate transaction.

Fiduciary

A relationship that implies a position of trust or confidence.

Fiduciary Relationship

A relationship that implies a position of trust or confidence.

Cooperating Agent

A selling agent who assists another broker by finding a buyer.

Agency Relationships

A special relationship of trust by which one person (agent) is authorized to conduct business, sign papers, or otherwise act on behalf of another person (principal). This relationship may be created by expressed agreement, ratification, or estoppel.

Tort

A violation of a legal right, or a civil wrong such as negligence, libel or nuisance.

Express Agreement

A written agreement, usually in the form for a listing contract which authorizes the broker to represent the seller in finding a ready, willing and able buyer.

Listing Agreement

A written contract by which a principal, or seller, emplys a broker to sell real estate.

Special Power of Attorney

A written instrument where a principal confers limited authority upon an agent to perform certain prescribed acts on behalf of the principal.

General Power of Attorney

Allows the agent to transact all the business of the principal. The agent is then known as attorney-in-fact.

Ostensible Agency

An agency relationship created by the actions of the parties rather by an express agreement.

Dual Agency

An agency relationship in which the agent acts concurrently for both principals in a transaction.

Agency coupled with an interest

An agent acquires an interest in the subject of the agency (the property)

Exclusive Listing

An exclusive contract where the seller must pay the listing broker a commission if any broker sells the property.

Exclusive authorization and right-to-sell listing

An exclusive contract where the seller must pay the listing broker a commission if the property is sold within the time limit by the listing broker, any other broker, or even by the owner.

Associate Licensee

Another term for a licensed real estate salesperson employed by a licensed real estate broker.

Material Fact

Any fact that would seem likely to affect the judgment of the principal in giving consent to the agent to enter into the particular transaction on the specified terms.

Disclosure Process

D-E-C: Disclose, elect and confirm

Option Listing

Gives the broker the right to purchase the property that is listed.

Agency Relationship Disclosure Act

Law requires that an agent supply a written document called Disclosure Regarding Real Estate Agency Relationships expalining the nature of agency. This disclosure must be made prior to taking a listing or writing an offer.

Misrepresentation

Making a false statement or concealing a material fact. 1. Innocent misrepresentations 2. Negligent misrepresentations 3. Fraudulent misrepresentations

Safety Clause

Protects the listing broker's commission, if the owner personally sells the property to someone who was showing the property or made an offer during the term of the lisitng.

Fiduciary duty

That duty owned by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress of pressure.

Conversion

The appropriation of property or funds belonging to anothher; as in a broker using a client's money.

Ratification

The approval of a previously authorized act, performed on behalf of a person, which makes the act valid and legally binding.

Selling Agent

The broker who find a buyer and obtains an offer for the real property.

Commingling

The illegal practice of depositing client's funds in a broker's personal or general business account.

Single Agency

The representation of only one party in a real estate transaction.

Negligent Misrepresentations

Untrue statements made without facts to back them up.