5 Written Questions
5 Matching Questions
- What is a Dual Agency?
- Why is the scope of authority in an agency relationship important? What are the three basic types?
- What are the legal effects of agency?
- How is vicarious liability treated in Washington between real estate agent and client?
- What is Vicarious liability and why does it matter in principal/agent relationships?
- a Under general agency law, the principal may be held liable for his agent's wrongful acts. This is known as vicarious liability. Thus, a buyer or seller may be liable for the acts of his broker or a salesperson working for that broker.
- b Dual agency exists when an agent represents both the buyer and the seller in the same transaction. Dual agency is legal in Washington, although it is discouraged. To act as a dual agent, a broker must have the written consent of both parties to the transac- tion. He must also act impartially towards both buyer and seller and refrain from acting to the detriment of either party.
- c The extent to which the principal can be bound by the agent's actions depends on the scope of authority granted to the agent; Types: Universal, general, special.
- d The principal is bound by acts of the agent that are within the scope of the agent's authority.
- e Under Washington real estate law, there is no vicarious liability between a real estate agent and a principal. A seller or buyer is ordinarily not liable for any act, error, or omission by a broker or salesperson.
5 Multiple Choice Questions
- Actual authority is authority granted to the agent by the principal, either expressly (written or orally), or by implication (the authority to do what is necessary to carry out actions that were expressly authorized) -- A person has apparent authority when he has no actual authority to act, but the principal negligently or deliberately allows it to appear that the actions are authorized. The principal may be liable for acts committed by an apparent agent (or ostensible agent)
- YOU'RE FIRED!!! The principal may revoke the agency by firing the agent whenever she wishes. The principal may be liable for any damages caused by the breach.
- A general agent is authorized to handle all of the principal's affairs in one or more specified areas. Property managers are considered general agents
- Think of this as Washington's requirement that ALL the cards be put on the table: Washington law requires real estate agents in residential transactions to make agency disclosures to both the buyer and seller informing them which party (or parties) they represent.
- An agent must always place the principal's interests above the interests of a third party. For instance, a seller's agent must negotiate with the buyer to get the highest price possible for the seller.
5 True/False Questions
What is a Special Agent? → This agent has limited authority to do a specific thing or conduct a specific transaction. In most cases, a real estate broker is a special agent because she has only limited authority; for instance, she can only negotiate with third parties and cannot sign a contract on the seller's behalf. (She would need a power of attorney to bind the seller.)
Duty 5: Good faith and continuous effort → Don't quit!!! Licensees must make a good faith and continuous effort to fulfill the terms of the agency agreement. For instance, a seller's agent must make a good faith and continuous effort to find a buyer for the property.
What is Imputed Knowledge? (Does it apply in Washington State?) → ABSOLUTELY NOT!!! NO KICKBACKS!!! An agent must not make any secret profits off the agency. A secret profit is a financial benefit that the agent receives without the principal's consent, such as a kickback from referring the principal's business to a contractor. An agent may still use the services of a contractor with whom she has an interest, so long as the interest is disclosed and the principal consents.
Duty 2: Honesty and good faith → Real estate agents must avoid inaccuracies in their statements to prospective buyers. Opinions, predictions, or puffing - Misrepresentations, which may be grounds for a lawsuit, should not be confused with opinions, predictions, or puffing. The latter are nonfactual or exaggerated statements a buyer should know he cannot rely on
What is a secret profit, and is it allowed? → ABSOLUTELY NOT!!! NO KICKBACKS!!! An agent must not make any secret profits off the agency. A secret profit is a financial benefit that the agent receives without the principal's consent, such as a kickback from referring the principal's business to a contractor. An agent may still use the services of a contractor with whom she has an interest, so long as the interest is disclosed and the principal consents.