Law of Agency 1151
DTPA
A Texas law that was passed in 1973 that allows an aggrieved consumer to sue a seller of goods for damages.
Intermediary
A brokerage firm represents buyers and sellers
Buyer agency only
A brokerage firm will only represent buyers.
Seller agency only
A brokerage firm will only represent sellers.
Myra owns Dirt Cheap Realty and is representing Owen in the sale of a home. Owen has durable power of attorney for his elderly mother, who is incapacitated, and he is helping his mother liquidate her assets. Shortly after Myra lists the home, Owen decides to sell the home to his niece, Kristina, who is just moving back to the area. Myra recommends that she be allowed to represent both parties and indicates that she can save them money this way because she will do the whole transaction for only 4%. They agree to allow Myra to represent them both because they believe this will help Kristina pocket the extra 2%. Kristina is a bit concerned about buying an older home because of the maintenance and upkeep. When Myra is showing the home, she proudly discusses the "new roof" that Owen had put on about two years ago. Myra has heard good things from a couple of other license holders about the roofer, so she tells Kristina that the roofer only uses the top-of-the-line material, so the roof should last a very long time. Myra mentions that most people get a home inspection, but Kristina declines to have the home inspection since her uncle is selling the home. Shortly after moving into the home, Kristina finds out that the roof leaks when it rains, and the roof has two layers of shingles. Only the top layer is relatively new, and the underlayment is badly deteriorated in places. The roof decking is rotten in several places and needs to be replaced. The roofer recommends that Kristina have the entire roof re-done and gives her a price quote of $10,000. If a lawsuit is filed, all of the following defenses could potentially help Myra EXCEPT: a. A signed seller's disclosure that provides details about how the roof was actually installed b. A certificate showing that Myra took an online class about visual roof inspections c. A signed document showing that Myra advised Kristina to get a home inspection, but Kristina declined to do so d. Written documents from the roofing contractor, which show that Myra was basing her statements on their written claims and guarantees
A certificate showing that Myra took an online class about visual roof inspections
Representation disclosure
A license holder who represents a party in a proposed real estate transaction shall disclose that representation at the contact with other parties to the transaction and to the license holders who represent them
Broker Bradley currently sponsors one agent, Ryan, at his firm XYZ Realty. Ryan has been at XYZ Realty for two months and has listed 3 properties in Bradley's name. Ryan was an agent in California, where dual agency is one of the statutory positions of an agent and has not worked an Intermediary transaction as of yet. He, like many new agents, is still a little confused as to how the process works. Monica is a buyer who contacted XYZ Realty to show her all of the homes for sale in a large neighborhood near XYZ Realty. Assume that at this stage of the process, Monica is merely an unrepresented buyer-customer. 3. If XYZ Realty, with Monica as the client, proceeds with the transaction using Intermediary without Appointments, which one of the following liability issues could he be facing?
A party to the transaction, either Monica or the seller, may later claim that he or she was not treated equally and paid too much or received too little in the transaction.
Customer
A person who receives limited brokerage services without establishing an agency relationship
Cooperative Sale
A property is sold by a firm other than the listing firm
In-house sale
A property is sold by the listing firm or A transaction in which a broker is on both the listing and selling side
_____ + _____= Production.
Activity, Consistency
Agent
Acts for or on behalf of another person
An agency relationship exists when one person, the _____, acts for or on behalf of another person, the _____.
Agent , Principal
Client
Also known as the principal
Honest dealing
An agent may not deceive or defraud a customer
Misrepresentation
An assertion or statement by words or conduct that is not in accordance with the facts.
Statuary Defenses
Arise out of law
Counseling
Assisting buyers arrive at a realistic offer for a property and helping them negotiate
TREC's Advertising rules require sales agents to include the broker's name, the brokerage name, or the broker's _____ in at least 50% of the largest contact information font on all forms of advertising.
Assumed name
Fiduciary
Based on trust
Broker Bradley currently sponsors one agent, Ryan, at his firm XYZ Realty. Ryan has been at XYZ Realty for two months and has listed 3 properties in Bradley's name. Ryan was an agent in California, where dual agency is one of the statutory positions of an agent and has not worked an Intermediary transaction as of yet. He, like many new agents, is still a little confused as to how the process works. Monica is a buyer who contacted XYZ Realty to show her all of the homes for sale in a large neighborhood near XYZ Realty. Assume that at this stage of the process, Monica is merely an unrepresented buyer-customer. 2. If Monica becomes a client and wants to purchase one of XYZ Realty's listings, what CANNOT happen?
Broker Bradley can choose Intermediary with Appointments and work as the listing agent in the transaction.
_____ have the right to determine what business relationships they choose to enter into, so long as they comply with federal fair housing laws.
Brokers
The agreement that buyers sign allowing a broker to represent them is called a _____.
Buyer/Tenant Representation Agreement
Substantive dialogue
Communication that involves a specific discussion that relates to a specific property
Subagency
Created automatically with no discussion or action needed on the part of a brokerage firm
Buyer Representation Agreement
Creates buyer agency
_____ is the act of harming the reputation of another person by making a false statement to a third person either by slander (spoken words) or libel (printed words).
Defamation
The commission can deny licensure to an applicant based on the applicant's _____.
Determination of fitness
Buyer agency agreements may be created orally or in writing, but by far the best method is to do so orally.
False
Commission rates and any other means by which brokers are compensated by sellers and buyers are never negotiable between the parties.
False
Sherman Anti-Trust Act
Federal legislation that specifically deals with illegal fixing of commission rates
According to TREC's advertising rules, which of the following terms MUST be used in a real estate team name?
Group
Defamation
Harming the reputation of another person making a false statement to a third party
Broker Bradley currently sponsors one agent, Ryan, at his firm XYZ Realty. Ryan has been at XYZ Realty for two months and has listed 3 properties in Bradley's name. Ryan was an agent in California, where dual agency is one of the statutory positions of an agent and has not worked an Intermediary transaction as of yet. He, like many new agents, is still a little confused as to how the process works. Monica is a buyer who contacted XYZ Realty to show her all of the homes for sale in a large neighborhood near XYZ Realty. Assume that at this stage of the process, Monica is merely an unrepresented buyer-customer. 1. What should Agent Ryan do before showing Monica any of the listings in the area?
Have her sign a Buyer's Representation Agreement with him
In Texas, there is no _____ agency relationship with any party to a transaction.
Implied
What form must an agent provide to a potential client at the first substantive discussion of a real estate transaction?
Information About Brokerage Services
Broker Steve, having no agents, is a solo practitioner in the state of Texas. He has a buyer-client who wants to purchase one of his listings. The process that Broker Steve must use is:
Intermediary without appointments
Geographic Farming
Marketing to a specific area or location; a great way license holders can market
Myra owns Dirt Cheap Realty and is representing Owen in the sale of a home. Owen has durable power of attorney for his elderly mother, who is incapacitated, and he is helping his mother liquidate her assets. Shortly after Myra lists the home, Owen decides to sell the home to his niece, Kristina, who is just moving back to the area. Myra recommends that she be allowed to represent both parties and indicates that she can save them money this way because she will do the whole transaction for only 4%. They agree to allow Myra to represent them both because they believe this will help Kristina pocket the extra 2%. Kristina is a bit concerned about buying an older home because of the maintenance and upkeep. When Myra is showing the home, she proudly discusses the "new roof" that Owen had put on about two years ago. Myra has heard good things from a couple of other license holders about the roofer, so she tells Kristina that the roofer only uses the top-of-the-line material, so the roof should last a very long time. Myra mentions that most people get a home inspection, but Kristina declines to have the home inspection since her uncle is selling the home. Shortly after moving into the home, Kristina finds out that the roof leaks when it rains, and the roof has two layers of shingles. Only the top layer is relatively new, and the underlayment is badly deteriorated in places. The roof decking is rotten in several places and needs to be replaced. The roofer recommends that Kristina have the entire roof re-done and gives her a price quote of $10,000. 1. When Myra told Kristina that the roofing contractor only uses "top-of-the-line material" and that the roof should last a very long time, she was most likely guilty of:
Misrepresentation
Fee-splitting arrangements between brokers are often established in the _____.
Multiple Listing Service
A broker who acts as an intermediary in a transaction:
Must treat all parties honestly
Nick is looking for a home and calls Anna at Acme Real Estate Agency to inquire about several properties he saw online. Anna mentions that she represents ACME Real Estate Company and its clients. She also takes Nick's contact information and asks in-depth questions about his needs and wants. Nick states that one of the most important considerations for him is that the home is in a neighborhood that has the highest likelihood of increasing in value. Anna advises Nick about several neighborhoods and recommends some properties that she thinks might be just right for him. She also sends Nick an email with some details about each of the homes. Anna then asks Nick if he would like to schedule an appointment with her to view the properties, and he agrees.3. What course of action could be taken if Anna works hard to find Nick a home, but he goes through a different license holder to submit the contract and buy the home?
No one may file a suit for the commission since they did not have a signed agreement to establish agency
Is an unlicensed assistant permitted to open doors for prospective buyers or tenants?
No, unlicensed assistants are not permitted to show properties for licensed sales agents, this includes opening doors for prospects
The duties we know as _____ apply in all states, and understanding these duties on the highest level establishes the agent's creditability and competitive standing in the marketplace.
OLDCAR
Intermediary with appointments
Occurs when a broker appoints associates within a brokerage firm to represent the listing and selling side of a transaction
Intermediary without appointments
Occurs when an agent sells his or her broker's own listing, but cannot give advice or negotiate for either party
_____ agreements are enforceable against the client, but are not enforceable against the agent.
Oral
_____ lending occurs when an unscrupulous lender takes advantage of a consumer's lack of knowledge regarding lending practices.
Predatory
Steven, a sales agent, signed an independent contractor agreement with broker Jean-Yves. JeanYves is now Steven's _____.
Principal (They are independent contractors engaged in a principal-agent relationship)
An example of a general agent in the world of real estate would be a(n) _____.
Property manager
Indemnification
Protection against damage or loss
_____ uses adjectives and opinions rather than details or facts and is not considered misrepresentation.
Puffing
The IRS requires the independent contractor pay a deposit for the agent's estimated tax liability on a ______ basis.
Quarterly
Unlicensed assistants may not:
Receive a commission on a real estate transaction
Risk Management
Reducing and managing the legal issues involved with doing business
Producing cause
Requires proof that an act or omission was a significant factor in bringing about injury
The commission charged is negotiated between ___ and the ___.
Seller, Broker
Price fixing
Setting commission rates between groups of brokers in an area
Nick is looking for a home and calls Anna at Acme Real Estate Agency to inquire about several properties he saw online. Anna mentions that she represents ACME Real Estate Company and its clients. She also takes Nick's contact information and asks in-depth questions about his needs and wants. Nick states that one of the most important considerations for him is that the home is in a neighborhood that has the highest likelihood of increasing in value. Anna advises Nick about several neighborhoods and recommends some properties that she thinks might be just right for him. She also sends Nick an email with some details about each of the homes. Anna then asks Nick if he would like to schedule an appointment with her to view the properties, and he agrees. 1. What did Anna do that could expose her and her broker to liability?
She did not provide him with the Information About Brokerage Service (IABS)
The federal laws that have the greatest impact in the area of price fixing are the _____ Anti-Trust Act and the _____ Act.
Sherman, Clayton
Seller Kristin meets with agent Angel and likes his plan for marketing her home. She decides to sign a listing agreement with him, thereby creating a _____ relationship.
Special agency
Which of the following is grounds for suspension or revocation of a real estate license by TREC?
Splitting a commission with a person other than a license holder
_____ can suspend or revoke a sales agent's license under a DTPA violation.
TREC
Which of the following would NOT be an example of the fiduciary duty of reasonable care?
Taking the buyer or seller out to dinner when the transaction closes a. Helping the client meet contract deadlines b. Assisting the seller to arrive at a reasonable listing price c. Discovering relevant facts and disclosing these facts to the client d. Taking the buyer or seller out to dinner when the transaction closes
Disclosure of representation is required by the _____.
Texas Real Estate License Act
TREC has included _____ for real estate license holders in the Rules of the Commission.
The Canons of Professional Ethics and Conduct
Broker Susan is representing the seller at We Sell it Fast Realty while Broker Daniel from Daniel Daniels's Properties is working with a buyer customer. Susan is representing the seller. Who is Daniel representing?
The Seller
Reasonable care
The agent is held to the standards of knowledge, expertise an ethics defined by TRELA
One of the advantages of practicing intermediary is:
The brokerage collects both the listing and selling commissions
Selling side
The buyer retains the services of a broker
Senate Bill 489
The legislation that gave the industry the Intermediary process
Myra owns Dirt Cheap Realty and is representing Owen in the sale of a home. Owen has durable power of attorney for his elderly mother, who is incapacitated, and he is helping his mother liquidate her assets. Shortly after Myra lists the home, Owen decides to sell the home to his niece, Kristina, who is just moving back to the area. Myra recommends that she be allowed to represent both parties and indicates that she can save them money this way because she will do the whole transaction for only 4%. They agree to allow Myra to represent them both because they believe this will help Kristina pocket the extra 2%. Kristina is a bit concerned about buying an older home because of the maintenance and upkeep. When Myra is showing the home, she proudly discusses the "new roof" that Owen had put on about two years ago. Myra has heard good things from a couple of other license holders about the roofer, so she tells Kristina that the roofer only uses the top-of-the-line material, so the roof should last a very long time. Myra mentions that most people get a home inspection, but Kristina declines to have the home inspection since her uncle is selling the home. Shortly after moving into the home, Kristina finds out that the roof leaks when it rains, and the roof has two layers of shingles. Only the top layer is relatively new, and the underlayment is badly deteriorated in places. The roof decking is rotten in several places and needs to be replaced. The roofer recommends that Kristina have the entire roof re-done and gives her a price quote of $10,000. What conditions are present in this situation that give Kristina the right to file a lawsuit against Myra and Dirt Cheap Realty?
The misrepresentation was a key element in Kristina's decision to purchase the property, and she was harmed by the purchase.
Dual agency
The practice that allows a real estate firm to represent both the buyer and seller with their written permission
The individual who, through a series of uninterrupted activities or actions, brought about the completion of a contract is also known as _____.
The procuring cause of sale
Listing side
The seller retains the services of a broker
A phrase one could use after the buyer has signed the buyer representation agreement might be: "Okay, now let's talk freely about the house, price and terms you want to find."
True
Any attempt to take short cuts and avoid compliance requirements will create possible license revocation or suspension by TREC.
True
Clarity in compensation is one of the many good reasons to insist upon a written buyer representation agreement.
True
Only a broker may earn a commission and only a broker may sue to collect a commission.
True
Prior to discussing the needs and wants of the buyer, the buyer should be provided the Information About Brokerage Service agency information form as required by the Texas Real Estate License Act.
True
The ABR® designation takes the fundamentals of agency law and looks deeper.
True
The listing broker does not have to agree in the listing agreement to split the fee with a cooperating broker.
True
The subagency relationship was not to the buyer's advantage. It was more in favor of the seller, and awkward for the broker.
True
Puffing
Using adjectives and opinions rather than details or facts
The _____ Approach to ethical standards is defined as ethical action that produces the best balance of good over harm.
Utilitarian
A broker's responsibility for disclosure is limited to areas:
Visual inspection
Consistency
When coupled with activity, the result is production.
Under DTPA, a residence is defined as _____.
a. A single-family house b. A unit in a multi-unit complex c. A condominium or cooperative system d. All of these qualify as a residence under DTPA D
Nick is looking for a home and calls Anna at Acme Real Estate Agency to inquire about several properties he saw online. Anna mentions that she represents ACME Real Estate Company and its clients. She also takes Nick's contact information and asks in-depth questions about his needs and wants. Nick states that one of the most important considerations for him is that the home is in a neighborhood that has the highest likelihood of increasing in value. Anna advises Nick about several neighborhoods and recommends some properties that she thinks might be just right for him. She also sends Nick an email with some details about each of the homes. Anna then asks Nick if he would like to schedule an appointment with her to view the properties, and he agrees. 2. When Anna meets Nick for the appointment, she spends a few minutes discussing representation and explains the advantages of allowing her to represent him in the purchase of a home. Nick agrees that she should represent him, but he states that he will not sign the Residential Buyer/Tenant Representation Agreement. He prefers an oral agreement and states that he has always been true to his word. What is one of the most important facts for Anna to consider when entering into an oral agreement?
a. She might not get paid.
Which of the following is TRUE regarding intermediary rules for a transaction?
a. The transaction must be an in-house sale. b. Both sides of the transaction must be clients of the broker. c. The broker must have written consent from both parties. d. All of these are true. D
What are the duties and obligations of an Intermediary?
a. To treat all parties fairly b. To decide whether or not to appoint associates c. To obtain written consent from both parties to act as the intermediary d. All of these are duties and obligations of an intermediary D
What does the Consumer Protection Notice (CN1-2) give consumers notification of?
a.How to file a complaint against a license holder b. The Recovery Trust Account c. TREC regulates brokers, sales agents, and inspectors, among others d. All of these D
A benefit of a _____ relationship is assistance in obtaining financing.
buyer-agency
A seller is a customer or in a third-party relationship with the broker until he or she becomes a(n) _____.
client
Real estate license holders who make _____ must comply with the requirements of the National Do-Not-Call Registry.
cold calls
An agent may not _____, _____, or otherwise deal with a customer in a dishonest manner.
deceive, defraud
The listing agreement or buyer representation agreement is a(n) _____ contract.
employment
The license holder must disclose all facts that he or she knows of or should reasonably be expected to know that _____ affect the value of or desirability of the property. This includes disclosure of agency, property condition, and environmental hazards.
materially
Most litigation over the payment of real estate commissions arises from disputes over who was the _____ of sale.
procuring cause
When written provisions are in conflict with oral provisions, the _____ ones virtually always prevail.
written
