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Real Estate Class > AMP Test -- Guide 1 > Flashcards

AMP Test -- Guide 1 Flashcards

1
Q

What are the 3 types of agreements that create an agency relationships?

A

Listing, buyer, and property management agreements

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2
Q

What creates an agency relationship?

A

a written contract or actions of the parties, creates the agency relationship

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3
Q

Does payment or money create an agency relationship?

A

No

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4
Q

The agency relationship can be…

A

expressed or implied

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5
Q

What is an express agency and give an example?

A

When the parties state the contracts terms and express their intention, orally or in writing. Example: listing agreement

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6
Q

What is an implied agency and give an example?

A

When the actions or conduct of the parties communicate that there is an agreement. Example: when the agent talks with a buyer. “Take this deal. It is the best one.”

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7
Q

What are the 3 types of agents?

A

General, special, and universal

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8
Q

What is a general agent?

A

When the principal delegates a broad range of powers, and the relationship is expected to be ongoing. Example: property manager

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9
Q

What is a special agent?

A

When the principal delegates a specific act or business transaction. Example: a listing agent or a party with durable power of attorney or an agent who entered into a buyer’s agency agreement.

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10
Q

What is an universal agent?

A

A party given full power of attorney to represent another person.

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11
Q

What are the 4 types of agencies?

A

Single, dual, designated, and facilitator/transaction broker

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12
Q

What is a single agency?

A

agent represents either seller or buyer in a transaction

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13
Q

What is a dual agency?

A

agent represents buyer and seller

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14
Q

What is a designated agency?

A

When there are two agents within one company: one agent represents the buyer and the other agent represents the seller. The listing agent is the designated agent of the seller. This can only occur with written permission of both parties.

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15
Q

When is a fiduciary relationship created?

A

When the owner (principal) has delegated to the brokerage (agent) the right to act on the owner’s behalf.

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16
Q

What is a subagent?

A

It is the agent of an agent. AKA sales associates.

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17
Q

Sales associates represent who?

A

They represent their brokers and their fiduciary relationship is with their brokers.

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18
Q

What is a listing agreement?

A

It is a personal service contract securing employment of a brokerage firm to fin a ready, willing, and able buyer.

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19
Q

What are the 5 types of listing agreement?

A

exclusive right to sell, exclusive agency, open, net, and option

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20
Q

What does the acronym COALD stand for?

A

confidence: exercising reasonable care and skill as a professional
obedience: agent must act in good faith and obey principal’s instructions
accountability: the agent is accountable for all funds or property of others that come into agents possession
loyalty: agent must be loyal, putting the principal’s interest first. this includes obtaining the best offer, explaining offers
disclosure: keep principal informed and disclose all facts and information that could affect transaction.

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21
Q

What happens if an agent breaches their fiduciary duty to the principal?

A

They are no longer entitled to their commission and may be liable for actual damages.

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22
Q

What are ministerial acts?

A

are acts that a licensee may perform for a consumer that are informative in nature and do not rise to the level of active representation.

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23
Q

what is puffing?

A

exaggeration of a fact

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24
Q

What is a unilateral contract?

A

only one party is required to perform

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25
Q

what is a bilateral contract?

A

both parties are obligated to perform

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26
Q

what is an express contract?

A

the parties have specifically agreed, either orally or in writing to enter into a contract

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27
Q

implied contract?

A

the parties by their actions or conduct enter into a contract. examples are ordering food in a restaurant, securing taxis, buying gas.

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28
Q

What is a valid contract?

A

a contract is valid if it meets all the essential elements and is enforceable.

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29
Q

what are the 7 essential elements of a contract?

A
  1. parties must be legally and mentally competent and authorized to perform.
  2. there must be an offer and acceptance, also known as a mutual assent or meeting of minds. An offer must be made by one party (offeror) and accepted without any qualifications or changes by the second party (offeree).
  3. Statue of Frauds: all contracts must be in writing
  4. the purpose of the contract must be for a legal purpose. illegal purposes make the contract void.
  5. there must be legal consideration, which is a promise, or something of value, made by one party to induce another party to enter into a contract. in a sales contract, the consideration is the selling price of the property; therefore earnest money, is not necessary to create a binding sales contract
  6. there must be reality of consent: means the contract was not entered into without duress, menace, misreprenstation of fraud.
  7. signatures of parties
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30
Q

what is a void contract?

A

it is missing an essential element and is not enforceable. Example: no signature.

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31
Q

what is a voidable contract?

A

when a contract can be rescinded by one or both parties. examples: duress, misrepresentation, fraud, or minor.

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32
Q

what is an unenforceable contract?

A

when neither party can sue. because real estate contracts must be in writing, an oral agreement to purchase property is unenforceable.

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33
Q

Does an offer create a contract?

A

No. An offer has to be accepted to create a contract.

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34
Q

Can an offer be changed once it is accepted?

A

No. Once an offer is accepted, it can not be changed.

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35
Q

What is notice of delivery/acceptance?

A

when an offer has been made and accepted. the accepted offer is not effective until the other party has been made aware. In other words, both parties has to know the an offer has been accepted in order for it to be effective and create a contract. page 5.

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36
Q

What is an executory contract?

A

It is when one or both parties have duties to perform. A sales contract is executory b/c buyer must financially qualify, and the seller must produce a marketable title.

A listing agreement is also executory because broker must market the property and help seller find ready, willing, and able buyer.

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37
Q

what is an executed contract?

A

all parties have fulfilled their duties and responsibilities. a sales contract is considered executed at closing WHEN THE DEED HAS BEEN CONVEYED AND THE BUYER HAS PAID THE PURCHASE PRICE.

REMEMBER: execute is different from an executed contract. execute means to sign a document.

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38
Q

what does execute mean?

A

it means to sign a document

39
Q

What is suit for specific performance?

A

it is something that can be file when one party defaults on their contract

40
Q

What instrument is used to make provisions within a contract?

A

addendum or supplement to a contract

41
Q

What is the purpose of the Electronic Signatures in Global and National Commerce Act (ESIGN) of 2000 and the Uniform Electronic Transaction Act of 1999?

A

It states that handwritten signatures (wet) carry the same weight as electronic signatures and therefore enforceable by law.

42
Q

What are the 5 elements of a contract to create a binding contract?

A
  1. Offer and acceptance
  2. consideration
  3. legally competent parties
  4. consent
  5. legal purpose
43
Q

What is an options contract?

A

An optioner (seller) agrees to keep an open offer to sell or lease real property in return for option money. While the optionee (buyer) does not have to buy, the optioner must sell should the buyer exercise his option.

44
Q

Is an option contract considered a unilateral or bilateral contract?

A

unilateral because only the seller is expected to perform an action.

45
Q

is an exercised option considered unilateral or bilateral contract?

A

bilateral contract because both parties have performed

46
Q

What is the purpose of a sales contract?

A

to expressly state in writing the terms of the transfer of real property

47
Q

What is assignment in relations to contracts?

A

a transfer of rights, duties, or both from one contract to another contract or from one person to another person. Contracts may include a clause that either forbids or permits assignments.

48
Q

What is novation?

A

When novation is granted, one contract is subtituted for another contract with the intent to discharge the obligation of the original contract. It is a release of liability from the original contract.

49
Q

What is ambiguities?

A

Unclear contents within a contract

50
Q

What is a contingency?

A

A contingency within a contract requires the completion of a certain act or promise before the contract is binding, or it may cancel contract obligations.

51
Q

What is an equitable title?

A

In an executory contract– such as a sales contract, land contract, or trust deed– the buyers interest in the property is called an equitable title interest. Although the legal title is held by another party, the buyer does have rights of possession and an insurable interest in the property.

52
Q

What is forfeiture clause?

A

under certain circumstances, one party must forfeit something to the other party. in the sales contract, the earnest money may be given to the seller if the buyer breaches the contract.

53
Q

what is right of refusal?

A

it has 2 meanings:
1. the right of a person to have the first right to purchase or lease a property, when the owner is ready to sell or lease.

54
Q

what does caveat emptor mean?

A

“let the buyer beware”

55
Q

what does caveat venditor mean?

A

“let the seller beware”

56
Q

what are punitive damages?

A

it is unrelated to the cost of the loss and are merely awards to punish the wrongdoer.

57
Q

what are the 3 things that terminate an offer?

A

notice of revocation by offeree, death of either party, insanity of either party, or a counteroffer.

58
Q

when does an offer become a sales contract?

A

Once it is accepted.

59
Q

To offer means…

A

to put forward for acceptance, rejection, or deliberation

60
Q

what is the name of the person making the offer?

A

the offeror

61
Q

what is the name of the party receiving the offer?

A

offeree

62
Q

meeting of the minds is also known as…

A

offer and acceptance

63
Q

what is it called when changes are made to the terms of an offer?

A

a counteroffer or void.

64
Q

Offers can be…

A

accepted, rejected, countered, or ignored

65
Q

What is the name of the special account held by brokers when handling other people’s money?

A

escrow accounts

66
Q

what type of money is held in escrow accounts?

A

earnest money, security deposits

67
Q

when are funds required to be transferred to the escrow account?

A

by the NEXT BUSINESS day from the acceptance of a sales contract or the signing of a lease

68
Q

What is a listing agreement?

A

a personal service contract securing employment of a brokerage firm to find a ready, willing, and able buyer. Most states require it to be in writing to be enforceable.

69
Q

When is a buyer agency relationship established?

A

When a real estate broker enters into a contract with a buyer. . As soon as relationship is established, the duties under law of agency take effect.

70
Q

What is absorption rate?

A

is an estimate of how quickly homes have sold in the neighborhood within the last year.

71
Q

What is capital gains?

A

is the taxable profit realized from the sale or exchange of an asset.

72
Q

What is the Taxpayer Relief Act of 1997?

A

it established the exclusion of capital gains on the sale of the principal residence. Single: $250k Married: $500k.

73
Q

What are the rules to use the capital gains exclusion?

A

To claim the exclusion, the home must have been used as the principal residence for 2 of the preceding five years. Homeowners may not have sold or exchanged a home during the 2 years preceding the sale, and the rule does not apply to vacation or second homes.

74
Q

what is capital improvement?

A

any improvement that is made to extend the useful life of a property or add to it’s value. Includes major repairs.

75
Q

What are homeowners allowed to deduct on their taxes?

A

mortgage interest on first and second homes that meet the definition of qualified residence interest.

76
Q

What are the 7 ways a listing agreement (seller agreement) can be terminated?

A
  1. expiration
  2. fulfillment of the contract
  3. mutual consent or rescission
  4. abandonment by either party
  5. death of the broker or seller
  6. destruction of premises
  7. eminent domain
77
Q

What are the 5 ways a buyer agency agreement may be terminated?

A
  1. expiration
  2. fulfillment
  3. mutual consent or a rescission
  4. abandonment by either party
  5. death of the broker or buyer
78
Q

What happens if the seller refuses to sell the property even if full list price if offered? Is the broker still entitled to a commission?

A

Yes!!

79
Q

What happens is a buyer does not purchase a property, does she still have to pay a commission to the broker?

A

Usually the buyer would not have to pay a commission. But it depends on the type of buyer agency agreement. (e.g. exclusive buyer agency) the buyer would be liable to pay commission even if the broker did not show them any properties. Nonpayment constitutes as breach of contract.

80
Q

What are the 4 types of listing agreements (seller agreements)?

A
  1. exclusive right-to-sell listing
  2. exclusive agency listing
  3. open listing
  4. net listing
81
Q

what is an exclusive right-to-sell listing?

A

one broker lists the property and other brokers have the right to sell the property, if there is cobrokerage arrangements. the listing broker is paid, no matter who sells.

82
Q

what is an exclusive agency listing?

A

one broker lists the property and the seller retains the rights to sell the property. other brokers may sell the property through a cobrokerage agreement. if the seller sells the property without the services of a broker, a commission is not due.

83
Q

what is an open listing?

A

the seller enters into listing agreements with any number of brokerage firms and retains the right to sell the property. the broker that sells the property is paid commission; but if the seller sells the property, no commission is due to any broker.

84
Q

what is a net listing?

A

this listing does not contain a specified sales price or commission. net listings are illegal in most states.

85
Q

What is a Home Protection plan?

A

insurance that covers the repair or replacement of appliances and of electrical, plumbing, heating, air conditioning, and other systems within the home. This policy can be purchased by the agent, seller, or buyer.

86
Q

What are the 4 types of buyer agency agreements?

A
  1. exclusive buyer agency
  2. exclusive-agency buyer agency
  3. open buyer agency agreement
87
Q

what is an exclusive buyer agency?

A

the buyer is legally bound to pay the agent when the buyer purchases the property described in the contract. this is true even if the buyer finds the property.

88
Q

what is an exclusive-agency buyer agency?

A

this creates an exclusive contract between the buyer and agent. however, the broker is entitled to payment only if the broker locates the property by the buyer. the buyer can find suitable property without obligation to pay the agent.

89
Q

what is open buyer agency agreement?

A

in this nonexclusive contract with the agent, the buyer can enter into similar agreements with any number of agents. the agent who finds the suitable property will be compensated.

90
Q

trust account aka…

A

escrow account or impound account

91
Q

what type of money is held in a trust account?

A

earnest money, security deposits

92
Q

what is commingling?

A

when a broker deposits clients money into their personal account

93
Q

what is embezzlement?

A

when the broker spends the clients money

94
Q

What form must a person fill out for the IRS is they accept 10k or more?

A

form 8300

Real Estate Class (11 decks)

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