Unit 7
The purpose of the Working with Real Estate Agents disclosure is to create an agency relationship between brokers and consumers.
False
Exclusive buyer agency brokerages were the most common form of brokerage entity before the Edina lawsuit.
False
Oral buyer agency is a lawful alternative to use when a consumer is unwilling to commit to a written buyer agency agreement.
True
The principal owes the agent 1. the duty of acting in good faith. 2. payment of compensation.
BOTH
Which of the following statements about dual agency is/are correct? 1. Dual agency can occur within one firm if a broker shows his buyer-client his or her own listing. 2. Dual agency can occur within one firm if a broker has become a buyer's agent and is showing a property listed by the broker-in-charge.
Both 1 and 2
Facilitation/transaction brokerage
Neither the buyer nor the seller are clients; both are customers; not permitted in North Carolina
puffing
Opinion statements that exaggerate a property's benefits
In real estate, which of these is the person who hires and delegates to an agent through a brokerage contract the responsibility for representing that person's best interests ?
Principal or client
Which of the following situations would be considered a material fact that would require disclosure by a North Carolina listing agent?
The house was totally re-plumbed after a polybutylene pipe broke in the master bathroom.
Which of the following statements is TRUE about the North Carolina Working with Real Estate Agents brochure?
The real estate agent must review the agency options in the brochure with the consumer.
The fiduciary relationship between the principal/client and the agent is the description for?
agency
Willful misrepresentation is the act of intentionally misinforming any party involved in a transaction about a material fact.
True
Which of these is NOT considered prohibited conduct under North Carolina real estate license law?
Willful misinterpretation
A property manager is BEST described as a
general agent.
Customer
the third party for whom some level of service is provided by an agent of another party, but who is not represented by the agent.
stigmatized properties
those properties branded by society as undesirable because of events that occurred there (homicide, suicide, or other violence; illegal drug or gang-related activity)
Negligent omission
unintentionally failing to disclose a material fact to any party involved in a transaction
The following may be used as a five-point checklist to properly follow disclosure rules:
1.The agency disclosure brochure must be given to prospective sellers and buyers no later than first substantial contact in all real estate sales transactions. 2. The broker must review the brochure and a determination of agency status must take place. The buyer/seller can acknowledge receipt by signing the tear-off panel to be retained by the broker. 3. Listing agreements are required to be in writing from the start of the agency relationship. 4. The rule allows for an agent to act as a buyer's agent, a dual agent, or a designated dual agent under an oral agreement, until such time as the agreements must be put in writing, which is not later than the time the first offer is going to be presented. 5. Any buyer agency agreement that sets forth agency exclusivity or a definite period of time must be in writing from the start of the agency relationship.
Which of the following is NOT considered a material fact?
A fact relating to the number of closings the agent has had that year
Which agent is defined as "may represent the principal in a broad range of matters related to a particular business or activity"?
A general agent
Which of the following statements is TRUE about types of agency?
A real estate licensee usually acts as a general agent of an affiliated firm.
Which of these is one of the three classifications of agency relationship?
A special agent
Which agent is defined as "a person who is empowered to do anything the principal could do personally"?
A universal agent
Dual agency
Both the buyer and the seller are the clients in the same transaction
The North Carolina Real Estate Commission (NCREC) strongly encourages the BIC of a real estate firm to have a written office policy as to the type(s) of agency the firm will practice. What is a BIC?
Broker-in-charge
Exclusive buyer agency
Buyer is the client; seller is the customer
Which of the following BEST defines the common law of agency?
Case law establishing the responsibilities of a person who acts for another
Single agency
Either the buyer or the seller is the client, but not both in the same transaction
This nonagency relationship is NOT allowed in North Carolina. A ____________ is a licensee who assists buyers and sellers in reaching an agreement in a real estate transaction without representing interests of either party.
Facilitator
A broker owes a third party (customer) honesty and fairness, as well as other fiduciary responsibilities
False
A broker who violates any duties owed to a third party (customer) can be penalized by the North Carolina Real Estate Commission (NCREC).
False
A real estate broker who does not represent either party in a transaction and treats both as customers is called a subagent.
False
An unlimited power of attorney would be an example of special agency.
False
The term customer is synonymous with the terms principal and client.
False
A listing agent owes what duties to a third-party buyer?
Honesty, fairness, and disclosure of material facts
Which of these is TRUE regarding North Carolina Real Estate Commission (NCREC) best practices for the broker-in-charge (BIC) when creating written office policies?
NCREC suggests that each real estate brokerage firm have a written office policy as to the type(s) of agency the firm will practice and how the type(s) of agency will be exercised.
The primary function of the NCREC is to license and regulate real estate agents (persons and firms who sell, lease, etc., real estate for others). What does NCREC stand for?
North Carolina Real Estate Commission
Exclusive seller agency
Seller is the client; buyer is the customer
An agent is representing the seller. The agent shows the house to his cousin and she is very interested in buying it. The agent presents his cousin's full price offer to the seller, who eagerly accepts it. Both the seller and the buyer are very happy with the transaction. Which statement is TRUE?
The agent has violated his fiduciary duties to the seller by failing to disclose his relationship with the buyer and could be subject to disciplinary action.
A seller hired a local real estate firm to market her property and signed a six-month listing contract with Joe, a broker in the firm. Joe gave the seller, as part of the listing presentation, a list of 100 marketing items he would carry out. One of the items was to hold an open house every week. Joe has held one open house in the six weeks since listing the property and has stopped responding to the seller's phone calls and emails. The seller has decided to list with another firm but was told the current listing must be terminated before an agency creation with a new firm could be formed. In this situation, which of the following is TRUE
The seller should send written notice to the principal broker of Joe's firm stating the seller's intention to terminate the listing because of poor service destruction or condemnation of the property. mutual agreement of the parties. completion or performance of the purpose of the agency. ALL*
The North Carolina Real Estate Commission (NCREC) require licensees at first substantial contact with a client to perform one action. What is this action?
To provide specific agency disclosures in writing
A broker who chooses to voluntarily disclose the presence of registered sex offenders is not a violation of the real estate license law.
True
Agency relationships can be created with a listing contract, property management contract, tenant representation agreement, and by conduct of the parties, among other examples.
True
Agency relationships can end by the fulfillment of the purpose for which the agency was created.
True
As a special agent, a broker cannot bind the principal to any contract.
True
Dual agency is a lawful and acceptable practice in North Carolina, provided both parties understand and consent in writing to the practice.
True
A broker properly reviewed real estate agency relationships to a prospective buyer using the Working with Real Estate Agents brochure. The buyer chose to enter into a written buyer agency agreement with the broker without authorizing dual agency. After the broker showed the prospective buyer several properties listed by other companies, the buyer asked to see one of broker's listings. Given these circumstances, what kind of approval or authority to act as a dual agent must the broker obtain in order to proceed with the transaction?
Written authority to act as a dual agent from both the seller and the buyer before showing the property.
A broker reviews the brochure Working with Real Estate Agents with prospective a buyer. The buyer is reluctant to enter into a written buyer agency agreement with the broker's firm, so the broker and buyer agree that the broker's firm will represent the buyer for the time being under an oral buyer agency agreement. Dual agency is not mentioned. After the broker shows the buyer several properties listed with the broker's competitors, the buyer expresses a particular interest in seeing a properly listed with the broker's firm. The broker's firm had previously executed a written listing agreement with the seller, but that agreement did not specifically authorize the firm to act as a dual agent when selling the owner's property. At this point, can the broker proceed to show the buyer the listed properly in question without a written dual agency agreement from the buyer and the seller?
Yes, but only if the broker first obtains oral permission of both the buyer and seller to represent them as a dual agent and obtains a written dual agency agreement with both before any offer is presented.
Concerning the North Carolina Residential Property Owners' Association Disclosure Statement, all of the following are true EXCEPT
a broker should complete the Residential Property and Owners' Association Disclosure Statement for the seller to expedite matters.
The document used to form the relationship between the agent and the principal is
a fiduciary agreement.
Fiduciary
a relationship in which the agent is placed in the position of trust and confidence to the principal.
Independent contractors in a brokerage firm must have
a written employment agreement.
In auction sales
a written listing agreement between the seller and a broker is required from the outset of the relationship.
John has listed a home for sale and Jim, another broker with the same firm, has an interested buyer client. The brokerage relationship that would provide the MOST advocacy for both the seller and the buyer is
designated dual agency.
The real estate broker's fiduciary responsibility to keep the principal informed of all facts that could affect a transaction is the duty of
disclosure.
A listing broker must disclose his brokerage relationship with the seller to any unrepresented buyer before
discussing any of the buyer's confidential information
Willful omission
intentionally failing to disclose a material fact to any party involved in a transaction
Willful misrepresentation
intentionally misinforming any party involved in a transaction about a material fact
Vicarious liability
is a legal concept that might allow a consumer to successfully sue the seller and/or the listing firm for illegal or inept actions performed by the subagent firm and/or its brokers
Universal agent
is a person who is empowered to do anything the principal could do personally. There are virtually no limits to the universal agent's authority to act on behalf of the principal. An unlimited power of attorney would be an example of universal agency. This type of agency is seldom practiced by a real estate broker in a typical real estate transaction.
special agent
is authorized to represent the principal in only one specific act or business transaction, and under limited, detailed instructions with no power to bind the principal. A real estate broker is usually a special agent. If hired by a seller, the broker's duty is limited to finding a "ready, willing, and able buyer" for the property. A special agent for a buyer has the limited responsibility of finding a property that fits the buyer's criteria. As a special agent, the broker cannot bind the principal to any contract. It is important to remember that a special agency relationship provides only limited authority.
When a listing broker finds a buyer for a property and agrees to represent the buyer in this transaction, the broker
is practicing dual agency and must obtain written consent from both parties in advance of providing any service.
In North Carolina, the doctrine of caveat emptor
is still intact for property owners in real estate transactions.
general agent
may represent the principal in a broad range of matters related to a particular business or activity. The general agent may, for example, bind the principal to any contracts within the scope of the agent's authority. A real estate broker typically does not have this scope of authority as an agent for a consumer in a real estate sales transaction. Brokers usually serve as general agents of their real estate brokerage firms. A more typical example of a general agent would be a property manager hired as a general agent for the landlord in the management of certain properties.
In North Carolina, oral buyer agency
must be nonexclusive and have no expiration date.
In a typical agency relationship between a broker and a client, the broker's commission is determined by
mutual agreement.
Under the common law of agency, a real estate broker owes all of the following duties to the principal EXCEPT
novation.
OLD CAR
obedience, loyalty, disclosure of information, confidentiality, accounting, and reasonable skill, care, and diligence
Subagent
one who is employed by a person already acting as an agent (such as a provisional broker licensed under a broker-in-charge who is employed under the terms of a listing agreement). Simply stated, a subagent is an agent of an agent.
A real estate firm who engages brokers as independent contractors must
still supervise the brokers and remain civilly liable for the brokerage activities of the brokers.
A North Carolina listing agent has the seller's permission to practice dual agency. A different agent with the listing firm holds an open house over the weekend. A prospective buyer attends the open house but never shows an interest in the open house property. The buyer begins to discuss his specific needs for property with the agent hosting the open house. The agent must
stop the buyer's information sharing until they have reviewed the Working With Real Estate Agents brochure and decided their agency relationship.
An agency relationship may be legally terminated by all of the following means EXCEPT
the broker discovers that list price will not yield an adequate commission
Agency
the fiduciary relationship between the principal/client and the agent.
Subagency
the fiduciary relationship between the subagent and the principal
Agent
the individual who is authorized and consents to represent the interests of another person. In the real estate industry, principals are hiring an entire company and all the company's affiliated brokers to represent them. Even though the firm is the agent, the broker-in-charge would be personally accountable for agency law compliance.
Fraud
the intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person
Principal or client
the person who hires and delegates to the agent through a brokerage contract the responsibility of representing that person's best interests. In the real estate business, the principal/client can be the buyer, seller, landlord, or tenant.
Facilitator/Transaction Broker
the real estate licensee who assists buyers and sellers in reaching an agreement in a real estate transaction without representing interests of either party. The licensee treats both parties equally as customers. This nonagency relationship is not allowed in North Carolina.
The common law of agency refers to laws from judgments and decrees of courts as opposed to laws created by a legislature.
true
Negligent misrepresentation
unintentionally misinforming any party involved in a transaction about a material fact