Unit 6: The Law of Agency

Buyer Frank sued broker Sam for a misrepresentation in the sale of a single family residence. He was awarded a judgment in the amount of $60,000. Broker Sam was bankrupt and unable to pay the judgment. Buyer Frank appealed to the Real Estate Recovery Account. Assuming the Recovery account agrees to pay Frank, he will receive a maximum of

$50,000.

A listing agreement is

All of the above (a promise for a promise., a bilateral contract., and an employment contract.)

An agent is liable to third persons for

All of the above (any tort (physical injury or property damage)., fraudulent misrepresentation., and torts or other acts committed by the principal in which the agent acquiesces.)

In addition to the actual authority specified in the agency agreement, an agent also has inherent authority regarding activities the agent needs to perform that are not mentioned in the contract such as,

All of the above (distributing fliers in the neighborhood., posting signs at nearby intersections., and advertising.)

An agency relationship may be terminated by

All of the above (expiration of the term., death of the agent., and agreement)

An agency relationship may be created by

All of the above. (agreement, ratification, and accepting an offer of subagency.)

Most of the laws dealing with the formation of an agency relationship are found in the

California Civil Code.

Which of the following accurately describes a listing agreement which allows the broker to either find a prospective buyer, or purchase the home himself/herself?

Option listing

Which of the following best describes a "dual agency?"

The agent acts concurrently for both the buyer and seller in a transaction with the full knowledge and consent of both parties.

Which of the following statements is most nearly correct concerning buyer's agency?

The buyer's broker has no agency relationship with the seller or the listing broker, and is therefore not liable for their actions.

With an exclusive listing, a broker may be subject to disciplinary action for

both (b) and (c). (failing to give accurate tax advice. and failing to include a definite termination date.)

In their dealings with clients and with each other, real estate agents generally act as

independent contractors.

When acting as agent for seller Jones, real estate broker Smith

is obligated to render faithful service to Jones.

An attorney-in-fact can best be described as a(n)

legally competent person who has been given the power of attorney by another competent person.

A "safety clause" is found in a

listing agreement.

Under an exclusive agency listing, a broker advertises a home for sale. The owner sells the home prior to the expiration of the listing. The broker is entitled to

nothing.

Seller A let buyer B assume that Broker C was his agent. This type of agency relationship is an example of:

ostensible authority.

The Real Estate Transfer Disclosure Statement (TDS) provides information regarding the

physical condition of the property

A listing that is retained and secretly marketed by the listing broker or salesperson, and is not made available to other brokers in the office or to other multiple-listing service members is called a

pocket listing.

A person authorized by a principal to perform a particular act or transaction is a

special agent.

An agent who tries to sell a property that is currently listed for sale by the original (listing) agent is called a

subagent.

In a real estate listing agreement, the commission is earned when

the broker finds a buyer who is ready, willing, and able to purchase the subject property on the seller's original terms.

When a real estate licensee accepts trust funds from his/her client in connection with the purchase of real property, the licensee must place these funds into the proper place

within three business days following receipt.