Section 4, Unit 4: Agency Relationships in California

Designated agency

(also called appointed agency) is one way that states allow individual agents to avoid dual agency. The broker-in-charge designates two of the brokerage's agents: one to represent the buyer and one to represent the seller. In such a scenario, the two agents are designated agents, and the broker is a dual agent in the transaction. The two designated agents and the broker must generally follow rules that attempt to protect the clients' interests. This allows each client to have the benefit of single agency, but the brokerage earns the commission from both sides in the transaction.

Define a sub-agent

A licensee who works for Firm A, but who is engaged with Firm B to perform agency functions on behalf of Firm B's client.

Marge is a licensee in a dual agency transaction with seller Steven and buyer Alda. In which of the following situations can Marge share what she knows with all parties without compromising her duty of loyalty?

Alda tells Marge that she's hired an inspector to perform a property inspection.

Cooperating Agents

An agent from another firm who assists another firm's agent (generally, the listing agent) in a real property sale. A cooperating agent from another firm may be a buyer's agent or a sub-agent. It's common practice for the listing firm to split its commission with the cooperating firm that brings the buyer to the table.

Single agents can or cannot advise on? Real estate.

Can

Single agents can or cannot advise on? Appraisal amount.

Cannot

Single agents can or cannot advise on? Legal items related to the transaction.

Cannot

Single agents can or cannot advise on? Mortgage qualifying.

Cannot advise

A licensee has several tasks to perform for seller clients. What's one of those tasks?

Communicate all offers and counter-offers to the sellers.

Natalie is selling her home and has hired Dylan as her agent. Natalie has given Dylan permission to enlist the services of another licensee, Al, to act as a sub-agent for the transaction. Who is liable for Al's actions?

Dylan, Natalie, and Al

Which one of the following tasks must licensees perform for seller clients?

Ensure that the buyer's earnest money is deposited.

A licensee must perform which of the following tasks for a buyer client?

Ensure the buyer understands the importance of due diligence, including a professional inspection of the property.

Single-licensed dual agency

Exists when one licensee represents both the buyer and seller in a transaction. In that case, the licensee is the dual agent, and his broker is also a dual agent.

Dual licensed dual agency

Exists when two agents from the same brokerage represent the buyer and seller in a transaction. For example, Rory and Dawn both work for ABC brokerage. Rory is a listing agent for a property. Dawn's client makes an offer on that property. Because Rory and Dawn both work for the same broker, this is dual agency (sometimes called in-house agency). Their broker is also filling the role of dual agent in the transaction.

If a listing agent enlists a sub-agent, both the agent and their client are liable for the sub-agent's actions. T/F

False

The MLS in California requires agents to engage in sub-agency. T/F

False

8 WAYS TO TERMINATE AGENCY

Goals of agency agreement met Specified term in agreement met Mutual agreement Client or agent becomes incapacitated or dies Property is destroyed and unmarketable Client or broker files for bankruptcy Client revokes the agreement Agent renounces the agreement

Broker Adeline's firm has a listing for a condo downtown. Maurice is a cooperating agent. What does this mean?

He's from another brokerage and brings a potential buyer for the listing.

Estelle is representing seller Margaret. Which of the following tasks is one that Estelle is required to perform as Margaret's agent?

Inform Margaret about required property condition disclosures.

Bradley is acting as a finder for Emma. Which action can he perform?

Introduce Emma to the seller (or buyer)

Which of the following is an example of a sub-agency situation?

Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group, and he has a buyer customer who wants to see the property.

Melinda is selling her home and has hired Megan as her agent. Megan enlists the services of another licensee, Alison, to act as a sub-agent for the transaction without permission from Melinda. Who is liable for Alison's actions?

Megan and Alison only

PRINCIPAL

Represented party to a transaction (A "party" is the generic term for anyone in the transaction that's represented. The client is the one you represent and the customer is the other guy)

What responsibility does the seller's agent have to the seller?

Seek a sale at the best price at terms that are acceptable to the seller.

Monica's business is booming. She's representing an owner who's selling a $500,000 home on one side of town, and a buyer who's purchasing a $300,000 property on the other side of town. As it happens, the seller and buyer both know each other from church and have been talking to others about Monica's talents, which has brought in several new leads for her to pursue. What type of agency relationship does Monica have with the seller and buyer?

She is each party's single agent.

If you represent the buyer and seller in the same transaction, what type of agency relationship do you have with your clients?

Single-licensed dual agency

CLIENT

Someone you work FOR (owed all agency duties)

CUSTOMER

Someone you work WITH (owed honesty, fairness, disclosure of material facts)

Dual agency involves an inherent conflict of interest. You may only engage in dual agency if:

State law allows it, and you follow the state law. Your brokerage specifically allows it according to the written rules your broker has established. Both the buyer and seller consent to you acting as a dual agent.

After a few meetings, the Stinsons sign a listing agreement with broker Vera so she can sell their house. The house has already generated interest from a potential buyer named Sergei, who has spoken with Vera about the house's price and square footage. Which of the following is true about this situation?

The Stinsons and Vera have brokerage relationship agreement.

In a buyer agency relationship, whom does the licensee represent?

The buyer

Assuming that dual agency is legal where these scenarios occur and that the licensees' brokerages permit it, which of these situations demonstrates illegal dual agency?

Tom is holding an open house for his client. Ruby, a buyer, says she wants to make an offer. She details her situation; Tom waits until she finishes and then suggests that she offer a non-refundable earnest money deposit to strengthen her offer.

If a client gives their agent permission to enlist a sub-agent, both the client and their agent are liable for the sub-agent's actions. T/F

True

Single Agency

firms require that the brokerage, and all the brokers and agents within that firm, act in a fiduciary capacity for either the buyer or the seller in a real estate transaction, but not for both. Single agency firms prohibit their licensees from representing opposing sides in a transaction.

Dual Agency

means that a real estate brokerage firm, and all the brokers and agents for that firm, can act in a fiduciary capacity for both the buyer and seller in the same transaction. Dual agents are required to provide all fiduciary duties to each party, except for the duty of undivided loyalty.