Duty of Accounting
Dual and Designated Agency
"Single-license dual agency" exists when one licensee represents both the buyer and the seller. When two licensees in the same brokerage represent a buyer and a seller, this is called "dual-license dual agency". Theoretically, these types of dual agency could occur in Tennessee, but it's more likely that the broker will appoint designated agents to avoid dual agency.
Licensees are limited to the specific duties and responsibilities outlined in the law that are initiated by the client. Duties to both clients and customers include:
*Accounting for trust fund deposits and other property licensees receive *Avoiding self-dealing or representing anyone or any group with whom they have a personal interest without making a full disclosure to all parties, including written consent *Avoiding recommending the services of a business or person with whom they have a personal interest or from whom they would receive a referral fee
Licensees are limited to the specific duties and responsibilities outlined in the law that are initiated by the client. Duties to both clients and customers include:
*Providing services with reasonable skill and care, as well as honesty and good faith *Disclosing adverse facts of which they have actual notice or knowledge *Maintaining confidentiality for all parties regarding information obtained prior to securing and disclosing to all parties a written agency or sub-agency agreement *Disclosing to each party all timely and accurate market conditions that might affect the transaction
Facilitators in Tennessee
A licensee isn't an agent unless the licensee is operating under a bilateral, written agreement with a client. So what is the licensee up until that moment? A facilitator, aka transaction broker.
Designated Agency in Tennessee
According to Tennessee law, designated agency supports the real-life practice in which individual agents—not the entire firm—advocate for their own clients, no matter whether two licensees from the same firm, or licensees from different firms, are involved. Some brokerages offer designated agency as the default, or only, type of agency offered.
Marge is a licensee in a dual agency transaction with seller Steven and buyer Alda. In which of the following situations can Marge share what she knows with all parties without compromising her duty of loyalty?
Alda tells Marge that she's hired an inspector to perform a property inspection.
Which one of the following provides the best example of single agency?
An agent from one firm acts as the agent for the buyer.
Duty of Accounting
An agent must account for any funds received on clients' behalf. So if a buyer client hands their agent an earnest money check for safekeeping, the agent must keep it safe until it's time to deliver it to the appropriate party, such as an attorney or an escrow office. Agents must also safeguard any paperwork received on their client's behalf and ensure that it's processed in a timely manner.
Seller's Agent Duties
At the time of a listing, inform the seller that some agents who show the property will be acting as buyer's agents. If the seller is concerned about having unknown agents on the property, you can offer to be present for all showings. As a practical matter, this can be a scheduling issue, but it's important that you protect your seller's interests. Also at the time of the listing agreement, you and the seller should agree as to offers of cooperation and offers of commission to other licensees outside your company. Remember that cooperation must always be offered to buyer brokers, even when compensation isn't.
Obedience
Carrying out a client's instructions describes the duty of ______.
obedience
Carrying out a client's instructions is the duty of
Specifically, what does the fiduciary duty of disclosure relate to?
Conflicts of interest, material facts, and adverse material facts
What kind of agency relationship enables two licensees in the same Tennessee brokerage to work with two parties in a transaction?
Designated agency
Dual Agency in Tennessee
Dual agency means that a real estate brokerage firm, and all the brokers and agents for that firm, can act in a fiduciary capacity for both the buyer and seller in the same transaction. Such a transaction is often referred to as "in-house." Dual agents are required to provide all fiduciary duties to each party, except for the duty of undivided loyalty. Loyalty: yes. Undivided loyalty: no. Because both sides are represented, undivided loyalty is a legal impossibility. Dual agents may not advocate for one party to the detriment of another. Dual agents owe both the seller and buyer fiduciary duties that include utmost care, integrity, honesty, and confidentiality.
Which one of the following tasks must licensees perform for seller clients?
Ensure that the buyer's earnest money is deposited.
buyer agency
Ensure that they understand the importance of due diligence, including a professional inspection of the property. *Review transaction documents with them, clarifying anything that could be confusing, without stepping outside the scope of your license (in other words, refer buyers to an attorney for interpreting any legal consequences or language). *Negotiate contract terms that are fair and agreeable to them.
Facilitators in Tennessee
Facilitators don't represent either party in a transaction. They can assist one or even both parties with no risk of conflict of interest since there's no representation. However, licensees can only wear one hat in any given transaction. You can't be a facilitator for one party and an agent for another in the same sale!
Material facts.
Facts that negatively affect a property's value are known as:
Erik is acting in a single agency capacity in a transaction. What does this mean?
He's representing (and owes undivided loyalty to) either the buyer or the seller.
buyer agency
In a buyer agency relationship, you exclusively represent the buyer. In the past, buyer agency was not properly practiced in residential real estate. The licensee's commission was drawn from the sale of a property, so it was assumed that buyers didn't need to be represented in the transaction and were regarded only as customers. Of course, much has changed over the years, and it's long since been mandated that buyers can and should be protected through an agency agreement, as well.
Seller Agency
In a seller agency relationship, you represent the seller. It's your duty to advocate solely for the seller and seek a sale of the property at the best price available or a price that's acceptable to the seller. The buyer, when you represent the seller in a single agency relationship, is your customer.
Seller Agency In a seller agency relationship, you represent the seller. It's your duty to advocate solely for the seller and seek a sale of the property at the best price available or a price that's acceptable to the seller. The buyer, when you represent the seller in a single agency relationship, is your customer.
In a seller agency relationship, you represent the seller. It's your duty to advocate solely for the seller and seek a sale of the property at the best price available or a price that's acceptable to the seller. The buyer, when you represent the seller in a single agency relationship, is your customer.
The Duty of Reasonable Skill and Care
In addition, you should be aware residential and commercial or agricultural sales are separate areas of expertise; even working in a geographic area that's unfamiliar may constitute working outside your area of expertise. Licensees shouldn't try to provide any service outside their area of expertise without seeking help from someone who is competent in that area or disclosing to the client their lack of expertise.
Designated Agency in Tennessee
In order to protect managing brokers and limit their (and their firms') liability, Tennessee's law specifically states that managing brokers aren't considered dual agents when individual licensees serve as designated agents in transactions.
In Tennessee, what does having a designated agent help a brokerage to avoid?
In-house dual agency
Conflicts of interest, material facts, and adverse material facts
It doesn't extend to material facts relating to the property.
Single Agency
It's important that you know and adhere to your firm's policies. When acting as a single agent, you owe your undivided loyalty to that client. You still owe duties of fairness, honesty, and proper accounting of funds to other parties, but that's where your obligation to them ends. You advocate in the best interests of your client, period. As a single agent, you're an advisor for your client in real estate matters. However, if your client asks for advice that's outside the scope of your expertise, your duty as a fiduciary dictates that you refer the client to an expert. It's sometimes tempting to try to be all things to a client, but acting outside your license is a mistake that can have serious repercussions. When faced with a situation that you're unsure of, refer.
Tennessee law stipulates that most agency relationships are limited. What are these limits?
Limits on licensee powers and duties
Think about the fiduciary duties an agent owes a client. What duty becomes the most challenging when representing both the buyer and the seller?
Loyalty
The duty of reasonable skill and care
Means you should never give opinions outside the scope of your expertise.
Single Agency
Real estate matters are the only items you should advise clients on. Do not advise on mortgage, legal, and appraisal (among others outside your scope) to those experts.
Single Agency
Require that the brokerage, and all the brokers and agents within that firm, act in a fiduciary capacity for either the buyer or the seller in a real estate transaction, but not for both. Single agency firms prohibit their licensees from representing opposing sides in a transaction.
As a licensee, you'll have several tasks you must perform for your buyer client. One of these tasks is to ______.
Review transaction documents with the buyer, clarifying anything that could be confusing, without stepping outside the scope of your license
What responsibility does the seller's agent have to the seller?
Seek a sale at the best price at terms acceptable to the seller.
Seller's Agent Duties .
Seller's Agent Duties You must perform specific tasks for your seller clients (unless the seller's attorney has or will perform these tasks). These tasks include: *Invest your time and energy in marketing and selling the property. *Inform the seller of the responsibility to make all required property condition disclosures. *Negotiate contract terms in accordance with the seller's wishes. *Ensure that the buyer's earnest money is deposited by the contracted deadline. *Communicate all offers and counter-offers to the seller.
If you represent the buyer and seller in the same transaction, what type of agency relationship do you have with your clients?
Single-license dual agency
Designated Agency in Tennessee
Some states that recognize designated agency maintain that the managing broker is a dual agent in situations where designated agents in the firm represent the buyer and/or the seller. Tennessee sees it differently.
Tennessee Limited Agency
The agency relationship for Tennessee real estate professionals is usually a "limited" one. Unlike a power of attorney, Tennessee agency law limits what a licensee can and can't do when representing a client.
In a buyer agency relationship, whom does the licensee represent?
The buyer
Accounting May Survive Agency Termination
The duty of accounting may continue even after the transaction closes. For instance, if a transaction closed, and an agent still holds a document or money that belongs to the client, the agent must account for that document or money until it is delivered to the appropriate party.
Means you do not divulge anything the seller has asked you to keep confidential—even subtly.
The duty of confidentiality
Means that you must disclose all known material facts to all parties.
The duty of disclosure
Means you put your clients' interests ahead of all others, including yourself.
The duty of loyalty
Designated Agency in Tennessee
The law also states that knowledge and information shouldn't be shared between clients, designated agents, or managing brokers in designated agency circumstances. Brokerages that offer designated agency can take certain actions to prevent unintended disclosure of information. These might include: *Policies and procedures intended to separate transactional documents *Firewalls *Policies for when and where to discuss confidential information inside the brokerage *Procedures to follow in the event confidential information is inadvertently shared
When a licensee represents a seller, which one of the following statements is true about the licensee's ability to list other properties that are for sale?
The licensee is permitted to list other properties for sale, even if they're competing properties.
In a seller agency relationship, to which party does the licensee owe undivided loyalty?
The seller
The Duty of Reasonable Skill and Care
The standard of care expected of agents, whether representing buyers or sellers, is that of a competent real estate professional. When you obtain your license, you'll be presumed to have skill and expertise in real estate matters that are superior to those of the average person.
reasonable skill and care
This goes to my level of professionalism, training, experience, and work ethic
Dual Agency in Tennessee
When you act in a dual agency role, confidential information about price, terms, motivation, or previous offers must remain confidential unless one party instructs you in writing to disclose specific information about them. Dual agency prohibits disclosing anything to one party that could be a disadvantage to the other. For example: *Disclosing the motivation of either the buyer or the seller for selling or buying the property *Disclosing to a buyer or seller that the opposing party will agree to financing terms other than those specified in their respective offering
Dual Agency in Tennessee
When you act in a dual agency role, confidential information about price, terms, motivation, or previous offers must remain confidential unless one party instructs you in writing to disclose specific information about them. Dual agency prohibits disclosing anything to one party that could be a disadvantage to the other. For example: *Disclosing to a buyer that the seller will accept an amount other than the asking or listed price *Disclosing to a seller that the buyer can pay a price other than or greater than the price submitted in a written offer to the seller
Seller's Agent Duties
When you represent a seller, you should have an express agency agreement in place. The listing agreement accomplishes this requirement and spells out the scope of your authority and agreement for compensation. Working under an implied agency agreement is definitely not recommended. Get it in writing!
buyer agency
When you represent buyers, it's your responsibility to advocate for your clients' interests and seek the best price available or a price that's acceptable to them. As a fiduciary, you're obligated to complete certain tasks for your buyers over the course of a transaction, such as: *Show them properties that meet their criteria and fall within their budget. *Ensure that they receive all required property condition disclosures from the seller.
Putting the client's interest first
Which of the following is an example of the duty of loyalty?
Advising clients to seek expert advice on matters outside of your expertise
Which of the following is an example of the duty of reasonable skill and care?
Seller Agency
You must disclose to the buyer that you don't represent her. Obtain the buyer's acknowledgment of this fact in writing. This can best be done by use of the mandatory disclosure form. Note that when you're representing a seller, you may list other properties for sale, even if they're competing.