Agency

general agent

- represents the principal in a broad range of matters and may bind the principal to any contracts within the scope of the agent's authority. - This type of agency can be created by a general power of attorney. - Typically, a broker does not have this scope of authority as an agent in real estate transactions.

listing broker

A listing broker may or may not have a single agency with the seller. According to license law, the listing broker may be engaged (in accordance with a written agreement) as a seller's agent, a dual agent, or a transaction licensee to market a property for sale or rent. Although the listing broker may have a single agency, this is not always the case. The controlling factor is the nature of the relationship established between the property owner and the broker.

special agent

A special agent represents the principal in one specific act with detailed instructions from the principal. A special agent, however, is not authorized to bind the principal to any contract. The principals must bind themselves to the terms of contracts. A real estate broker is usually a special agent.

express agency

An express agency relationship between a buyer and a broker is created by a buyer agency agreement. Similar to a listing agreement, it stipulates the activities and responsibilities the buyer expects from the broker in finding a suitable property for purchase or rent.

designated agent

In Pennsylvania, the license law provides an alternative for the dual agency dilemma by permitting the broker (with written consent of the principal) to designate a licensee within the firm to represent the interests of a principal—known as a designated agent. The broker is still a dual agent, but separate designated agents, one as the exclusive agent of the seller/landlord and another as the exclusive agent of the buyer/tenant, serve as the legal representatives of the principals.

initial interview

This is the first substantive discussion between a licensee and a consumer about the consumer's needs (certainly this should occur before the licensee provides any services). The law contemplates that this will be the first face-to-face meeting between a licensee and a consumer.

agency relationship

Under the law of agency, an agency relationship is created when one person—the principal—delegates to another person—the agent—the right to act on his or her behalf in business transactions with third parties.

transaction licensee

a broker or salesperson provides communications, document preparation services, and otherwise assists both parties in a transaction without being an agent or advocate of either party. A transaction licensee is required to advise the consumer that the licensee is not acting as an agent and should not be provided with confidential information. The law does state, however, that a transaction licensee must provide limited confidentiality. This means that a licensee is not permitted to disclose that the seller will accept less than the asking or listed price, that the buyer will pay more than the price submitted in a written offer, or that either the seller or buyer will agree to financing terms other than those offered. While permissible under the law, transaction licensees are not very common.

subagent

a broker, not in the employ of the listing broker, who is engaged to act for or cooperate with the listing broker as an agent of the seller. The subagent assumes the same fiduciary obligations to the principal that the agent has.

consumer

a person who is the recipient of any real estate service

agency coupled with an interest

agency relationship in which the agent is given an interest in the subject of the agency, such as the property being sold. An agency coupled with an interest cannot be revoked by the principal or be terminated upon the principal's death. For example, a broker might agree to supply the financing for a condominium development in exchange for the exclusive right to sell the completed units. Because this is an agency coupled with an interest, the developer would not be able to revoke the listing agreement after the broker provided the financing.

single agency

agent represents only one party in any single transaction. - The agent owes fiduciary duties exclusively to one principal, who may be either the buyer or seller (or the landlord or tenant), in the same transaction. The other party receives customer-level services. - A single agency broker may choose to exclusively represent buyers or sellers. - Rather than offering exclusive services, a single agency broker may choose to represent both buyers and sellers in separate transactions. This must be done carefully, however, to avoid problems that can arise in dual agency, which will be discussed later in this unit.

fiduciary duties

an agent owes the principal arecare, obedience, accounting, loyalty (including confidentiality), and disclosure

subagency

created when one broker appoints other brokers, as subagents, to help perform client-based functions on the principal's behalf. A subagent is a broker, not in the employ of the listing broker, who is engaged to act for or cooperate with the listing broker as an agent of the seller. The subagent assumes the same fiduciary obligations to the principal that the agent has.

law of agency

defines the rights and duties of the principal and the agent. It applies in a variety of business relationships. In real estate transactions, contract law and real estate licensing law—in addition to the law of agency—interpret the relationship between licensees and their clients. Although the law of agency is a common-law concept, it may be (and increasingly is) redefined or replaced by states' statutory laws.

Consumer Notice

explains the licensee's duties when acting as a dual agent.

implied agency

implied agency with a buyer can result if the words and actions of a salesperson do not dispel this assumption. Otherwise, one agency relationship is created in conflict with another. Dual representation, which will be discussed in detail later in this unit, may occur even though it was not intended.

buyer's agent

the agent of a buyer or tenant

seller's agent

the agent of a seller or landlord

dual agency

the agent—a dual agent—represents two principals in the same transaction. Dual agency requires equal loyalty to two separate principals at the same time. Because agency originates with the broker, dual agency arises when the broker is the agent of the buyer and either the agent or subagent of the seller. The salespeople, as agents of the broker, have fiduciary responsibilities to the same principals as well.

statutory law

the laws, rules, and regulations enacted by legislatures and other governing bodies

principal

the original amount of a debt on which interest is calculated

agent

the person who is authorized and consents to act on behalf of and represent the interest of another. In real estate, a firm's broker is the agent, and he or she shares this responsibility with the licensees who work for the firm.

client

the principal whom the agent represents.

common law

the rules of a society established by tradition and court decisions

agency

word used to describe that special relationship between a real estate licensee and the person he or she represents. Agency is governed by two kinds of law: common and statutory law

The principles that govern the relationship are:

• The relationship must be consensual. This means the principal delegates authority; the agent consents to act. • The parties must mutually agree to form the relationship. The agent may reject an agency that he or she is incapable of performing. • A fiduciary relationship is formed. This means the agent has certain obligations to the principal, including the duty of loyalty (similar to the loyalty the servant owes to the master). The principal regards the agent as an expert on whom the principal can rely to represent his or her best interests.