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IL-Chap 4

Real Estate Agency

QuestionAnswer
Agency describes the relationship between the real estate licensee and the parties involved in a real estate transaction. Governed by common law=rules of a society established by tradition & court decisions. Statutory law=rules enacted by legislatures.
Law of Agency defines the rights and duties of the principal and the agent.
Agent individual who is authorized and consents to represent the interests of another person.
Brokerage Agreement Made verbally or set in writing, for an agent or firm to provide brokerage services to a consumer and to receive compensation for it.
Client Person or entity that a licensee represents in a real property transaction.
Compensation Payment made to a person or entity for executing services for a client or customer.
Consumer person for whom an agent provides services or seeks services from a licensee.
Confidential Information 1. Client requests licensee to keep in confidence. 2. relates to the client's negotiating position 3. could do damage to client's negotiating position, if disclosed. Must not be shared unless client gives permission.
Customer person for whom licensee is providing services but is not represented by the licensee in an agency relationship.
Ministerial Acts Informative or clerical services provided by a licensee to a consumer.
An Agent works for a client and with a customer. Client is the Principal to whom her agent gives advice and counsel.
Fiduciary Relationship agent's trust and confidence means the real estate licensee owes the principal certain duties which form the common law of agency COLD AC = Care; Obedience; Loyalty, Disclosure, Accounting & Confidentiality.
IL Residential Real Property Disclosure form requires that sellers of 1 to 4 unit residential properties fill out property disclosure forms revealing any material defects they are aware of in the real estate for sale
IL Residential Real Property Disclosure form if the disclosure form is delivered after offer has been accepted, the buyer has 3 days to cancel the contract. If seller learns of a new problem after contract signed, he has up & until closing to disclose it. Can not cancel. Comp may be negotiated.
IL licensees are required to deliver true copies of all executed sales contracts to the people who signed them within 24 hours. In IL, all funds entrusted to a licensee must be deposited in a special escrow account by the next business day following the signing of a sales contract. Escrow account transactions must be kept on file for at least 5 years.
Commingling escrow funds with licensee's personal funds is illegal. Conversion is the practice of using those funds as licensee's own money is illegal.
Statements of opinion are permissible only as long as they are offered as opinions without any intention to deceive. Statement of Facts must be accurate.
Puffing exaggeration of a property's benefits.
Fraud intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person.
Express Agency parties formally express their intention to establish an agency and state its terms and conditions.
Buyer agency agreement relationship between a buyer and a sponsoring broker. Similar to a listing agreement, stipulates resp. that the buyer expects.
Real Estate License Act 2000 requires that all exclusive brokerage agreements must be in writing.
Implied Agency agency created by the parties unintentionally, inadvertently or accidentally by their actions.
Compensation Does not determine agency relationship. Both buyers and seller's real estate agents are often paid by the seller in a cooperative commission arrangement.
Termination of Agency Death or incapacity of either party Destruction or condemnation of the property; Expiration of the terms of the agency; Mutual agreement by all parties to the contract; Breach by one of the parties. By operation of law Completion of agreement
Universal Agent person empowered to do anything the principal could do personally. In IL, a written power of attorney is required to be a universal agent.
General Agent may represent principal in a broad range of matters. A property manager is considered a general agent to property owner. Brokers and managing brokers are general agents to their sponsoring broker.
Special Agent authorized to represent the principal in one specific act or business transaction only, under detailed instructions. A real estate licensee is a special agent.
Designated Agent person authorized by the sponsoring broker to act as the agent of a specific principal. Sponsoring broker can designate licensees employed by them to act as a legal agent of a client.
Buyer Agency relationship established in the same way as any other agency by contract, agreement or implication.
Dual Agency agent represents two principals in the same transaction. Requires equal loyalty to two separate principals at the same time.
Disclosed dual agency Law permits dual agency so long as buyer and seller are informed and consent to the licensee representation of both in the same transaction.
Created by: Denise Setchel