Real estate law of agency

Why is it important that a brokerage firm actively enforce the policies and procedures documented in the firm's policies and procedures manual?

Active enforcement helps to ensure compliance from members of the firm and helps protect the broker against claims that there was no expectation of adherence.

Canon of competency

Be informed on real estate market conditions. Commit to continuing education in areas involved in marketing real estate. Be informed on developments in the real estate industry and issues at the federal, state, and local levels. Exercise skill and good judgment in the performance of your duties.

Common law permitted dual agency

Before '93

Cannon of integrity

Behave honestly and fairly. Avoid misrepresentation. Employ good judgment and use caution.

Sam represents the seller, and Max represents the buyer in the same transaction.

Broker to broker

Vicki is acting under Sam's license.

Broker to broker's agent

Sam will pay Rhonda's brokerage's portion of the commission. Max will pay Rhonda her split.

Broker to other broker agent

You represent a buyer in a transaction that includes a 2% cooperating agent commission to be paid by the seller. Who's your client?

Buyer

Who benefits from the limitation of liability for acts of the listing broker in the buyer agency relationship?

Buyer agent

If you're the —, the seller and the seller's agent are your customers and are third parties.

Buyers agent

Canons of

Canon of competency, discriminatory practices, fidelity, integrity, consumer information

Consumer information form 1-1

Canon of consumer information

Laws that have evolved from case laws or customs

Common law

What type of dual agency became temporarily permissible in 1996, when intermediary brokerage replaced statutory dual agency?

Common law dual agency

This worker is classified by the common understanding of the profession, such as a food server.

Common law employee

CIIA

Compensation, indemnification, information, availability

Duties That Survive Termination

Confidentiality and accounting

In a real estate transaction, which two parties are owed the same duties?

Customers and other parties

It's not enough to distribute copies of the PPM to members of the firm and train them on the PPM's contents. Brokers must also actively enforce the policies and procedures contained in the manual. Why is it important for brokers to enforce the PPM?

Enforcement protects the broker against claims that although certain policies were documented, there was no explicit expectation that they should be followed.

Common titles issues

Errors in public records Unknown liens Missing heirs Forgeries Survey or boundary issues Death divorce bankruptcy

If significant changes are made to the policies and procedures manual, when should they be communicated to the members of the firm?

Immediately

Which two of these items identify the primary reasons that workers are categorized by federal law?

Impacts how the worker is treated for employment tax law purposes. Determines whether the worker is exempt or non-exempt for purposes of the FLSA.

Payments for damages or losses to the associate caused by the broker's action

Indemnification

Sally is a listing agent and is meeting with a buyer for the first time for a substantive discussion about the property for sale. What information is Sally required to share in writing?

Information about brokerage services form

Which one of these agreements will you use to become the seller's agent?

Listing agreement

Agency Termination by action

Mutual agreement, client revocation, and agent renunciation

OLDCAR

Obedience, loyalty, disclosure, confidentiality, accounting, reasonable skill and care

Limits the amount of representation received from any one professional in exchange for the flexibility to work with multiple agents.

Open agency

Exclusive right to sell talking points

Parties to the agreement Property description Listing price term (beginning and end date) of the agreement Broker compensation Listing services Access to the property Cooperation with other brokers Intermediary

PPM

Policies and procedures Manual

Cannon of fidelity

Put the interests of the client first. Be faithful and observant to the trust placed in you. Place no personal interest above that of your client. Be scrupulous and meticulous in performing your functions. Make your position clear to all parties—no undisclosed agency or interests. Treat other parties involved in transactions fairly.

from the perspective of the buyer's agent. Your client, Buyer Brando, is purchasing a four-bedroom, two-story house just outside of the city. The seller of this house is Seller Sam, who is being represented by his listing agent, Andrea. For the buyer's agent, the third parties in this transaction are

Seller Sam and Andrea.

If you're the —the buyer and the buyer's agent are your customers and are third parties.

Sellers agent

purpose of sharing the history of buyer agency with the buyer?

Shows how agency has evolved to benefit buyers.

In 1993 TRELA was amended to allow disclosed dual agency. What is another way to describe this type of law?

Statutory dual agency

With the growth of buyer agency in the 1980s, more brokers attempted dual agency under common law. The legislature responded in 1993 by amending TRELA to establish what?

Statutory dual agency

independent contractor who's treated as an employee for employment tax purposes, such as a delivery driver paid on commission.

Statutory employee

Laws enacted by a legislature or other governing bodies

Statutory laws

This worker is treated as self-employed by statute for all federal tax purposes, such as a licensed real estate agent.

Statutory non employee

In what capacity is a broker from another agency, who represents the owner in cooperation with the listing broker, working?

Sub agent

Creates rules for how license law is put into practice and enforced.

TREC

Oversees protection of consumers of real estate services.

TREC

Primary law that regulates the real estate profession in Texas.

TRELA

TREC

Texas Real Estate Commission

TREC is charged with passing rules to enforce, interpret, and explain the provisions of which of the following?

Texas Real Estate License Act

TRELA

Texas Real Estate License Act

Which of the following requires that sellers disclose material defects related to the condition of their property?

Texas property code

Now that you have an idea of how sub-agency works, let's see if you can explain it to the Robertsons. Which of these is the correct explanation?

"In order to get wider exposure for my client's property, I often choose to work with an agent from another firm. If the other agent finds a buyer, I'll split my commission with the agent. The cooperating agent is a sub-agent and owes the seller the same fiduciary duties as a seller agent."

Undisclosed Principal

A principal whose identity is unknown by a third person, and the third person has no knowledge that the agent is acting for a principal at the time the agent and the third person form a contract.

Any listing agreement TREC adopts related to the contractual obligations between a real estate seller and a license holder who is acting as that seller's agent must include both of the following provisions:

A provision that informs the parties to the contract that real estate commissions are negotiable A provision that explains the availability of information concerning Texas coastal natural hazards that's important to coastal residents, if appropriate

Resolve title issues by three documents

A quitclaim deed A release of lien/judgment A deed of reconveyance

Sub-chapter L of the Texas Real Estate License Act, "Practice by a License Holder," addresses

What's so important about the Information About Brokerage Services form, and when do you have to give it to consumers? When is an intermediary used (and what in the world is an intermediary, anyway)? What type of information can you disclose in a transaction, and what are you required by duty to withhold or disclose?

How can a dual agency be created

When a licensee represents a client, but the customer comes to believe that the licensee represents the customer

Term

Where in the listing agreement will the seller find the beginning and ending dates for the agreement?

Lenders, appraisers, and other service providers are not customers, but they are

Third parties

party who is involved in a transaction, but who is not your client, is ______.

Third party

policies and procedures manual

establishes the types of agency relationships that are allowed in your firm, clarifies the duties and activities of each entity, prohibits illegal activities, and includes step-by-step procedures for common agency scenarios

Joins agent representation and self-representation.

exclusive agency

Suit to quiet title

lawsuit that asks the court to decide who has claim to the property, and who does not.

MLS sub-agency requirements were made optional due to

liability concerns.

Exclusive right to sell

listing agreement that provides the highest service to the seller and the most protection for the broker's commission. An exclusive right to sell allows the listing agent to list the property and receive a specific commission, no matter who brings the buyer to the seller, as long as the property sells within the term of the agreement

Filing liens for commission

only applies for commissions earned on commercial real estate transactions—and it only applies if the commission owed is more than $2,500, and if the broker specified in the fee agreement that the broker had the right to file that lien

Which of the following best describes the listing agreement's purpose?

To identify the obligations of seller and seller brokers to one another

Which of the following choices has always been an illegal form of dual agency in Texas?

Undisclosed dual agency

licensee owes the duty to all both clients and customers

presenting all written offers and counter-offers to both clients and customers.

Deed of reconveyance

records payment of a mortgage under a deed of trust.

Release of lien/ judgement

removes a paid mortgage or spousal or child support lien.

Quitclaim deed

removes an heir and clears up title among co-owners or spouses.

Physical stigma

result of a condition which doesn't directly affect the structure or property itself, but may physically affect the occupants. Because of the real or imagined health-related problems associated with a physical stigma

Policy

rules by which a business operates

Exclusive agency agreement

sellers and landlords who want to reserve the right to find a buyer or tenant themselves and avoid paying a brokerage fee, but who still want to make sure their property receives the broadest possible market exposure. With an exclusive agency agreement, only one broker lists the property

Procedure

ways in which tasks are carried out within the firm

Statutory Employee

who is treated as an employee by statute for certain employment tax purposes.

Texas Real Estate Broker-Lawyer Committee

13 Members: • 6 Lawyers appointed by the president of the Texas Bar Association • 6 Brokers appointed by TREC • 1 Member of the public, appointed by the governor

Complainttime limit

4 years

the sales contract is signed by both parties before the seller has provided this disclosure, the purchaser has the option to terminate that sales contract—for any reason— within — days of receiving the disclosure.

7

TREC members

9 Members: • 6 licensed brokers, engaged full-time for five years prior to appointment by the governor • 3 members of the public • All appointed by the governor • All must be qualified voters • 6-year terms; staggered with three members' terms expiring on January 31 of each odd-numbered year

Statutory law permitted disclosed dual agency

93-96

Intermediary brokerage introduced

96

Agency termination by law

Death destruction bankruptcy

Statutory non employee

Direct sellers Licensed real estate agents Certain companion sitters

1993, the Texas legislature modified common law dual agency to create statutory dual agency. What did statutory dual agency permit?

Disclosed dual agency

What does it mean to say that dual agency was permitted by common law?

Dual agency was permitted because there was sufficient precedent for it in the courts.

Which term can be defined as a person registered in Texas who may buy, sell, lease, or transfer an easement or right-of-way for another?

Easement of right of way agent

physical Stigmas

Electromagnetic fields (EMFs) Radon Hazardous waste disposal Soil or groundwater contamination Underground storage tanks (USTs) Chlorofluorocarbon (CFC) emissions

I am a real estate assistant. I work for a broker. I am paid $15/hour., plus I get 2% of his net commission received (i.e., $18,000 commission paid-out, I get $360). I do A LOT of overtime working weekends and nights! I handle all the advertising, marketing, flyers, brochures, MLS input, some phone, and all the email. I open houses for showings, take pictures, make videos, virtual tours, etc. I also handle website info, track Google Analytics, Craigslist hits, etc. It is exciting work, actually, I am awake right now putting up his Craigslist ads, which I do every two days. I talk to his clients, help with getting a painter or setting up an inspection or making sure the utilities get transferred into the buyer's name, etc. Is this person operating illegally or is this a licensed assistant? How do we know?

The assistant is sharing in the commission.

TREC must ensure that it prioritizes a consumer-filed complaint and its enforcement, if any. TREC will assign priorities to investigate complaints based on the following risk-based elements:

The degree of potential harm to a consumer The potential for immediate harm to a consumer The overall severity of the complainant's allegation The number of licensees potentially involved in the complaint The history of complaints against that particular licensee The number of potential violations in the complaint

Without a buyer agency agreement in place, which party does the agent who's assisting the buyer represent?

The seller