Law of Agency: Cumulative

broker

An individual licensed by TREC to perform brokerage duties

buyer's agent

a broker representing a buyer in a real estate transaction, a.k.a. buyer's broker

REALTOR®

a licensed sales agent who is a member of the National Association of REALTORS®

non-agency

a type of agency in which the buyer chooses to find and purchase a home without being represented by an agent

equitable title

also known as "equitable interest;" the contractual right of the purchaser to conveyance of a property once all terms and conditions of the contract are met

private remedies

civil lawsuits brought by consumers against the alleged violators

morals

personal values derived from a system of beliefs

errors and omissions insurance

protects agents and brokers in the event of accidental legal violations, including mistakes and failures to complete required tasks

quarterly taxes

quarterly estimated taxes used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax for individuals or entities who do not have taxes withheld from their income

laws

rules that are enforced by government authority and require mandatory compliance

foreign broker

a broker licensed outside of Texas

license holder

a broker or a sales agent licensed by TREC

landlord's agent

a broker representing a landlord in a real estate transaction

listing agent

a broker representing a seller in a real estate transaction, a.k.a. seller's agent, seller's broker, or listing broker

buyer representation agreement

a document that outlines the duties and implications of the broker-buyer agency relationship

material fact

a fact that, if known, could cause someone to take a different course of action or make a different decision regarding a real estate transaction

misrepresentation

a false statement (spoken or written) that is made unintentionally

general agency

a form of agency relationship in which the principal is responsible for the acts of their agent as long as the agent is acting within the scope of their duties (i.e., broker-sales agent)

arbitration

a forum where parties and counsel present their positions before an impartial third party who renders a specific award

principal

a major party to a real estate transaction (buyer, seller, landlord, tenant) or an individual who authorizes an agent to represent their interests as a client in a real estate transaction

protection period

a period of time after the buyer's representation term ends in which the agent can still get compensation for their role in a transaction

excluded prospect

a prospective buyer or tenant who is procured by the seller instead of the agent; in the event of which, the broker will receive a reduced commission or none at all

contingency

a provision within a contract that makes performance conditional upon the occurrence of a stated event

comparative market analysis (CMA)

a report comparing the prices of sold homes that are similar to the subject property (called comparables); created by a license holder to help the seller or buyer determine the market value

mediation

a resolution procedure where an impartial person (the mediator) is used to facilitate communication between parties and to promote reconciliation, settlement or understanding

fiduciary duty

a responsibility to act in the best interest of your client — the highest standard

collusion

a secret agreement or cooperation for an illegal or deceitful purpose

attorney representation

a situation in which a real estate attorney can represent the buyer in the purchase of a home (this option is only available in certain states)

Seller's Disclosure Notice

a state-mandated form filled out by sellers and given to buyers containing disclosures about the property being sold

security

a tradable financial asset of any kind

implied buyer agency

a type of agency where authority is implied or presumed based on the nature of the relationship between the agent and the buyer

property inspection

a vital part of the home buying process which can reveal significant defects, conditions, and issues that can affect a property's value

agency by actual authority

actions taken by an agent for which they have permission, whether given through express or implied authority by a principal

direct activities

activities (that usually require a license) in which a person directly helps another buy, sell or lease real property

junk fees

additional fees charged by agents and brokers on top of the sales commission

agency by estoppel

agency imposed by law when it is determined that ostensible agency existed; used to create legal accountability for the agent or the principal on whose behalf the agent acted

employment contract

an agreement between a principal and a broker to buy, sell, lease, or manage a property

exclusive right to sell agreement

an agreement in which the seller guarantees the named broker receives a commission if the property is sold even if the seller brings the buyer themselves

exclusive agency listing

an agreement in which the seller has an exclusive relationship with an agent but has the right to sell the property themselves for a reduced commission (or none at all) to the listing broker

net listing

an agreement in which the seller names an amount they want their property to sell for, and then the broker tries to sell it for more because they receive the difference (the dollar amount above what the owner wants) as their commission

open listing

an agreement that allows multiple real estate brokers (and the owners themselves) the right to sell the property; the individual considered the procuring cause of the sale of the property getting the commission

exclusive broker agreement

an agreement that binds the buyer to working only with that broker/agent for the specified duration of the contract

non-exclusive broker agreement

an agreement that leaves the buyer free to work with other agents to acquire a property under the condition that if the buyer does purchase a property because of that agent, the buyer will be required to compensate that agent based on procuring cause

damages

an award paid to someone to compensate them for economic or non-economic loss

sales agent

an individual holding a sales agent license from TREC who is sponsored by a broker

employee

an individual who works part- or full-time for wages or salary under contract and control of an employe

fiduciary

an individual whose principal has trusted them to represent their interests — it denotes a high level of trust

customer

an individual with whom a license holder has no agency relationship nor fiduciary duties but to whom fairness and honesty are still required

consumer

an individual, partnership, corporation, the state, or a subdivision or agency of the state who seeks or acquires by purchase or lease, any goods or services

kickback

any money, fees, commission, credit, gift, gratuity, thing of value, or compensation of any kind for improperly obtaining or rewarding favorable treatment

lottery

any scheme or procedure whereby one or more prizes are distributed by chance among persons who have paid or promised consideration for a chance to win anything of value, whether such scheme or procedure is called a pool, lottery, raffle, gift, gift enterprise, sale, policy game, or some other name

protected classes

classes of people covered under the Federal Fair Housing Act

ready, willing, and able buyer clause

clause in a listing agreement that offers brokers more protection and certainty of being paid compensation for the work and services performed on the client's behalf

agency by ratification

created when a license holder acts on behalf of but without prior authorization of a principal and that principal accepts the license holder's action after the fact

indirect activities

day-to-day activities that are influential, but more difficult to classify as to whether a license is required

fraud

deception deliberately done with the intention of gaining something of value or causing damage to another person

reasonable person standard

judicial standard for determining liability in which the court would decide that if a reasonable person would have known about the defect in question, the license holder should have, too

duty of honesty

license holders are required to always tell the truth to their clients and customers; they should also advise their clients to be truthful in their disclosures as well

duty of fairness

license holders are required to proactively maintain a space of fairness in their real estate transactions and never mislead customers

dual agency

occurs when a broker represents both a seller and a buyer in a single real estate transaction according to common law precedent.

blockbusting

occurs when a real estate agent canvasses a geographical area and incites panic by suggesting that people of certain races, colors, religions, or other protected classes will be moving into the neighborhood and causing the area to deteriorate and prices to destabilize

backup offer

offer made on a property already under contract

net sheet

one of several names given to a worksheet that provides a seller with an idea of what they would net from the sale on their home if they accepted an offer as presented; a tool for comparing multiple offers

home warranty

policy that insures household items such as the air conditioner, heater, and large kitchen appliances

Real Estate Owned (REO) property

real estate owned; describes property that is owned by a lender as result of a failure to find a third-party buyer at a foreclosure auction

safe harbor

refers to effort made by Congress in 1978 to put a halt to what it deemed as overly aggressive attempts to reclassify independent contractors as employees

public remedies

remedies enforced by the Texas Attorney General's Office, specifically the Consumer Protection Division

independent contractor

someone who is bound by contract to perform a certain job, but who is not considered an employee for federal or state income tax purposes

actual authority

specific powers given to an agent by the principal that allows them to act on the principal's behalf

ethics

standards of conduct agreed upon and recognized by a particular group or culture

disclosure

statements of facts associated with real estate transactions that by law must be shared

goods

tangible chattels or real property purchased or leased for use

disclosure of representation

the act of explicitly informing all parties about whom an agent is representing

broker price opinion (BPO)

the agent's determination of an appropriate purchase price

curb appeal

the attractiveness of the property, as viewed from the street (exterior)

procuring cause

the defining actions that brought a buyer to purchase a property

Intermediary Relationship Notice

the form that is used to give the buyer and seller notice of an intermediary relationship and for the buyer and the seller to accept the appointments (which is required by law)

fiduciary duties

the full sum of obligations owed to the client in an agency relationship that ensure that the agent always acts in the best interest of the client

brokerage

the joining of two people for the purpose of an exchange of products or services

puffing

the making of exaggerated claims (technically opinions) in order to achieve a sale or some other objective

broker compensation

the percentage fee or commission (or, in rare instances, flat fee) that is paid for an agent's representation and services provided during real estate transactions; a.k.a. brokerage fee

client

the person that an agent is representing, made official through a representation document

intermediary

the practice of intermediary brokerage occurs when a single transaction is negotiated within one brokerage and during which proper representation for both the seller and the buyer takes place in accordance with Section §1101.559 of the Texas Real Estate License Act.

redlining

the refusal for lenders to issue mortgages to a specific area; a violation of the Fair Housing Act

renunciation

the rejection of an agreement by the person who accepted it, such as when an agent terminates an agency relationship

seller agency

the relationship between a real estate agent and the seller in the brokerage of homes

revocation

the termination of an agreement by the person who granted it, such as when as when a principal terminates an agency relationship

in-house sale

when a brokerage handles both sides of a real estate transaction

operation of law

when a change in law affects the property at the center of the agency relationship

negligent misrepresentation

when a license holder fails to disclose a known material fact

ostensible agency

when a principal allows a license holder to act in such a way as to cause a third party to believe that license holder is the principal's agent

express authority

when a principal gives an agent authority to act on their behalf by mutual consent, either by written or oral agreement

innocent misrepresentation

when an agent communicates false information that the agent is not aware is false

agency coupled with interest

when an agent is involved in a real estate transaction with a personal interest (either for themselves, a family member, or a business interest)

fraudulent misrepresentation

when an agent purposely and deliberately hides a property flaw or feature to make the sale

implied authority

when an agent takes actions that are considered customary for the profession in order to represent their agent's interests

disparate treatment

when someone is treated differently than other people who don't share the same protected characteristic

mutual rescission

when the license holder (agent) and the principal (client) mutually agree to end the agency relationship

abandonment

when the license holder ceases to perform their duties of the agency relationship

services

work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods