TheCe shop: Law of agency exam + definitions

How many days does the Texas seller have to deliver a "commitment for title insurance" to the buyer under the terms of the TREC One To Four Family Residential Contract (Resale)?

20

Renunciation by Agent

Agent may decide to discontinue representation of the client to terminate agency.

Sub-Agent

An agent working under the main agent such as a salesperson for a listing broker.

Exclusive Agency Listing

An agreement between a seller of property and a broker in which the seller agrees to pay a commission to the broker if anyone other than the owner finds a buyer, during the period of the agreement.

Leashold title insurance

Assures a lessee (tenant) that their lease is valid

Owner's Title Insurance

Assures the buyer that the title is as stated Provides for reimbursement up to the purchase price named on the owner's policy

Mortgagee's title insurance policy

Assures the lender that it has a valid first lien against the property Reimbursement is limited to the current outstanding loan balance

Where is the best place to hold a sit-down meeting with a new buyer client?

At your office

Belinda is a licensee whose client asked her to draft an addendum containing complicated terms that even Belinda doesn't fully understand. Belinda should ______.

Avoid unauthorized practice of law

When should the seller's disclosure form be completed?

Before entering into a sales contract

Brenda is discussing ways in which buyer Brett can make his offer more attractive to the seller. Which type of relationship is probably in place?

Buyer agency -This is something you'd do for a buyer client when there's a buyer agency relationship.

The most common way a buyer's agent is compensated is __________________.

By a share of the listing agent's commission from the sale -Most commonly, the listing broker splits their commission from the sale with the buyer's broker. However, other arrangements can be negotiated between the buyer and the buyer's broker in the written buyer representation agreement.

What Client's Duties are owed to the Agent?

C-compensation I- information I- indemnification A- Availability

Candy wants out of her contract, because she doesn't believe her agent has estimated the property value correctly. She thinks her property is worth more. What must happen before the listing agreement can be terminated?

Candy and her agent must mutually agree in writing to terminate their agreement.

The Gundersons have signed an exclusive right-to-sell agreement with Clear Lake Brokerage. If the Gundersons find a buyer for their property, who will be entitled to compensation for real estate services?

Clear Lake Brokerage

Revocation by Client

Client may revoke the authority of the agent to represent the client to terminate agency.

What type of dual agency became temporarily permissible in 1996, when intermediary brokerage replaced statutory dual agency?

Common law dual agency -Because it was not expressly prohibited in the intermediary brokerage laws, common law dual agency became permissible again until 2005, when it was prohibited.

Words and ____________ can create an implied agency relationship.

Conduct

Consumer complaints to TREC about violations of the intermediary rules could lead to ___________ including reprimands, monetary penalties, and suspension or loss of license.

Disciplinary actions

Jan is a real estate licensee selling a vacation home for which she is part owner. What must she do?

Disclose the interest in writing to all parties to the transaction

Fidelity, integrity, competency, consumer information, and _________________ are the Canons of Professional Ethics and Conduct.

Discriminatory practices -The code is divided into fidelity, integrity, competency, consumer information, and discriminatory practices.

2005

Dual Ageny was Outlawed

1993

Dual Agwncy became subject to statutory law when Texas legislature amended the TRELA

Which of these tasks must a licensee perform for buyer clients?

Ensure that the buyer receives copies of all signed paperwork.

When the representation agreement expires and the goal has not been met, agency terminates.

Expiration

Clerical/Ministerial Tasks

Factual-based tasks that don't require you to use your judgment as a licensee

Which statement describes a code of ethics?

Guidelines for conduct -A code of ethics is a defined set of guidelines for ethical conduct.

Contrary to federal fair housing laws, the state where Katrina lives includes age as a protected class. Which of these statements about this conflict is true?

Katrina must follow the more restrictive of federal or state law.

Open Listing

Non-exclusive agreement in which a seller may contract with many real estate agents to locate a buyer. Only the agent who brings in the buyer earns the commission.

The Intermediary Relationship Notice

Notice establishing Intermediary Consent from both parties

Agency Coupled With Interest

Occurs when an agent is a co-owner in a property, and while you could sell the property in your own right, selling it as an agent requires a license per TREC Rule 525.5c

Tabitha listed her property for sale, but it's been on the market for several months with no offers. She decides to terminate her listing agreement and rent the property out instead of selling it. Assuming that her listing agent has fulfilled all of his responsibilities under the contract, can Tabitha terminate the contract before its expiration date?

Only if she and the listing agent mutually agree to terminate the agreement. -Since the listing agent hasn't done anything to breach the contract, Tabitha's only options are to let the listing agreement expire or try to reach mutual agreement with the listing agent to terminate the agreement without penalty.

Agency by estoppel

Principal causes a third person to believe that another person is the Principal's Agent, and the third person acts to her detriment in reasonable reliance on that belief.

Policies and Procedures Manual

Provides guidance on all activities—not just agency-related activities—that occur within the brokerage and its business.

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?

Ratify the implied agreement by getting a signed agency agreement.

Agency by ___________ occurs when a party to the transaction accepts the benefits from the previously unauthorized act of the agent after the fact.

ratification

General Agent

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

Policies

rules in which a business operates

Universal Agent

someone who's empowered to do anything the principal could do personally. This type of agent has the most authority. Authority is Virtually unlimited

Procedures

ways in which tasks are carried out

Substantive dialogue

written or verbal communication in which a discussion about a specific real property is discussed. This includes conversations held in face-to-face meetings, or via email, phone, and/or text.

In order to utilize the written notice defense, a licensee must provide the consumer a written statement that they have relied on information from a third party. Which of the following is also true?

The information received from the third party must be in writing.

Which of the following representation options has always been illegal?

Undisclosed dual agency

Which fiduciary duty is modified in the intermediary relationship?

Undivided Loyalty

As a court-appointed guardian, Marion serves as which type of agent?

Universal -A court-appointed guardian—whose authority would likely be over a person and the person's property—is an example of a universal agent. Universal agents have broad authority to act in all capacities for another individual.

Fiduciary

What does a real estate agent become after agreeing to work with a client?

Mutual Agreement

When both the client and the agent agree, agency can be terminated.

Implied Agency

When the actions of the principal and agent indicate that they have an agency agreement.

Completion

When the goal of the agency agreement is met, agency terminates.

Which of the following factors helps the IRS determine whether a licensee is classified as an employee or an independent contractor?

Whether the licensee receives benefits from the brokerage firm -The IRS considers a number of factors when determining whether a licensee should be classified as an employee or an independent contractor, including whether the licensee receives benefits from the firm.

What is specified in the Broker's Compensation provision of the listing agreement?

Who pays the broker's fee and how it is to be calculated - The information regarding the broker's fee and how it is to be calculated, when it's paid, and who pays it is specified in the Broker's Compensation provision.

Net Listing

an agreement in which the seller specifies a price desired for the property and agrees to pay the broker a commission that's any amount received above that price

The Information About Brokerage Services Brochure

an informational brochure or form that explains the different types of agency representation available to consumers. This form does not create or establish an agency relationship, and it is not an agency disclosure. Texas real estate licensees are required by law to provide this form.

Agency by Ratification

occurs when a party to the transaction accepts the benefits from the previously unauthorized act of the agent after the fact.

When new buyer, Pablo, called to set up a meeting with you, he mentioned that he and his wife had outgrown their current home. When Pablo and his wife come into your office to meet you, what is a good initial question to ask them?

"Do you need to sell your current home before you can buy?"

What's the first question a licensee should ask a prospective buyer?

"How did you get my name?"

1996

- Intermediary Broker Introduced - Texas Legislature eliminated statutory dual agency and amended TRELA to put intermediary brokerage in the place of statutory dual agency with Senate Bill 489.

Principal

-A Client represented by a real estatw agent -A party to a transaction

1980s

-Agency Disclosures were required. -Growth in Buyer Agency

Accounting

The duty of accounting refers to accounting for funds, property, and paperwork related to the transaction.

A Non-Agent/ Facilitator/ Transaction Broker

A licensee who has a unique relationship with a consumer, generally acting as a "middle man" in a transaction.

Designated/Assigned/Appointed Agent

A licensee who's appointed by a brokerage's broker to represent one party in an in-house transaction. This form of agency is allowed in some states where two clients of the same agency are involved in a single transaction.

Exclusive Right-to-Sell

A listing agreement that allows the listing agent to list the property and receive a commission, no matter who brings the buyer to the seller. Even when the owner finds a buyer, a commission is owed to the listing agent, provided the sale occurs during the term of the listing agreement.

Consumer

A person who might use a product or service (like an open house) without actually being involved in the transaction in any way.

What is a marketable title?

A title free of encumbrances (easements, restrictive covenants, mortgages, violation of zoning ordinances).

After the closing, Donna ensures that her client has keys to the property and copies of all the transaction paperwork. Which fiduciary duty is Donna performing?

Accounting

Business is slow, and you've decided to pull in some more clients with a marketing campaign claiming you're the top-producing real estate agent in town. What type of violation are you committing?

Advertising in a misleading or untruthful manner

Leanne continues to show a property to prospective buyers even though her listing agreement with the seller has expired. The seller continues to allow her to do so and potential buyers assume Leanne is the seller's agent. What type of agency is this considered?

Agency by estoppel -Under agency by estoppel, a seller cannot deny that an agency relationship has been established if that seller has allowed the licensee to continue to act as an agent with third parties.

Lisa purchased an older home with a large backyard that's perfect for her pack of collies to romp in. Six months after she bought the property, a total stranger knocked on her door and told her he's the true property owner. After investigating, it turns out the person who sold Lisa the property had forged the deed without the true owner's knowledge. What's true about Lisa's situation?

Her title insurance policy may protect her from loss.

Which of the following duties are owed to customers and other parties to a real estate transaction?

Honesty and fairness

What must title insurance include?

Insured party's name Property's legal description Covered estate or interest Schedule of all exceptions, as found in the public record Any conditions and stipulations under which the policy will be issued

Certificate of Sale title insurance

Issued to a purchaser in a court sale Ensures that the purchaser's interest in a property sold under a court order

Tom and Rosanne are interested in a property, but before making an offer, they want to make sure there aren't any registered sex offenders living in the neighborhood. Which statement is most accurate?

It's up to the buyer to perform due diligence and research whether sex offenders live in the area. Licensees can direct clients to the state's registry. - Because of Megan's Law, sex offenders must register with the state. This information must be made available to the public (usually through websites). Buyers should do the research if this is a concern, keeping in mind that sex offenders may move.

Daniel has an accepted offer. A back-up offer is accepted from Kayla. Which of the following is true?

Kayla's offer increases the chance that Daniel will close on the home. -Back-up offers generally increase the chance that the first buyer will close on the home. They create competition for the property. In addition, if the back-up offer is for a higher price than the original offer, it often creates a sense that the first buyer is getting a good deal.

Statutory Law

Laws enacted by a legislature or other governing bodies

Common Law

Laws that evolved from case laws or customs

OLDCAR

Level of Service owed to Clients Obedience Loyalty Disclosure Confidentiality Accounting Reasonable Care

DRHP

Level of Service owed to Customers Disclosure of material facts Reasonable skill and care Honesty and fair dealing Prompt presentation of all written offers and counter-offers

What's meant by "minimum ethical standards"?

Licensees should strive to act at least at that level, and more if possible.

A licensee stating that a property is "guaranteed to increase in value over the next five years" is an example of _______.

Misrepresentation

Jose forgot to measure the home's interior to verify the square footage. After the buyer moved in, she found that he had made an error, and that her home was 200 square feet smaller than she had been told. What violation has Jose committed?

Misrepresentation

Which of the following is something you'd perform only for a client and not for a customer?

Negotiate to get the best price.

Which addendum to TAR's Residential Real Estate Listing Agreement Exclusive Right to Sell discloses the condition of the property and is required by Texas law?

Seller Disclosure Notice

Michaela is a real estate licensee who works out of her broker's office in beautiful, downtown Austin. She is busy making last-minute preparations at 112 Orchard Avenue, where she is hosting an open house for her clients. What type of agent is Michaela?

Seller's agent - Michaela is selling a property, so she is a seller's agent.

According to the Source of Commission section in the TAR Residential Buyer/Tenant Representation Agreement, from whom will the broker first seek to obtain payment of the commission?

Seller, landlord, or their agents

Susie is a licensee accompanying her buyer client, Jeff, to an open house. The seller's agent approaches her and introduces herself. "Hi, I'm Helen, the listing broker, representing Elite Realty." Susie shakes her hand and says, "Hello there. I'm Susie. Great house! I was just talking to Jeff here about all that great closet space. And that backyard is to die for! Jeff has three dogs, so he's very excited about that." What, if anything, has Susie done wrong?

She has not identified herself as the buyer's agent.

What must a broker obtain in order to act as an intermediary in a transaction?

Signed consent from both parties to the dual representation

Customer

Someone involved in the transaction, but whom you don't represent

Agent

Someone who acts on someone else's behalf

Where in the listing agreement will the seller find the beginning and ending dates for the agreement?

Term

Which of the following is true about radon testing?

Test kits are available for purchase. -Test kits are available for purchase but must be sent to a laboratory for analysis. Licensees should advise all buyers to have homes tested for radon, regardless of location.

TREC stands for what entity in Texas?

Texas Real Estate Commission

Zara is a listing agent. While talking to a prospective buyer, Zara assures the buyer that she'll take care of everything, and handle the sale for the buyer. What might the buyer think?

That the buyer is represented by Zara

Who benefits from a stronger negotiation strategy in the buyer agency relationship?

The buyer - The buyer's agent will negotiate to promote the best interests of the buyer client.

Subrogation

The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.

What is Agency?

The relationship between a buyer or seller and a real estate licensee

Through which of these actions is implied agency created?

Through the actions of the parties

Express Agency

You and and your client have expressed, agreed to, and understand the terms of the relationship. This can be accomplished written of orally.

Special Agent/Limited Agent

You don't make any decisions or enter into any contracts on your client's behalf, but you simply act as an intermediary, liaison, and negotiator, conveying and representing your client's wishes

Latent Defect

a hidden structural defect that would not be discovered by ordinary inspection