CH 4 R.E

In Illinois, which of these is TRUE concerning designated agency? A) License law requires that the seller and the buyer be represented by different companies. B) Designated agency is the same as creating an implied agency. C) License law requires the licensee to disclose that a designated agency relationship exists. D) Designated agency is always illegal.

) License law requires the licensee to disclose that a designated agency relationship exist

ex of agency coupled with an int

A broker agrees to provide the financing for a condominium building being constructed by a developer in exchange for the exclusive right to sell the units once the building is completed. The developer may not revoke the listing agreement once the broker has provided the financing because this is an agency coupled with an interest.

Which of these is considered dual agency? A) A licensee listing and then selling the same property B) Two brokerage companies cooperating with each other C) A licensee acting for both the buyer and the seller in the same transaction D) A licensee representing two or more sellers at the same time

A licensee acting for both the buyer and the seller in the same transaction

Which of these BEST describes an agent? A) A person who is in a customer-agent relationship B) A person who is placed in a position of trust and confidence C) A person who gives someone else the legal power to act on her behalf D) Two agents who work for the same brokerage firm

A person who is placed in a position of trust and confidence

latent defect.

A structural defect that would not normally be uncovered over the course of an ordinary inspection (due to the placement or type of defect, for example) is called a latent defect.

The Duty of Care

Agents must exercise a reasonable degree of care while transacting the business entrusted to them by the principal. Principals expect the agent's skill and expertise in real estate matters to be superior to that of the average person. The agent should know all facts pertinent to the principal's affairs, such as the physical characteristics of the property being transferred and the type of financing being used.

Property Management Agency

An owner may employ a sponsoring broker to market, lease, maintain, or manage the owner's property. Such an arrangement is called property management. The sponsoring broker is made the agent of the property owner through a property management agreement. As in any other agency relationship, the sponsoring broker has a fiduciary responsibility to the client-owner.

The body of law which IL agency is based is?

Article 15 of the Real Estate License Act of 2000

Broker A tells a prospective buyer, "This property has the most beautiful view." In fact, the view includes the back of a shopping center. In a separate transaction, broker B fails to mention to some enthusiastic potential buyers that a six-lane highway is planned for construction within 10 feet of a house the buyers think is perfect. Based on these facts, which of these statements is TRUE? A) Broker A has committed fraud. B) Broker B has committed puffing. C) Broker A is merely puffing; broker B has misrepresented the property. D) Both brokers are guilty of intentional misrepresentation. Explanation

Broker A is merely puffing; broker B has misrepresented the proper

A real estate licensee was representing a buyer. At their first meeting, the buyer explained that he planned to operate a dog grooming business out of any house he bought. The licensee did not check the local zoning ordinances to determine in which parts of town such a business could be conducted. Which agency duty did the licensee violate? A) Accountability B) Obedience C) Loyalty D) Care

Care

The Duty of Confidentiality

Confidentiality is a key element of fiduciary duties. Client information obtained during the term of the brokerage agreement must be kept confidential. For example, when the principal is the seller, the agent may not reveal such things as the principal's willingness to accept less than the listing price or urgency to sell, unless the principal has authorized the disclosure. If the principal is the buyer, the agent may not disclose that the buyer will pay a higher price, is under a tight moving schedule, or other facts that might harm the principal's bargaining position.

Termination of Agency

Death or incapacity of either party Destruction or condemnation of the property Expiration of the term of the agency Mutual agreement by all parties to the contract Breach by one of the parties, in which case the breaching party might be liable for damages By operation of law, as in bankruptcy of the principal (bankruptcy terminates the agency contract, and title to the property transfers to a court-appointed receiver) Completion, performance, or fulfillment of the purpose for which the agency was created

A licensee who has contracted with a condominium owner to manage a highrise apartment is probably a A) special agent. B) general agent. C) transactional broker. D) buyer's agent.

General Agent

Puffing

Generalized, vague exaggeration of a property's benefits is called puffing.

Agent

Hired (licencee)

Commingling

Illinois licensees are required to deliver true copies of all executed sales contracts to the people who signed them within 24 hours. In Illinois, all funds entrusted to a licensee must be deposited in a special escrow account by the next business day following the signing of a sales contract or lease (unless the contract terms specify a different time frame). Commingling such monies with the licensee's personal or general business funds is illegal. Conversion, the practice of using those escrow funds as the licensee's own money, is illegal as well. Licensees should be aware that records of escrow account transactions and reconciliations must be kept on file for at least five years.

In Illinois, a real estate broker hired by an owner to sell a parcel of real estate must comply with the A) Illinois statute called the Real Estate License Act of 2000. B) concept of caveat emptor as codified in Illinois law. C) concept of market value as codified in Illinois law. D) federal common law of compensation.

Illinois statute called the Real Estate License Act of 2000.

cooperative commission

In Illinois, compensation does not determine the agency relationship. Both the buyer's and the seller's real estate agents are often paid by the seller in a cooperative commission arrangement.

The Duty of Disclosure

It is the agent's duty to keep the principal informed of all facts or information that could affect a transaction. Duty of disclosure includes disclosure of relevant information or material facts that the agent knows or should have known about. The agent is obligated to discover facts that a reasonable person would feel are important in choosing a course of action, regardless of whether those facts are favorable or unfavorable to the principal's position.

Buyer Agency

Many licensees involved with residential property are discovering opportunities for buyer representation. Some licensees have become specialists in the emerging field of buyer agency, even representing buyers exclusively. A buyer agency relationship is established in the same way as any other agency relationship: by contract, agreement, or implication. The buyer's agent may receive a fee from the buyer or share in the seller-paid commission to the listing sponsoring broker or both, depending on the terms of the agency agreement.

ministrial acts

Ministerial acts are informative or clerical services provided by a licensee to a consumer. Providing ministerial acts is not equivalent to active representation.

The Duty of Accounting

Most states' license laws require that agents periodically report the status of all funds or property received from or on behalf of the principal. Similarly, most state license laws require that licensees give accurate copies of all documents to all affected parties and keep copies on file for a period of time.

Negligent misrepresentation

Negligent misrepresentation occurs when the licensee should have known that a statement about a material fact was false. If the buyer relies on the licensee's statement, the licensee is liable for any damages that result.

ex of implied agency

Prospective buyers enter a real estate office asking to see a property listed with another brokerage. A real estate licensee immediately calls the sellers' agent and makes an appointment to show the property. Without discussing the available agency options or having the customers sign a written agency agreement, the licensee drives them to the house. Through the actions of the licensee, the customers think they are being represented.

statutory responsibilities

The agent is entrusted with certain confidential information and has fiduciary responsibilities

Under Illinois agency law, which of these is TRUE? A) Dual agency is illegal. B) The law codifies the common-law concept of caveat emptor by eliminating any assumption of a buyer's right to representation or disclosure. C) Sellers are not legally obligated to make any disclosures regarding the known physical condition of the property. D) Sponsoring brokers may designate which agent represents which party.

The answer is sponsoring brokers may designate which agent represents which party. A sponsoring broker entering into a brokerage agreement may specifically designate those licensees employed by or affiliated with the sponsoring broker to act as legal agents of that client to the exclusion of all other licensees employed by or affiliated with the sponsoring broker.

The Duty of Obedience

The fiduciary relationship obligates the agent to act in good faith at all times, obeying the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical.

Which of these events will terminate an agency in a broker-seller relationship? A) The owner declares personal bankruptcy. B) The broker discovers that the market value of the property is such that she will not make an adequate commission. C) The broker appoints other brokers to help sell the property. D) The owner abandons the property.

The owner declares personal bankruptcy.

The Duty of Loyalty

The principal's interests come first, even above the self-interest of the agent. Agents must not consider how the result of negotiations will serve their own interests (for example, by providing them with a commission). Rather, agents must perform all services with the goal of promoting the principal's interests. Agents are not permitted to buy property listed with them for their accounts—or buy or sell property in which they have personal interest—unless they have made that interest known to the principal or purchaser and received that party's consent.

A buyer who is a client of the broker wants to purchase a house that the broker has listed for sale. Which of these statements is TRUE? A) Illinois law no longer regulates this situation. B) The seller and the buyer must be informed of the situation and agree to the broker's representation of both of them. C) The buyer should not have been shown a house listed by the broker. D) The broker should refer the buyer to another broker to negotiate the sale.

The seller and the buyer must be informed of the situation and agree to the broker's representation of both of them.

Client, Principal

Those who hire ( buyer seller)

The Illinois Association of REALTORS® Residential Real Property Disclosure Report shifts the responsibility for full disclosure from the real estate agent to the seller. True False

True,The statement is true. Sellers of one- to four-unit residential properties must fill out property disclosure forms revealing any material defects they are aware of in the real estate for sale.

Single Agency

When an agent or firm represents only one party (buyer, seller, landlord, or tenant) exclusively in a real estate transaction, this relationship is called single agency. The agent and firm's fiduciary and statutory duties are provided only to that one party (the principal).

Stigmatized properties

are those properties that society has branded undesirable because of events that occurred there.

special agent

authorized to represent the principal in one specific act or business transaction only, under detailed instructions. A real estate licensee usually is a "special" agent to a client. If hired by a seller, the licensee is limited to finding a ready, willing, and able buyer for the property. A special agent for a buyer (buyer's agent) has the limited responsibility of finding a property that fits the buyer's criteria.As a special agent, the licensee may not bind the principal to a contract. The principal makes all contractually related decisions and will sign on her own. A special power of attorney is another legal means of authorizing an agent to carry out only a specified act or acts.

The six common law fiduciary duties are A) care, obedience, loyalty, disclosure, accounting and efficiency. B) accounting, appraisal, negotiation, confidentiality, obedience and loyalty. C) obedience, negotiation, care, accounting, loyalty and efficiency. D) care, obedience, loyalty, disclosure, accounting and confidentiality.

care, obedience, loyalty, disclosure, accounting and confidentiality.

express contract

he principal and agent may enter into an express contract (also called an express agreement) in which the parties formally express their intention to establish an agency relationship and state its terms and conditions. The agreement may be either oral or written.

gratuitous agency.

in fact, agency can exist even if no fee is involved; it is called a

buyer agency agreement

it stipulates the activities and responsibilities the buyer expects from the sponsoring broker (or designated licensees) in finding the appropriate property for purchase or rent.

Megan law

pedophiles

Agency

refers to a strict, defined legal relationship. In real estate, agency refers to the relationship that a broker, managing broker, or leasing agent (representing the sponsoring broker) may have with buyers, sellers, landlords, or tenants.

agency coupled with an interest,

the agent has an interest in the subject of the agency, such as the property being sold. An agency coupled with an interest cannot be revoked by the principal or be terminated on the principal's death.

dual agency

the agent represents two principals in the same transaction.

general agency

the relationship of the broker, managing broker, or leasing agent with the sponsoring broker is also called a general agency because they represent the sponsoring broker in all daily actions. Contracts most effectively establish the agent-client relationship.

fiduciary duties.

these duties include the duties of care, obedience, loyalty, disclosure, accounting, and confidentiality.

listing agreement,

An agency relationship between a seller and a sponsoring broker is generally created by a written employment contract, commonly called a listing agreement, which authorizes the sponsoring broker (or designated licensees) to find a buyer or a tenant for the owner's property.

express agency

An agency relationship may be based on a formal agreement between the parties (express agency

A seller listed his property with a brokerage company. The agency relationship between the seller and the sponsoring broker is what type of agency? A) Universal B) Special C) Implied D) General

Special

In real estate transactions, the term fiduciary typically refers to the A) agent's relationship to the principal. B) person who has legal power to act on behalf of another. C) person who gives someone else the legal power to act on her behalf. D) sale of real property.

agent's relationship to the principal.

In a dual agency situation, a licensee may represent both the seller and the buyer if A) the licensee informs either the buyer or the seller of this fact. B) both parties give their informed consent, in writing, to the dual agency. C) both parties are represented by attorneys. D) the buyer and the seller are related by blood or marriage

both parties give their informed consent, in writing, to the dual agency.

designated agent

designated agent is a person authorized by the sponsoring broker to act as the agent of a specific principal. A designated agent is the only licensee in the company who has a fiduciary responsibility toward that principal. When one licensee in the company is a designated agent, the others are free to act as agents for the other party in a transaction. In this way, two licensees from the same real estate company may represent opposite sides in a property sale without entering dual agency.

A real estate licensee's responsibility to keep the principal informed of all the facts that could affect a transaction is the duty of A) disclosure. B) accounting. C) care. D) obedience.

disclosure

implied contract.

his occurs when the actions of the licensee indicate that she has formed an agency relationship with a party. Even though the licensee may not have consciously planned to create an agency relationship, the parties can create one unintentionally, inadvertently, or accidentally by their actions.

A buyer comes into a real estate broker's office and asks the broker to represent her while searching for a home in the $190,000-$200,000 price range. The broker recalls a house for sale by an owner listed at $198,000. The broker calls the owner of the house, asking for permission for his client to see the house. Based on these facts, which of these statements is TRUE? A) Both the buyer and for-sale-by-owner seller are customers of the broker. B) The for-sale-by-owner seller is the broker's customer; the buyer is a client. C) The buyer is the broker's customer; the for-sale-by-owner seller is the broker's client. D) The broker is now a dual agent.

The answer is the for-sale-by-owner seller is the broker's customer; the buyer is a client. A client is the person or entity that a licensee represents in a real property transaction. A customer is a person or entity for whom a licensee is providing services (including ministerial acts) but who is not represented by the licensee in an agency relationship.

A seller lists his home with a real estate broker for $289,500 and has given written permission for dual agency. Later the same day, a potential buyer comes into the broker's office and asks for general information about homes for sale in the $250,000-$300,000 price range. Based on these facts, which of these statements is TRUE? A) The seller is the broker's client; the broker must obtain written consent for dual agency from the buyer if intending to show properties including the new listing. B) If the potential buyer asks the broker to be his buyer representative, the broker must decline because of the pre-existing agreement with the seller. C) The seller and potential buyer are both the broker's customers. D) The broker owes fiduciary duties to both the seller and the potential buyer.

The answer is the seller is the broker's client; the broker must obtain written consent for dual agency from the buyer if intending to show properties including the new listing. In states where dual agency is permitted (i.e., Illinois), all parties must consent to the arrangement, preferably in writing.

Which of these statements is TRUE of a real estate broker acting as the agent of the seller? A) The broker is obligated to render faithful service to the seller. B) The broker can accept a commission from the buyer without the seller's approval. C) The broker can disclose personal information to a buyer if it increases the likelihood of a sale. D) The broker can agree to a change in price without the seller's app

The broker is obligated to render faithful service to the seller.

A broker lists a residence. The owner of the residence must sell the house quickly. To expedite the sale, the broker tells a prospective purchaser that the seller will accept at least $5,000 less than the asking price for the property. Based on these facts, which of these statements is TRUE? A) The broker should have disclosed this information, regardless of its accuracy. B) The broker has not violated his agency responsibilities to the seller. C) The disclosure was improper, regardless of the broker's motive. D) The relationship between the broker and the seller is called a general agency relationship.

The disclosure was improper, regardless of the broker's motive.

general agent authority

ay represent the principal in a broad range of matters related to a particular business or activity. The general agent may, for example, bind the principal to any contract within the scope of the agent's authority. A property manager is typically considered a general agent to the property owner. Brokers and managing brokers are general agents to their sponsoring broker.

Confidential

confidential information is information given by a client to a licensee during the term of a brokerage agreement that the client requests (in writing or verbally) the licensee keep in confidence, relates to the client's negotiating position, or could damage the client's negotiating position if disclosed. This information must not be shared unless the client gives authorization for the licensee to share the information, the information must be shared by law, or the information is revealed by some person or entity other than the licensee.

universal agent

is a person empowered to do anything the principal could do personally. The universal agent's authority to act on behalf of the principal is virtually unlimited.

customer

is a person or entity for whom a licensee is providing services (including ministerial acts) but who is not represented by the licensee in an agency relationship.

consumer

is a person or entity for whom an agent provides services, which are only to be provided by a licensee, or a person or entity who seeks such services from a licensee.

brokerage agreement i

is an agreement for an agent or firm to provide brokerage services to a consumer and to receive compensation for providing those services. In Illinois, any exclusive brokerage agreement must be in writing.

Compensation

is payment (monetary or otherwise) made to a person or entity for executing services for a client or customer.

Fraud

is the intentional misrepresentation of a material fact so as to harm or take advantage of another person. That includes not only making false statements about a property but also intentionally concealing or failing to disclose important facts.