CHAPTER 1 QUESTIONS AND VOCAB
Power of Attorney
A legal instrument authorizing one to act as another's attorney or agent to the extent authorized in this document.
Principal
A person (Client) who empowers another (Agent) to act as his or her representative in a real estate transaction.
Which of the following would be considered a Net Listing?
A seller tells an agent the amount that they would like to make on the sale of the home. The Agents commission will be based on what the home sells for above or below that agreed upon amount
Which of the following documents creates and identifies the extent of authority for a licensee acting on behalf of an owner?
Agency agreement
Joshua, a Real Estate Broker, represents Savannah in listing her home for sale. What is the relationship between Joshua and Savannah? - Agent-Customer - Seller-Customer - Agent-Principal - Seller-Principal
Agent-Principal
Which of the following is a requirement of the Multiple Listing Service?
All Brokers involved in the real estate transaction share the commission, but the commission is negotiable.
A licensee offering services to a customer shall - Timely present all offers to and from the parties involving the sale, lease, and exchange of property - Timely account for all money and property received by the broker on behalf of a party in a real estate transaction - Provide a meaningful explanation of agency relationships in real estate transactions - provide an explanation of the scope of services to be provided by the licensee - All the above
All of the above
Proxy
An agent legally authorized to act on behalf of another party (client).
Fiduciary duties that are not limited in dual agency
Confidentiality Accounting Reasonable Care
A Principal that can tell the other party who the principle is and that you represent them.
Disclosed Principle
A buyer hires an agent with 123 Realty to help him in the purchase of a home. The agent is on summer vacation and the buyer finds the home he wants. Regardless of the agent not being the one who found the home the buyer has decided to purchase; the buyer still owes commission. What Buyer Agreement did the buyer sign?
Exclusive Right to Purchase Agreement
What type of Listing Agreement guarantees the Agent a commission?
Exclusive Right to Sell Listing
Broker John listed a property for his client. The home was on the market for 6 months and the listing expired. The client now decides to list with a new agent. The client is now required to reimburse Broker John for all the marketing expenses. (T/F)
False
Implied Agency is legal in South Carolina. (T/F)
False
The law of agency requires agents to disclose all known property defects to a client, but does not require an agent to disclose them to a customer. (T/F)
False
According to the law of Agency, Agents are required to disclose all information learned or obtained by the agent to the client. This Fiduciary Duty is known as:
Full Disclosure
A subagent is also known as a ____________
General Agent
Client obligations to agent
Good conduct Reimbursement Indemnity Opportunity Compensation Good faith
Agent obligations to customers
Honesty Fairness Reasonable Care & Skill Disclosure
Which of the following duties best describes obligations of an agent to a customer?
Honesty, Fairness, and Reasonable Care
Broker John is practicing as a Transactional Broker. John has shown Customer Jerry 5 homes in one day. Jerry calls John the following day asking for advice. John gives him his professional services. What type of Agency did John just create?
Implied Agency (which is illegal in sc)
An agent realizes that a house they have listed isn't getting much activity. The agent makes the decision to do some aerial photography to get more interest in the house. The agent does this without getting prior approval from the seller. What type of Authority does this describe?
Implied Authority
According to the common law of agency, which of the following statements about the fiduciary obligation of confidentiality is CORRECT when an agent represents a principal in a real estate transaction?
It outlasts the termination of the agency relationship
If the agent represents the seller, the agent may not disclose certain information without the seller's permission to the buyer or buyer's agent. However, the agent must always disclose which of the the following:
Known Defects of property being sold
Kristen rides by a house listed by John with ABC Realty. Her friend, Haylee happens to work for the same company. Kristen contacts Haylee to look at the house, but does not want to enter into an agency agreement. Haylee can show Kristen the house listed with ABC Realty if - Kristen signs a dual agency consent form - Kristen agrees to remain a customer - John shows the home to Kristen - Kristen verbally agrees to buyer agency
Kristen agrees to remain a customer
MLS is an Acronym for
Multiple Listing Service
Customer obligations to agent
NOTHING!!
What type of agreement is between the seller and agent stating that the seller will get an agreed upon amount at closing and the agent will get the difference in that amount and what it actually sold for as commission?
Net Listing
What is meant by "gratuitous" service?
No Compensation
Agent obligations to client
Obedience Full Disclosure Loyalty Reasonable Care & Diligence Accounting Confidentiality
Fiduciary duties that are limited in dual agency
Obedience Loyalty Disclosure
An agent gets a call from a potential buyer for a home he has listed. The agent meets the potential buyer at the home. Which of the following would be best case scenario of when to introduce the Agency Disclosure Brochure? - In the Driveway as soon as both potential buyer and agent get out the car. - When the Agent and Potential Buyer meet at the Real Estate Office - Once the Agent and Potential Buyer enter the home - When the potential buyer provides confidential information
Once the Agent and Potential Buyer enter the home
Single agency is when you represent _____ Buyer or Seller?
One
Agent
One empowered to act for or represent another in a real estate transaction. The agent will be the Broker-in-charge of a real estate company. Affiliated licensees are not agents to the principle.
Sub-agent
One empowered to act for or represent another in a real estate transaction. The agent will be the Broker-in-charge of a real estate company. Affiliated licensees are not agents to the principle.
Third-Party
One other than the principals involved in a transaction. There could be several parties to a real estate transaction. All parties that are not represented by the Agent in the real estate transaction are considered third parties
Customer
One who desires the services of an Agent, but opts not to establish an agency relationship for legal representation. Agents must ensure to clearly explain the agency relationships to all potential buyers and sellers of real estate. If, after the agency relationships have been fully explained, and the buyer/seller elects to use the services of an agent, but without legal representation, they are considered customers of the company. Agents cannot provide any professional services to a customer. Customers may elect to become a client later if they so choose.
Fiduciary
One, such as an agent of a principal that stands in a special relation of trust, confidence, or responsibility in certain obligations to others (client).
This form of agency agreement allows for the seller to hire one or as many brokers as they choose to represent them as their agent. The seller is only obligated to pay a commission to the agent that actually sells the house. The seller also retains the right to sell the home with no representation and owe no commission to any agent.
Open listing
A Principal that cannot tell who the principle is but can say that you represent them
Partially Disclosed Principal
A Real Estate Agent was responsible for the chain of events that resulted in the sale of his client's property. This is known as
Procuring Cause
Although the agent does not owe any fiduciary duties to a customer, the agent may offer the following services to a customer EXCEPT - Identify and show property for sale, lease, or exchange - Provide real estate statistics and information on property - Provide pre-printed real estate form contracts, leases, and related exhibits and addenda - Provide legal advice
Provide legal advice
Sarah is working as an Independent Contractor for ABC Realty. How is she paid?
Sarah pays her own taxes
Choose the following Legal Brokerage Relationships in SC
Seller Agency Buyer Agency Disclosed Dual Agency Disclosed Designated Agency Transaction Brokerage
The Exclusive Agency Listing
Sellers agreeing to an exclusive agency listing may only hire one agent to represent them in the sell of their home. The seller will be liable for the agent's commission only if a licensed agent sells the home. The seller retains the right to sell the home themselves and not owe the agent a commission.
The Agent and the Sub-agent are only liable for their proportionate share of obligations is known as what type of liability?
Several
A buyer-broker agreement is MOST likely to create which of the following types of agency relationships?
Single
The broker exclusively represents either the buyer or the seller in a transaction. The broker never represents both parties in the same transaction.
Single Agency
When must the licensee provide the South Carolina Disclosure of Real Estate Brokerage Relationships brochure?
Substantive Contact
Which of the following is not a Fiduciary Duty of an agent? - Confidentiality - Accounting - Obedience - Substitution
Substitution
A Dual Agency is legal if
The buyer and the seller agree to it
According the the Law of Agency, Broker Tom is required to to inform his client of all facts that may affect his clients best interest. Which of the following would not be something that Broker Tom should know? - The Air Condition is not in working condition - There is a crack in the Master Bathroom Wall - The ceiling has a wet spot in Master Bedroom - The owner of the property has HIV
The owner of the property has HIV
Client
The party for which professional services are rendered, as by a real estate broker. Under the laws of agency, clients are those which have entered into a written agency agreement for representation by an agent.
Which of the following best defines the law of agency?
The rules of law that apply to the responsibilities of a person who acts as agent for another
All of the statements below must be disclosed EXCEPT - Keep the clients secret that the roof leaks - A Faulty Foundation known by the agent - Material information that might affect the price of the property - The seller will be purchasing a house a few doors down
The seller will be purchasing a house a few doors down
Open Listing
This form of agency agreement allows for the seller to hire one or as many brokers as they choose to represent them as their agent. The seller is only obligated to pay a commission to the agent that actually sells the house. The seller also retains the right to sell the home with no representation and owe no commission to any agent.
Transactional Broker
Transactional brokers only perform ministerial acts for both parties. There is no agency relationship or fiduciary responsibilities and do not provide any representation for either party. In essence, transactional brokers only serve as a facilitator in attempt to bring the buyer and seller to agree on terms of the purchase and sale of real estate.
Fiduciary duties never expire after agency is terminated. (T/F)
Trick question. All expire except accounting and confidentiality.
Agents may not provide any professional services to a customer. Professional Services may only be provided to clients. (T/F)
True
An agent may identify schools, shopping facilities, places of worship, and other similar facilities to a customer. (T/F)
True
Broker John list Client Jason's house. John and Jason are talking about things he loves about the house. Jason discloses to John that when it rains, the ceiling in one of the rooms leak. John is now required by law to disclose the information to a potential buyer. (T/F)
True
Which type of agents is considered a very broad authority when acting for the principle?
Universal Agent
Partially Disclosed Principal
When an Agent represents a Principal by disclosing to third parties of an agency relationship, but does not disclose the identity of the Principal. Although it is practiced in residential real estate, it is practiced very seldom.
Undisclosed Principal
When an agent represents a Principal without disclosing who the Principal is or even that they are representing a Principal is an Undisclosed Principal. As far as the third party is concerned, the Agent is acting for and by himself without a Principal. Should the Principal default or be in breach of contract, the liability will remain with the Agent since the Agent is presenting himself as the Principal. This type of Principal is more common in commercial real estate.
Disclosed Principal
When the Agent is representing a Principal and the identity is known to third parties, the principal is considered to be a Disclosed Principal. Most residential real estate transactions include the Disclosed Principal.
Agency
a consensual fiduciary relationship authorizing a broker to act on the behalf of and represent a client in a real estate transaction. The client retains the right to control the agent during the relationship. Agents may not provide ANY professional services without an agency relationship.
A Broker in Charge is also considered an
agent
Attorney in Fact
an attorney or agent who may or may not be a lawyer who is given written authority to act on another's behalf as specified by a power of attorney.
Confidentiality can be breached in all of the following situations EXCEPT when
another client may benefit
Commissions earned by a broker in a real estate sales transaction
are determined by agreement of the broker and his or her principal
Express Authority
authority granted in the agency agreement for thr agent to act on behalf of the client
Common Law
body of law that is based on custom and general principles and embodied in case law and that serves as precedent or is applied to situations not covered by statute
Jason seeks professional services from Jackson, a Real Estate Broker. Jackson has Jason sign a written agency agreement. What party does Jason represent in this transaction? - Agent - Customer - Client - Proxy
client
Broker Joan shows properties listed for sale with her company to prospect Karl. Karl has refused buyer representation. Karl is Joan's
customer
The Agent represents the buyer and the seller in the same real estate transaction is known as _________. - Dual Agency - Designated Agency - Seller Agency - Buyer Agency
dual agency
The type of listing agreement that provides for payment of a commission to the broker even though the owner makes the sale without the broker's aid is called an
exclusive-right-to-sell listing
A Transactional Broker represents the seller in a real estate transaction. (T/F)
false
Dual Agency is Illegal in South Carolina? (T/F)
false
A broker has a house listed and one of the sales agents has a buyer client who is interested in the property. That sales agent must
get prior consent from both buyer and seller to participate in either dual or designated agency
Procuring cause
is the agent that has a written agency agreement with the buyer and without any break in the chain of events between signing the agency agreement and closing the transaction.
How is a broker's commission determined in a real estate sales transaction?
it must be stated in the listing agreement and is negotiated between the broker and seller
Joint Liability
means the Agent and the Sub-agent are fully liable for all their obligations
Several Liability
means the Agent and the Sub-agent are only liable for their proportionate share of the obligations.
Some property owners list their property for sale with a broker. During the listing negotiations, they tell the broker that they want $138,000 for the property, and anything above that amount the broker can keep as a commission. A listing with this type of provision is known as a
net listing
Universal Agent
one authorized to conduct business on behalf of a client with very broad authority. Most real estate agents will not be a Universal Agent. An example of this broad authority might be for one working for Wal-Mart. Wal-Mart will instruct the Agent to find the next great location for a new Wal-Mart Super Store and when it is found, go ahead and buy it and Wal-Mart will build a new store.
General Agent
one authorized to represent a client on behalf of another agent. Associated licensees are typically General Agents to the Agent (Broker-in-charge). General Agents are employed by the Agent either as an employee or independent contractor. The General Agent will be given specific authority to act for the Agent in the hiring agreement.
Thomas signed a legal document that allows Sara to sell his home in the event that he can't be present to do so himself. This document is known as ________? - Attorney in Fact - Power of Attorney - Common Law - Ministerial Action
power of attorney
The Agency Relationship is between the Agent and the ________. - Attorney - Mortgage Holder - Principle - Bank
principle
Vicarious Liability
secondary liability that arises under the common law doctrine of agency. Anything a sub-agent knows or should know, it is presumed the agent also has knowledge (whether they actually do or not).
When an agent represents only one client in the same real estate transaction. (Either the buyer or the seller)
single agency
A first real estate agent is considered a
sub agent
Implied authority
supplemental authority that comes with express authority
Special Agent
the Special Agent is typically the Broker-in-charge/Company for a principal (buyer or seller). The principal will hire the Special Agent and indicated the level of authority in which to act in the Listing or Buyers Representation Agreement.
Buyer Agency
the practice of a real estate agent only representing the buyer in a real estate transaction.
Seller Agency
the practice of a real estate agent only representing the seller in a real estate transaction.
An attorney, lender, and home inspector would be considered a _________ in a real estate transaction? - Customer - Client - Third Party - Agent
third party
Ministerial Acts
those acts that a licensee may perform for a person that are informative in nature. NO professional services or obligations are provided.
Designated Agency
when an agent may designate an individual associated licensee to act solely on behalf of a client. The designated agent has a duty to promote the best interest of their client, including negotiating a price. The Broker-in-charge will remain the dual agent.
Single Agency
when an agent represents only one client in the same real estate transaction (either the buyer or the seller).
Dual Agency
when the agent represents two clients in the same real estate transaction (both buyer and seller).