Chapter 04

Question 1

Agent

Answer 1

The individual who is authorized and consents to represent the interest of another person

Question 2

Principal

Answer 2

The individual who hires the agent

Question 3

Agency

Answer 3

The fiduciary relationship between the client and agent

Question 4

Fiduciary

Answer 4

The relationship in which the agent is held in a position of special trust and confidence by the principal

Question 5

Client

Answer 5

The principal

Question 6

Customer

Answer 6

A third party non-represented consumer for whom some level of service is provided

Question 7

Nonagency. Aka

Transactional broker, facilitator, coordinator, or contract broker

Answer 7

Helps both parties navigate through the process of a real estate transaction without representing either

Question 8

Express agency

Answer 8

A formal agreement usually written but sometimes oral, of a principal and agent to work together

Question 9

Implied agency

Answer 9

An agency relationship created by the actions of both parties without any formal expressed agreement

Question 10

Compensation

Answer 10

The source of the compensation does not determine agency

Question 11

Puffing

Answer 11

Exaggeration of a properties benefits

Question 12

Negligent misrepresentation

Answer 12

When a broker knowingly or unknowingly makes a mistake

Question 13

Fraud

Answer 13

Intentionally misrepresentation of the facts or failing to disclose important facts

Question 14

Latent Defect

Answer 14

A Structural defect that is not discovered by ordinary inspection.

Must be disclosed by law

Question 15

Universal Agent

Answer 15

A person who is empowered to do anything the principal can do personally.

Real estate agents don’t have this status

Question 16

General Agent

Answer 16

Represents the principal in a broad range of matters related to a particular business or activity.

• Most agents are general agents for their brokers
• Property managers are general agents for the owner

Question 17

Dual Agency

Answer 17

Represents both parties in a real estate transaction.

• Not legal in some states.
• if they are legal, both parties must consent

Question 18

Law of agency

Answer 18

Defines the rights and duties of both agent and principal

Question 19

Disclosure of agency

Answer 19

Real estate licensees are required by law to disclose the parties they represent

Question 20

Designated agency

Answer 20

When both parties have the same broker but two separate salespeople

Question 21

Designated agent

Answer 21

The person authorized by a real estate broker to act as the agent of a specific principal

Question 22

Fiduciary Relationship

Answer 22

The duties the broker owes the principal by law.

• Care
• Obedience
• Loyalty
• Disclosure
• Accounting
• Confidentiality

Question 23

Termination of Agency (Reasons)

Answer 23

• Completion
• Death
• Destruction or condemnation of property
• Expiration of agreement
• Breach of one of the parties
• Operation of law ( bankruptcy foreclosure)

Question 24

Single Agency

Answer 24

The agency represents only one party in any single transaction

Question 25

Special Agent

Answer 25

Authorized to represent the principle in one act or business transaction. This is usually the relationship between the client and broker