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Chapter 8
Real Estate Brokerage and the Law of Agency
| Term | Definition |
|---|---|
| agency | The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions |
| agent | one who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be the |
| broker | 1) one who acts as an intermediary on behalf of others for a fee or commission. 2) one who is licensed to list, lease, buy, exchange, auction, negotiate or sell interest in real estate for others for a fee |
| brokerage | the bringing together of buyers and sellers in the marketplace |
| broker in charge (BIC) | Required for each brokerage firm and each branch office, the full broker responsible for displaying all licenses properly, notifying the ncrec of any changes of business addr or trade name, ensuring that all adverstising and agency compliance is done prop |
| caveat emptor | A Latin phrase meaning "let the buyer beware" In a caveat emptor state, sellers do not have to disclose any facts about their property when selling |
| client | Principle |
| commingling | The illegal act by a real estate broker of placing consumer funds with personal funds. By law brokers are required to maintain a separate trust or escrow account for other parties funds held temporarily by the broker |
| commission | Payment to a broker for services rendered as in the sale or purchase of real property; traditionally a percentage of the gross sales price of the property but can be a flat fee or some other calculation |
| cooperation broker | Listing broker |
| dual agency | Representing both parties to a transaction; must be consensual and reduced to writing prior to presentation of the first offer |
| employee | someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and social security taxes from the compensation of the employee |
| express agreement | contracts An oral or written contract in which the parties state the contracts terms and express their in words |
| fiduciary | One in whom trust and confidence are placed; a reference to a principal agent relationship |
| first substantial contact | A flexible moment in time when conversation between a licensee and a consumer begins to address confidential needs, desires and abilities; latest moment to legally disclose agency choices to a consumer |
| fraud | An intentional misrepresentation of material fact so as to harm or take advantage of another person |
| general agent | One who is authorized to represent the principal in a broad range of matters related to a specific business or activity; a property manager might have this power |
| implied agreement | contract A contract under which the agreement of the parties is demonstrated by their conduct |
| independent contractor | Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays all expenses an |
| in house sale | A real estate transaction where the listing firm actually produces the buyer for their listings as opposed to a co brokered or cross sale that involves two firms |
| LOADS | A mneumonic to remember the fiduciary duties of an agent to the principal; loyalty, obedience accountability, disclosure of information, skill care and diligence |
| material facts | 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 |
| multiple listing service (MLS) | A marketing organization composed of member brokers who agree to share their listing agreement with one another in the hope of procuring ready willing and able buyers for their properties more quickly than they could on their own. Most MLS accept only ex |
| negligent misrepresentation | Unintentionally misinforming any party involved in a transaction about a material fact |
| negligent omission | Unintentionally failing to disclose a material fact to any party involved in a transaction |
| oral buyer agency | A non exclusive verbal agency agreement between a firm and a buyer client. There can be no time limit on oral agency, but it must be reduced to writing prior to presentation of first offer |
| principal | 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 or superlative comments or opinions |
| ratification | A method of creating an agency relationship in which the principal accepts |
| special agent | One who is authorized by a principal to perform a single act or transaction. A real estate broker is usually a special agent of the seller authorized to find a ready, willing and able buyer for a particular property or a special agent of the buyer to fin |
| stigmatized properties | Property regarded as undesirable because of events that occurred there, also called psychologically impacted property. Some conditions that typically stigmatize a property are murder, gang related activity, proximity to a nuclear plant and even the alleg |
| subagent | one who is employed by a person already acting as an agent. Typically a reference to a provisional broker licensed under a broker who is employed under the terms of a listing agreement. A subagent has the same duties to the client as the agent |
| tort | A wrongful act, injury or violation of legal right to the person or property of another |
| universal agent | Person empowered to do anything the principal could do personally, unlimited authority, unusual in real estate |
| willful misrepresentation | Intentionally misinforming any party involved in a transaction about a material fact |
| willful omission | intentionally failing to disclose a material fact to any party involved in a transaction |
| working with real estate agents | A mandatory agency information brochure that a licensee must give to and review with consumer in all real estate sales transactions no later than first substantial contact, it does not create agency |
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