Ch 07: Agency Relationships
Several principles govern the relationship, they are:
* Both parties must consent to the relationship * Both parties must agree to form the relationship * The relationship is fiduciary - Meaning the agent owes certain duties to the principal
Some reasons why an agency relationship may terminate involuntary include:
* Duff or incapacity of either party * Agent abandonment * Condemnation of the property * Destruction of the property Through fire, vandalism, or natural disaster * Renunciation by the client * breach of the contract * Bankruptcy * Revocation of the agents license
If the agent represents the buyer, exercising care and skill includes:
* Helping the buyer locate appropriate housing * Evaluating property values and property conditions * Determining financing alternatives * Presenting offers and counteroffers with the buyer's interests in mind
If the agent represents the seller, exercising care and skill includes:
* Helping the seller set a realistic asking price * Discovering and disclosing facts that affect the seller * presenting contracts properly * marketing the property effectively * Helping the seller evaluate purchase offers
Commission is usually paid after the transaction has been consummated, However, the commission is earned when the following activities have occurred:
* The broker has produced a ready, willing and able buyer. * The buyer has signed an offer to purchase. * The seller has excepted the offer. * both buyer and seller have received signed copies of the agreement.
An agency relationship is terminated when one of the following occurs:
* performance * Expiration of the agreement term * Termination of the relationship by mutual agreement of the parties * Termination of the relationship by one party
Dual agency exists when:
A real estate firm or a real estate license he represents both the seller and the buyer or the landlord and the tenant in the same transaction
The principal could be
A seller, a buyer, a landlord, or a tenant
The agent can offer advice and counsel to his or her principal To guide principal in future actions
An agent can give this advice based on the expectation that the agent has professional and technical real estate expertise That will be of value to the principal
An agent is responsible for discovering anything that might be deemed important to his client in making an informed decision; whether or not are favorable to the client's position
An agent could be held liable for damages if he or she failed to disclose such information
Fiduciary Duties - Disclosure
An agent is bound to inform the client of all facts that might affect the clients interest in the transaction. This includes both the fax that the agent knows and those that the agent should have known.
If an agent fails to exert reasonable efforts to represent his clients interests, the agent could be found guilty of negligence in Court
An agent is liable to the principal for any loss that results from Carelessness Or negligence
Accountability
An agent must be able to account for all monies, documents and other property he or she receives from the principal
Accountability is an important duty owed to clients
An agent must be able to account for all monies, documents and other property he or she receives from the principal. Brokers must also give copies of documents to everyone who is affected by them and retain these documents for at least three years.
The duty of loyalty requires the agent to please the clients interests above those of all others, including his or her own
An agent must negotiate agreements without considering the amount of compensation he or she will receive. In addition, a licensee is required to disclose any personal interest he or she has in a property.
The duty of Royalty requires the agent to please the clients interests above those of all others, Including his or her own
An agent must negotiate agreements without considering the amount of compensation he or she will receive. In addition, the licensee is required to disclose any personal interest he or she has in a property
Passive fraud
An intentional non disclosure of a material fact
There is no obligation to obtain or disclose information related to a customer's race, creed, color, religion, sex or national origin
Anti-discrimination laws hold such information to be immaterial to the transaction
In most cases, a sub agent is a real estate agent that the listing broker appointments with the sellers permission to perform activities on behalf of the seller. The seller grants the permission in the written listing agreement.
Any broker who is not the listing broker is known as the selling or cooperating broker
An agency relationship can be created by either an oral or written agreement
Between the principal and the agent. It can also be implied from either words or actions
Dual agency must be disclosed to both the buyer and the seller
Both parties must agree in writing to the dual agency relationship
Dual agency is a violation of the New York license law unless
Buyer and Seller concert in writing
The duties that the agent owes his or her principal are:
Care (Reasonable care) Obedience Accountability Loyalty Disclosure or Notice
Agents DO have certain duties to customers even though they do not represent them
Care, Obedience, Accountability, Loyalty, Disclosure or Notice
The law expects an agent to do his or her job with a reasonable degree of
Care, Skill and Dilligence
The most common way of creating an express agency is by
Completing are you written agency agreement
The duty of confidentiality extends beyond the termination of the relationship
Confidential information must always remain confidential
The duty of confidentiality extends beyond the termination of the relationship. No personal information gain during the term of the agreement can ever be disclose to another party.
Confidential information must always remain confidential
An alternate way to handle dual agency situations is called:
Designated agency
The fiduciary duties of exercising care skill and diligence for an agent representing a seller would include
Discovering and disclosing facts that affect the seller
Subagency may be created by a written agreement
Epress
There are three types of agency relationships... They are
Express agency, employed employed agency, agency ratification an estoppel
An agent owes to the principal
Fiduciary Duties
A common complaint that buyers have against listing brokers has to do With this representation By the Broker
Fraud can be active or passive
The agency relationship expert establish between the agent and the principal put in place a set of fiduciary duties that the agent goes to the principal
Hey fiduciary relationship is one of utmost trust
Confidentiality about the principles affairs is an important aspect of loyalty
If the agent Represents the seller, he or she may not disclose, without the sellers express permission, such things as: Clients willingness To except an offer lower than asking price come clients anxiousness to sell
The agent must disclose material facts about the property
If the agent represents the buyer, he or she may not disclose, without the buyers express permission, such things as: Clients willingness to pay more than asking price; clients need or desire to move quickly.
The agent must disclose material facts about the property
If the agent represents the buyer, he or she may not disclose, without the buyers express permission, such things as: clients willingness to pay more than asking price; Call need or desire to move quickly.
Confidentiality about the principals affairs is an important aspect of loyalty
If the agent represents the seller, he or she may not disclose, without the sellers express permission, such things as: Clients willingness to accept an offer lower than the asking price; Clients anxiousness to sell.
If the dual agency relationship is not disclose and agreed to in writing, it is known as undisclosed dual agency
If this situation occurs, the agent has breached his or her fiduciary responsibilities to the client and has also violated New York State license law
Subagency may be created by words or actions
Implied
An agent is bound to inform the client of all fact that might affect the client's interests in the transaction
Including both the facts that the agent knows and those that the agent should have known
What is required for legal dual agency in New York?
Informed consent
Active fraud
Intentional misrepresentation of a material fact for the purpose of gaining an unfair or dishonest advantage over another person
Changing of the agents place of business
Is NOT a cause of termination of an agency relationship
A special agent
Is also known as a specific agent
An agency coupled with an interest
Is an agency relationship in which the agent has an interest in the property that is being sold
Dual agency is permitted in New York ONLY with disclosure and informed consent
Is known as consensual dual agency
blind obedience
Is not a fiduciary duty that an agent owes to his or her principal
Agency
Is the fiduciary relationship between the agent and the principal
Principal
Is the person who hires the agent and delegates To the agent the responsibility of representing the principles interests.
Agent
Is the person who is authorized to represent an act on the behalf of another person
A client
Is the principal
Fiduciary
Is the relationship of trust or confidence between the agent and the principal
A customer
Is the third-party with whom the agent deals when working on behalf of the principal
Agent Sam does not know the age of a roof but tells a potential buyer it is three years old
It is a possible instance of negligence misrepresentation
An agency relationship is based on authorization and mutual consent
It is not based on compensation
The duty of confidentiality extends me on the termination of the relationship
No personal information gained during the term of the agreement can ever be disclosed to another party. Confidential information must always remain confidential.
An agency coupled with an interest cannot be revoked by the principal
Nor is it terminated if the principal dies
Obedience
Obey the principal's directions as outlined in the contract, as long as they are legal
According to NY license law, A broker is vicariously liable for a salesperson's wrongful actions
Only if the broker had actual knowledge of such violation or retains the benefits, profits or proceeds of a transaction wrongfully negotiated by his sales person or employee after notice of the sales persons or employees misconduct
If an agency relationship arises because of the actions of the parties involved rather than by a written agreement, what is that agency called?
Ostensible agency
Loyalty
Place the client's interests above those of all others, including his or her own
Which of the following terminations of an agency relationship could result in legal or financial ramifications?
Renunciation by the client
Obedience
Requires that the agent act in good faith and obey the principles directions as outlined in the contract, as long as they are legal
If a cooperating broker accepts the offer of subagency from a listing broker, to whom does the cooperating broker owe fiduciary duties?
Seller
The law expects an agent to do his or her job with a reasonable degree of care, skill and diligence
Since the principal hired an agent with because of his or her expertise in the field, the principal expects the agent to use that expertise on the principal'ss behalf
A property seller empowers an agent to market and sell a property on his behalf. What is this an example of?
Special agency
Agent; A term that refers to a very precise legal relationship.
That relationship is between a licensee and one of the following, a seller, a buyer, landlord, and a tenant
One of the main drawbacks of dual agency is
The agent cannot provide full disclosure to both parties without violating the duty of confidentiality.
If agent fails to exert reasonable efforts to represent his client's interest
The agent could be found guilty of negligence in court
If a licensees actions are negligent and cause damage and/or injury
The broker could be held liable and be required to pay damages
When a client enters into a listing agreement with a brokerage firm
The broker is the agent of the client
The commission is paid to the broker who was the procuring cause of the sale
The broker who took action to start or to cause a chain of events that resulted in the sale
In a cooperative sale, The commission splits are handled by
The listing broker
In a universal agency relationship
The principal and Powers the agent to perform any and All actions that may be legally delegated to an agency representative. The instrument of authorization is the power of attorney.
Under the special agency agreement
The principal delegates authority to conduct a specific activity, after which the agency relationship terminates. In most cases, the special agent may not bind the principal to a contract.
In a general agency
The principal delegates to the agent ongoing tasks and duties within a particular business or enterprise. Such delegation May include the authority to enter into contracts.
Real estate brokerage is based on a special agency
The principal hired a licensed broker to procure a ready, willing and able buyer or seller. When the objective is achieved, the relationship terminates, although certain fiduciary duties survive the relationship.
Confidentiality
The principal's affairs is an important aspect of loyalty
A brokers agent does not have a direct relationship with the buyer, seller or tenant.
Therefore, the buyer, seller and tenant do not have Vicarious liability for the acts of the Brokers agent
An agency relationship imposes fiduciary duties on both the client and the agent, but mostly on the agent
These duties are both moral and ethical, but also legal - they are the law of agency
In most cases, a real estate transaction is completed by cooperating broker's. Each broker will receive and agreed upon shared (percentage) of the compensation
These shares can be referred to as the listing side commission and the selling side commission.
If an agent entersInto an agency agreement with a buyer, the agent becomes the buyers agent
This is also known as buyer brokerage
An agent is liable
To the principal for any loss that results from carelessness or negligence
The brokers agent does not have a Direct relationship with a client of the broker who engages him or her
True
8% empowered by another to perform well action that can be legally delegated is an
Universal agent
A Licensee cannot give legal advice
Unless he or she has a separate license to do that
Brokerage
Used to refer to the business of bringing buyers and sellers together to assist them in the negotiations for the sale of a property
An agency relationship is created
When a buyer or seller, landlord or tenant delegates to the agent the right to act on his or her behalf in business transactions with third parties (the customers)
The agent represents the principal in dealing with third parties
Who are known as customers
According to New York law,
a licensee must have the informed consent of all parties in a transaction to receive compensation from more than one party.
An ostensible agency relationship is one that
arises from the actions of the parties involved rather than from a written agreement.
A fiduciary relationship
is one of utmost trust
An agent
is the person who is authorized to represent and act on the behalf of another person
The agent works FOR the principal and WITH the customer
licensees owe their customers: * Honesty and fair dealing * Reasonable care and skill * proper Disclosure
The term Agent is actually a term
refers that relationship is between a licensee and one of the following * A seller * A buyer * A Landlord * A tenant
Care, Obedience, Accountability, Loyalty, Disclosure or Notice
the Acronym COALD
The licenses that are affiliated with the brokerage firm
the agents of the broker and the sub agents of the broker's clients
The essence of the agency relationship is
trust, confidence, and mutual good faith
