Principles - Ch 4

A Broker can keep ________ of his/her personal funds in a trust account without being guilty of commingling.

$200

Termination of an Agency Relationship - Acts of the Seller or Broker

1. Agreement of both broker and seller 2. Renouncement of listing by the broker. 3. Revocation of Listing by the Seller. 4. Close of Escrow.

Termination of an Agency Relationship - Operation of Law

1. Expiration of the Agent (Listing) agreement. 2. Destruction of the property. 3. Death or incapacity of Broker or Seller (Listing Only)

Three types of misrepresentation

1. Innocent misrepresentation = a false statement that are not known to be false. 2. negligent misrepresentations = false statements believed to be true, but made with reasonable grounds for the belief. 3. Fraudulent misrepresentations = statements made at a time when the broker knows the statement to be false or statements in which the broker fails to disclose material facts.

6 basic types of listings

1. Open Listing (non-exclusive) 2. Exclusive Agency Listing 3. Exclusive Right to Sell Listing 4. Net Listing (rare) 5. Option Listing 6. Oral Listing

Real Estate Transfer Disclosure Statements (TDS) steps:

1. The Seller fills out a TDS being forthright and honest. 2. The Seller's agent makes a visual, diligent inspection and fills out the appropriate section and signs at the same time the seller lists the property. 3. The buyer receives a copy of the TDS and signs signifying that they have received it. 4. The buyer's agent makes a visual inspection, filling out the appropriate section and signing. 5. if buyer fails to receive the TDS prior to signing the contractual offer (purchase agreement), they have the right to cancel, after receipt of TDS, for any reason (3 day if delivered by hand or 5 days if mailed)

Law of Agency (3 rules)

1. The agent must inform the principal of all material facts pertaining to the handling of the principal's property 2. The agent may not gain any monetary interest int he property without the principal's prior consent. 3. An agent may not use the principal's property to his or her own advantage.

Real estate agency relationship disclosure act in the Civil Code became a law in

1988

Disclosure of AIDS & death

A death on the property with the past 3 years is a material fact and must be disclosed. But not if related to AIDS because it may violate privacy laws.

Agents who buy and sell for their own account.

A licensee must disclose in writing that they are licensed when involved in a transaction as a principal.

Visual Inspection

A listing and selling broker must each conduct a reasonably competent and diligent inspection of the property and disclose to the prospective buyer all material facts affecting the value, desirability and intended use of the property.

Exclusive Agency Listing (No Commission if Owner Sells Privately)

A listing providing that only one agent (listing broker) has the right to be the only person, other than the owner, to sell the property during a specific period and earn a commission. The Owner, however, still has the right to sell the property, and thus the agent would not receive a commission.

Automated Valuation Model (AVM)

A service that can provide real estate property valuations using mathematical modeling combined with a database.

Puffing

A statement of opinion (not fact) that exaggerates a property's benefits. It would only be a misrepresentation if a reasonable person would consider it a statement of fact.

Power of Attorney

An acknowledged, written authorization of one person to act for another.

Secret Profit *

An agent may not make any secret profit!!

Difference between independent contractors and employees

An independent contractor sells results rather than time, and his or her physical conduct is not subject to the control of another. An employee, on the other hand, works under the direct control (designated hours and breaks) and supervision of the employer.

Ratification

Approval (confirmation) of a transaction which has already taken place.

The three steps of agency disclosure are

Disclose elect and confirm

The law of agency is found...

In the Civil Code

Dual agent

Is a broker acting as an agent for both the seller and the buyer in the same transaction, with the informed consent of both parties

Principal (client)

Is a person who hires or employs an agent to work for him or her

Agent

Is one who acts for and with authority from another, called the principal

Agency

Is the authority or power to act in place of another, a principal (person who hire), to do a specific act for a stated period of time.

Third party

Is the other person in a contractual negotiation, other than the principal and his or her agent

Exclusive Right to Sell Listing (Commission if sold w/n the listing period)

MOST COMMONLY USED. Entitles the listing broker named in the agency contract to a commission even if the owner sell the property.

Fiduciary relationship

Requires the highest good faith from the agent to his or her principal

A commission can be earned even if the sale is not finalized. How?

The broker is entitled to a commission if all the "exact" terms of the listing agreement are met.

Listing

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.

Cooperating Broker

a non-listing broker with whom the listing broker agrees to share a commission (not necessarily 1/2 and 1/2) in the non-listing broker sell the property.

Fiduciary

a person acting in the position of trust and confidence in a business relationship.

Procuring Cause

a series of unbroken events that lead to an acceptable agreement with the seller.

Express Warranty of authority

a written listing between the seller and the broker to offer the property for sale.

General Power of Attorney

allows the person so authorized to perform any act the principal could perform.

Special Power of Attorney

allows the person to perform only specific acts.

Pop Ups

are paid advertisement that appear suddenly on a computer screen.

A listing for a residential building containing 1-4 dwelling units must include a notice that the commission is negotiable in what size font?

at least 10-point bold type.

Real estate licensees in California are:

employees of the broker. Not independent contractors.

Transaction File *

file or folder (all documents) kept for 3 years by the broker for each real estate transaction in which the broker participates.

Option Listing (Broker has the reserved right to buy)

gives the listing broker the right to purchase the property. The broker must disclose to prospective buyers that he/she is acting in the dual role of agent and principal, and present all offers to the seller.

Attorney in Fact under "special" P of A,

has the authorization to perform only a specific act. This type for an Agent to a Principal.

Real Estate Transfer Disclosure Statements (TDS)

identifies items of value attached to the structure of land and states whether these items are operational. It asks the seller to identify any structural or material defects. It provides the seller an opportunity to completely disclose problems. Buyer has two years to sue an agent for failure to make proper disclosure.

Safety Clause (aka Broker Protection Clause) re. Exclusive right to sell listing.

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. To enact, the broker must provide seller with a written list of prospective buyers within 3 days of termination of listing.

Commission

in real estate is a fee paid, usually as a percentage of the selling price, to a broker/agent as compensation for his or her services.

Subagent

is a licensed broker or salesperson upon whom some of the powers of an agent have been conferred, not by the principal, but by the agent with the principal's authorization.

Multiple Listing

is a listing, usually an exclusive right to sell, taken by a member of a multiple listing service, with the provision that all members of the multiple listing service have the opportunity to find an interested buyer.

Attorney in Fact under "general" P of A

is a person who has been given the right to transact all of a principal's business.

Commission Split

is a previously agreed split between a broker and his or her salesperson of a commission earned on a a sale.

CAR.org or CA.REALTOR.com

is a source of California Multiple Listing Services' databases that links and provides the largest directory of homes for sale in California.

A Quick Response Code (CR code)

is a type of barcode that consists of black modules (square dots) arranged in a square grid on a white background, which can be read by an imaging device (such as a camera) and processed until the image can be appropriately interpreted.

Net Listing (Must be used with other listing)

is an agreement providing that the agent agrees to sell the owner's property for a set minimum price, any amount over the minimum being retained by the agent as commission. Seldom Used.

MLS (Multiple Listing Service)

is an association of real estate brokers that provides a pooling of listings, recent sales, and the sharing of commissions on a specific basis.

Open Listing (unilateral, Non-Exclusive Contract)

is an authorization to sell a property. It may be given to several brokers or the property may be sold by the owner. Rarely used due to uncertainty of commission.

"Pocket Listing"

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.

Tort

is any civil injury or wrong committed upon a person or that person's property.

Commingling *

mixing together of the funds of a principal and a licensee. Illegal.

Estoppel

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...As in can't stop from denying.

Listing Agreement Copies must be give to...

signing party(ies) after signing.

Policy Manual

specific rules and policies for handling procedures at a specific brokerage firm are usually set down here.

Ostensibly or Implied Authority

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

Implied Warranty of Authority

to act for a seller by the mere fact that he or she shows the seller's property.

Conversion *

unlawful misappropriation and use of a client's funds by a licensee. Stealing.

CalBRE required notification of brokers coming or going.

when a sales person chooses to leave the employ of a broker, that broker must notify the CalBRE within 10 days. When a salesperson transfers a license to a new broker, that broker must notify the CalBRE within 5 days of the new employment.