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Chapter 7

Real Estate Brokerage & Agency Law

QuestionAnswer
Agency the fiduciary relationship between the principal and the agent.
Agent one who represents the interest of another person.
Antitrust laws laws that prohibit monopolies and contracts, combinations, and conspiracies that unreasonable restrain trade.
Broker One who acts as an intermediary on behalf of others for a fee or commission; licensed to list, lease, buy, exchange, auction, negotiate or sell interest in real estate for others for a fee
Brokerage the business of bringing buyers and sellers together
Broker-in-charge Required for each brokerage firm and branch office, the full broker responsible for supervision of all real estate activities therein, including provisional brokers.
Caveat emptor let the buyer beware
Client or Principal the person who hires and delegates to the agent through a brokerage contract the responsibility of representing that person's best interest.
Commingling when trust funds and the firm/broker's personal/business funds are placed in the same account
Commission compensation provided by the principal to the firm, contingent on the firm successfully performing the service
Cooperating brokers those who act as subagents of the principal
Customer the third party for whom some level of service is provided by an agent of another party, but who is not represented by the agent
Designated duel agency used when a transaction is an in-house sale (when one agent from firm X represents the buyer and another agent from firm X represents the seller)
Dual agency when the broker/firm represents the buyer and the seller in the same transaction
Employee one who works as a direct employee of an employer and has employee status.
Express Agreement/Contract An oral or written contract in which the parties state the contract's terms and express their intentions in words.
Fee-for-service Arrangement where consumer asks licensee to perform specific real estate services for a set fee; unbundling of services; limited service firms.
Fiduciary a relationship in which the agent is placed in the position of trust and confidence to the principal.
First Substantial Contact A flexible moment in time when conversation between a licensee an a consumer begins to address confidential needs, desires and abilities; latest moment to legally disclose agency choices to a consumer.
General agent one who represents the principal in a broad range of matters related to a particular business or activity
Implied agreement when principal and agent, without formally agreeing to the agency, act as if one exists.
Independent contractor Someone retained to perform a certain act but is subject to the control and direction of another. Unlike an employee, he pays social security and income taxes and receives no employee benefits. Most real estate licensees are independent contractors
In-house sale a sale in which both the selling agent and the listing agent are from the same firm.
LOADS the specific duties of the principal: loyalty, obedience, accounting, disclosure of information, and skill, care, and diligence
Material fact any fact that is important or relevant to the issue at hand; mandatory disclosure by all agents in a transaction to all parties of the transaction
MLS Multiple listing services
Negligent misrepresentation when agents unintentionally misinform a buyer, seller, tenant, or landlord concerning a material fact because they do not have actual knowledge of the fact, b/c they have incorrect information, or b/c of a mistake by the agent.
Negligent omission takes place when agents do not have actual knowledge of a material fact but should reasonably have known of such a fact.
Oral buyer agency an agency option a firm may use when the consumer is unwilling to commit to an exclusive written buyer agency relationship.
Price-fixing the practice of setting prices for products or services rather than letting competition on the open market establish them.
principal (1) funds loaned or used in an investment (2) original amount of a loan (3) main party to a transaction – the person for whom the agent works; the client.
Provisional Broker A real estate licensee who performs real estate activities under the supervision of a licensed real estate broker-in-charge. Must complete post-licensing courses to remove the provisional license status
puffing exaggerated comments or opinions; "This house has the best view in town!"
Ratification establishing an agency relationship by performing any act that accepts (ratifies) the conduct of the agent as that of an agent.
Special agent one who is authorized to represent the principal in only one specific act or business transaction
Stigmatized Properties Property regarded as undesirable because of events that occurred there,such as murder, gang-related activity, proximity to a nuclear plant, and even the alleged presence of ghost. Also called psychologically impacted property.
Subagent one who is employed by a person already acting as an agent (an agent of the agent).
Tort A wrongful act, injury or violation of legal right to the person or property of another.
Universal agent one who is empowered to do anything the principal could do personally
Willful misrepresentation when agents who have actual knowledge of a material fact deliberately misinform a buyer, seller, tenant, or landlord concerning such fact.
Willful omission takes place when agents have actual knowledge of a material fact and a duty to disclose such fact to a buyer, seller, tenant, or landlord, but deliberately fail to disclose such fact.
Working with Real Estate Agents A mandatory agency information brochure that a licensee must give to and review with consumers in all real estate sales transactions no later than first substantial contact; it does not create agency.
Created by: whitwill
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