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Chapter 9
National agency
| Question | Answer |
|---|---|
| the most primary of relationships in real estate brokerage is that between a broker and a client. It is known as the______. | agency relationship |
| who defines and regulates the legal roles of the agency relationship? | law of agency |
| the principle: the agent: the customer: | a client a broker a third party |
| the essence of the agency relationship is_________and_______. | trust, confidence, and good faith |
| True or false: the agency relationship does require compensation of any form of consideration. | False (compensation does not define an agency relationship) |
| in an agent relationship, a principal hires an agent as a ______ to perform a desired service on the principal's behalf. as a ___, the agent has a legal obligation to fulfill specific____duties throughout the term of the relationship. | fiduciary |
| what are the three types of agencies? | universal, general, and special. |
| what is a universal agency? | the principal empowers the agent to perform any and all actions that may be legally delegated to an agency. (power of attorney) (rare) |
| what is a general agency? | the principal delegates to the agent ongoing tasks and duties within a particular business or enterprise. (ongoing) |
| what is a special/limited agency? | the principal delegates authority to conduct a specific activity, after which the agency relationship terminates. (most common) (terminates) |
| what is the most common way of creating an agency relationship? | by listing agreement, which may be oral or written. It establishes an agency for a specific transaction and has a stated expiration. |
| what is an implied agency? | Parties act as if there were an agreement. They create a agency relationship outside an existing one. Obligates the agent to fiduciary duties and professional standards of care. |
| true or false: parties may terminate the relationship at any time by mutual agreement. | true |
| what is involuntary termination? provide one example | an agency relationship may terminate contrary to the wishes of the parties by reason of: death of either party |
| true or false: involuntary termination does not create legal and financial liability | false |
| what are the fiduciary duties of an agent to a client? | O-bedience L-oyalty D-isclosure C-onfidentiality A-ccounting R-easonable care, skill, and diligence |
| what fiduciary duties are imposed on a client? | C-ompensation I-nformation A-vailability |
| what fiduciary duties does an agent owe to a customer, and a customer to an agent? | Agent: honesty, fairness, reasonable care and skill, and disclosure customer: none |
| the ______standard is one of the duties that extends beyond the termination of the listing. At no time in the future may the agent disclose ______ information. | confidentiality; confidential |
| what is the most obvious example of a "should have known" disclosure is a _______. | property defect ex: inoperative central air conditioner |
| what is the traditional notion of caveat emptor? | let the buyer beware |
| True or false: caveat emptor no longer applies to real estate transactions. | true |
| true or false: agents do have certain obligations to customers, even though they do not represent them. | true |
| what is intentional misrepresentation? | when an agent intentionally or unintentionally defrauds a buyer by misrepresenting or concealing facts |
| what is negligent misrepresentation? | when an agent fails to disclose facts they were not aware of but should have known. |
| what is misrepresentation of expertise? | when an agent acts or speaks outside their area of expertise. |
| true or false: an agent will not be held liable for a breach of duty to a client or customer | false: a breach of duty may result in license suspension or damages in court |
| what are the 3 primary forms of agency relationship between brokers and principals? | single, dual, and subagency |
| what is the fourth kind of relationship with no agency relationship? | transaction brokerage/ no agency |
| what is a single agency? | an agent represents one party in a transaction. Client can be either seller or buyer. agent -----> seller agent ----> buyer |
| what is a listing broker? | an agent of the seller or owner |
| what is a listing agent? | an agent who works for the listing broker and who obtained the listing |
| what is a buyer's broker? | a broker who represents a buyer |
| what is a subagency? | a broker/licensed salesperson works as the agent of a broker who is the agent of a client. (broker of the broker). Sub agent owes same duties to agent, that agent owes to client agent -----> client ^ sub agent |
| what is a dual agency? | agent represents both buyer and seller or tenant and owner. Agents fiduciary duties can only be rendered to one party. buyer <----- agent -----> seller |
| what is implied/ undisclosed dual agency? | if a broker or agent act in any way that leads a customer to believe that the agent is representing the customer, dual agency created. agent now obligated to fiduciary duties. |
| if both parties accept the dual agency, the agent owes all the fiduciary duties to both parties except: | disclosure, undivided loyalty, and representation of one principal's interest |
| What is an example of an agent in a dual agency, exempting disclosure. | if a potential buyer discloses financial qualifications to seller's agent, agent required to disclose ito to seller. |
| what is a no agency? | to clear up the question of who works for whom, and who owes fiduciary duties to whom. Broker allowed to represent no one in a transaction. Broker is now a transaction broker/facilitator. dealing with customers not clients. buyer<broker>seller |
| what is a no subagency? | response to "who works for whom". subagency replaced by buyer agency or seller agency only. agent ----> client |
| true or false: agent must inform client and customer that the agent represents the client and does not represent the customer | true, unless it is a dual agency. |
| true or false: agent does not have to disclose agency relationships whether the interest is a fee, partial fee, air right or subsurface right | false |
| what is client disclosure (seller agent)? | agent who intends to represent SELLER/ OWNER must disclose the import of the proposed agency relationship in writing BEFORE the listing agreement is executed. (agent will be representing client's interests as a fiduciary) |
| what is a customer disclosure (seller agent)? | when a listing agent must disclose in writing to a BUYER/ TENANT that agent represents the OWNER in the transaction. occur at the FIRST SUBSTANTIVE CONTACT |
| what is a substantive contract (seller agent)? | contract between listing agent and customer |
| what is client disclosure (buyer agent)? | agent who plans to represent a BUYER/TENANT must disclose in writing BEFORE the representation agreement is executed. |
| what is the customer disclosure (buyer agent)? | buyer agent must disclose agency relationship to seller/seller's agent on FIRST CONTACT. |
| How are no agency and dual agency similar? | Rules for disclosing a transaction broker's status of non-agency are similar to those of dual agency. The agent must provide written notice to all parties or their agents on first becoming a transaction broker or on the first substantive contact, |
| Are dual agencies legal in Texas? | no |
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AA412614
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