Real Estate Lesson 7: Agency Law

Client

A real estate agent's client is the person who engaged the agent's services. The client may be a seller, a buyer, a landlord, or a tenant.

Reasonable Skill and Care

A real estate licensee has a duty to use reasonable skill and care when providing brokerage services. If carelessness or incompetence on the part of the licensee results in harm to a party, the licensee can be held liable. A licensee is required to use the same degree of skill and care ordinarily used by others competently engaged in the same business. So when a court evaluates a real estate licensee's performance, the licensee is compared with a competent real estate licensee, not with the average citizen.

Retainers

A retainer is a fee paid up front, before services are provided. It's not common, but some buyer's agents collect a retainer from new clients, to make sure their work doesn't go entirely uncompensated. The retainer is usually nonrefundable if the buyer fails to buy any property, but if she does purchase a property, the retainer is refunded or credited against any compensation that the buyer owes the agent.

Secret Profit

A secret profit is any financial benefit an agent receives without the principal's consent.

Establishing Seller Agency

A seller agency relationship is ordinarily created with a written listing agreement. The listing brokerage is the seller's agent, and the named affiliated licensee is the seller's subagent.

Working with buyers

A seller's agent may prepare an offer to purchase for a buyer and help the buyer apply for financing, without violating his duty of loyalty to the seller.

Role of a Seller's Agent

A seller's agent promotes the seller's interests by marketing the property and negotiating with prospective buyers on the seller's behalf.

Special Agent

A special agent has more limited authority. She is authorized only to do a specific thing or conduct a specific transaction. A real estate licensee is usually a special agent. In most cases, a licensee is authorized to represent a seller or a buyer in connection with a single transaction. Under the terms of most listing agreements, the licensee is authorized to show the property and negotiate with prospective buyers. The licensee is not authorized to sign a contract binding the seller, or sign a deed transferring the property. In order to sign a contract on behalf of a client, a real estate licensee would have to be specifically authorized to do so in a power of attorney.

Tort Liability

A tort is a civil wrong, as opposed to a criminal wrong. This means that in a tort suit, one private individual (the injured party) sues another (the wrongdoer) for redress. In contrast, in a criminal case it's the public prosecutor who brings an action against the wrongdoer. A tort is different from a breach of contract. Someone who commits a tort breaches a duty imposed by law, as opposed to an obligation arising out of a contract. A real estate licensee's breach of duty is a tort, and the injured party can sue the licensee. If the injured party wins the lawsuit, the court may order the licensee to compensate the injured party for losses that resulted from the breach of duty. Compensatory damages are the standard remedy in tort suits.

Universal Agent

A universal agent is authorized to perform any acts that the law allows one person to delegate to another. This type of agent has the greatest degree of authority.

Express Agency Agreement Requirements

An agency agreement must meet some, but not all, of the requirements for a valid contract. Both parties must consent to the agency, both must be legally competent, and the purpose of the agency must be lawful. However, consideration is not required. So an agency relationship can exist even when the principal isn't compensating the agent for her services. Also, an agency agreement does not have to be in writing; an oral agreement can create a valid agency relationship. The agency begins as soon as the parties agree to it.

Agency Termination through Expiration of Term (Operation of Law)

An agency can terminate simply by expiration of the agreed term. When the termination date set in the agency agreement arrives, the agent's authority ends automatically. Even if no termination date is specified in the contract, the agency will expire after a reasonable time. What's a reasonable time under the circumstances may have to be decided by a court.

Agency Termination through Death, incompetence, or bankruptcy (Operation of Law)

An agency is also terminated automatically if either the principal or the agent becomes legally incompetent, goes bankrupt, or dies (if the agent is a brokerage, "death" means going out of business). Even before the agent is informed of the terminating event, the agent's actions are no longer authorized.

Creating an Agency through Ratification

An agency is created by ratification if the principal gives approval after the fact to acts that weren't authorized at the time they were performed. The unauthorized acts may have exceeded the authority that the principal originally granted to the agent. Or the agent may be someone who originally had no authority to act for the principal. The principal may ratify the agency by expressly approving the unauthorized acts. Or, even without express approval, the principal may ratify the agency simply by accepting the benefits of the unauthorized acts.

Employee of Broker

An employee is supervised and controlled much more closely than an independent contractor. Employees generally work on a schedule set by their employers, for an hourly wage or a salary. The distinction between Independent Contractor and Employees matters to real estate agents because certain employment and tax laws apply only to employees, not to independent contractors.

Apparent Authority

Apparent authority is agency authority that someone appears to have, although the principal didn't actually grant it. An unauthorized person who is behaving like an authorized agent is referred to as an apparent agent or an ostensible agent. If the principal either deliberately or negligently fails to deny that the ostensible agent's actions are authorized, and a third party relies on the agent's apparent authority, the principal may be bound by the agent's actions. In spite of this rule, a third party dealing with an agent should make a reasonable effort to verify the agent's authority and determine its scope. The principal will not be bound by unauthorized actions unless she is aware of them and her conduct indicates approval of them.

Express Agreement

Most agency relationships are created by express agreement. The principal appoints someone to act as his agent, and the agent accepts the appointment. A listing agreement or a buyer agency agreement is an express agency agreement.

Agency Termination through Fulfillment of Purpose (Operation of Law)

Not surprisingly, an agency terminates when its purpose has been fulfilled. For instance, a seller hires a real estate licensee to find a buyer for his property. When a buyer is found and the transaction closes, the purpose of the agency has been met and the agency ends.

Agency Disclosure

The licensee must disclose which party (or parties) he's representing in the transaction, and that disclosure must be made to anyone he renders real estate services to.

Agency Termination through Mutual Agreement (Acts of Parties)

The principal and the agent can terminate their relationship by mutual agreement at any time. It's a good idea to put the termination in writing, especially if the agency was based on a written contract (such as a listing agreement). Any third parties that the agent has been dealing with should be notified.

Agency Termination: Acts of Parties

termination by actions of the parties, and termination by operation of law. An agency can be terminated by actions of the parties through mutual agreement, revocation by the principal, or renunciation by the agent.

Legal Effects of Agency

1. An agent's actions may be legally binding on the principal As a general rule, authorized acts performed by an agent are legally binding on the principal, as if the principal had performed those acts himself. 2. The principal may be held liable for the agent's mistakes and misconduct 3. The principal may be held to know information that is known by the agent.

Real Estate Agent's Duties to the Principal

1. Loyalty 2. Disclosure of Conflicts of interest 3. Confidentiality 4. Recommend Expert Advice 5. Good Faith Effort

Real Estate Agent's Duties to all Parties

1. Reasonable Skill and Care 2. Honesty and Good Faith 3. Present Written Offers 4. Disclose Material Facts 5. Account for Trust Funds 6. Provide Agency Law Pamphlet 7. Disclose Agency Status

Buyer Agency: Compensation

1. Retainer 2. Seller Paid Fee 3. Buyer Paid Fee

General Agent

A general agent is authorized to act only in a specified area of the principal's affairs. Within that area, however, the general agent has broad authority. A general agent often handles all matters pertaining to a particular business or property owned by the principal. Property managers are typically general agents.

Expert Advice

A licensee has a duty to advise the principal to seek expert advice on matters relating to the transaction that are beyond the licensee's expertise. A licensee should be especially careful to avoid giving the principal (or anyone else) legal advice. Questions about any matter with legal implications—taking title to property, zoning issues, encroachments, and so on—should always be referred to a lawyer.

Disclosure of Material Facts

A licensee must disclose material facts that are known to the licensee and that are not easily discoverable by the parties. A fact is considered "material" if it has a substantially negative effect on the property's value or a party's ability to perform his or her contractual obligations, or it defeats the purpose of the transaction. A real estate agent generally doesn't have a duty to investigate financial or legal matters concerning the property. However, what if the agent happens to know something material of that nature—for example, that the neighborhood prices are falling drastically or that the property isn't zoned for the buyer's intended use? These may be material facts that the agent must disclose.

Agency Law Pamphlet

A licensee must give an agency law pamphlet to each party in a real estate transaction. The required pamphlet summarizes Washington's real estate agency statute, and also sets forth the provisions of the law. The pamphlet must be provided to a party before that party signs an agency agreement with the licensee, signs an offer in a transaction handled by the licensee, consents to a dual agency, or waives any rights granted by the agency statute.

Present Written Offers

A licensee must present all written offers, copies of signed documents, and other written communications to each party in a timely manner. This is true even if the property is already subject to a contract or the buyer is already a party to a contract. An offer must be relayed even if it seems entirely unacceptable. It's up to the individual party to decide whether to accept or reject an offer.

Cooperating Agent

All the members of the listing firm's multiple listing service (and the members of any other MLS that is participating in the transaction) are called cooperating agents. A cooperating agent may be the buyer's agent or the seller's agent. (A cooperating agent who succeeds in procuring a buyer is the selling agent.)

Agency Termination: Operation of Law

An agency will be terminated by operation of law, if the term of the agency expires; if its purpose is fulfilled; if either party dies, becomes incompetent, or files for bankruptcy; or if the subject property is extinguished.

Subagency

An agent may be authorized by the principal to delegate agency authority to a subagent. A real estate licensee working for a designated broker is a subagent.

Independent contractor

An independent contractor is hired to perform a particular job and is allowed to use her own judgment in carrying out the work. Independent contractors generally set their own schedule and are paid by the job or by commission.

Advantages of Buyer Agency

Being represented by a buyer's agent gives a buyer the advantages of loyalty and confidentiality, objective advice, help with negotiating, and access to more homes.

Agency Termination through Revocation by Principal (Acts of Parties)

In the absence of mutual agreement, the principal can revoke the agency at any time. In other words, the principal can fire the agent for any reason, or for no reason at all. However, if the agency agreement specified a termination date, revocation before that date might be a breach of contract. There's one exception to the revocation rule: an agency coupled with an interest can't be revoked. An agency is coupled with an interest if the agent has a financial stake or other interest in the subject matter of the agency.

Dual-Agency Disclosure

The buyer's and seller's written consent to dual agency can only be obtained after the dual agent gives them the required pamphlet on real estate agency law and discloses the terms of the dual agent's compensation. Dual agency disclosures should not be treated as a mere formality. In addition to providing the agency pamphlet, the agent should explain to each party all of the ramifications of dual agency and discuss its limitations and disadvantages. This discussion can be as important for the agent as it is for the parties. A buyer or seller who accepts dual agency without giving it sufficient thought may later come to feel that the agent favored the other party, or simply didn't provide adequate representation. The dissatisfied client could sue the dual agent for breach of agency duties.

Honesty and Good Faith

The licensee must avoid making inaccurate or misleading statements to any party. Unintentional as well as intentional misrepresentations may amount to fraud, giving a party the right to rescind the purchase and sale agreement or sue for damages. However, a party generally can't sue a real estate licensee based on the licensee's opinions, predictions, or puffing. These are nonfactual or exaggerated statements, which the party should recognize as unreliable.

Trust Funds

Trust funds are funds that the licensee is holding on behalf of a client or another party. A buyer's earnest money deposit and a tenant's security deposit are examples of trust funds commonly held by licensees.

Creating a Real Estate Agency: Buyer Agency

Under the real estate agency statute, a licensee who performs real estate brokerage services for a buyer automatically becomes the buyer's agent, unless there is a written agreement to the contrary. The most common case of a written agreement to the contrary is a listing agreement with a seller.

Agency Coupled with an Interest

When an agent holds a personal interest in the subject matter of the agency, the agency can't be revoked by the principal.

Scope of Authority: Classification of Agents

1. Universal Agent 2. General Agent 3. Special Agent

Buyer's Agency Agreement States

A buyer agency agreement typically states: 1. The term of the agency 2. The characteristics of the property the buyer wants to find 3. A price range 4. Conditions under which a fee will be earned, who will pay the fee, and the agent's contractual duties. A buyer agency agreement, like a listing agreement, may be either exclusive or open. A buyer may enter into multiple open buyer agency agreements.

Establishing Buyer Agency

A buyer agency relationship arises automatically when a licensee who is not representing a seller provides services to a buyer. A buyer's agent may also enter into a written representation agreement with a buyer.

Dual Agent Impartiality

A dual agent must do his best to be impartial and treat both clients equally. Dual agency is generally inappropriate when the agent has an ongoing personal or business relationship with one of the parties.

Latent Defect

A latent defect is a problem with the property that a buyer wouldn't discover through a casual inspection of it.

Creating a Real Estate Agency: Seller Agency

A real estate agency relationship between a real estate firm and a seller is ordinarily created with a written listing agreement.

Customer

A third party that a real estate agent is dealing with on behalf of a client may be referred to as the agent's customer. For example, if the agent is representing a seller, a prospective buyer is sometimes called a customer.

Tort

A tort is a negligent or wrongful act that causes an injury or financial harm to another person.

Actual Authority

Actual authority is authority granted to the agent by the principal. The agent is given express actual authority whenever the principal specifically directs him to do something. The authorization may be spoken or written. The agent also has implied actual authority to do whatever is necessary to carry out the acts that the principal expressly authorized. A principal is bound by his agent's actions if those actions are within the scope of the actual authority that the principal granted to the agent.

Fiduciary Relationship

An agency relationship is a fiduciary relationship; the agent is a fiduciary in relation to the principal. A fiduciary is someone who acts for the benefit of another in a relationship founded on trust and confidence. The law holds a fiduciary to high standards to prevent exploitation of the other's trust.

Inadvertent Dual Agency

An inadvertent dual agency may be created by implication, when a real estate agent who's representing the seller acts as if he's representing the buyer. Unintentionally, the agent's behavior makes him a dual agent.

Disclosure of Conflicts of Interest

Closely related to the duty of loyalty is the licensee's duty to disclose to the principal any conflicts of interest between them. It's a conflict of interest if the licensee has some personal interest in a transaction that might come into conflict with the principal's best interests. The licensee isn't necessarily required to withdraw from representing the principal, but he must disclose the conflict of interest. The principal might then decide that she doesn't want to rely on the licensee, and find someone else to represent her in the transaction. Because of the potential for a conflict of interest, a licensee representing a seller must disclose any relationship the licensee has with a prospective buyer. If the buyer is the licensee's relative, friend, or business associate, the licensee must let the principal know that. Likewise, a licensee representing a buyer is required to disclose to the buyer any relationship she has with a prospective seller.

Listing Agent

Either a licensee or a real estate firm may be referred to as the listing agent. The licensee who actually takes the listing is called the listing agent. (The licensee's real estate firm and designated broker are also often referred to as the listing agent.) A listing agent is the seller's agent

Selling Agent

Either a licensee or a real estate firm may be referred to as the selling agent. The licensee who actually procures the buyer for a home is referred to as the selling agent. The brokerage firm (or the firm's designated broker) that this licensee works for may also be referred to as the selling agent. The selling agent is usually the buyer's agent.

Requirements to be an Independent contractor

For a licensed real estate agent to be considered an independent contractor for federal income tax purposes, the Internal Revenue Service has two requirements. 1. Substantially all of the agent's compensation must be based on commission rather than hours worked. 2. The agent must work under a written contract specifically providing that she will not be treated as an employee for federal tax purposes.

General Agency law

General agency law is the body of legal rules that applies to agency relationships in most contexts. In Washington, a state statute has largely replaced general agency law in the real estate field.

Breach of Duty

If a licensee breaches a duty to either her principal or a third party, the injured party may file a tort suit against the licensee. The court may order the licensee to pay compensatory damages. Whether or not there is a lawsuit, the Department of Licensing may suspend or revoke the licensee's real estate license.

Seller-paid Fees

Probably the most common compensation arrangement for buyer's agents is the seller-paid fee. Under this arrangement, the buyer's agent receives a share of the listing agent's commission. By law, agency representation is not determined or affected by which party is paying an agent's fee. So accepting payment from the seller does not give the buyer's agent any special duties toward the seller. The buyer's agent is still representing only the buyer.

Ostensible Agent

Someone acting on another's behalf without authority to do so, or exceeding the scope of her authority, may be referred to as an ostensible agent or apparent agent.

Real Estate Brokerage Relationships Act

The Real Estate Brokerage Relationships Act is the Washington statute that governs real estate agency relationships. For the most part, it supersedes general agency law in the real estate context.

Duties owed after a relationship terminates

The Washington statute provides that after a real estate agency relationship terminates, the agent still owes the principal two duties. 1. The agent must account for all money and property received during the agency relationship. 2. The agent must not disclose the principal's confidential information.

Duty of Loyalty

The licensee must put the principal's interests above those of a third party, and above his own interests. He may not take any action that is adverse or detrimental to his principal's interests in a transaction, and must follow any lawful instruction given by the principal.

Good Faith and Continuous Effort

The last of a licensee's special duties to her principal concerns diligent representation. A licensee who enters into an agency relationship must make a good faith and continuous effort on her principal's behalf. Specifically, a licensee representing a seller has a duty to make a good faith and continuous effort to find a buyer for the property. And a licensee representing a buyer must make a good faith and continuous effort to find a suitable property.

Implication vs. estoppel

But in an agency by estoppel, it's the principal who is required to acknowledge the agency, for the protection of a third party. In an agency by implication, it's the agent who has to acknowledge the agency, for the protection of the principal. Inadvertent agency by implication can be a problem in real estate transactions.

Seller-Paid vs. Buyer Paid Fees

Buyer agency agreements often contain a provision stating that the buyer's agent will accept a commission split from the listing brokerage if the buyer purchases a listed home. The provision will also typically state that the agent will receive a buyer-paid fee if the home purchased is unlisted or a seller-paid fee is not available for some other reason.

Patent Defect

By contrast, a patent defect is a defect that is readily apparent, through ordinary inspection. Both latent and patent defects should be disclosed to all prospective buyers.

In-House Transactions

It's an in-house transaction when the listing agent and the selling agent both work for the same brokerage. In this situation, as a general rule, the listing agent represents the seller, the selling agent represents the buyer, and the designated broker for the firm is a dual agent. This arrangement is sometimes referred to as split agency, since the same brokerage firm is serving both parties. It may also be called designated agency, assigned agency, or appointed agency, in that one agent in the firm is assigned to represent one party and another agent in the same firm is assigned to represent the other party. In a typical in-house transaction, the brokerage firm and designated broker automatically become dual agents, but the two brokers do not. Each broker represents only his or her own client. A buyer and a seller may also deliberately enter into a dual agency, agreeing to be represented not just by the same firm, but by the same broker at that firm. A dual agent must sign a buyer agency agreement with the buyer and a seller agency agreement with the seller. And in any dual agency situation, the standard disclosure and consent requirements apply.

Confidentiality

If the principal tells the licensee something in confidence, the licensee must not reveal that information to third parties or use it for his own purposes. Confidential information must be protected even after the agency relationship terminates. In contrast, a licensee does not owe the duty of confidentiality to third parties. If a buyer gives the seller's agent information that would be useful to the seller, the agent must disclose it to the seller (her client). Similarly, if a seller tells a buyer's agent something the buyer would like to know, the buyer's agent must disclose it to the buyer.

Agency Termination through Extinguishing of Subject Matter

If the property that is the subject matter of an agency is extinguished, the agency ends. In this sense, a property is 'extinguished' not only if it is destroyed, but also if title is transferred.

Agency Disclosure Requirements

In Washington, a real estate licensee must disclose which party (or parties) she's representing in a transaction to anyone she renders services to in connection with the transaction. A licensee must make the required disclosure to a party before that party signs an offer in the transaction. The disclosures must be in writing. They usually take the form of a separate paragraph in the purchase and sale agreement. By signing the agreement, the parties indicate their understanding and acceptance of the agency relationships disclosed in that provision. Alternatively, agency disclosures may be set forth in a separate disclosure document. The document must be signed by the parties and by the licensee.

Power of Attorney

In a power of attorney, a principal appoints another person to act as his attorney in fact and carry out actions specified in the document. (An attorney in fact does not have to be an attorney at law.)

Agency

In an agency relationship, the principal authorizes an agent to represent him in dealings with third parties. A real estate firm is her client's agent. The client is the firm's principal

Non-Agency

In some transactions, real estate licensees choose to act merely as facilitators, not as agents. In other words, they make a deliberate decision not to take on any agency duties in regard to either the seller or the buyer. Of course, even when a licensee is not acting as either party's agent, he still owes them the duties that a licensee owes to any party. These include the duties of: 1. Reasonable care and skill, 2. Honesty and good faith, 3. Presenting written communications, 4. Disclosure of material facts, 5. Accounting, 6. Providing the agency law pamphlet 7. Agency (or non-agency) disclosure.

Self-Dealing

It isn't unethical for a licensee to buy her principal's property, but she must disclose the property's true value and explain her intention of reselling it for a profit.

Agency Termination though Renunciation (Acts of Parties)

Just as the principal can terminate the agency unilaterally, the agent also has the power to terminate the agency at any time without the principal's consent. This is called renunciation. If the agency agreement included an expiration date, renunciation might be a breach of contract, and the principal could sue the agent for damages.

Real Estate Agent

The term real estate agent often refers to any real estate licensee. The real estate firm owns the relationship with the principal, and designated brokers are the only real estate licensees who are legally authorized to represent a buyer or seller directly, as the designated representative for the firm. Affiliated licensees work with the buyer or seller on behalf of the firm and the designated broker they work for.

Dual Agency

The written consent of both parties is required, and the dual agent owes agency duties to both clients. There's an inherent conflict of interest in any dual agency arrangement. It's difficult for a dual agent to promote the interests of both parties at the same time. In spite of this, there are situations in which the parties are willing to accept dual agency. And if the dual agent works within certain limitations, she can avoid violating the agency duties owed to either party. However, neither party receives full representation. In fact, by law, the duty of loyalty normally owed by an agent to a principal does not apply to a dual agent. Instead, a dual agent has the duty to refrain from acting in any way that will harm either party. A dual agent must explain to each party at the outset that he is required to withhold certain information.

Creating an Agency: Implication

This can occur when one person is behaving in a way that implies that he's acting as another person's agent. If the other person believes that the first person is acting as her agent, and the first person fails to correct that impression, he may be held to owe agency duties to her.

Buyer-Paid Fee & compensation

This protects the agent in case the buyer decides to purchase a FSBO, where the seller is not represented by an agent and is not planning to pay anyone's commission. 1. Hourly Rate 2. Percentage of Sale 3. Flat Fee

Terminating an Agency in Washington State

Under Washington's real estate agency statute, a real estate agency relationship continues until one of four things happens. 1. The licensee completes performance of the agency. 2. The agreed agency term expires. 3. The parties terminate the agency by mutual consent. 4. Either party notifies the other that the agency is terminated. When one party terminates the agency without the other's consent, that doesn't change any duties that remain under the contract (such as a listing agreement). The other party may be able to sue for breach of contract.

Types of Agency Relationships (WA)

Under the current Washington statute, there are four types of agency relationships in real estate transactions: 1. Seller agency 2. Buyer agency 3. Dual agency 4. Non-agency.

Creating an Agency: Estoppel

Under the legal doctrine of estoppel, a person cannot take a position that contradicts her previous conduct, if someone else has relied on the previous conduct. Here's how an agency may be created by estoppel: Someone (an apparent agent) acts on behalf of another without authorization. That other person (the apparent principal) allows a third party to believe that the actions were authorized. Later, however, the principal asserts that the actions were unauthorized and therefore not binding on the principal. If this leads to a lawsuit, the court may rule that the principal is estopped (prohibited) from denying an agency relationship, because that would be unfair to the third party.

Disclosure Statement

Washington law requires a seller in a real estate transaction to provide the buyer with a property disclosure statement. In the statement, the seller is supposed to disclose any problems with the property that he's aware of. The law specifically provides that neither the seller nor the seller's real estate agent may be held liable for inaccurate information in the property disclosure statement, unless they were aware of the inaccuracies. The disclosure statement does not require the disclosure of the presence of a registered sex offender in the neighborhood. Although a licensee has to disclose material facts to the parties, he doesn't have to independently verify the accuracy or completeness of statements made by either party. (No duty to verify)

Vicarious Liability

When a principal may be held liable for his agent's negligent or wrongful acts as if he had committed them himself. With vicarious liability, the person injured by the agent may sue the principal as well as the agent. If the court enters a judgment in favor of the injured party, the principal and agent are jointly responsible for paying the judgment. When a principal who personally did nothing wrong is held vicariously liable for his agent's actions, the principal can turn around and sue the agent. Rarely applies in real estate actions. There are only two situations where vicarious liability still applies. The principal participated in or authorized the real estate agent's negligent or wrongful conduct. The principal benefited from the real estate agent's conduct, and a judge decides that the injured party probably won't be able to enforce a judgment against the agent.

Imputed Knowledge

When a third party communicates something to an agent, the principal is held to have notice of that information, even if the agent never actually tells the principal. Similarly, if the agent knows something that should be communicated to a third party, the principal is also held to be aware of the information. Thus, the principal may be held responsible for failing to disclose the information to the third party, even if the agent never actually told the principal. Under Washington's real estate agency statute, the imputed knowledge rule no longer applies in real estate transactions. Unless otherwise agreed in writing, a principal doesn't have knowledge or notice of facts known by a real estate agent that are not actually known by the principal.