Chapter 3 Real Estate Agency

A real estate broker is allowed to keep _______ of his/her on money in a trust fund to handle bank service charges.

$200

The maximum amount per individual claim against the Bureau of Real Estate Recovery Fund is

$50.000

The disclosure conformation is 3 steps:

1. Disclosure: The agent discloses or presents the choice of being the agent for the seller, only the buyer, or both. 2. Election: The seller and /or buyer elect the type of representation, single or dual. 3. conformation: The agent, seller, and buyer confirm the agency relationship and sign the required form.

In a fiduciary relationship the agent

1. cannot profit from the agency without the consent of the principle 2. must obey all lawful instructions of the principal must keep all information told to the agent by the principle confidential unless instructed to disclose or such disclosure is required by law.

Trust funds

A broker is required to keep an official record of all deposits that pass through his/her real estate business. The account must be kept using acceptable procedures Account is subject to audit by the California real estate commissioner.

A listing agent owes the buyer

A disclosure of known defects

General Agency

Broad Powers

Single Agency

Broker acts as an agent to only the seller or only the buyer

Example of secret profit

Broker receives a reffal from a title company without telling the principals in the sales transaction.

California Civil Code 2079.14

California civil code 2079.14 requires trhe listing agent to disclose only to the seller, and the selling agent to disclose to both the seller and the buyer unless one agent represents both seller and buyer, in which case a single disclosure is made to the seller and buyer

Agency Disclosures Requirements

California law requires al real estate agents to disclose in writing the the buyer and seller wheather the real estate broker is the agent of the seller, the buyer or both. The buyer and seller must sign a disclosere form explaining the real estate agency status. The agency disclosre must be done before the seller signs the listing contract and before the buyer signs th epurchase contract, The disclosure and confirmation process is completed in three steps.

Cooperating Agents

Cooperating agents are agents that attempt tp find a buyer for the other broker's listing and then to act as the agent of the buyer, not the subagent of the seller.

Actual Agent

Directly appointed by the principle where the agent is granted certain powers to act on behalf of the principle.

The use of cooperating agents is illegal under California law

False

Categories of Agency

General Special

Subagents

If given permission by the seller in the listing agreement, a real estate agent can assign some if his/her duties to other licensed agents. These other agents a called subagents. Due to change of MLS rules subagency was virtually elimanated.

Agreement

In writing greatest numbers of real estate agencies are created this way

The top producing salesperson Jane, at ABC Realty has become a broker and decided to open her own office. She currently has 10 listings with ABC Realty. What will happen to these listings when Jane opens her new office?

Jane will have to leave the listings with ABC since they belong to the brokerage.

Special Agency

Limited or well defined powers

Real Estate Agency

Principal = Seller (appoints) Agent = Broker (to find) third party ((Buyer)

Dual Agency

Real Estate broker represents both seller and buyer in the same transaction with the knowledge and consent of both parties. (two real estate licensees working for the same broker will be a dual agency if one have the seller and the other has the buyer.

Trust fund-handling problems

Section 10145 Number one on the CalBRE's list of violations. This is the most common agency violation, failure to handle trust funds in an appropriate manner outlined by law and CALBRE regulations. Trust fund are defined as money or other items of value that an agent receives on behalf of a principle on the course of a real estate transaction that requires a license.

Misrepresentation

Section 10176(a) misrepresentation on the part of the broker or salesperson. This includes what was said but also the failure of a broker or sales person to disclose a material fact about the property. A misrepresentation is a false statementof fact. Failure to disclose is a type of misrepresentation!

False promise

Section 10176(b) This is not the same as misrepresentation. A false promise is a false statementabout what the promiser is going to do in the future. To prove false promise, the injured party must show that the promose was impossible to perform and that the person making the promise knew it to be inpossible.

Commingling and conversion

Section 10176(e) Commingling takes place when a broker has mixed funds of his/her principles money with the brokers own money. Conversion is misappropriating and using a client's money. (This is a crime that carries a jail sentence.)

Definite termination date

Section 10176(f) Requires a specified termination date for all exclusive contracts between a real estate agent and a principal relating to tansactions for which a real estate agent license is required. If cannot be determined from the exclusive listing contract when the listing is to expire, then the real estate agent may be in violation of the the law.

Secret profit

Section 10176(g) Agents must always disclose any self-interest they might have in a transaction and obtain their principals consent.

A real estate broker who has been appointed in writing to be a property owner's agent to find a buyer under a specified set of terms is a:

Special, actual agent

If a broker receives a deposit from a prospective buyer who does not instruct that the deposit be held uncashed,

The broker must , within 3 business days do one of the following: 1. Give the deposite to the principal. 2. Put the deposite in escrow. 3. Put the deposite in a trust fund account. If the broker fails to do one of these three things within 3 business days, the broker can be found guilty of commingling. If asked by the prospective buyer to hold the depoiste pending the sellers acceptance of the offer, upon acceptance, the broker must, within three business days,do one of the three actions mentioned above.

Under a buyer's agency, the fiduciary relationship is between the broker and the

The fiduciary relationsship is between the broker and the buyer.

If a real estate salesperson decoes to work for a new broker, the existing listings obtained by the salesperson belong to whom

The listings belong to the former broker

Buyer Agency

The practice of an agent representing only buyers is known as buyer agency. Buyers agents under buyer representation agreement, may negotiate with "For Sale by Owner" properties and owners of unlisted properties without concern about being paid. If the seller is not willing to pay a commission to the agent, the buyer representation agreement provides that the buyer will pay the commission.

Recovery Fund

The public cab recover money when there are certain uncollectable court judgements obtained against a real estate licensee on basis of fraud, misrepresentation, deciet, or conversion of trust funds in a transaction. The maximum amount of money a person can receive from the fund is currently limited $50.000 per individual up to $250,000 maximum for multiple claims against any real estate licensee

A salesperson has a signed listing agreement that has gone under contract. The buyers inspection report, which was sent to the broker and salesperson, shows a number of items that the seller disclosure did not mention. The buyer terminates the contract. In this case all of the following are true Except"

The salesperson is due a commission

Sellers Agency relationship is between

The seller and the broker. Real Estate Bkoker is legally bound to do the very best for the seller

Creation of Real Estate Agencies

Three ways 1. agreement 2. ratification 3. estoppel

An independent contractor would expect which of the following from her broker

To be repsonsible for her own withholding taxes

Agency violations

Trust fund handling problems Misrepresentation False promise Commingling and conversion Definite termination date Secret profit

Basic Rules of Trust Fund Entries

Trust records must be kept chronological sequencein a CalBRE-approved columnar form or a method deemed an acceptable accounting practice If not deposited into a brokers trust fund bank account, the items must be entered in a trust fund logbook outlining what happened to the funds. If deposited into the the bank account another entry must be made in another account in the name of the beneficiary of the funds. The bank account must be reconciled monthly with a bank statement and the bank account must be reconciled monthly with each separate beneficiary. The trust fund accound must be kept in an institution insured by a government agency.

Ostensible Agency

When an agents purports to be representative of a principle but has not been authorized to act on behalf of the principle and knowingly allows innocent third parties to believe that the unauthorized person is the principals agent.

A real estate salesperson is a

agent by virtua of his or her contract with a broker

Ratification

approved unauthorized act

A real estate agency exists between the:

broker and the principal

Buyers Agency

buyer appoints a real estate broker to be the buyers agent

When a real estate agent mixes his or her personal funds with that of a principal, the agent is guilty

commingling

In today's real estate market, when a real estate agent uses agents from other real state companies to help find a buyer, the other agents are called:

cooperating agents

All of the following are true, except

dual agency does not required written confirmation from the buyer and seller

All of the following are methods of terminating a real estate agency except

estopple

Fiduciary Relationship

is created when a real estate brokerage is appointed as an agent, by the principle (seller) to represent the seller in negotiations with a buyer. Fiduciary relationship is one of loyalty, obedience, and confidentiality, and obligates the agent to act in the principals best interest.

A fiduciary relationship is best described as:

loyalty and confidentiality

By Estoppel

mislead an innocent person In an estoppel situation an individual knowingly allows another person to perform tasks beneficial to that individual. Later the individual determines that the person did not act properly and decides to pursue legal recourse.

A real estate agent mistakenly states that the portable dishwasher is included in the sales price of the home. This agent is guilty of:

misrepresentation

A real estate agency can ne created by all of the following

ratification agreement estoppel

A home seller must inform his or her real state agent when the seller is aware of

termite infestation discoved earlier a leaky roof an in operative fireplace. all the above

Unless instructed to hold the check unccashed, a b buyer's deposit must be placed with the appropriated party or account within how many business days

three