Texas Law of Agency

Agency Law

-Becoming an agent of a principal in real estate requires WRITTEN agreement -This is required by the STATUTE OF FRAUD -One party delegates the transaction of some lawful business or power to another which is usually a seller and/or buyer -Third party is a "customer"

Option Contracts

-Unilateral: seller must perform, not buyer -When your client wants an option to buy at a specific time period in the future -Owner might not be interested in selling at the present time, but may be in the future -Right to buy at a specific price during a specific time period costs money. The money is call a PREMIUM.

Cost Basis (Seller Consideration)

-The amount of money the seller originally paid for the home -Improvements made such as landscaping, wiring, plumbing, etc. -Selling home lower than cost basis DOES NOT offer the seller tax deductions

Licensee Compensation

In any real estate transaction: -Broker's Compensation: Paid by seller/buyer/3rd party or shared with another buyer -Commission DOES NOT form agency -Seller may agree that the agent can share commission with another broker -Buyer can do the same -Commission Based on Price: Buyers agent or dual agent may receive compensation based on purchase price

Mission Statement

Most manuals produced by firms have a mission statement which state: -Who they are -What they are trying to accomplish -What market and people they want to service -What their goal is

Negligence and Unintentional Misrepresentation

Negligence- Failure to use ordinary or standard care Unintentional Misrepresentation- Must be relied on by the listener or reader. The speaker must know that the listener is relying on the factual correctness of the statement. *MISREPRESENTATION MUST RESULT IN A LOSS TO LISTENER/READER

Fiduciary Relationship

One that is authorized to represent the interests of another in legal proceedings

Federal Lead Paint Regulations

Residential property built BEFORE 1978 must: -Present pamphlet -Disclose lead presence -Provide lead hazard evaluation report -Allow 10 day right of inspection (landlords not required to do so) -All buyer's must sign statement saying they have received all of the previously listed things Penalties for non-performance include: -Civil monetary penalty -Monetary penalties -Action from HUD HOWEVER- The sales Contract is STILL VALID

Mortgage/Debt (Seller Consideration)

Short Sales: When a house will be sold at a price less than the total debt -This involved possible legal exposure to all parties involved, including you; working with an experienced agent in this field is highly advised

Buyer's Agent

A licensee who enters into an agency relationship with just the buyer

Seller's Agent Duties

-Be loyal -Notify of conflicts of interest -Advise seller to seek professional advice (legal matters) -Fiduciary capacity -Find buyers continuously

Time a Sale

-Home sales we higher when the weather is warm -Homes offered on the market in Spring and Summer will fetch a higher price

Buyer Requests Corrections to Property/Seller Refuses to Make Repairs

-When a buyer makes changes (second offer) the seller can either refuse corrections or make them -If there are discrepancies in the disclosure statement after closing transaction, the seller has no obligation to amend the statement -The buyer has no right of rescission (civil action is always an option for the buyer) -If the seller DOES NOT disclose information, the buyer has the right of rescission until the transfer of real property is closed and complete -The buyer has no rights if they waived their rights by signing the waiver ***Refusal and/or failing to act on the form DOES NOT prevent the sale***

Agent

A licensee who enters into an agency relationship with a buyer or seller

Brokerage

A real estate brokerage performs real estate activities for the public. It must comply with the federal, state, and local laws that govern real estate activity. -The RE brokerage *OWNS THE LISTINGS*. -It has full control over its licensees and staff and is responsible for their actions. -A licensee is *AN AGENT OF THE BROKER* and the broker is liable for acts of those licensees. -The broker must supervise the activities of their brokerage licensees

Buyer Agreement

Buyer's Agreement (Agency) -Contract states that the broker represents the buyer and that the buyer has an obligation to the broker for commission during term of the agreement Buyer's Agreement (No Agency) -Contract states the broker DOES NOT represent the buyer, even though they may be performing services

Fiduciary Capacity

The relationship of utmost good faith and loyalty that a broker owes to their principal

Types of Agency

Universal- A written agreement where the agent has the actual power to sign legal documents for their principal (principal lives abroad) -This is normally for people who are incapacitated physically or mentally -Agent acts/has general power of attorney on behalf of the principal General- Does involve power of attorney designation. Includes all business affairs of the principal but not personal aspects ***GENERAL AGENCY HAS POWER TO BIND THEIR PRINCIPAL ON BUSINESS AND REAL ESTATE MATTERS*** Specific (Special Agent)- Agency relationship gives the agent representative power, but it is limited to only one specific business activity outlined in their agency agreement -Licensees are involved with regarding principal's needs Broker- Normally broker does not have power of attorney nor does the broker need it - Client is capable of taking care of themselves, but needs help with real estate Listing Agreement- Creates specific agency. "Find house/person, I'll pay".

Liability Responsibility

Vicarious- "enjoying" services *If licensee does not play by the rules, the principal is NOT responsible unless they knew of the agents actions and/or benefited from said actions

Texas Real Estate Broker-Lawyer Committee

"The Committee" -Provides legal knowledge and guidance for current and proposed TREC regulations -Also provides knowledge and guidance of Statutory Contract forms that are required by the state of Texas -MAIN DUTY is to provide statutory (state approved) real estate contract forms that can be used in real estate transactions to expedite real estate transactions -Contracts must contain adequate safe guards to protect the principals -Drafting and revising is primary focus -Comprised of 13 members -SIX are appointed by the Commission -SIX are members of the State Bar of Texas aka lawyers (appointed by the State Bar president) -ONE public member appointed by the Governor -Committee members serve staggered SIX YEAR terms -Terms of two Commission appointees and two State Bar appointees expire every TWO years -The public appointee expires every SIX YEARS -FOUR new appointees are chosen every TWO YEARS replacing the four whose appointment has expired (TWO from Commission/TWO from State Bar)

Difference Between Dual Agent and Intermediary

***TEXAS LAW DOES NOT PERMIT DUAL AGENCY. MUST BE INTERMEDIARY*** Dual Agent- A broker who represents two parties at the same time (may give opinion and advice regarding sales) Intermediary- A broker who negotiates the transactions between parties (may NOT give opinions/advise regarding transaction. Cannot show favoritism toward either client)

Points for Sales (Working on Broker License)

**ONE SEMESTER HOUR= 15 CLOCK HOURS** -A salesperson must have 3600 points before they can apply for their Brokers License POINTS SYSTEM Residential Transactions -Closed Purchase/Sale: 300 -Rental Extension for Landlord: 50 -Rental Collection: 25 per year -Exclusive Right Listing: 10 -Closed Sale/Purchase of an Unimproved Residential Lot: 50 Commercial Transactions (Apartments/Offices/Hotel/Motel) -Sale/Purchase: 500 -Lease: 100 per year -Rent Collection: 150 per year -Listings: 20 per transaction -Buyer/Tenant Representation: 20 per transaction Farming/Ranch/Unimproved Land Transactions -Purchase/Sale: 300 -Lease: 50 per transaction -Rent Collection: 50 per year -Listings: 10 per transaction -Buyer/Tenant Representation: 10 per transaction -Brokerage Branch Office Team Management: 20 per month with a max of 1200 points credit toward 3600 points total requirement

Voidable Agreement

-"Material" Misrepresentation: Unintentional false statement by the agent or principal -"Material" Concealment: Unintentional hiding of information by the agent or principal -Fraud: Intentional lying or hiding or material information

Imputed Knowledge

-"Unknown" knowledge -Unknown by PRINCIPAL: Knowledge of an agent DOES NOT constitute knowledge by the principal UNLESS material facts are TOLD to the principal -Unknown by AGENT: DOES NOT constitute knowledge by agent UNLESS material facts are TOLD to agent *NEGLECT MATERIAL MISREPRESENTATION- Agent unaware of a material fact that could hinder sale

Commission Membership

-A GOVERNOR appoints members -NINE members head the Commission -These members have the powers of establishing rules -At least SIX members must have been working as a broker for FIVE years prior to appointment -THREE must be from the public sector without real estate background -Members must be registered to vote

Real Estate Services

-A broker is allowed (by the state of TX) to perform on behalf of an owner/principal the following: -Selling and/or leasing of client property -Negotiating for clients (with permission) -Exchanging of property with others -Negotiate purchases for buyer clients -Negotiate terms of leases with owners

Tort Law

-A group of laws that addresses and provides remedies for civil wrongs not arising out of contractual obligations -A person who suffers damages may be able to use Tort Law to receive compensation from someone who is legally responsible for those injure in civil law

Agency Relationship (Buyer)

-A licensee when working for a buyer is a buyer's agent UNLESS: *Written agreement- Licensee has a written agreement with seller, now licensee is a seller's agent *Dual Agency- Licensee enters into a written agreement with both parties *Licensee IS seller- The Licensee is the seller or one of the sellers in a transaction *Written agreement otherwise- The parties (principal and agent) to the transaction agree otherwise in writing

Exempt From Licensing

-A person selling property for a person they have general power of attorney over -A public employee selling/buying on behalf of a local government -Auctioneers who only conduct auctions and no other real estate activities -A representative setting as estate or trust instrument -An "on-site" apartment manager leasing units -The sale or lease of mineral rights, cemetery plots, and hotel/motel rooms -A business owners employee selling property owned by the business

Residential Rental Locator

-A person who is paid to locate a unit in an apartment complex for lease to a prospective tenant -Does not include an owner who offers to locate a unit in their own complex

Duration of Agency Relationship

-An AGENCY RELATIONSHIP commences at the time a licensee undertakes to provide real estate brokerage services to a principal and continues to do so until the earliest of the following: *PERFORMANCE- Property is sold/purchased *EXPIRATION OF THE AGREEMENT *MUTUAL ASSENT- Licensee/principal agree to terminate contract -Duration is important (commissions are based off of this) -Once terminated, licensee owes no further duty other than: *ACCOUNTING OF FUNDS- Accounting for all moneys and properties received during relationship *CONTINUED FIDUCIARY CAPACITY- May not disclose confidential information -Notice of termination from client DOES NOT always apply - All buyers that you brought forward are active even AFTER agreement has EXPIRED -All properties you showed buyer are part of agency AFTER expiration ***YOU ARE STILL ENTITLED TO COMMISSION***

Dual Agent Duties

-Be loyal to both parties -Disclose any conflicts to both parties -Advise both parties to seek professional advice (legal matters) -Fiduciary capacity -Continuous effort to work with both parties -Multiple showings

Buyer's Agent Duties

-Be loyal to client -Disclose any conflict of interest in transaction -Advise principal to seek professional advice (legal matters) -Fiduciary capacity -Continuous effort to find property

Licensee Compensation

-Brokers Compensation: May be paid by the seller, buyer, 3rd party, or shared with another broker ***Commission DOES NOT form agency*** -Sharing Commission (seller): Seller may agree that their agent can share commission with another broker (buyer can do the same)

Public Member Eligibility/Ineligibility

-Cannot be registered or licensed with any real estate industry or state agency -Cannot be employed by or manage a firm regulated by the TREC -Cannot own more than 10% of the stock of any real estate firm -Cannot be married to anyone in the real estate industry -Cannot be a member of a real estate trade association Texas Trade Association- Nonprofit, cooperative, and voluntary joined statewide association of business or professional competitors designed to assist its members in dealing with mutual business or professional problems

Organizing Time Daily

-Check appointments -Office Requirements: -Check messages -Check front desk -Check mail -Now you are ready to organize your day

Substantive Dialogue

-DOES NOT include a dialogue at an open house or a meeting after the time of contract -IS A face to face meeting with a prospective client in which you are discussing properties -Written correspondence about specific properties -Provide the information about brokerage services statement

Types of Listing Agreements

-Exclusive Right to Sell: Allows the broker to earn the listing portion of the commission, NO MATTER WHO SELLS PROPERTY (broker OR seller) -There is a time period stated (usually 90 days) -Listing may not be terminated until that date -Brokerage firm must place sign and then remove the sign once listing is terminated -Exclusive Agency Sale: The broker DOES NOT earn the listing portion of the commission if the SELLER produces a sale -Net Listings: The broker's commission is the difference (net) between the sales proceeds and an amount desired by the owner of the real property -A broker may not take a net listing unless the principal requires a net listing and the principal appears to be familiar with current market values of real property -Open Listing: The seller is only obligated to pay IF THE BROKER BRINGS them a READY, WILLING, AND ABLE BUYER and the broker is the procuring cause -Broker MUST HAVE had to be primarily responsible for bringing the parties together ***Considered a NON-EXCLUSIVE Listing***

Creating An Agent- Principal Relationship

-Express Contract: Expressed between principal and agent *Must be written or oral agreement (Texas requires WRITTEN)

Organizing Time Weekly

-Finding prospects -Finish closings -Advertising -Records up to date/correct? -Entertainment (entertaining potential clients)

TREC Presiding Officer

-GOVERNOR appoints Presiding Officer (Head of Commission) -The Commission appoints Assistant Presiding Officer and Secretary -Position is selected on an ANNUAL basis -If the Administrator of the TREC discovers a problem with one of the six members, they must notify the Presiding Officer who will then notify the GOVERNOR

Agencies that Regulate the Real Estate Industry

-HUD -Department of Treasury -Federal Reserve -US Attorney General -FBI -Department of Justice (DOJ) -Federal Housing Act (FHA) -Commission on Civil Rights/Fair Housing -Department of the Interior -Department of the Veterans Affairs -Environmental Protection Act (EPA) -Federal Trade Commission (FTC)

Purchase and Sale Agreement

-If sales agent has any questions, they should call their broker for final approval -Every effort should be made to secure at least the down payment as earnest money -If the check or cash is taken as earnest money deposit, it is MANDATORY that it be turned in to the OFFICE or BANK IMMEDIATELY ***All deposits MUST be made WITHIN 2ND BANKING DAY AFTER RECEIPT IS GIVEN***

Liquidated Damages Clause

-If the buyer backs out of the sale, they forfeit their earnest money -The owner and the brokerage firm agree how much each will receive of the earnest money

Requirements for Business Entities

-Licensed Designated Broker: Corporation or LLC MAY NOT act as a broker UNLESS the entities designated agent is a license broker ***OWNERSHIP LESS THAN 10% OF A COMPANY REQUIRES A MINIMUM OF $1 MILLION IN ERRORS ANS OMISSIONS INSURANCE**

Local Agencies that Regulate Real Estate

-Local MLS (Multiple Listing Service) -Mayor/city planning commission -Local planning and land use bureaus -Local building departments -County tax assessor

Fiduciary Duties

-Loyalty -Good faith -Honesty -No self dealing -Integrity -Disclosure

Organizing Time Monthly

-Make time for office meetings -Catch up on any training needed -Farming (making connections)

Multiple Listing Services (MLS)

-Means of marketing property -When property is sold on MLS, commission is SHARED by listing brokerage firm, buyers brokerage, and MLS -There is a MLS fee for online listing -Sellers/buyers agents both get commission

An Express Contract- Written

-Most real estate contracts must be in writing as required under Statute of Frauds -Contracts that must be in writing: *Earnest money receipts *Property management agreements *Listing Agreements *Options Contract

Statutory Contract Forms

-Must be used unless seller/seller's lawyer draw up their own custom forms -Licensee can not alter forms -Statutory Listing Agreement must explain that: Commissions paid are negotiable and that living in coastal areas present dangerous natural hazards (hurricanes, flooding, etc.)

Appraisal Value Factors (Determining Property Value)

-Supply and Demand: Few homes available with many willing buyers means higher prices for homes -Competition: With many available homes and few buyers, appraisers must know the competitive areas and they must know the demands of the buyers -Characteristics of Property: -The highest and best use of property, -Plottage/Assemblage: Two or more tracts are merged into one parcel -Progression: Cheap house surrounded by nice houses increases value -Regression: Nice house surrounded by run down houses decreases value -Increase/decrease Returns: The seller spends money on improvements can either increase or decrease the value of the home

Seller's Disclosure Law

-Texas requires that sellers provide purchases with a WRITTEN disclosure statement regarding material facts or material defects about the property -Only seller or seller's legal representative can complete statement *Examples: heating/cooling info, environmental info, garages, building safety

TREC (Texas Real Estate Commission) Board

-NINE Commissioners -Commission appoints Administrator and Assistant Administrator -Commission determines salaries for all its employees -Commission has final say on the policies and responsibilities of the TREC -Commission has a "career ladder" program (those employed always have the opportunity to move up) -ADMINISTRATOR must enforce the discrimination program and provide an annual report regarding the efforts of the TREC to abide by federal and state discrimination laws and regulations -GOVERNOR delivers BIENNIAL REPORT to the legislature based on information received -This is done every TWO YEARS -TREC is responsible for Statute 1101/1102: Licensing of salespersons and brokers/Licensing of home inspectors -Statutes are written and voted by legislature and signed by the governor -"Rules" of TREC are written by nine commissioners -TREC establishes the Code of Conduct for licensees -TREC has the authority to look at records of brokers/salespersons at ANY time -Commission can subpoena you to appear at a hearing -ATTORNEYS GENERAL OFFICE is the POLICE FORCE on behalf of the TREC if a person refuses to cooperate -TREC provides real estate information to the public -Topics are chosen by the TREC -This includes info on the function and use of TREC, as well as public warnings regarding their rights in a real estate transaction -To let the public be aware of the Commission and its services, NOTICES MUST be posted for all to see -This includes posting notices within each RE office, on bills of service, RE websites, applications for a license, and brochures utilized by firms

Misrepresentation

-Negligent Misrepresentation: A failure to disclose a material fact out of ignorance when the broker should have known otherwise -Puffing: An exaggeration or an overstatement regarding the subject property. "This roof will last FOREVER!", "This is the prettiest house in the world!" -Intentional Misrepresentation: Knowingly making a false statement about a material fact

TREC Official Oath

-No later than the 15th day after the date of appointment, the appointee must take the constitutional oath -The Commission me,bears serve STAGGERED SIX YEAR TERMS, with the terms of TWO MEMBERS expiring 01/31 of each odd numbered year -The GOVERNOR appoints a person to fill vacancies

Occupations Code (Section 1101)

-Occupations code for real estate is 1101 -1101: License Act -Long Title for Code is: Practices and Professions Related to Real Property and Housing Professions Related to Real Estate "Person"- A person is any entity involved in a real estate business "Business"- A licensed real estate firm is a "person" by definition "Individual"- A licensed individual is a "person"

Accreditation and Approval of RE Educational Programs

-One of the main objectives of the Commission is to provide educational programs for licensees -Excludes programs and courses offered by accredited colleges -Schools must achieve benchmarks (certain percentage pass) in order to offer courses -When a private school is authorized to provide real estate education, the authorization is good for a TWO YEAR PERIOD -After two years, the real estate school will be required to apply once again for accreditation BOND PAYMENT -State Universities/colleges do not have bonding requirements -All other institutions are required to pay a $20,000 bond (payable to the TREC) -Bond money is for the benefit of a party who suffers damages caused by the failure of the institution to fulfill obligations related to the Commissioners approval REVIEW COMMITTEE -The TREC may appoint a committee to review performance of an educational program, which consists of: -ONE Commission member (at least) -ONE Commission staff member (at least) -Individuals licensee under 1101 and 1102 -Representative from TX Real Estate Research Center ***Review Committee MAY NOT revoke an institutions accreditation. They may ONLY temporarily suspend their license**

Daily Real Estate Practices

-Organizing -Goals -Communicating Properly -Carry through

Types of Manuals

-Policy and Procedure -Manager's -Office Staff's -Policy Manual for Agents

Listing Property

-Properly filling out a listing agreement is on of the most important tasks in real estate -It must be in WRITING to receive commission -Most listing agreements are BILATERAL (firm AND seller have obligations)

Stigmatized Property

-Property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features: -Murder/Suicide -Haunted -Illegal drug activity/Crime scene **TEXAS agents NOT REQUIRED to disclose this information

Educational Standard Advisory Committee

-Regularly reviews and revises curriculum standards, course content requirements, and instructor certification requirements for core and MCE courses -Committee consists of TWELVE members appointed by the TREC -SEVEN members must have be in RE for at least FIVE years -FOUR are real estate instructors/owners of real estate schools -ONE member represents the public

Working With Your Client/Marketing Plan

-Selling Price -Illegal negotiations -Never discuss clients lowest price willing to accept -Personal property willing to include in sale -What improvements have been made -What time line the client has in mind in regard to sales Marketing planning consists of: -Discussing the plan -Working with the client to devise the plan -Announce sale to neighborhood -List property on MLS -Tours of the home -For Sale signs in yard -Advertising property -Nice presentation of home (have homeowner pretend they're the buyer to help with sales preparation in house) -Figure out marketing costs

An Express Contract- Oral

-Some agreements may be on oral nature *Usually between licensees and are not covered by the Statute of Frauds *Agreements to split commission *Broker's Employment Agreement

Denial of License

-The Commission shall IMMEDIATELY give written notice to the applicant of the Commission denial of a license -Applicant has 20 DAYS after receivable of notice to APPEAL **OFFICE OF ADMINISTRATIVE HEARINGS (OHA) HANDLES ALL STATE APPEALS** PROBATIONARY LICENSE -Rather than deny a license, the Commission may issue a license that is immediately on probation -Can be revoked at any time, for any reason by the TREC

Selling Price

-The price the seller is willing to sell at -Seller's selling price is RARELY the price5e buyer offers -If the seller is willing to negotiate with the buyer, the actual selling price will be agreeable to both parties

What is agency?

-The relationship of principal and agent -Created by an agreement (actual agency) by ratification, estoppel, or as the result of the conduct of the parties and the agents inherent relationship with 3rd parties

Four Year Exemption

-There is a FOUR YEAR Statute of Limitations regarding any claimed injury by the public against a licensee -No anonymous complaints are accepted -TREC must notify the licensee unless it is an undercover investigation

Non Agency

-When a broker is working with a buyer or seller, but not representing them -Working with a "CUSTOMER", not a "CLIENT" -Acting as a "FACILITATOR"

Listing Agreement

-When a broker lists property for sale, a listing agreement is a contract between the seller and broker. A listing agreement specifies (amongst other things): -Address of property being sold -Legal description of property (KNOW) -Length of listing -Broker and brokerage company -Authorization to install key box -Attorneys fees -Plus MUCH more!!

Disclosure of Representation

-When making an appointment with a listing agent, or seller to show a property, a buyer's agent must disclose that he/she represents the buyer -ALWAYS provide "About Brokerage Services" form (informs parties only to POTENTIAL representation)

Agency Relationship (Dual)

-When the Licensee is affiliated with the broker who represents both parties -Requires written consent from BOTH buyer and seller

Zoning Considerations

-Zoning can increase or decrease property value Conformity: When the property is in harmony with the surrounding area, the property will be at a higher value -When it does not conform, the value will probably drop (appraised value)

Intermediary

A broker who is employed to negotiate a transaction between two parties and for that purpose may act as an agent of both parties. -This happens when two salespeople from the same brokerage firm represents the buyer AND seller -*THE BROKERAGE FIRM OR BROKER (not agent) is the intermediary -A broker can appoint a salesperson if he/she complies with the written consent requirements -LICENSEE holder CANNOT be hired as an Intermediary, only appointed by broker

Subagent/Subagency

A licensee engaged on behalf of a principal by the principal's agent where the principal has authorized subagents -You will work with buyers who are interested in property NOT listed with your broker. This makes you. SUBAGENT of the broker holding the listing -Being a subagent of the listing broker is called a sub-agency ***LICENSEE is agent for BROKER, BROKER is agent for PRINCIPAL.. THEREFORE, LICENSEE is SUBAGENT***

Dual Agent

A licensee who enters into an agency relationship with both the buyer and the seller in the same transaction

Seller's Agent

A licensee who enters into an agency relationship with only the seller

Characteristics of a Legal Contract

A listing agreement is a contract between the owner of a property and a brokerage firm MUST INCLUDE: -Offer and Acceptance -Competent Parties -Seller -Designated Broker -Legal Object (contract must have legal purpose) -Consideration (or value) by all parties -All purchase and sales agreements MUST meet all of the listen elements ***MUST BE WRITTEN***

Licensee

A real estate broker, associate broker, or real estate salesperson DUTIES: -Provide skills -Be honest -Present all offers -Disclose all material facts -Account in a timely manner -Provide pamphlet on the law of real estate agency before party signs an agency agreement, real estate transaction, dual agency consent or waivers. *Agency Disclosure- Disclose IN WRITING to all parties whether the licensee represents the buyer or seller/both or neither **LICENSEE NOT RESPONSIBLE for conducting inspections, investigating parties financial abilities or verifying the accuracy of statements by either party

Terminating An Agency AGREEMENT

Agreement may be terminated by means of: -Renunciation by the agent as long as no suffering/loss to the principal -Bankruptcy -Death -Insanity -Change of business conditions -Loss or destruction -Loss of qualification -Laws Change -War

Seller

An actual or prospective seller in a transaction or a landlord for a lease or rental

Buyer

An actual or prospective tenant in a transaction

Principal

Another name for a buyer or a seller who enters into an agency agreement with a licensee

License Fees for Brokers/Salespersons

BROKER -Original Application Fee: $605.00 plus $10.00 Recovery Trust Account fee -Annual Renewal Fee: No more than $640.50 -Broker Branch Fee: $50.00 per branch SALESPERSONS (Agent) -Original Application Fee: $205.00 plus $10.00 Recovery Trust Fee -Annual Renewal Fee: No more than $239.00 -License Exam Fee: $54.00 -Going from inactive to active: $40.00 via mail or $20.00 online -When a salesperson is not "sponsored" by a broker, they are considered inactive -If and when the TREC increases the fee for a brokers license: 25% goes to Texas A&M Research Center and 75% goes to general funds for the state of Texas

When Commission Is Due

Commission is due to broker/salesperson if/when: -Performance: If the house sells during the listing period -Sale After Expiration: If a broker's customer buys the home in a reasonable time period after the listing expires -Attempted Revocation: Seller CANNOT revoke a listing as an attempt to interfere with the broker's right to commission -Destruction of Property: If there is destruction of the property after either possession was taken by the buyer or title was transferred, COMMISSION IS STILL DUE -Refusal to Sell: If the broker provides an able, willing buyer and the seller refuses to sell or cannot provide marketable title, COMMISSION IS STILL DUE

Implied Agency Contract

Condoned Action- If an agent/licensee uses powers and goes beyond the agency agreement, and the principal fails to protest, these condoned actions re under an implied contract. ***IMPLIED BY THE PRINCIPAL FOR LACK OF LACK*** -Implied contracts are created by approval of actions, not written or oral agreement -The actions of the agent must be done with knowledge of the principal -Principal agrees to honor the unauthorized act either due to lack of action or by acknowledgment by the principal RATIFICATION- Lack of action on the part of the principal for a known wrongful action of their agent Agency Power- Principal takes no action, is therefor allowing the public to believe their real estate agent has the power Express Power- Act of non-action would somehow become part of agent's express powers by ratification of the written agency agreement

Office Procedures Manual

Contains: -Advertising guidelines -Sexual Harassment Policies -Process if turning in real estate related paperwork and the review of this paperwork -Licensee responsibilities -Brokerage responsibilities -Real Estate related forms use -Alcohol and Drug Policies -Hiring/Termination processes -Company Procedures

Procedures Manual

Contains: -Guidelines for success -Office appearance -Personal appearance -Office hours -Holidays -Company listings -Expired listings -MLS listings -Sales Meetings -Office tour -Smoking Policy/locations around Office -Telephone use -Floor time availabilities -Client protection -How to handle disputes -Commissions -Awards Status -Referrals

Terminating An Agency CONTRACT

Contract may be terminated by: -Mutual Agreement (RECISSION) -Expiration Date -Fulfillment of purpose (SALE) -Revocation by the principal/client if there is no injury to the agent/broker *If The listing is "agency coupled with an interest" it CANNOT be unilaterally terminated by seller

Carry Through

Doing what you say: -Forms: Follow up on potentials -Escrow: Get info they need -Appointments: Don't Be late -Office Requests: Office needs something, don't put it off -All promises: Carry out

License Requirements

General Requirements -Must be 18 -Must be a US citizen -Must live in Texas -Must prove honest and trustworthy -Must demonstrate competency (pass exam) -Moral Character Determination: If an applicant has a felony conviction on their record, this individual can apply to the Commission for a ruling PRIOR to beginning classes so that they don't waste their money/get turned down after they complete their classes -Notice of Determination: Not later than the 30th day AFTER THE DATE THE COMMISSION MAKES ITS DETERMINATION, the Commission will notify the person of determination -Further Investigation Possible: The Commission may conduct a supplemental moral character determination even AFTER passing the first -FINGER PRINTS MUST be taken WITHIN SIX MONTHS of the date a person applies for an inactive license

Material Fact

Information that substantially affects the value of property or a party's ability to perform

Agency Relationship

Is created by a written agreement between a licensee and a buyer and/or seller relating to performing brokerage service

Business Opportunity

Is real estate business, real estate business opportunity, or goodwill of an existing business, or a combination of all

Gathering Listing Information

Listing information must contain: -Property Profile Details Report (obtained from county tax records or title company) -Photos of property -Information on occupants (when will they move out, when are they home, when will best time to show) -Seller's Disclosure Statement -Timing for selling property -Showing of property -Information about comparative sales

Loan Underwriting/Applying for a Loan (Buyer)

Loan Underwriting- Verification of borrowers information (salary, debt, etc.). Looking over the information and determining the amount of funds needed -Appraisal Requirements: The lender wants to be certain the value of the home will cover the issued loan amount -Loan Commitment: Stated amount the lender will loan -Loan Approval: The figures the lender will contractually meet -Contingencies: A specified event that must occur to make the contact binding -Most common is financing on the part of the buyer

Market Value/Appraised Value (Seller Consideration)

Market Value- Developing a Comparative Market Analysis (CMA) to determine the fair market value of the home -CMA works up a comparison of similar property in the area where the seller's property is located -Gives you and your client comparison pricing to determine the listing price Appraised Price- Licensed appraiser determines an opinion of the market value by comparing recently SOLD properties in the area Assessed Value- The county will have an assessment of value on record for property tax purposes (often lower than appraised value) -Property tax is based on assessed value

Principal Reliance

Principal relies on broker to protect their interests in real estate transaction

Duties of Seller/Principal

SELLER MUST PROVIDE: -Accurate Information -Accurate records -Assume legal liability -Proper acts (principal gives authorization for specific actions of agent) -Improper acts (Principals know of agents wrong doings)