Texas Real Estate Agency

72 terms by Kristinap_2011

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Agent

A person who accepts a designation of authority by agreeing to act for the principal.

Broker

A Texas real estate licensee who is authorized by law to sell, exchange, purchase, lease real estate or perform other related acts in exchage for a commission or other valuable consideration.

Client

An agent's principal.

Common Law

The body of law that developed from decisions of the courts (precedents) along with unwritten principles of fairness and justice.

Customer

A third party to whom the agent owes duties of fairness and honesty.

Licensee

Anyone holding a Texas real estate salesperson or broker license.

NAR

The National Association of Realtors, a large national trade association of real estate professionals.

Power of Attorney

A written document authorizing a person, called attorney-in-fact, to act on behalf of another person to the extent indicated in the instrument.

Principal

A person for whom action is to be taken in an agency relationship.

Salesperson

A Texas real estate licensee who is associated with a broker.

Statutory Law

The body of law relating to statutes that have been enacted by legislative bodies.

TREC

The state agency that administers the provisions the The Real Estate License Act.

TRELA

The Real Estate License Act; The law that regulates real estate professionals in Texas. The primary law that affects broker misconduct.

Types of Agents

Universal
General
Special

Universal Agent

Has the authority to perform every type of transaction that a principal may lawfully delegate to the agent.

General Agent

Is authorized to act on behalf of a principal; however, here the general agent can only perform acts of a scope that are restricted only to the delegated act. Ex: broker and his associates.

Special Agent

Is restricted to only the acts permitted by the principal and is very limited in scope. Ex: listing agmt agent has with principal, they can only market and submit offers, they cannot make decisions on behalf of the principal.

How an agency relationship is created

Express
Implied
Agency by Ratification
Ostensible Agency (Agency by Estoppel)
Gratuitous

Express Agency

Relationship is created when agency is expressly created between the parties either orally or in writing. But must be in writing to be enforceable.

Implied Agency

Is inferred by the conduct of the parties, because it is customary, or the norm, in the specific business context. Still risky for agent.

Agency by Ratification

Is created when a principal ratifies or approves of an action that was originally performed without authorization, thereby accepting the benefits associated with the representation.

Ostensible Agency (Agency by Estoppel)

An agency relationship created by law where the words and actions of a licensee demonstrate to third parties that the licensee is apparently (ostensibly) working for a party and the party fails or refuses to correct this mistaken impression. The party is legally barred (estopped) from later denying that such an agency relationship existed.

Gratuitous Agency

Relationship formed without compensation for the agent.

Termination by Acts of the Parties

Accomplishment of purpose
Expiration of term
Mutual agreement
Renunciation by the agent - an agent's rejection of authority
Revocation by the principal - a principal's taking back of authority
Abandonment by agent

Termination by Operation of Law

Death of party
Property destroyed
Illegality
Bankruptcy of owner

Fiduciary Relationship

A special legal relationship based upon trust, confidence, integrity, and fidelity.

Common Law Fiduciary Duties

Obedience to instructions
Loyalty to principal
Disclosure of material information
Confidentiality of information
Accounting of money and property
Reasonable care, skill and diligence

Specific Fiduciary Duties under Commission Rules

Duty of Fidelity
Duty of Integrity
Duty of Competency
Duty of Disclosure of Material Facts
Duty of Honesty and Avoidance of Self Dealing
Duty of Accountability of Funds
Duty of Diligence

Real Estate Recovery Trust Account

Provides funds for TREC to reimburse consumers who have obtained court judgments against licensees for actual damages caused by licensees but have been unable to collect. If payment is made, the agent's license may be revoked or suspended. Claims for exemplary damages cannot be reimbursed. Claims against unlicensed people cannot be accepted unless they are an employee or agent of licensees. Limited to $50,000 per transaction and $100,000 per licensee.

Disclosure Obligations to Customers

Concerning agency status
Concerning certain conditions affecting the property
Concerning title issues
Relevant material facts

Duties to Customers under Commission Rules

Duty of fairness
Duty of integrity
Duty to be knowledgeable
Duty to avoid misrepresentation
Duty to disclose self dealing

Common Law Fraud

Fraud is the misrepresentation of a material fact made with both the knowledge of the falsity and the intent to deceive, that is justifiably relied upon, as well as damages suffered.
Misrepresentation - must be proved to be false
Material - influences a reasonable person's decision
Knowledge - whether the person making the representation knows of th falsity of the representation
Intent - involves whether the alleged wrongdoer intended to deceive
Reliance - being influenced by the representation

Negligent Misrepresentation

It is not necessary for the defendant to have knowledge or a reckless disregard of the falsity of the representation.

Remedies Available for Common Law Liability

Rescinding or canceling the contract and damages.

Compensatory Damages

Intended to compensate the innocent party for the loss suffered at the hands of the wrongdoer. Ex: out-of-pocket expenses being awarded to plaintiff as reimbursement.

Benefit of the Bargain Damages

Damages that may be assessed by a judge or jury to recover the benefit of a lost bargain in an amount that puts that person in the same financial position that would have resulted in the contract had been fully performed.

Exemplary Damages

Intended to punish the defendant; as a result, these are sometimes referred to as punitive damages and can be quite large. Texas law specifically allows awarding of exemplary damages in common law fraud cases, many plaintiffs choose this route. Must be proven by clear and convincing evidence.

TRELA Disciplinary Action

Suspension - license is suspended for a period of time.
Revocation - license has been revoked or returned to the commission, the licensee has lost the license.
If the commission proposes to suspend or revoke, the licensee is entitled to a hearing first.
Administrative penalty, court injunctions, state civil penalty, criminal prosecution

Limitation Periods for Common Broker Actions

4 years - Actions for breach of fiduciary duty and common law fraud.
2 years - Actions under state law so as to be entitled to reimbursement from the real estate recovery account.

Seller Agency

Refers to the agency relationship that results when an agent represents a person who wishes to sell their property.

3 Basic Listing Agreements

Exclusive right to sell
Exclusive agency
Open listing

Express Agreement

An agreement or contract that has been put into words, either written or spoken. Must be written to be enforceable.

Implied Agreement

An agreement or contract that not been put into words, but is implied by that actions of the parties.

Original broker

If a salesperson changes sponsoring brokers, the listing belongs to the ____________________.

Termination Date

A listing term may be for any period of time, but must always contain a definite ____________________. Failure to specify one may lead to license suspension or revocation.

Exclusive Right to Sell

Entitles the listing broker named in the contract to a commission even if the owner sells the property.

Protection Clause

In a listing is a negotiated period after the termination of a listing in which the listing broker may still be entitled to a commission.

Exclusive Agency Listing

A listing providing that one agent has the right to be the only agent, other than the owner, to sell the property during a specified period. No commission if owner sells.

Open Listing

A unilateral, non-exclusive listing agreement where the owner agrees to sell the property and pay and commission to any successful broker with whom they have a written open listing agreement.

Net Listing

Is any one of the three types of agreements whereby the agent agrees to sell the owners property for a set minimum amount to the owner. If the sale price exceeds the minimum net to the seller, the the excess sales price will be retained by the agent as their commission. Not recommended.

Commissions

Percentage of sales price
Flat fee
Rate price - based on time expended to sell property
Net listing
Combination

Buyer Agency

The buyer is the principal and the broker is the agent.

Pre-qualification

A preliminary qualification based on a persons current income, expense situation, and credit score. A rough estimate of the price range a buyer can afford.

Pre-approval

Where the buyer must actually complete a loan application and submit it to a lender for preliminary approval.

Dual Agency

A single broker representing more than one party at the same time. As of Sep 2005, TRELA states that a broker who represents both a seller and a buyer must act as an intermediary. Any licensee who fails to do so in in violation of TRELA and is subject to disciplinary action by TREC, as well as civil suits for damages.

Undisclosed (Accidental) Dual Agency

Exists when a person believes that theyre being represented by an agent. This is prohibited by statute.

Intermediary Brokerage

Only a broker may serve as one. Texas law requires that both parties to this relationship must agree in writing that they authorize the making of the appointments. The broker must then give written notice that he/she has made the appointments, including names of all appointees and specifying the party each represents.

Statutory, Common Law

___________ duties supersede ________________ duties.

Things a broker acting as an intermediary may NOT do

1. Disclose to the buyer/tenant that the seller/LL will accept a price less than the asking price.
2. Disclose to the seller/LL that the buyer/tenant will pay a price greater than the price submitted in a written offer.
3. Discolse any confidential info or any info a party specifically instructs the broker or salesperson in writing not to disclose, unless: the broker is instructed otherwise in a separate writing by respective party, the broker is required by law or a court order, or if the info materially relates to the condition of the property.
4. Treat a party dishonestly.

Subagency

A form of agency where the seller's agent works with a licensee in another office in order to represent the seller. Subagent owes OLD CAR fiduciary duties to seller, even if representing a buyer.

Single Agency

A firm that will represent buyers and seller, but never within the same transaction. They will never practice intermediary brokerage.

Disclosure of Representation

The commission may suspend or revoke a license, if they fail to make clear to all parties to a real estate transaction the party for whom the license holder is acting. A license holder who represents a party in a transaction shall disclose, orally or in writing, that representation at the time of the license holder's first contact with: another party or another license holder who represents another party to the transaction.

IABS

Is a statutory info form, required to be given to non-represented parties, which explains agency, agency options, and the duties of the agents for each option. Must be given at the time of the first substantive dialogue - meaning a meeting or written communication that involves a substantive dialogue relating to specific real estate property. A signature is not required but is a very good idea for evidence that the disclosure was given and received.

Seller's Disclosure of Property Condition

Under Texas law, a home seller is required to make a disclosure to the purchaser concerning the condition of the property. This disclosure is required by the Texas Property Code. The seller must be the one to complete the form.

Significant Defect

Including a latent structural defect known to the license holder that would be a significant factor to a reasonable and prudent buyer in making a decision to purchase real property.

Latent Defect

Usually means something which is hidden. To be held responsible for property condition misrepresentation or concealment, the licensee must have known about the property defect.

Material Facts

Relate to the physical property itself or it can refer to some aspect of the property such as ownership issues.

Stigmatized Property

Properties where a real or rumored event occurred.

AIDS and HIV

Persons with __________________ are alos protected by federal law. Considered to be handicapped under the federal fair housing act, disclosing these health issues can result in severe penalties.

Deaths unrelated to the property condition

A license holder is not required to disclose about _______________________________ whether it be by natural causes, suicide, or accident unrelated to the condition of the property.

Megan's Law

Certain sex offenders are required to register with local law enforcement authorities.

Title Disclosures

When an offer to purchase real estate in this state is signed, a license holder shall advise each buyer, in writing, that the buyer should: Have the abstact covering the real estate that is the subject of the contract examined by an attorney chosen by the buyer or be provided with or obtain a title insurance policy. Failure to do so could result in license suspension or revocation and legal inability to recover an unpaid real estate commission.

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