laws of agency

Routine acts that do not involve discretion or the exercise of significant independent judgment.

Ministerial Acts

Traditional Common Law Agency Duties (Fiduciary duties) thin: OLD CAR

Obedience Loyalty Disclosure Confidentiality Accounting Reasonable care and due diligence

Fiduciary duty that requires an agent (broker) to protect and account for all money and property held on behalf of the client

accounting

An ___ is a person that agrees to represent a client in a legal transaction

agent

Most of the states that permit dual agency require an agent to obtain proper _________(customer or client ?) consent before entering into the relationship

client

Person, also known as a principal, who has an agency relationship with an agent

client

the principal = the ...

client

Person authorized to perform a particular act or transaction pursuant to an agency agreement.

special agent

f the seller is the client, the broker can offer the property for sale, but cannot actually sell it. A ______ has authority to carry out one specific act only.

special agent

Agent of an agent who may perform for the client's benefit under primary agent's authority

subagent (requires client approval; salesperson is an example).

Designated agency is MOST likely to occur when

the buyer and the seller are represented by the same company

Generally, the parties in an agency relationship that was created to purchase or sell property are the............____( client and the real estate broker OR the salesperson and client???)

the client and the real estate broker (NOT the salesperson and clientWHY?a salesperson working under the listing or buying broker may serve as a sub-agent of his or her broker.)

agency is....

the legal relationship between two or more persons where Person 1 (principal) provides Person 2 (agent) with the authority to act on Person 1's (principal's) behalf and in a manner that promotes Person 1's best interests (fiduciary duties)

t/f Unless the agent and the client otherwise agree in writing, the agent owes no further duties to a client after termination except account for all moneys and property relating to the brokerage relationship; and keep confidential all personal and financial information received from the client during the course of the brokerage relationshi

true

t/f if a broker acts as a dual agent, but fails to formally disclose that he is a dual agent to all parties, he risks losing his commission, his license, and/or jeopardizing the transaction (under state law).

true

An___ is an example of universal agency.

unlimited power of attorney

does dual agency require written consent?

yes

Bill, a broker with XYZ Realty, sells a property listed by Gene, an independent broker. In this transaction, what is the relationship between Bill and Gene? a. Bill is the agent; Gene is the principal . b. Bill is the trustee; Gene is the trustor . c. Bill is the sub-agent; Gene is the agent . d. either a or c could be correct

A (Pay close attention to what the question asks—the status of the relationship between Gene and Bill, not the relationship between Gene, Bill, and the seller. Gene is Broker Bill's principal and Broker Bill is his agent. Regarding the relationship between the two brokers and the seller, Gene is the agent of the seller and Bill is the subagent of the seller (Bill is NOT the subagent of Gene).)

An owner is listing his rental property with a broker. Based on past experience, the owner thinks that females cause less damage. He therefore tells the broker that he only wants to rent to females. What should the broker do? A) advise the owner that this restriction is illegal . B) follow the owner's instruction in order to protect the client's interest . C) accept the listing and give preferential treatment to female applicants . D) follow the owner's instruction because of the fiduciary relationship .

A (What the owner is asking is illegal. If the broker accepts the listing, he would be in violation of the law. The broker is not under any fiduciary obligation to obey the illegal instructions of the principal (owner).)

woman offers to buy property listed by her sister (a broker). However, she does not want her sister to tell the seller of their relationship. The sister should: A) tell the seller that the prospective buyer is a relative . B) let another person buy the property and turn the deed over to the sister . C) sell the property without disclosing the relationship . D) find another listing agent to avoid conflict of interest .

A (You must disclose any interest you have in property, such as a family relationship with the buyer.)

A general agency empowers the agent to: A) transact matters of all types for the client . B) transact the client's affairs in a certain business . C) perform only specific acts for the client . D) perform any legal act for the client .

B (A general agent is authorized to perform any and all acts associated with a specific service. The other choices are either too broad or too narrow.)

What is NOT a fiduciary duty that an agent has towards his client? A) to use care in completing form contracts . B) to obey all client instructions . C) to be loyal to the client . D) to be accountable for documents and funds

B (The fiduciary duties that an agent owes the client/principal include the duty of care, the duty of accounting, and the duty of loyalty. Of the choices presented, the duty "to obey all client instructions" is the best choice because it is too broadly stated. That is, it is not always true. An agent is obligated to obey only LAWFUL client instructions. Following all client instructions could violate other duties (loyalty) and laws if it results in an illegal act or omission.)

A buyer's broker presents an offer for property listed by another broker. Proper agency disclosures have been made. Prior to acceptance, the listing broker discovers a zoning change that will affect the value of the property. He tells the buyer and the offer is withdrawn. Which of the following statements is correct? A) the listing broker has violated his fiduciary relationship with the seller . B) the listing broker has exercised due care and loyalty to his principal . C) the buyer may not withdraw his offer . D) disclosure of this information violates state licensing regulations .

B (The listing broker has duty to disclose material facts to the buyer. The zoning change is material because it will significantly impact the value of the property. Disclosure of material facts is not a violation of loyalty or due care. The seller's agent is avoiding a violation of the law.)

All of the following persons may act as escrow agents except: A) brokers . B) neutral third persons . C) salespersons . D) attorneys

C (Brokers and attorneys can and do act as escrow agents. Both may be neutral third persons, which is the basic requirement for an escrow agent. However, most states do not allow salespersons to be escrow agents, although they may accept money and documents for escrow on behalf of their employing broker.)

_______ is the act of mixing or mingling entrusted client or customer funds with personal or business funds (deposit into the same account), and ________ is the act of stealing (using, misappropriating) entrusted client or customer funds

Commingling conversion (both violate the duty of accounting.)

All of the following are examples of dual agency except: A) broker representing buyer and seller, with consent of both . B) escrow agents . C) broker representing both buyer and seller, without consent of either . D) two salespersons in a firm represent a different buyer and seller

D (Escrow agents are dual agents because they hold money for the benefit of both buyers and sellers. Even if a dual agency is undisclosed, it is still a dual agency (though the contract may be rescinded). However, the situation where two salespersons represent a different buyer and seller for the same broker is the definition of a designated agency.)

Fiduciary duty that requires an agent to disclose all material facts, rumors, and other information that might implicate the transaction to her client

Disclosure

t/f Clients don't have to consent to dual representation and acknowledge disclosure by their signatures.

FALSE there has to be consent for dual agency!!!

Person hired to perform a specific task, who uses independent discretion and judgment to select a method of completion

Independent Contractor

Traditional Common Law Agency Duties (Fiduciary duties)

Obedience Loyalty Disclosure Confidentiality Accounting Reasonable care and due diligence (remember the acronym: OLD CAR)

Fiduciary duty that requires an agent to act as a competent professional and to make reasonable efforts to keep the client informed.

Reasonable Care and Due Diligence

Sub-Agency

The agent of an agent. Agents (Brokers) may appoint subagents (salespersons) where the client expressly authorizes or the law otherwise permits. The subagent may then perform tasks for the primary agent's clients

One who is authorized to perform a variety of acts necessary to effectuate a variety of transactions on behalf of another. is a much broader grant of authority

Universal agency

One with authority to act on behalf of, and to obligate, another.

agent

A buyer may be the ______ of a buyer's agent, a seller may be the ______ of a seller's agent, and a property owner may be the _______ of a property manager.

client client client (same thing diff scenarios)

The party the agent represents is called the ________ and the other party to the transaction is called the __________.

client, customer

Agents owe most fiduciary duties to ______

clients

: Any person, firm, or corporation that is a source, compiler, or supplier of information regarding real estate for sale or lease and other data.

common source information compant

fiduciary duty that prohibits an agent from disclosing information given to him by a client if such disclosure would be harmful to the client or the client's interests.

confidentiality

For a broker that represents a seller, any actual or potential buyer is the _____________

customer

Person who is not in a brokerage relationship with respect to a particular broker, but for whom a real estate agent may perform ministerial acts in a real estate transaction.

customer

Agency relationship where a single broker represents both the buyer and the seller in the same real estate transaction

designated agency (same broker!! DUAl agency is same agent. think broker is same company and companies have a lot of agents!)

designated agency vs dual agency

designated agency is the same BROKER representing both buyer and seller, but different salespersons (agents) for buyer or seller Dual agency is same AGENT for both buyer and seller. ( think broker is same company and companies have a lot of agents!)

Situation where the same agent (broker or firm) represents multiple parties (buyer and seller) with competing interests in the same transaction

dual agency

_____________ are examples of dual agents, as they hold money for the benefit of multiple parties

escrow agents

A ______ is a person holding a position of trust and confidence by virtue of their representation of another (agent representing a principal)

fiduciary

a licensed salesperson is the ____ of his employing broker, which authorizes him to perform many different acts necessary to effectuate the sale of real estate.

general agent

A property manager authorized by an owner to manage a real estate project on a continuing basis is the _______ of the owner.

general agent (authorized to perform many different types of acts on behalf of the owner in order to carry out his management function)

Agent authorized to perform any and all acts associated with a specific service

general agent (property manager)

The duty of ______ requires that the agent promote the client's interests above all interests, including his own.

loyalty

Generally, common source information companies are known as....

multiple listing services (MLS)

is An independent contractor subject to the default fiduciary duties?

no bc they are not an agent, and is therefore not

Fiduciary duty that requires an agent to follow all lawful client instructions.

obedience

One who has conferred authority on an agent to act on his behalf (may include authority to execute legal decisions).

principal

Parties to an agency relationship include the ____ and the _____

principal and agent

Agency representation where a broker represents only one party in a transaction—either the buyer or the seller, but not both

single agency

Dual Agency Form of Disclosure must be oral or written or can it be both?

written