5 Written questions
5 Matching questions
- Are taxes withheld from independent contractors?
- Termination by operation of law (their are 4 ways this happens -- think EPDD)
- Are latent defects to be disclosed, even if the property is listed "as is?"
- Duty 1: Reasonable care and skill
- Is the broker responsible for the salesperson's conduct, even if he or she is an independent contractor?
- a YES YES YES! You MUST disclose those defects as well. In fact, if the seller is trying to get you NOT to disclose them, you should refer to take the listing!
- b Relationship doesn't last forever -- An agency relationship will terminate automatically if (1) the term of the agency expires; (2) the purpose of the agency is fulfilled (property sold); (3) either the principal or agent dies, is declared incompetent, or declares bankruptcy; or (4) the property is destroyed (e.g., burns down).
- c If an agent's negligence or in- competence harms a third party, the agent may be liable
- d Even if a salesperson is considered an independent contractor for tax purposes, the broker is still considered responsible for supervising the salesperson's actions and may be liable for a salesperson's misconduct.
- e Important employment and tax laws apply when someone is classified as an employee, particularly those involving the withholding of income taxes and social security. Unlike employees, independent contractors do not have taxes withheld from their earnings.
5 Multiple choice questions
- Licensee must watch the money closely!!!! A licensee must account for any trust funds: money or valuable items received on behalf of a party to a transaction. The licensee must report to the party on the status of the trust funds and avoid commingling (mixing) them with her own money. The duty of accounting continues after the termination of the agency.
- NO! An agent must inform the seller if the agent is buying the property him or herself. A broker should not list a property for less than it is worth, buy it, and then sell it for a profit; this is known as self-dealing.
- KEEP SECRETS!!! The agent must place the principal's interests above the interests of a third party by refusing to reveal confidential information. The duty not to disclose confidential information continues even after the agency relationship has ended; thus, a broker could not tell subsequent clients information about a past client obtained while representing that past client.
- The parties may terminate the relationship by mutual agreement at any time. If the original agreement was in writing, the termination should be in writing.
- In addition to owing fiduciary duties to her principal, an agent owes certain duties to any party to whom he renders services. This applies whether it is a principal or a third party.
5 True/False questions
What is the Broker/Salesperson relationship? → Fiduciary! Agent stands in special position of trust and confidence for someone else.
What is Vicarious liability and why does it matter in principal/agent relationships? → Agent - authorized rep; Principal - controller of agent's acts; People outside the relationship are third parties. Principal who engages agent's services is the "client", but a mere third party is a "customer."
In-house transaction → The most common dual agency situation is an in-house transaction, in which two different salespersons, representing the buyer and seller, both work for the same broker.
What are the agent's duties to the principal? → In addition to the general duties that licensees owe to any party to whom they render services, there are specific duties that licensees owe to the parties they represent. If the agent represents the seller, these duties are owed only to the seller. If the agent represents the buyer, these duties are owed only to the buyer. If the agent is a dual agent, these duties are owed to both buyer and seller.
What are the legal effects of agency? → The principal is bound by acts of the agent that are within the scope of the agent's authority.