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Law of agency

Terms in this set (80)

Subagent
A lincense holder not associated with the seller but who is representing the seller through a cooperative agreement.
What is agency?
An agency relationship exists when one person, the agent acts for or on behalf of another person the (principal) is also knowns a client.
The Texas real estate license act (trela) was passed in ?
1939
The Texas real estate commission was created to enforce and administer the act in ?
1949
How is responsible for the professional acts of an associate sales agent?
A broker lincense
Trela rep disclosure
The commission intent is clear that all parties to a transaction must understand their relationship with the broker.
Trela is also call?
Section 1101.651
Fails to advise a buyer in writing before the closing of a real estate transaction that the buyer should.can cause what?
Suspensión or revocation of línchese!
The initial relationship with all potential buyer and sellers is a _________.
Customer
A buyer becomes a client by entering into a buyer representation agreement with the _______?
Broker
When dealing with a customer, the broker has duties of disclosure ________,
______ and competency.
Honestly,fairness
A person who receives limited brokerage services without establishing an agency relationship is called
A customer or 3rd party
The most desirable method of creating an agency relationship with buyer,seller,landlord or tenant is to do in ?
Writing
When an individual grants express authority to the agent to perform some act the authority granted may be in ?
Oral or writing form
When actions lead another person to assume that one is an agent is call?
Ostensible agency
Impplie authority
Agency authority or right may also be a result of the norm
Held to the amount of good faith are required to exclude all selfish interest disclosure of relevant facts
Fiduciaries
Universal agent has less authority than?
General agent
Fiduciary duties and responsibilities
Obedience, loyalty, disclosure, confidentiality, accounting, reasonable care
Obedience
An agent is obligated to follow all of the lawful instructions of a client.
Confidentiality
Any confidential information learned about a client must be kept confidential forever.
disclosure of presentation
The disclosure of representation may be done orally or in writing.
"Substantive"
When an agent and potential party enter into _______________________ discussion of a real estate transaction, the party must be provided with a TREC-prescribed agency information form. The license holder is responsible for determining when a discussion becomes substantive, as the discussion "triggers" the requirement for the delivery of the form.
License Act Sec. 1101. 558. Representation Disclosure:
(c) A license holder is not required to provide the notice required by Subsection (b-1) if:
(1) the proposed transaction is for a residential lease for not more than one year and a sale is not being considered.
Broker can only be the intermediary between:
Agent seller and Agent buyer
Broker acting as intermediary
(1) the broker obtains written consent from each party for the broker to act as an intermediary in the transaction; and

(2) The written consent of the parties states the source of any expected compensation to the broker.
What form must be an agent provide to potential client at the first substantive discussion of a real estate transaction?
IABS
In real estate, an example of a general agent would be a(n) ____________________
Property manager
Seller's disclosure of property condition
In Texas, most sellers prepare a seller's Disclosure of Property condition.
All of these sellers:

1. Pursuant to a court order or foreclosure sale.

2. A bankruptcy trustee.

3. To a lienholder by the owner of a property.

4. A mortgagee (lender) who has acquired the property through a foreclosure or a deed in lieu of foreclosure.

5. Fiduciary (executor, trustee, or guardian) in the course of administration of a decedent's estate, guardianship, conservatorship or trust.

6. From one co-owner to one or more other co-owners.

7. A spouse or to a person in the lineal line of consanguinity (parents, grandparents, children) of one or more of the transferors.

8. Between spouses resulting from a divorce decree or a property settlement agreement incident to a divorce decree.

9. To or from any governmental entity.

10. of a new residence which has not previously been occupied for residential purposes.

11. Where the value of the dwelling does not exceed 5% of the value of the property.
Have the obligation to disclose any known material defects to a buyer.
When is a property stigmatized?
When some events occurs, or some people believe that a past event or condition is affecting it.
TREC rules defines _____________________ at any form of communication on behalf of a license holder designed to attract the public to use real estate brokerage services.
Advertisement
If any person violates the provisions of the Texas Business and Commerce Code, Fraud in Real Estate and Stock Transactions, he or she is liable to the person defrauded for:
-Attorney's fees
-Expert witness fees
-Court costs
What is a listing agreement?
Is an employment contract used by sellers to employ a real estate broker, or brokerage firm, to find a buyer for their property.
A listing package should , at a minimum include:
-A legal description of the property, including a street address.

-The agreement to pay a stated commission, usually a percentage of the sales price
What is an open listing?
it gives the seller the right to list the property with multiple competing brokers and to sell the property personally without liability for payment of a commission.
The shared information from the MLS can be used by agents to prepare a(n)________________
A Comparative Market Analysis:
to show a seller the market value of the property. If possible agent should use data from sales that have closed within the last six months.
Subagency
when a license holder is not associated with the seller's broker but is representing the seller through a cooperative agreement with the seller's broker
Listing Termination
All listing agreements must have a definite termination date.
The _____________________ is usually a fixed percentage of the sales price negotiated between the broker and the client, payable to the broker
Broker's fee
Exclusive agency agreements:
Allow the seller to sell the property himself without paying the broker a commission
Buyer/Tenant Representation Agreement
The agreement that buyers sign allowing a broker to represent them.
Suit for commission (broker compensation)
-Only a broker may earn a commission
-Only a broker may sue to collect a commission.
Cooperative sale (when there is 2 brokers involved)
A property is listed by one firm and later sold by another.
How agency is terminated?
- The expiration of the time period stated in the listing contract.

-At any time by mutual agreement.

-Death or incapacity of either party.

-Bankruptcy of either party.

-A broker has the power of termination that allows him or her to terminate an agency agreement early. For example: if a broker determined that a principal was not cooperating with their efforts to market their property.
Dual Agency (one agent representing buyer and seller)
This common law could only be applied by the application of court decisions rendered over the decades in the area of dual representation.
What is the name of the method used to resolve the conflict of when a buyer that the broker is representing wished to purchase a property from the seller whom the broker also represents?
Dual agency
intermediary
Is a process that makes it possible to bring client buyers and sellers together while at the same time representing their best interests. When this type of transaction occurs the broker becomes the _______________________. Since the broker has a personal duty to represent both sides.
Intermediary without appointments
Occurs when an agent sells his or her own listing, but cannot give advice or negotiate for either party. There will be no appointments because there there is only one agent in the transaction.
Intermediary without appointments-liability issues: Some brokers feel that Intermediary without appointments carries with it a level of liability that is unacceptable. Because of this, brokers required that another agent in the firm be brought in so that appointments can be made but...
To appoint or not is at the discretion of the broker.
When will Intermediary with appointments happen?
When 2 agents are involved, one working with the seller and the other with the buyer.
The _______________________ notifies the parties that both the seller and buyer are clients of the broker
Intermediary Relationship Notice
IABS (Information about Brokerage Services)
Is to be provided when the first substantive discussion of real estate transaction takes place.
Intermediary with Appointments Only
-If a single agent in the firm is working with both the buyer and seller, another agent in the firm needs to be brought into the transaction so appointments can be made.
Advantages of buyer agency only and seller agency only (No intermediary)
Do not have to worry about unintentional dual representation.
What is one problem that should be addressed in an agency policy manual:
Presenting the IABS at the wrong time. Presenting the IABS as the buyer is about to write an offer is too late.
The IRS (internal Revenue Service) set guidelines to determine whether or not a sales agent would be classified as an independent contractor or an employee by a real estate broker. All of the following factors in the list are used as a guideline for the determination by the IRS:
-Commissions must compensate the sale agents.
- There may be policies and procedures manual provided, but there may not be mandatory compliance with the policies.
-The sales agent cannot be made to attend sales meetings.
-The sales agent cannot be made to attend training seminars.
-The sales agent cannot be made to work set hours.
The following guidelines ser forth by the Internal Revenue Service are appropriate for designation of employee status:
-If there is a guaranteed minimum monthly compensation.
-If the broker pays the agent's licensing fees.
-If the company operates with a policies and procedures manual and there is an attempt to control the sales agents on a day-to-day basis.
What is one of the tests under the Tax Equity and Fiscal Responsibility Act for specifying that sales agent is an independent contractor?
The sales agent must have a written contract with the broker specifying the sales agent is not an employee.
Real Estate broker are exempt from....
providing worker's compensation to sponsored agents.
Unlicensed Assistant may:
- Greet prospects and give general information about the area.

-Be a closing or transaction coordinator
Unlicensed Assistant may NOT:
Receive a commission on a real estate transaction.
The Texas Real Estate Commission has included the ___________________________ for real estate license holders in the Rules of the Commission.
Canons of Professional Ethics and Conduct
A real estate broker or sales agent has a special obligation to exercise_______________________ in the discharge of his/her responsibilities.
Integrity (honesty)
Competency
Is the obligation of the real estate agent to be knowledgeable as a real estate brokerage practitioner.
Each real estate inspector or real estate broker licensed by the Texas Real Estate Commission shall display ____________________________ in a permanent location in each place of business the broker maintains.
Consumer Protection Notice CN 1-2
Intentionally means:
Actual awareness, or flagrant disregard of prudent and fair business practices.
When a real estate license holder is sued it tends to be due to an action under the___________________
DTPA
knowledge
With actual awareness of a falsity, deception, or unfairness of an act.
Statutory defenses are defenses that arise out of law (statute). Examples include:
-Written information relating to the particular goods and service in question obtained from governmental records.

-A court law cannot suspend or revoke an agent's license under a DTPA violation.

-TREC could suspend or revoke an agent's if the license holder is found guilty.
Liability of Misrepresentation
A provision of Senate Bill 489 clarified a number of issues regarding misrepresentation on the part of a principal an agent and a subagent. The general idea is that neither the principal, agent or subagent is liable for the misrepresentation of the other if they were unaware of the misrepresentation and had no reason to know of the falsity of the information.
Who can suspend or revoke a sales agent's license number under a DTPA violation?
TREC
Defamation
Act of harming or ruining another's reputation of another person by making a false statement.
Defamation requires the evidence of:
- A false statement
-Statement made to someone other than the person who is allegedly defamed.
-The damage to the person allegedly defamed.
TREC advertising Rules
It must contain name of the broker or the name of the designated officer if the sponsoring broker is a corporation.
advertisement
-Publications, stationary, business cards
-Signs, billboards
-radio, television, electronic media
-The internet, e-mail, text messages, social networking websites (facebook, tweeter etc..)
deceptive advertising
Advertising that misleads consumers, and A license holder may NOT place an advertisement that implies a sales agent is responsible for the brokerage business, or causes someone to believe a person not authorized to conduct brokerage is engaged in brokerage.
deceptive advertising may include
failing to remove an advertising about a listing within a reasonable time after it ends.
TREC rules require that most records for brokerage firms be retained for at least ______ years
4
Each real estate inspector or real estate broker licensed by the Texas Real Estate Commission shall display ____________________________ in a permanent location in each place of business the broker maintains.
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