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Ch. 7

Vocab: Laws & Regulations Governing Brokerage Relationships

TermDefinition
Agent A person authorized by another to act on his or her behalf.
Apparent Authority A fact situation that creates the appearance of an agent's authority. When ag agent gives the impression he has certain authority that a 3rd party might reasonably rely upon, when in fact the agent does not actually hold such authority.
Breach of Duty The failure to fulfill an agent's duty to his/her principal. This includes: -disloyalty, -disobedience -lack of skill, care and diligence -failure to either properly disclose information -failure to accurately account for funds.
Buyer Agency Agreement A contract in which a buyer engages an agent to act on the buyer's behalf in purchasing a property.
Caveat Emptor "Let the buyer beware." Does not relieve agent's obligation of disclosing material fact.
Client The principal, to whom the agent owes fiduciary duties.
Customer The "third party" in a transaction; the agent works with the customer but not for him.
Disclosure of Information The prompt and total communication to the principal by the agent of any information that is material to the transaction for which the agency was created.
Designated Agency "I'll let you keep your agent if you let me keep mine." Firm designates 1 agent to represent seller's interest and other agent to represent buyer's. Each agent can now more specifically advocate for their principal (firm still in dual agency role).
Dual Agency Agreement Representing 2 parties at the same time or in the same transaction. This practice is illegal unless all parties are properly informed and consent to the agency.
Employment Authority A document or contract giving a real estate agent the right to act for a principal with certain specific guidelines in a real estate contract (Examples: a listing contract or buyer's agency contract).
Express Agency Any oral or written agreement establishing a trust relationship between a principal and agent.
Express Authority The authority specifically granted in a contract.
Fiduciary A person, such as an agent, who is placed in a position of trust in relation to the person for whose benefit the relationship is created. Essentially the same as a trustee.
First Substantial Contact A flexible standard that typically occurs when an agent and a prospective buyer discuss in any detail the buyer's interest (motivations, wishes, desire, wants, requirements) in purchasing property.
General Agency Full authority over 1 particular field of business or aspect of personal affairs of the principal (ex: a property manager managing an apartment complex for the owner).
Implied Agency (Ostensible Agency) When the actions of the principal and agent indicate that they have an agency agreement.
Loyalty An absolute duty of an agent to a principal to serve the best interest of the principal.
Misdemeanor A criminal violation punishable by a fine and/or imprisonment. It is not considered as severe an offense as a felony.
Misrepresentation The communication of false or incorrect information.
Negligent Misrepresentation An unintended misrepresentation of a material fact that the party did not make knowingly but should have known the truth by exercising due skill, care, and diligence.
Negligent Omission An unintended failure to communicate a known material fact. Unintended failure to communicate unknown material fact by a person responsible for dislcosing it b/c this person did not exercise the due skill, care, and diligence to reveal that fact.
Principal In the law of agency, one who appoints an agent to represent him or her. In finance/math: the amount of money on which interest is either owed or received.
Special Agency Limited authority to act on behalf of the principal, such as created by a listing.
Subagent A person appointed by an agent to assist in performing some or all of the tasks of the agency.
Third Party The person or party in a transaction other than the principal and his/her agent. In a subagency relationship, the buyer is a third party. In a buyer's agency relationship, the seller is a third party.
Universal Agency Complete authority over all activity of the principal. May be created by an unlimited power of attorney.
Willful Misrepresentation A deliberate false statement concerning a material fact that one has an obligation to that party to relay all material facts.
Willful Omission A deliberate failure to inform a party of a known material fact when one has an obligation to that party to relay all material facts.
Estoppel Occurs when an individual claims incorrectly that a person is his agent and a 3rd party relies on the incorrect representation. Person making incorrect statement is estopped and prohibited from later claiming that the agency relationship does not exist.
3 Classifications of Agency Relationships 1. Universal Agency 2. General Agency 3. Special Agency
Fiduciary Duties/Obligations to their Principal Include: "OLDCAR": 1. Obedience 2. Loyalty 3. Disclosure 4. Confidentiality 5. Accounting 6. Reasonable skill and care.
Civil Penalty Payment or redress for a private civil wrong imposed by a civil, not a criminal, proceeding.
Tenant Agency Tenant agency is different from buyer agency in that the broker is representing a consumer who is seeking to lease rather than purchase a property.
Leasing Agent vs. Tenant Representative Leasing agents- have prop. listings (empty spaces) job=put tenants in the spaces. Experts @ finding tenants. Tenant reps-has tenants. Helps clients find right location for their business. Experts @ finding locations. To do jobs, rely on ea. other.
Created by: laurenk1996
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