Agency 1

An agent is someone who

-is employed by another person -has the legal authority to act for that person -has the authority to exercise some degree of discretion while acting for the other person Some examples of agents include: -a real estate broker acting for a homeowner to sell a home. -a lawyer representing a client -an investment manger who invests someone else's money.

These six ways of terminating a listing can be classified as occurring through either

Acts of the parties or Acts of Law

Three types of listing agreements

Exclusive right to sell listing Exclusive agency listing Open Listing

Creation of an Agency

For a valid agency to be created, the objective (purpose) of the agency must be legal. Also, the principal must have contractual capacity, meaning: -He/she must be legally competent. -He/she must be of legal age (18 in Georgia) The agent is NOT required to have contractual capacity, meaning: -He/she must be legally competent, but -He/she is NOT required to be of legal age. Therefore, a minor may be an agent in a contractual agency, but a minor cannot be a principal. NOTE: It is not necessary that an agent be LICENSED in order to create a valid agency relationship. A REAL ESTATE agent must be licensed, but not all agents must be licensed.

Agreement of the parties

If both parties mutually agree, the listing agreement can be terminated

Death of either party

If the principal or broker dies, the listing agreement is automatically terminated

Expiration of the listing period

If the property does not sell during the listing period, the listing agreement automatically terminates

Extinction of the property

If the property is destroyed, the listing agreement is terminated.

Net Listing

In a net listing, the broker receives all excess money received for the property over and above the minimum amount that the seller agrees with the broker that he/she will accept. For example, if a seller tells a broker she wants to net 100k on the sale of her home and the broker sells it under a net listing for 110k, the broker receives a 10k commission. If he had sold it for 120k the brokers commission would have been 20k. In GA, net listing are prohibited.

Universal Agency

In a universal agency, the agent is given the legal authority to transact matters of ALL types for the principal . Universal agencies are extremely rare and frowned on by the courts because the agent's powers are so broad. One of the few examples of this type of agency has become more visible recently in professional sports. Many athletes are hiring universal agents who have the authority to: -negotiate salary with a team owner. -select and manage all the player's investments -negotiate endorsement contracts

Open Listing

In this listing, the principal gives the right to sell, but it is not an exclusive right. Any number of agents may have an open listing on a given property at the same time. The first broker to find a buyer is entitled to a commission. If the owner sells the property, he/she does not pay a commission. The open listing: -Does NOT have to be in writing in GA. It may be oral. However, if the open listing is oral, the broker must still obtain written permission to advertise the property. -Is an expressed, unilateral contract. It is unilateral because the owner has promised to pay a commission if the broker finds a buyer, but the broker has not promise to do anything. -Is not used often. However, it is used more frequently than the exclusive agency listing.

One good way to remember the methods by which an agency can be terminated is to use the word READIE

R - Revocation or renunciation E - Expiration of the listing period A - Agreement of the parties D - Death of either party I - Incapacity of either party E - Extinction of the property

Way to remember

REA - Acts of the parties DIE - Acts of law

Termination of Agency

The agency relationship created by a listing agreement is automatically terminated when a sale of the property is completed. In additional, there are several other ways in which a listing can be terminated.

Incapacity of either party

The listing agreement is terminated if either party is declared legally incompetent, declares bankruptcy, or if the broker loses his/her license.

Principal

The person who hires or appoints an agent to act on his/her behalf.

Revocation or renunciation

The principal may decide to revoke the agency and terminate the listing. However, this does not relieve him/her form the obligation to pay a commission if the property is sold during the original listing period. For example, the owner may "take the property off the market" and terminate the agency, but he/she must pay a commission if it is sold.

Listing Agreements

The real estate listing is a type of contract that establishes an agency relationship between an agent and a principal. The agent is the broker The principal is the seller. (The buyer would be the principal under a buyers agency agreement, which is another type of agency contract in real estate. WE will not cover buyers agency agreements in this lesson.

General Agency

The second type of agency is a general agency. This is one in which the agent is authorized to act for the principal in a specific business or trade. Some examples include: -a real estate salesperson who is a general agent for the broker in the real estate business. -a property manager who manages property for the owner -a sales representative in any field who sells products for a company.

Special Agency

The third type of agency is a special agency. In a special agency, the agent is authorized to perform a specific act or transaction. Some examples include: -a real estate broker who is authorized to sell a home. -a person who has power of attorney to sign a deed for someone.

Exclusive Agency

This is identical to the exclusive right to sell listing with one exception. The owner of the property may sell the property without paying a commission. The exclusive agency listing: -must also be in writing in GA to be either valid or enforceable. -must also have a specific ending date. -is also an expressed bilateral contract. -is the least common type of listing.

Exclusive right to sell listing

Under an exclusive right to sell listing, the principal gives the agent the exclusive right to sell the property for a specified time. Regardless of who sells the property, the agent is entitled to a commission if the property is sold (even by the owner) within the listing period. Any broker who sells the property must go through the listing broker and receive his/her commission from the listing broker. The listing broker may also receive a commission even if the property does not sell, as long as the broker procures a buyer who is ready, willing, and able to purchase the property at the sellers terms. -It is the most common type of listing -Must be in writing in the state of GA to be either valid or enforceable -Must have a specific ending date. -Is an expressed, bilateral contract.

Agency

is the name for the relationship between the agent and the principal For example, when a real estate broker obtains a listing to sell a home, he/she has an agency which allows him/her to act for the homeowner. NOTE: The term "agency' does not refer to a business but to the relationship between the agent and the principal

Three major types of agencies

universal general special

An agent may be appointed (or hired) by

written contract oral contract implication The importance of the agency's purpose may determine the method used. In real estate, an agency's relationship between a broker and a seller is created through a contract called a "listing agreement". Most states require that at least some types of listing contracts be in writing. In Georgia, different requirements exist for different types of listing agreements. These will be covered next.