UNIT 15

At what time should a Pennsylvania licensee present the Consumer Notice to a prospective homebuyer?

At the initial interview. In Pennsylvania, licensees must discuss the Consumer Notice at the initial interview or the first substantive discussion between a licensee and a consumer about the consumer's needs before the licensee provides any services, and before they enter into an agency agreement or agreement of sale.

In a dual agency situation, brokers may be compensated by both the seller and the buyer if

Both parties give their informed written consent to the dual compensation. Representation is an agency issue; compensation is a contract issue. When the broker represents both the buyer and the seller in the same transaction, the dual representation must be fully disclosed and both parties must give their informed consent in writing. The broker may be compensated by both buyer and seller as stipulated in the agency contracts.

In the case of real estate agency, who is the individual who is authorized and consents to represent the interest of another?

Broker of record. In the real estate business, a firm's broker is the agent and shares this responsibility with the licensees who work for the firm.

In a fiduciary relationship, the agent is primarily responsible to the

Client. In a fiduciary relationship, the primary responsibility of an agent is to protect the interests of the client in a transaction.

In addition to the Consumer Notice, the broker of the real estate firm must also establish procedures for disclosing

Company policies regarding dual agency and designated agency. The disclosure process does not end with the Consumer Notice; however, brokers and their licensees may not discuss protected classes or to even hint that their fees are set in cooperation with other brokerages.

In real estate, the relationship between the principal/consumer and agent/broker must be

Consensual. The relationship between the principal and agent must be consensual; that is, the principal delegates authority and the agent consents to act.

A person who has the authority to enter into contracts concerning all business affairs of another is called

General agent. A general agent represents the principal in a broad range of business matters and has the power to bind the principal to contracts within the scope of the agent's authority.

The sellers listed their home with a broker for $190,000. The broker tells a prospective buyer to submit a low offer because the seller is desperate to sell. The buyer offers $180,000 and the seller accepts it. In this situation, the broker

Has violated his agency relationship with the sellers. Confidentiality is a key element of fiduciary duties. If the principal is the seller, the agent may not reveal such things as willingness to accept less than the listing price or urgency to sell, unless the principal has authorized the disclosure.

In Pennsylvania, all exclusive contracts for real estate activities must be

In writing. In Pennsylvania, all exclusive contracts of employment must be in writing. Furthermore, the Real Estate Commission's regulations prohibit a licensee from marketing or advertising the sale or lease of real estate or otherwise soliciting prospective buyers without the written authority of the seller or owner (or the owner's agent).

Which of the following may obligate a buyer client to owe a fee to the real estate agent?

Is signed a written agency agreement. The licensee may not expect a fee for representing a buyer unless the buyer has entered into an agency relationship with a written agency agreement. An agent may perform services before an agreement is signed, but the licensee is not entitled to recover a fee in the absence of a signed agreement.

What is a transaction licensee obligated to disclose?

Material defects in the property. A transaction licensee provides real estate services without having any agency (i.e., fiduciary) relationships with a consumer; however, the transaction broker may only disclose material defects, nothing else.

The broker provided the seed money for developing a property and is now acting as the listing agent. In this situation, the developer

May not revoke the listing agreement. The broker holds what is called an agency coupled with an interest, a relationship in which the agent is given an interest in the subject of the agency, such as the property being sold (because the broker has invested in the property). An agency coupled with an interest cannot be revoked by the principal or be terminated upon the principal's death.

A real estate broker acting as the agent of the seller

Obligated to render faithful service to the seller. As an agent of the seller, the broker owes full fiduciary duties to the principal-seller.

A buyer and a seller approach a broker and explain that they have agreed on the sale of the seller's home. They ask the broker to assist them with the rest of the transaction. In Pennsylvania, the broker

Permitted to act as a transaction broker. If both the buyer and seller negotiate the sale without representation, a nonagent (transaction broker) is not an agent of either party and solely helps with the necessary paperwork and formalities involved in transferring ownership of real property.

The term fiduciary refers to

Principal-agent relationship. The term fiduciary refers to the nature of the relationship created when the agent is placed in the position of trust and confidence when representing the principal.

The legal relationship between broker and seller is MOST frequently a

Special agency. When a broker is engaged by a seller to represent the seller in the sale of a property, the broker is a special agent.

The Consumer Notice must include a discussion of

The Real Estate Recovery Fund. The Pennsylvania law requires that the Consumer Notice provide information about the Real Estate Recovery Fund and provide the reference in the law for complete details.

A licensee lists a residence for $187,000. For various reasons, the owner must sell the house quickly and confides to the licensee that a lower price would probably be acceptable, although the asking price is reasonable. To expedite the sale, the licensee tells a prospective purchaser that the seller will accept up to $5,000 less than the asking price for the property. Based on these facts, which statement is TRUE?

The disclosure was improper, and possibly illegal, regardless of the motive of the licensee. The broker owes fiduciary duties to the seller-client, including the obligation to work in the seller's best interest and be an advocate for the seller's position.

Which event terminates an agency in a broker-seller relationship?

The owner declares personal bankruptcy. An agency relationship may be terminated in a number of ways.

A salesperson representing the seller shows a house to a prospective buyer. The salesperson knows that the house has a wet basement. Which of the following is TRUE?

Withholding the information prevents the buyer from making an informed decision. The agent is obligated to discover and disclose facts that a reasonable person would feel are important in choosing a course of action, regardless of whether they are favorable or unfavorable to the principal's position.