Unit 4: Authorized Relationships, Duties, and Disclosure
Common law
(sometimes called unwritten law) is law based on usage, general acceptance, and custom. It is judge-made law manifested in decrees and judgments of the courts (case law).
residential sale transactions
- Improved residential property of four or fewer units - Unimproved residential property zoned for four or fewer units - Agricultural property of 10 or fewer acres
that ceramic tiles in the dining room are loose.
A broker has listed a seller's property. The seller has disclosed to the broker that the ceramic tile is loose in the dining room because the cement did not adhere to the tile. The loose tile is not readily visible because it is covered with an area rug to protect the seller's toddler. The broker has satisfied his legal obligation if he tells the buyer that the floor appears to be in good condition. that ceramic tiles in the dining room are loose. that the buyer can order an inspection at his own expense if he is concerned about the floor. nothing unless he is asked specifically about the tile floor's condition.
Transaction Broker
A broker who provides limited representation to a buyer, a seller, or both in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent.
Single agent
A broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction.
accounting for all funds.
A broker's obligations to consumers with whom the brokerage firm has no brokerage relationship include the duty of full disclosure. accounting for all funds. loyalty. limited confidentiality.
a for-sale-by-owner (FSBO) seller before showing the FSBO home to a buyer customer of ABC Realty.
A licensee of ABC Realty must give the no brokerage relationship notice to a buyer who has a single agent relationship with XYZ Realty. every prospective buyer and prospective seller in all cases. a for-sale-by-owner (FSBO) seller before showing the FSBO home to a buyer customer of ABC Realty. every prospective buyer who walks through an open house listed by ABC Realty.
nonrepresentation
A no-brokerage relationship.
Agent
A person who accepts the authority (and the responsibilities, duties, and obligations associated with that authority) is called the agent. Also the person entrusted with another's business. Authorized to represent and act for the principal.
principal
A person who delegates authority to another
Deal honestly and fairly
A real estate broker (and the broker's associates) are obligated to which duty in all three brokerage relationships? Loyalty Full disclosure Deal honestly and fairly Perform additional duties that are mutually agreed to
a transaction broker
A real estate broker who works in a limited capacity for both the buyer and the seller in the same transaction is a dual agent. a transaction broker. bound to fiduciary duties to both the buyer and the seller. a single agent of both the buyer and the seller.
Both the seller and the buyer must transition to a transaction broker relationship before the buyer can be shown the seller's property
A real estate brokerage company has entered into a single agent buyer broker relationship with the buyer. In order to show this buyer property that is listed with the same brokerage company for which it is a single agent, in what brokerage capacity may the company work with this buyer and seller? Single agent for the seller and transaction broker for the buyer Single agent for the seller and single agent for the buyer Any relationship that is agreed to by both the buyer and the seller Both the seller and the buyer must transition to a transaction broker relationship before the buyer can be shown the seller's property
present both offers, explaining the details of each to the seller.
A seller lists her home for $216,900. The seller tells the sales associate that she needs to get at least $212,000 for the home. After Sunday's open house, the sales associate receives two offers on the home. The first offer for $216,900 is contingent on the seller's financing a portion of the down payment. The second offer is for $209,000, with the prequalified buyer to secure her own financing. The sales associate should seek his broker's advice regarding which offer to present. present the full-price offer to the seller. present the second offer to the seller. present both offers, explaining the details of each to the seller.
obedience
A transaction broker has all the following duties EXCEPT limited confidentiality. to use skill, care, and diligence. to disclose all known facts that materially affect the value of residential real property and are not readily observable to the buyer. obedience.
Consent to transition
A written agreement to gain the principal's permission to a change in brokerage relationship. Chapter475.
At arms length
Conducting negotiations on one's own behalf without being subject to the other party's control or influence.
single agents for the buyer and the seller in nonresidential transactions where the buyer and the seller meet certain asset thresholds.
Designated sales associates are BEST described as single agents for the buyer and the seller in nonresidential transactions where the buyer and the seller meet certain asset thresholds. the sales associates designated to represent the buyer and the seller in a transaction broker relationship. undisclosed dual agents. the sales associates in charge of the required brokerage disclosure forms for the brokerage office.
Fulfillment, Mutual agreement, Destruction, Death, Bankruptcy
Fill in the blanks to complete the list of reasons that a brokerage relationship may be terminated: __________ of the brokerage relationship's purpose. __________ _______________ to terminate. __________ of the seller's property. __________ of a seller's broker or the seller before the broker finds a ready, willing, and able buyer. __________ of the principal or the customer.
Confidentiality Obedience Loyalty Disclosure (full)
Four Unique Duties of a Single Agent COLD*
should inform the principal of possible harm inherent in the instructions, and then either do as instructed or withdraw from the relationship.
If a principal gives the broker instructions that will result in loss or harm to the principal, the broker is justified in not carrying out such instructions. should carry out such instructions without question. should carry out only that portion of the instructions that will not cause loss or harm to the principal. should inform the principal of possible harm inherent in the instructions, and then either do as instructed or withdraw from the relationship.
at arm's length with each other.
In the common public relationship that exists in a typical real estate transaction, buyers and sellers are said to be dealing in a fiduciary capacity. at arm's length with each other. in an agency status with each other. under the doctrine of ethical confidentiality.
Nonrepresentation, single agent, transaction broker
List the three brokerage relationship options in Florida.
Account for all funds, deal honestly and fairly, disclose all known facts that affect value of residential property
List the three duties in a no brokerage (nonrepresentation) relationship. ADD*
5
Real estate brokers are required to retain buyer brokerage agreements for a period of ______________ years.
sale of a condominium unit.
The brokerage relationship disclosure requirements in Chapter 475, F.S., apply to the sale of a 20-unit apartment complex. sale of a condominium unit. residential lease agreement in a duplex. sale of a bookstore business and real property.
Obedience
The duty of __________ obligates an agent to act in good faith according to the principal's lawful instructions.
Confidentiality
The duty of __________ prevents an agent from revealing to a third party, without the principal's permission, personal or private information that might lessen the principal's bargaining position
loyalty
The duty of __________ requires the broker to place the principal's interests above those of other persons with whom the broker deals.
Showing of property
The no brokerage relationship notice must be given before the ___________ _____ __________.
listing agreement, showing
The single agent disclosure must be made before, or at the time of entering into a ______________ __________ or before the ______________ of property, whichever occurs first.
limited representation
Transaction brokers provide a limited form of nonfiduciary representation to a buyer, a seller, or both in a real estate transaction.
designated sales associates
Two real estate licensees designated to represent the buyer and the seller as single agents in a nonresidential transaction. The buyer and seller must have assets of $1 million or more and sign disclosures stating their assets meet the required threshold. ONLY USED IN NONRESIDENTIAL TRANSACTIONS. BROKERS SERVE AS AN ADVISER
Nonresidential transactions Rent or lease agreements (except when there is an option to purchase residential property) Business opportunities (except for property with four or fewer residential units) Auctions Appraisals
Types of Transactions That Do Not Require Brokerage Relationship disclosures
Destruction of the listed property by a large sinkhole
Which action will terminate a single agent relationship with the principal who has listed a home for sale with the brokerage? Death of a customer interested in the listing Buyer's offer not accepted by the seller Decision of sales associate who acquired the listing for the brokerage to leave the company Destruction of the listed property by a large sinkhole
Relationship between the employing broker and a broker associate
Which relationship is a general agency relationship? Brokerage company employed under a listing contract Relationship between the employing broker and a broker associate Sales associate working with a prospective buyer Relationship between a sales associate and the seller who has listed property with the brokerage
The broker must act in the best interest of the principal.
Which statement BEST describes the duty of loyalty in a single agent relationship? The broker must act in the best interest of the principal. The broker must disclose all latent defects to prospective buyers. The broker is held to a standard of care that requires knowledge concerning the land and physical characteristics of the property. The broker must be able to account for all funds received on behalf of the principal.
Full Disclosure
________ ______________ is a broker-agent's duty to keep the principal fully informed at all times of all the facts or information that might affect the transaction or the property value.
administrative law
a body of law created by administrative agencies in the form of rules, regulations, orders, and decisions. Florida Statute 475 empowers the Florida Real Estate Commission to govern real estate practice in Florida.
Customer
a member of the public who is or may be a buyer or a seller of real property and may or may not be represented by a real estate licensee in an authorized brokerage relationship. The buyer or the seller in a nonrepresentation relationship with the broker.
fiduciary
acts in a position of trust and confidence for another. Owes complete allegiance to the principal. A relationship of trust and confidence between the broker as agent and the person who delegated the authority to the broker (the principal).
Special agent
authorized by the principal (broker or owner-developer) to handle a specific business transaction or to perform a specific act.
general agent
authorized by the principal to perform acts associated with the continued operations of a particular job or a certain business of the principal. May represent the principal in a broad range of matters related to a particular business.
subagent
is an agent appointed by another agent with the knowledge and consent of the principal.
caveat emptor
let the buyer beware
duel agency
occurs when a brokerage firm represents as a fiduciary both the buyer and the seller in the same real estate transaction. It is illegal in Florida for a real estate licensee to operate as this.
statutory law
written statutes enacted by a legislature. Chapters 455 and 475 are two Florida statutes enacted by the Florida Legislature pertaining to license law.
