Ch. 4 Agency and it's Responsibilities

At most, only $______ of the broker's personal funds can be in a trust account.

$200

personal assistants

(term) handles things like: clerical tasks, paperwork, marketing, tickler files, and conduct computer research.

absolute auction

(term) is an auction where the property must be sold to the highest bidder, not matter how low the final bid.

ratification

(term) is approval/confirmation of a transaction which has already taken place.

express authority

(term) is created by the contract of the principal which completely and precisely delineates those activities which the agent is authorized to undertake.

implied authority

(term) is the authority that a third person reasonably believes an agent possesses because of the acts or omissions of the principal.

commingling

(term) is the mixing together of the funds of a principal and a licensee. This is in violation of the Commissioner's Regulations. Opposite of segregating.

conversion

(term) is the unlawful misappropriation and use of a client's funds by a licensee.

no-sale auction

(term) is where there is a minimum bid underlying each property so that a certain price must be reached before the property will be sold

estoppel

(term) prohibits the principal from denying that a person is his or her agent if the principal has misled another to his prejudice into believing that person is the agent.

transaction coordinators

(term) responsible for: organizing forms, disclosures and other documents necessary to complete a property sale and are often paid per transaction.

Where do you need to have your real estate license number?

- business cards, stationary, advertising materials - websites, email, and regular mail - first point of contact with a consumer, including any purchase agreements

What are two other listings? aside from open and exclusive

- net listing: must be used with another type of listing, stating that anything above the minimum price will be the broker's commission. - option listing: must be disclosed to everyone, option for the broker to buy the listing.

What are the 5 forms in a listing package?

1. AD: disclosure regarding real estate agency relationship 2. PRBS: possible representation of more than one buyer or seller - disclosure and consent, CAR form 3. WFA: wire fraud and electronic funds transfer advisory - CAR form 4. RLA: residential listing agreement (exclusive authorization and right to sell) - CAR form 5. SA: seller's advisory - CAR form

3 basic rules from the California Civil Code for responsibilities of an agency.

1. Agent must inform the principal of all material facts pertaining to the handling of the principal's property. The agent must put client's interest above interest of self or others. 2. Agent can't gain any monetary interest in property without principal's prior consent. 3. An agent may not use the principal's property to his or her own advantage.

5 circumstances for ratification

1. agent must have professed to act as a representative of the principal 2. The principal must have been capable of authorizing the act both at the time of the at and at the time of ratification (i.e. sometimes the promoters of a proposed corporation make contracts on its behalf, but the corporation cannot ratify them -- though it may achieve the same result by other means). 3. The principal must have knowledge of all material facts (unless ratification is given with the intention to ratify whatever the facts may be). 4. The principal must ratify the entire act of the agent, accepting the burdens with the benefit. 5. The principal must ratify before the third party withdraws.

3 consequences for an agent not disclosing dual agency to both parties

1. be disciplined 2. not receive a commission 3. it will be grounds for either party to rescind the contract

What are the three steps of agency disclosures?

1. disclose 2. elect 3. confirm

5 things where a DRE license is required in return for compensation.

1. sell or offer to sell 2. buy or offer to buy 3. solicit prospective buyers or sellers 4. negotiate purchase, sale, loan, or exchange of business opportunities or real estate 5. negotiate leases and collect rents

What are some things the Seller's mandatory disclosure duties include (though not limited to)?

1. transfer disclosure statement 2. natural hazard disclosure statement 3. lead disclosures 4. ordnance disclosures

What year did the Real Estate Agency Relationship Disclosure Act (civil code) become law?

1988

A buyer has _____ year(s) to sue an agent for failure to make proper disclosures in the Transfer Disclosure Statement.

2 years

listing

A (term) is a contract to employ a broker as an agent, to do certain things for the owner/seller. It is an employment contract for personal service.

Real Estate Broker

A broker's license holder (boss/owner) and therefore permitted by law to employ those individuals holding a salesperson's license (or another broker).

Broker Associate

A licensed real estate broker working in the capacity of a salesperson for another broker or corporation.

Real Estate Agent

A period licensed by the DRA (california department of real estate) who holds either a broker's or salesperson's license and negotiates sales for other people.

Real Estate Salesperson

An individual holding a salesperson's license who must be employed by a real estate broker to perform any of the activities of a real estate broker.

Real Estate Associate or Associate Licensee

Another name for a real estate salesperson

CAR

California Association of REALTORS®

AD form

Disclosure Regarding Real Estate Agency Relationship.

True or False. Advance fees are legal in California.

FALSE. Advance fees, from anyone including lawyers/real estate brokers, are ILLEGAL in California. No money is to be asked for upfront.

T or F. An agent of licensee is either a broker or a salesperson who works for a broker. All listings belong to and are owned by the salesperson.

FALSE. All listings are owned by the broker.

T or F. Brokers (either individually or through their associate licensees) may work with only ONE prospective buyer at the a time

FALSE. Brokers can work with many prospective buyers at the same time

T or F. The TDS is not necessary for an "as is" sale of a single-family residence when being offered for sale by owner.

FALSE. The Transfer Disclosure Statement is REQUIRED

What was the outcome of Easton vs. Strassburger in 1984

Legally, the listing broker and the buyer's broker must conduct a reasonably competent, diligent, and "visual inspection" of accessible areas of the property and disclose to a prospective buyer all material facts affecting value and desirability.

PRBS form

Possible Representation of More Than One Buyer or Seller - Disclosure and Consent. Informing seller and/or buyer that as an agent you may be working for more than one seller/buyer.

RLA form

Residential Listing Agreement (exclusive authorization and right to sell) form. The form used to "take a listing" whereby the seller gives the agent/broker the authority to sell his or her property, under what conditions, and during a particular time period. It also includes escrow instructions.

RLA

Residential Listing Agreement (total of 5 forms from CAR's).

SA form

Seller's Advisory form. Accompanies the RLA.

T or F. Agency Disclosure form may be used in connection with a transaction for a leasehold interest exceeding one year.

TRUE

T or F. A broker/agent can pay a finder's fee to an unlicensed individual only for introducing a client to the broker/agent.

TRUE.

T or F. A licensed salesperson can only work for one licensed real estate broker at a time.

TRUE.

T or F. If the seller's agent informs the buyer that the seller will take less than the list price, the agent violates the fiduciary duty of confidentiality to the seller.

TRUE.

T or F. An unlicensed employee of a broker who is authorized in writing can make withdrawals from the broker's trust account.

TRUE. Provided the employee is covered by a "fidelity bond" for at least the amount of funds to which the employee has access at any given time.

Agency

The action where the seller gives the right to representing him/her in the sale of property and the broker agrees to use diligence in obtaining a purchaser.

material facts

These types of facts are so important that failure to disclose them may affect financial decisions of the parties to the transaction.

MLS: multiple listing service

This (Term) is an association of real estate brokers that provides a pooling of listings, recent sales, and the sharing of commissions on a specified basis.

safety clause (aka Broker Protection clause)

This (term) clause in a listing is a negotiated period (any agreed to time period) after the termination of a listing in which the listing broker may still be entitled to a commission.

fiduciary and fiduciary relationship

This (term) is a person acting in a position of trust and confidence in business relationship. This relationship requires the highest good faith from the agent to the principal.

TDS Transfer Disclosure Statement

This (term) is a transitional step between the "listing package" and the "purchase agreement package." It must be provided to a prospective buyer at the time he or she indicates an offer is going to be made. Pretty much give the TDS to the prospective buyer at the earliest moment.

Agent

This (term) is the one who acts for and with authority from the principal to represent the principal in dealing with third parties.

customer (aka THIRD PARTY)

This (term) is the other person in a contractual negotiation, other than the principal or agent. (two terms)

client (aka PRINCIPAL)

This (term) is the person who hires and authorizes an agent to work for him or her. (Two terms for this)

open listing

This (term) type of listing is an authorization to sell a property. It may be given to several brokers or the property may be sold by the owner. not commonly done because of its uncertainty and expense of advertising when working this type of listing.

exclusive agency listing

This (term) type of listing provides that only one agent (the listing broker) has the right to be the only person, other than the owner, to sell the property during a specified period and earn a commission. The owner can still independently sell the property without paying a commission to the listing broker.

what is a "pocket listing?"

This is an unethical practice of not giving a new listing to the MLS until the listing broker first tries to sell that listed property through only the other agents within the company

T or F. According to the Civil Code, in real property dealings, the ratification must be generally in writing.

True.

What is a buyer's agency?

Where the agent represents the buyer only.

WFA form

Wire Fraud and Electronic Funds Transfer Advisory form.

Real Estate laws related to real property in California apply to 1 to _____ - unit residential property, commercial property, vacant land, and industrial property.

four

What must be filled in on the RLA - residential listing agreement?

the RLA exclusive has to have the END DATE filled in

A transaction file is kept for _____ years.

three

dual agency

when the agent is representing both buyer and seller