5 Written questions
5 Matching questions
- Is self-dealing okay?
- What is Imputed Knowledge? (Does it apply in Washington State?)
- There aren't any exceptions to the confidentiality rule...uh, right?
- Duty 6: Providing an agency law pamphlet
- Does Washington State impose a duty to investigate upon the agent?
- a WRONG! Think court order, and latent defects -- Confidential information may be disclosed under court order or subpoena. In addition, latent defects should always be disclosed, even if a principal considers them to be "confidential."
- b NOPE! Agents are meant to be Sherlock Holmes! Alicensee has no duty to investigate any matters that he does not specifically agree to investigate. This includes inspecting the property, investigating either party's financial position, or verifying the seller's statements.
- c Under general agency law, a principal is considered to have notice of information that the agent has, even if the agent never actually tells the principal. As a result, a principal could be liable for failing to disclose a problem to a third party, even if the agent never told the principal about the problem. This rule does not apply in Washington State = Principal is NOT automatically liable for things known by his agent.
- d The client even gets some documents proving the agency relationship!!! A licensee must give an agency law pamphlet to each party she provides services to. The pamphlet sets forth provisions of Washington's agency law. The pamphlet must be given to parties before any written agreement is signed.
- e 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.
5 Multiple choice questions
- When in doubt, disclose it out!!! A licensee must disclose any potential conflicts of interest to the principal, such as any relationship between the agent and a prospective buyer. (For instance, if the buyer is a friend, relative, or business associate of the agent.)
- Most agencies are created by an express written agreement, such as a listing agreement or a buyer agency agreement. However, the agreement does not need to be in writing to create a valid agency, nor does the agreement have to be supported by consideration.
- A licensee must disclose any material fact, if the fact is not apparent or readily ascertainable by the party.
- 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.
- If an agent's negligence or in- competence harms a third party, the agent may be liable
5 True/False questions
What is Vicarious liability and why does it matter in principal/agent relationships? → 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.
Are latent defects to be disclosed, even if the property is listed "as is?" → The seller and his agent have a duty to disclose any known latent defects in the property to the buyer, even if the property is listed "as is." A latent defect is one that would not be discovered in a typical inspection of the property by the buyer. A broker should refuse to take a listing if the seller insists that she must conceal any latent defects.
Does it matter when the agency disclosure happens? → IN WRITING AND BEFORE!!! The agency disclosures must be made to the buyer before the buyer signs the offer, and to the seller before the seller signs the offer. The disclosure must be in writing, either in a separate paragraph in the purchase and sale agreement or in a separate disclosure document.
What is the duty in an agency relationship? → BROKERS ARE ULTIMATELY THE AGENT! A real estate salesperson cannot act directly as the agent of a principal in a real estate transaction. Rather, the salesperson acts as the agent of his broker, and it is the broker who acts as the principal's agent.
Ratification of agency relationship → Implied agency: one not expressed in words, but understood from actions or circumstances.