1 Law of Agency Flashcards
(15 cards)
What are the duties of an agent to a client?
OLDCAR
Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care
Universal Agency
(elderly parents example) power to act for the principal in ALL transactions. Rarely used in real estate
General Agency
(Property manager duties, BROKER/AGENT RELATIONSHIP)
represent a principal in a particular transaction or business
Special/Limited Agency
(agent for client, can’t sign without permission)
Can only follow the instructions of the principal. Not allowed to sign or accept terms on behalf of principal
Sherman Anti-Trust Act
prevents any combination in restraint of trade. Commission rates must always be a matter of negotiation between the broker and the client.
Other terms for principal
buyer, seller, landlord, or tenant
What are the elements of a valid listing agreement?
- The SIGNATURES of all of the owners and the listing agent
- A LEGAL DESCRIPTION of the property, including the street address
- The list PRICE of the property as set by the seller
- A definite STARTING (commencement) and ENDING (termination) DATE
- COMMISSION (compensation) to the broker
Agency by actual authority
The authority granted may be in oral or written form.
- Actual, written authority is given to a broker when a seller signs a listing agreement.
- An example of actual oral authority is when a buyer and agent enter into an unwritten buyer representation agreement. Actual, oral authority is often granted to the agent after the client enters into a written agreement. A common example would be a seller asking that the agent hold an open house.
Ostensible Agency
Exists when actions lead another person to assume that one is an agent.
For example, a license holder might falsely make public statements that he or she is representing a commercial property owner as a leasing agent or property manager. If the property owner learned of the misrepresentation and made no effort to correct it, ostensible agency may be created because it is reasonable for others to believe the license holder.
Agency by Ratification
Occurs when an agent acts without prior authorization, and the principal accepts it upon learning of the action.
For example, a seller relocating to another state has left the house vacant and listed with a local real estate agent. The agent has found a buyer, and the seller accepts the offer. At closing, the seller is surprised to learn that he will receive one week’s rent in addition to the sales price. Although the agent had no authority to do it, the seller’s agent authorized the buyers to move in one week before closing. This behavior on the part of the agent was extremely risky and unprofessional. The seller accepts this action on the part of the agent and receives the rental income in addition to the sales price. By accepting the rent payment, this seller has ratified the unauthorized action of the agent.
Agency by Estoppel
created when a principal inadequately supervises an agent.
The agent takes on powers that go beyond the scope of authority given by the principal. If this activity causes a third party to believe the agent has these powers, agency by estoppel has been created.
Agency Coupled with an Interest
a broker is the owner of a property being sold or is interested in buying a property.
A real estate license holder is obligated to advise a property owner as to the license holder’s opinion of the market value of a property when negotiating a listing or offering to purchase the property for the license holder’s own account as a result of contact made while acting as a real estate agent
Unlicensed assistants may not:
Subagent
A license holder not associated with the seller’s broker, but who is representing the seller through a cooperative agreement, often through membership in a Multiple Listing Service (MLS), with the seller’s broker.
Cooperative Broker
A broker selling the listing of another broker. A cooperative broker may complete the transaction as a subagent of the listing broker or may represent the buyers under an agency agreement; he or she is also known as the other broker.
