RE Course Section 4: Agency in Michigan

Seller agent duties

- Invest your time and energy in marketing and selling the property. - Inform the seller of the responsibility to make all required property condition disclosures. - Negotiate contract terms in accordance with the seller's wishes. - Ensure that the buyer's earnest money is deposited by the contracted deadline. - Communicate all offers and counter-offers to the seller.

Buyer's agent duties

- Show them properties that meet their criteria and fall within their budget. - Ensure that they receive all required property condition disclosures from the seller. - Ensure that they understand the importance of due diligence, including a professional inspection of the property. - Review transaction documents with them, clarifying anything that could be confusing, without stepping outside the scope of your license (in other words, refer buyers to an attorney for interpreting any legal consequences or language). - Negotiate contract terms that are fair and agreeable to them.

Rules of a dual agent

- can't disclose all known information to one client if it was provided by the other client - still have a duty to disclose material facts related to the property or transaction as required by law - licensees can only act as a dual agent with written, informed consent from BOTH parties in the transaction (not the broker)

In what scenario does termination of agency occur?

- the sale is completed - The specified term in the agency agreement expires - through force of law (broker dies, property is destroyed and becomes unmarketable, client or firm's broker files for bankruptcy) - client revokes the agreement prior to the agreement's expiration date (ex: they lose confidence in the agency, but if they revoke it for no specific reason or without good cause, they may be in breach of contract) - The agent renounces the agreement prior to the agreement's expiration date.

Beverly doesn't represent either party to this Michigan real estate transaction. She's just here to handle the paperwork once the two parties finish negotiations. What role is Beverly taking in this transaction? A designated agent A dual agent A sub-agent A transaction coordinator

A transaction coordinator

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 she wants to make an offer on Steven's property and asks Marge what she should offer, since Marge knows Steven's rock-bottom price. Alda tells Marge that she's hired an inspector to perform a property inspection. During the home inspection, Marge hears the buyer tell the inspector several times, "That's no big deal. I can fix that." The buyer lists those as repairs she wants the seller to make. Steven tells Marge he can reduce his price, and Alda tells Marge she can increase her offer.

Alda tells Marge she wants to make an offer on Steven's property and asks Marge what she should offer, since Marge knows Steven's rock-bottom price.

Imagine you're a Michigan licensee in a dual agency situation. Which of these questions can you answer without breaching your duties to either client? - Are you aware of any structural issues with the property? - How much should my counter-offer to the buyer be? - What repairs or concessions should I ask for from the home inspection? - What should I agree to fix from this list the buyer sent?

Are you aware of any structural issues with the property?

Which of the following questions can an agent in a dual agency transaction answer without breaching her duties to either client? Are you aware of any structural issues with the property? How much should my counter-offer to the buyer be? What repairs or concessions should I ask for from the home inspection? What should I agree to fix from this list the buyer sent?

Are you aware of any structural issues with the property?

when must a RE licensee make the agency disclosure?

Before a prospective buyer or seller reveals confidential information ... licensees must disclose all possible agency relationships available, and the duties that come with each relationship, to potential client.

You represent a buyer in a transaction that includes a 2% cooperating agent commission to be paid by the seller. Who's your client? Buyer Seller Seller's agent Seller's sub-agent

Buyer

Cam is a Michigan real estate broker. His licensees, Jane and John, represent two sides in a single transaction. Jane represents the seller; John represents the buyer. What relationship does Cam have to John and Jane? Cam is a designated agent to both the buyer and seller. Cam is a designated agent to the buyer and a dual agent to the seller. Cam is a designated agent to the seller and a dual agent to the buyer. Cam is a dual agent to both the buyer and seller.

Cam is a dual agent to both the buyer and seller.

Specifically, what does the fiduciary duty of disclosure relate to? Adverse material facts and publicly recorded facts only Conflicts of interest and confidential information only Conflicts of interest, material facts, and adverse material facts Material facts and adverse material facts only

Conflicts of interest, material facts, and adverse material facts

A real estate licensee is acting as what type of agent when assigned by the broker to represent one party in an in-house transaction? Designated General Special Universal

Designated

Eileen is an associate broker working with Nathan, a seller client. A buyer approaches Eileen about working with an agent to purchase Nathan's property. With her broker's permission, she provides the buyer with her co-worker, Jacob's, contact information. Both Eileen and Jacob work for the same sponsoring broker. What type of agency situation is this? Designated agency Seller agency Single agency Sub-agency

Designated agency

Your buyer client, Ben Dalton, tells you two weeks before closing that he's lost his job. He doesn't have any other income at the moment, and may not be able to follow through on his purchase of the house you're helping him buy. However, he doesn't want to miss out on his dream home and is optimistic that he'll find something soon, so he asks you to keep it confidential. What should you do? Disclose this fact to all parties to the transaction if Ben refuses to do so. Keep it confidential, because you owe him that fiduciary duty. Keep it confidential, but only on the condition that Ben promises not to tell anyone he told you, so you can play dumb. Send an anonymous note to the seller's agent telling him the truth.

Disclose this fact to all parties to the transaction if Ben refuses to do so.... A buyer losing his job - and ability to fulfill his duty under the contract by paying for the house - is a material fact that is very relevant to the transaction. Therefore, it must be disclosed.

If you fail to notify your client of a conflict of interest, in addition to the duty of loyalty, what other duty have you breached? Confidentiality Disclosure Obedience Reasonable skill and care

Disclosure

You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients? Buyer agency Dual-license dual agency Seller agency Single-license dual agency

Dual-license dual agency

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. Review the seller's property disclosures and show the buyer the ones that you believe are important. Show the buyer properties that you are listing for other sellers. Tell the buyer how much earnest money she should put down to ensure the deal goes through.

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

Which of the following has the legal effect of preventing a person from making a claim based on her prior behavior or statements? Estoppel In rem proceeding Ratification Reaffirmation

Estoppel

In general, what is the term for a person who's been placed in a position of loyalty and trust? Attorney in fact Client Fiduciary Mortgage lender

Fiduciary

Ginnie's Aunt Becca listed the old family mansion with Ginnie. Ginnie put it on the market for Becca, but then she and her cousins talked with Becca and decided they wanted to keep the property in the family. What's the best way to terminate the agreement? Becca should revoke the listing. Ginnie and Becca can mutually agree to terminate the agreement. Ginnie should renounce the listing. They should wait for the listing to expire.

Ginnie and Becca can mutually agree to terminate the agreement.

Which of the following is an example of the duty of disclosure? Carrying out a client's instructions without question Informing parties to the transaction of material facts related to the transaction Keeping a client's confidential information confidential Keeping the client in the loop on all that is happening with the transaction

Informing parties to the transaction of material facts related to the transaction

Which of the following statements about the fiduciary duty of confidentiality is true? It doesn't extend to material facts relating to the property. It encompasses any and all information the client tells the agent, not just confidential information. It ends with the termination of the agency agreement. It never conflicts with the duty of disclosure.

It doesn't extend to material facts relating to the property.

What's one of the most fundamental of all fiduciary duties, and is the one that underlies all other duties? Accounting Disclosure Loyalty Obedience

Loyalty

When agents put their clients' interests ahead of their own, this describes the duty of ______. Accounting Loyalty Obedience Reasonable skill and care

Loyalty

Facts that negatively affect a property's value are known as: confidential. Immaterial facts. Material facts. property fraud.

Material facts.

consumer

NOT a customer, RE agents have no contact or very limited contact with them, once the consumer makes contact with the real estate licensees about anything RE related, they become customers

Gloria is a Michigan licensee acting as a transaction coordinator for a real estate transaction. Who does she represent in the transaction? Both the buyer and the seller Neither the buyer nor the seller The buyer, but not the seller The seller, but not the buyer

Neither the buyer nor the seller

A real estate licensee and his client fulfill the listing agreement, and the agency relationship is terminated. At what point did the agent's fiduciary duty of confidentiality to this client terminate? After 30 days After one year Immediately Never

Never

As a single agent, on what topics can you advise your clients? - Real estate - Mortgage qualifying - Legal items related to transaction - Appraisal Amount

ONLY real estate, also true of any type of real estate licensee, not just a single agent (the rest should be left to specialists in those areas)

Shari's clients want her to post that there are "no showings on weekends" on the MLS. Shari knows that will significantly cut down on their market exposure. Her duty of reasonable skill and care is in conflict with her duty of ______. Accounting Disclosure Loyalty Obedience

Obedience

Client

Once you both agree to work together, the customer becomes a client

Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann's options for accepting an agency relationship after the fact? Continue to assist Carly and have her sign an estoppel certificate. Leigh Ann's only option is to get a signed listing agreement. Prepare an agency agreement or continue to assist Carly with the purchase. Prepare an estoppel certificate and a listing agreement.

Prepare an agency agreement or continue to assist Carly with the purchase.

The buyer you're working with doesn't want to enter into an agency relationship. However, the buyer begins to rely more and more on your advice and, indeed, implied agency has begun! You could have avoided this issue by providing appropriate disclosures, but now that you've created implied agency, what should you do? Create an estoppel agreement with the buyer. Disclose to all sellers your relationship with the buyer. Ratify the implied agreement by getting a signed agency agreement. Terminate the agency relationship.

Ratify the implied agreement by getting a signed agency agreement.

If you represent the buyer and seller in the same transaction, what type of agency relationship do you have with your clients? Buyer agency Dual-license dual agency Seller agency Single-license dual agency

Single-license dual agency

Which one of the following definitions best describes a consumer? Someone who is involved in a transaction but represents neither party Someone who's hired to act on behalf of a client Someone who's in a position of trust and loyalty Someone who uses or purchases a product or service

Someone who uses or purchases a product or service

When working with a client on a real estate sale, a real estate licensee is usually acting as which type of agent? Designated General Special Universal

Special

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 square footage and potential as an investment. Which of the following is true about this situation? - Because Vera now has a sub-agency relationship with the Stinsons, she shouldn't talk to Sergei until the house is officially on the market. - The Stinsons and Vera have an agency agreement. - Vera has an agency agreement with Sergei. - Vera should encourage the Stinsons to talk to Sergei about the property's selling points.

The Stinsons and Vera have an agency agreement - since they both signed a listing agreement. By talking to Sergei, Vera's fulfilling her duty of helping to find a buyer

A seller tells his agent that he has to sell his house quickly because of a divorce proceeding and that he's willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Which of these is true? The agent has breached his duty of confidentiality to his client. The agent hasn't violated any fiduciary responsibilities to his client. The buyer is prohibited from making an offer because of the agent's breach of confidentiality. Unless the agent has the seller's permission to share this information, the agent should have disclosed only that the seller is willing to reduce his price, not the amount.

The agent has breached his duty of confidentiality to his client.

Norman, the seller's agent, notices a significant crack in the foundation that the inspector failed to note in the inspection report. Norman decides to keep this information to himself. He really needs to close this deal. Which fiduciary duty has Norman breached? The duty of accounting The duty of disclosure The duty of obedience The duty of reasonable skill and care

The duty of disclosure

Alex's client doesn't want prospective buyers to track dirt and mud throughout her clean home. She asks Alex to place a box of booties by the front door with a sign asking visitors to wear the booties while viewing the home. Alex does as his client instructs—no questions asked. What fiduciary duty is this an example of? The duty of accounting The duty of loyalty The duty of obedience The duty of reasonable skill and care

The duty of obedience

Simone can't believe that her client won't let her put a lockbox on the property. How does he expect other agents to be able to show the home? Oh well, it's not as if he's asking her to do something illegal. The client's wish is her command. What fiduciary duty is this an example of? The duty of accounting The duty of loyalty The duty of obedience The duty of reasonable skill and care

The duty of obedience

When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale? The licensee isn't permitted to list other properties for sale. The licensee is permitted to list other properties for sale as long as they're not competing properties. The licensee is permitted to list other properties for sale, even if they're competing properties. The licensee must list the seller's property only for the first 90 days, after which the licensee may list other properties.

The licensee is permitted to list other properties for sale, even if they're competing properties.

Which of these situations is addressed by the fiduciary duty of disclosure? The buyer fails to disclose to the seller his need to close on the property quickly. The buyer's home inspector refuses to share the inspection report with the seller. The seller refuses to complete a property disclosure form. The seller's agent fails to disclose a conflict of interest.

The seller's agent fails to disclose a conflict of interest. .. The fiduciary duty of disclosure relates to the licensee's responsibility to disclose material facts and conflicts of interest.

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? Jarrod represents the seller, Juan. A buyer, Alaina, approaches Jarrod about representing her in the purchase of Juan's house. Jarrod obtains Juan and Alaina's consent to dual agency. Kady's firm uses representation agreements that, when signed, provide consent to dual licensee dual agency. Kady's buyer makes an offer on one of Kady's colleague's listings. Levi's customer, Renee, wants to make an offer on Levi's seller client's home. Levi presents Renee's offer to his client. 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.

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.

A Michigan licensee who facilitates a transaction but doesn't actually represent either party to the transaction may be a ______. Designated agent Dual agent Sub-agent Transaction coordinator

Transaction coordinator

A person who facilitates the paperwork, but doesn't actually represent either party to the transaction, may be a ______. Designated agent Dual agent Sub-agent Transactional broker

Transactional broker

Principal

a client or a party to a transaction (ex: buyer or seller, whether or not they are represented by an agent)

Estoppel

a legal doctrine that says that a person is stopped from asserting rights or facts that aren't consistent with a previous statement, position, or behavior

Sub-agent

a licensee from a competing firm who brings the buyer to the deal, but instead of representing the buyer, works under the listing agent as a REPRESENTATIVE OF THE SELLER

Non-agent/facilitator/transaction broker

a licensee who has a unique relationship with a consumer, "middle man", can provide only limited services to facilitate the transaction

Fiduciary

a person who's in a position of trust and owes loyalty to another (this is what an agent also becomes to a new client)

ratification

acceptance after the fact, sometimes in contrast to a prior agreement. Ratification may occur through contractual paperwork or the parties' actions.

express agency

agency relationship whereby you and your client agree to and understand the relationship (may be written or unwritten)

implied agency

agency relationship which exists when you act on behalf of a consumer in such a way that the consumer believes you are their agent

An unrepresented ______ who's a party to a transaction is known as a principal. - agent - broker - client - customer

customer (remember a customer is a principal when the customer is a party to the transaction, such as a buyer or seller)

You're holding an open house for Brenda. Walt and Mary walk in and ask you for a flyer that gives details about the property. Walt and Mary are now your ______. - clients - confidantes - customers - friends

customers

universal agent

empowered to do anything the principal could do personally; has the most authority out of any type of agent, highly unlikely you would be this as a RE agent ex: court-appointed guardian

Firewall

established to minimize the risk of confidential information being shared between opposing parties in a designated agency situation; keeps each party's confidential information strictly separated, even though both agents work for the same brokerage

clerical tasks

factual-based tasks that don't require you to use your judgement as a licensee, allowed to perform these tasks for customers

property managers are ______ agents

general

designated agent/appointed agent/assigned agent

licensee who's appointed by brokerage's broker to represent one party, allows two parties to a transaction to be represented by ONE brokerage, broker becomes a dual agent **key: both agents in the transaction belong to the same brokerage

An escrow officer is what type of agent?

limited agent; often played by an attorney

special agent/limited agent

limited authority to act on your client's behalf; in most transactions involving a buyer and a seller, you will act as this, when transaction is complete your role as an agent ends

transaction coordinator

non-agent, acts as a facilitator to a party, assists with paperwork, but doesn't act as a fiduciary to either one, ex: transactional broker, still does owe both parties the duty of confidentiality

The agent as a fiduciary owes the client...

obedience, undivided loyalty, full disclosure, confidentiality, accounting, reasonable skill and care (acronym: OLD CAR)

single agency firms

require that the brokerage, and all the brokers within that firm, act in a fiduciary capacity for either the buyer or the seller in an RE transaction, but NOT for both

general agent

responsibility for all of the dealings of a specific piece of your client's property

Customer

someone involved in the transaction, but whom you don't represent (could even be someone who just stops by an open house)

Agent

someone who acts on someone else's behalf, at that person's request

customer versus client

very important distinction between the two, because if you treat a customer like a client, you could be breaching your duty to your actual client.

Sub-agency

when a licensee from a competing firm works under the listing agent. It's rarely seen and most firms forbid it