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Ch. 7
Vocab: Laws & Regulations Governing Brokerage Relationships
Term | Definition |
---|---|
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. |