Law of Agency
List the steps involved in creating a broker's policies and procedures manual.
1) Review the various agency choices 2) Review advantages and disadvantages of each choice 3) Consider size and experience of office staff 4) Write company policy manual 5) begin in company training session to measure the effectiveness of policy
Express Contract
A contract that has been put into words, either spoken or written.
Survey
A document which precisely shows the property lines, and size and location of improvements on a particular property.
Constructive Notice
A fact, imputed to a person by law, which should have been discovered because of the person's actual notice of circumstances and the inquiry that a prudent person would have been expected to make.
Exclusive Agreement (Exclusive Right to Sell Listing Agreement)
A listing given to only one broker who is entitled to the commission if anyone sells the property during the term of the listing contract.
Fiduciary
A person in a position of trust and confidence, as between principal and broker; broker as a fiduciary owes certain loyalty which cannot be breached under the rules of agency.
Abstract of Title
A summary or digest of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record which may impair title.
Identify at least two ways a seller can benefit from an agency relationship.
Agencies benefits the seller or landlord providing the following 1) advice and opinions 2) broad marketing 3) contract negotiation 4) confidentiality
Express Agency
An agency relationship created by oral or written agreement between principal and the agent.
Confidentiality
An agent is obligated to safeguard his/her principal's lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal's bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold known material facts about the condition of the seller's property from the buyer, or to misrepresent the property's condition. To do so constitutes misrepresentation and may impose liability on both the broker and/or the seller.
Discuss the relationship between sponsoring brokers and agents.
An agent works for the sponsor broker as an independent contractor. They do not directly work for the broker.
Punitive Damages
Damages simply for the purpose of punishment.
Summarize at least two practices that are prohibited by a broker acting as an intermediary.
Disclosing to the buyer that the seller will accept an offer below the asking price, Disclosing to the seller that the buyer is willing to pay more than the asking price, Disclosing confidential information about either party
Identify at least three items that must be paid by an independent contractor.
Expenses incurred by the associate, license and membership fees, automobile expenses, special expenses including desk fees, transaction fees, e&o premiums, franchise fees.
Explain the difference between express and implied agency, and provide an example of each.
Express Agency - An agency relationship created by oral or written agreement between principal and the agent. i.e. Listing agreement, Buyer Representation Agreement, Sales conract Implied Agency - Agency that exists as a result of actions of the parties. When a person sits down and orders food at a restaurant, it is implied the person will pay for the food they ordered
Sherman Anti-Trust Act
Federal legislation including imposition of civil and punitive damages for anti-trust activities.
Summarize at least two duties that are owed by an agent to a customer.
Honesty and fairness
Identify at least three duties owed by a broker to the principal in an intermediary brokerage.
Honesty, fairness, and confidentiality
Explain the purpose of the Seller's Disclosure of Property Condition form, and provide at least three items that are included in the form.
IS A DISCLOSURE OF SELLER'S KNOWLEDGE OF THE CONDITION OF THE PROPERTY AS OF THE DATE SIGNED BY SELLER. Examples include Items included with property, the installation of smoke detectors on property, and if the seller is aware of any malfunctions or defects on the property or in any fixtures installed.
Identify at least two documents a broker should explain/provide to a seller prior to entering into a listing contract.
Information for Brokerage Services Form, Company Agency Policy, Explain what services which will be provided and fee structure
Distinguish between morals, laws, and ethics, and provide at least one example of each.
Law - The system of rules that a particular country or community recognizes as regulating the actions of its members and may enforce by the imposition of penalties. Ethics - Moral principles that govern a person's or group's behavior. Morals - a person's standards of behavior or beliefs concerning what is and is not acceptable for them to do.
Common Law
Law that is derived from court decision. The body of law that grew from custom and practices developed and used in England "Since the memory of man runneth not to the contract".
Client
Prior to signing a listing agreement, a party in a real estate transaction who will employ an agent.
Identify at least two tasks a buyer's broker should do for a buyer after signing a buyer representation agreement.
Provide General Information and Notice to Buyer Form, then determine what their needs and wants are for their purchase.
Summarize at least two federal laws that relate to the conduct of real estate professionals.
Sherman Anti-Trust Act - Federal legislation including imposition of civil and punitive damages for anti-trust activities. Truth-in-Lending Act (TILA) - The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction.
Americans with Disabilities Act (ADA)
A federal law protecting the rights of individuals with physical or mental impairments.
Associate Licensee
A licensee who is licensed under a broker, or who has entered into a written contract with the broker to act as the broker's agent in a real estate transaction.
Identify who serves as a third party to an agency relationship.
A third party to an existing relationship. i.e. Listing agreement, a buyer would be the third party, buyer representation agreement, the seller would be the third party, sellers contract, a lender would be a third party. Obligations - Honesty, fairness, competency, good faith, and disclosure of material facts.
List the parties to an agency relationship, and explain the role of each party.
It comes down to the principal and the agent. The agent is hired by the principal to do certains acts dealing with a third party.
Summarize at least two paragraphs of the Residential Buyer/Tenant Representation Agreement.
1. Parties- Parties involved in transaction 2. Term - describes when the starts and ends.
Listing Contract
A contract in which a property owner employs a real estate broker to market the property described in the contract.
Net Listing
A listing which provides that the agent may retain as compensation for agent's services all sums received over and above a net price to the owner.
Real Estate Broker
A person or an organization acting as the agent for others in negotiating the purchase and sale of real property or other commodities for a fee.
Independent Contractor
A person who acts for another but who sells final results and whose methods of achieving those results are not subject to the control of another.
Provide at least one example of how a broker can operate as an intermediary.
A statutory law where a broker represents the interests of one or more parties. An example is where the broker acts an intermediary between the buyer and the seller on the transaction of a property.
Implied Agency
Agency that exists as a result of actions of the parties.
Define puffing and provide at least three examples.
Puffing, is an misleading or exaggerating statement on the sale or lease of a property. It presents opinions rather than facts about real property. Examples include property lives in safest school district in state, this house is the most beautiful in vicinity, this house is immaculate, be the talk of the town.
Universal Agent
An agent that can serve the principal in any capacity. Think of a power of attorney or a close family member.
General Agent
An agent with full authority over one property of the principal, such as a property manager.
Special Agent
An agent with limited authority to act on behalf of the principal, such as created by a listing contract. A special agent also includes the duties of a residential real estate agent.
Commission
An agent's compensation for performing the duties of the agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.
Loyalty
An agent's duty to place the client's interest above those of all others, including the agent's own self-interest.
Implied Contract
An agreement that has not been put into words, but is implied by the actions of the parties.
Puffing
An expression or exaggeration made by a salesperson that concerns the quality of real property offered for sale or lease. It presents opinions rather than facts about real property.
Material Fact
Any fact that would influence the decision of a reasonably prudent person.
Explain three ways a buyer's agent may be compensated.
Broker-Agent Commission Split, Principal-Broker-Agent Commission Split, Principal-Broker-Buyer Broker-Agent Commission Split
Identify at least three types of agency relationships that may exist in a transaction, and provide an example of each.
Broker-Seller relationship - Broker representing the seller; Broker-Buyer relationship - Broker representing the buyer; Intermediary - Broker represents both parties
Summarize at least two paragraphs of the Independent Contractor Agreement.
Definitions - provides definitions used within the document, Associate fees - describes all the parties compensated and the fees given to each.
Summarize the various ways an agency relationship can be created.
Express or Implied agency; mutually agreeing parties
Summarize at least one state law that relates to the conduct of real estate professionals.
Fair housing and discrimination practices
Misrepresentation
False statements made negligently or innocently.
Distinguish between fraud and misrepresentation, and provide an example of each.
Fraud - The intentional and successful employment of any cunning , deception, collusion, or artifice, used to circumvent, cheat or deceive another person whereby that person acts upon it to the loss of property and to legal injury. i.e. Stealing funds or lying about relationship with an inspector or appraiser Misrepresentation - False statements made negligently or innocently. i.e. on a property or a disclosure
Identify at least two tasks a personal assistant may perform for a broker.
Host an open house, schedules showings, takes calls and appointments
Title Insurance
Insurance to protect a real property owner or lender up to a specified amount against certain types of loss (ex: defective or unmarketable title).
Statutory Law
Law that is set down by a body of legislation or by a singular legislator.
Explain who is protected under the DTPA.
Liberally Construed State law that is intended to protect consumers. The following classes are protected - race, color, religion, gender, national origin, handicap, and familial status.
Describe at least three items that should be included in a broker's written policies and procedures.
Matters regarding the competency of agents, Matters regarding advertising rules, Matters regarding continuing education, license maintenance, notice to TREC, TRELA, and promulgated forms
Ethics
Moral principles that govern a person's or group's behavior.
Summarize the fiduciary duties owed by an agent to their principal, and provide an example of each.
O.L.D.C.A.R. - Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care and Diligence
Agent
One who acts for and with authority from another called the principal.
Identify at least three duties owed by a buyer's broker to a buyer.
Providing the following services to their client; financial, legal, and appraisal services
Explain the concept of sub-agency, and provide at least two examples.
Sub-agent is a person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent's principal. i.e. Non-exclusive sellers agency, represent buyers and sellers but not in the same transaction. Sub-agent until you sign a buyer representation contract with the buyer on a property.
Identify at least two requirements under TRELA.
Subchapter H. License Requirements; Subchapter I - Examinations
Fiduciary Duty
That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.
Rescission
The cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into.
Reasonable Skill and Care
The degree of care and skill ordinarily used by others competently engaged in the same business.
Principal
The employer of an agent; one of the main parties in a real estate transaction, such as a buyer, borrower, seller, or lessor.
Obedience
The fiduciary relationship that obligates the agent to act in good faith at all times, obeying the client's instructions in accordance with the contract.
Fraud
The intentional and successful employment of any cunning , deception, collusion, or artifice, used to circumvent, cheat or deceive another person whereby that person acts upon it to the loss of property and to legal injury.
Truth-in-Lending Act (TILA)
The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction.
Customer
The party the agent brings to the principal as seller or buyer of the property.
Agency
The relationship between principal and the principal's agent which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.
Law
The system of rules that a particular country or community recognizes as regulating the actions of its members and may enforce by the imposition of penalties.
Summarize the various ways an agency relationship can be terminated.
Time, action of principals and agents, operation of law, duties of agency that survive termination(agent leaves office but contract still tied to broker)
Marketable Title
Title which a reasonable purchaser, informed as to the facts and their legal importance and acting with reasonable care, would be willing and ought to accept.
Summarize the penalties/damages under the DTPA.
Under section 17.5 of the code, economic damages, attorney fees, and court costs can be recovered. Also, extra money for any mental anguish could be provided as well. Sue to 3x of the economic damage if there was any intention found during the judgement.
Describe the roles of the parties to an agency relationship.
Real Estate Broker - A person or an organization acting as the agent for others in negotiating the purchase and sale of real property or other commodities for a fee. Real Estate Salesperson - A person performing any of the acts included in the definition of real estate broker but while associated with and supervised by a broker. Associate Broker - A licensed real estate broker who chooses to work under the name and supervision of another licensed broker. Associate Licensee - A licensee who is licensed under a broker, or who has entered into a written contract with the broker to act as the broker's agent in a real estate transaction. Client - Prior to signing a listing agreement, a party in a real estate transaction who will employ an agent. Customer - The party the agent brings to the principal as seller or buyer of the property.
Disclosure
The release of relevant information about a property that may influence the final sale, especially if it represents defects of problems.
Summarize the three agency classifications, and provide an example of each.
Universal Agent - An agent that can serve the principal in any capacity. i.e. Pretty rare, a principal may have only one universal agent. A close family member or trusted individual. General Agent - An agent with full authority over one property of the principal, such as a property manager. Special Agent - An agent with limited authority to act on behalf of the principal, such as created by a listing contract.
List at least two defenses under the DTPA.
1) DTPA establishes a procedure for limiting liability and damages 2) Broker gave timely written notice therefore providing a remedy to the accusation
Associate Broker
A licensed real estate broker who chooses to work under the name and supervision of another licensed broker.
Non-Exclusive Listing (Open Listing)
A listing given to one or more brokers in which the broker procuring a sale is entitled to the commission but imposes no commission obligation on the owner when the owner sells the property.
Real Estate Salesperson
A person performing any of the acts included in the definition of real estate broker but while associated with and supervised by a broker.
Sub-agent
A person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent's principal.
Identify the parties to a transaction.
Buyer, Seller, Buyers Agent, Sellers Agent, Buyers Broker, Sellers Broker
Explain the difference between common law and statutory law, and provide an example of each.
Common law is law which is derived from court decisions, practice of law over time. Statutory law is what is administrated by local, state, and national legislative bodies or legislators.
Identify at least two professional code of ethics for real estate professionals.
Fidelity, Integrity, and competence
Identify at least two duties owed by an agent to a customer.
Honesty and fairness
Identify at least two examples of a buyer representation agreement.
Residential Buyer-Tenant Representation Agreement, Amendment to Buyer-Tenant Representation Agreement
Summarize the four types of listing contracts, and explain when each contract is used.
Exclusive Agreement (Exclusive Right to Sell Listing Agreement) - A listing given to only one broker who is entitled to the commission if anyone sells the property during the term of the listing contract. Exclusive Agency Agreement - A listing given to only one broker (exclusive) who is entitled to the commission if the broker or any agent of the listing broker effects a sale but imposes no commission obligation on the owner who sells the property to a person who was not interested in the property by efforts of the listing broker or an agent of the listing broker. Non-Exclusive Listing (Open Listing) - A listing given to one or more brokers in which the broker procuring a sale is entitled to the commission but imposes no commission obligation on the owner when the owner sells the property. Net Listing - A listing which provides that the agent may retain as compensation for agent's services all sums received over and above a net price to the owner.
Fair Housing Act of 1968
A federal Prohibition on discrimination in sale, rental, financing, or appraisal of housing on the basis of race, color, religion, gender, national origin, handicap, or familial status.
Exclusive Agency Agreement
A listing given to only one broker (exclusive) who is entitled to the commission if the broker or any agent of the listing broker effects a sale but imposes no commission obligation on the owner who sells the property to a person who was not interested in the property by efforts of the listing broker or an agent of the listing broker.
