Chapter 2

Question 1

Agent

Answer 1

One who undertakes to transact some business or to manage some affair for another by authority of the latter

Question 2

Broker’s Agent

Answer 2

A broker’s agent is an agent that cooperates or is engaged by a listing agent or a buyer’s agent (but does not work for the same firm as the listing agent or buyer’s agent) to assist the listing agent or buyer’s agent in locating a property to sell or buy, respectively, for the listing agent’s seller or the buyer agent’s buyer

Question 3

Buyer’s Agent

Answer 3

An agent who represents the buyer of real property

Question 4

Client

Answer 4

The one by whom a broker is employed

Question 5

Implied Agency

Answer 5

Form of agency that occurs when the words and actions of the parties indicate that there is an agency relationship

Question 6

Landlord’s Agent

Answer 6

A person who has oral or written authority, either express or implied, to act for or on behalf of a landlord

Question 7

Principal

Answer 7

The employer of an agent or broker; the broker’s or agent’s client

Question 8

Seller’s Agent

Answer 8

An agent who represents the seller of real property

Question 9

Sub-Agent

Answer 9

An agent of a person already acting as an agent of a principal

Question 10

Tenant’s Agent

Answer 10

A licensed real estate agent who acts on behalf of a tenant in a commercial property transaction

Question 11

Confidentiality

Answer 11

An agent is obligated to safeguard his/her principal’s lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal’s bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold know material facts about the condition of the seller’s property from the buyer, or to misrepresent the property’s condition. To do so constitutes misrepresentation and may impose liability on both the broker and/or the seller

Question 12

Disclosure

Answer 12

The release of relevant information about a property that may influence the final sale, especially if it represents defects or problems

Question 13

Fiduciary

Answer 13

A person who on behalf of or for the benefit of another transacts business or handles money or property not the person’s own; such relationship implies great confidence and trust

Question 14

Fiduciary Duties

Answer 14

The legal duty of a fiduciary to act in the best interests of the beneficiary. One common duty includes confidentiality.

Question 15

Obedience

Answer 15

The fiduciary relationship obligates the agent to act in good faith at all times, obeying the client’s instructions in accordance with the contract.

Question 16

Loyalty

Answer 16

The fiduciary duty that prohibits the agent from advancing any interests adverse to the principal’s interest or conducting the principal’s business in such a way as to benefit a customer, a sub-agent, the agent or any other party to the detriment of the principal’s interest unless required by statute, regulation or common law – e.g., disclosing material facts and defects of a property

Question 17

General Agent

Answer 17

An agent with the full authority over one property of the principal, such as a property manager

Question 18

Special Agent

Answer 18

An agent with limited authority to act on behalf of the principal, such as created by a listing

Question 19

Informed Consent

Answer 19

An agreement to do something or to allow something to happen only after all the relevant facts are disclosed

Question 20

Misrepresentation

Answer 20

Making an intentionally false statement to induce someone to contract

Question 21

Sub-agent

Answer 21

An agent of a person already acting as an agent of a principal

Question 22

Misrepresentation

Answer 22

Making an intentionally false statement to induce someone to contract

Question 23

Vicarious Liability

Answer 23

A situation in which one party is held partly responsible for the unlawful actions of a third party

Question 24

Expressed Agency

Answer 24

An actual agency created by written or oral agreement between the principal and the agent

Question 25

Implied Agency

Answer 25

Form of agency that occurs when the words and actions of the parties indicate that there is an agency relationship

Question 26

Estoppel

Answer 26

The principle which prevents a person from asserting something contrary to what is implied by a previous action or statement of that person

Question 27

Price Fixing

Answer 27

Conspiring to establish fixed fees or prices for services or products.

Question 28

Group Boycott

Answer 28

An agreement between members of a trade to exclude other members from fair participation in the trade.

Question 29

Market Allocation

Answer 29

Market Allocation - An agreement between members of a trade to refrain from competition in specific market areas.

Question 30

Tie-in Arrangement

Answer 30

A contract where one transaction depends upon another.

Question 31

Dual Agency

Answer 31

Representing both principals (seller and buyer) to a transaction.

Question 32

Designated Sales Agent

Answer 32

Appointing one or more individual agents in a firm to represent only the interests of the seller and one or more different individual agents in the firm to represent only the interests of the buyer when a firm has an “in-house” dual agency situation.

Question 33

Undisclosed Dual Agency

Answer 33

A relationship in which the real estate agent is found to be the agent of both the buyer and seller in a transaction, but without the knowledge and informed consent of both parties. Undisclosed Dual Agency is illegal in all states.

Question 34

Designated Sales Agent

Answer 34

Appointing one or more individual agents in a firm to represent only the interests of the seller and one or more different individual agents in the firm to represent only the interests of the buyer when a firm has an “in-house” dual agency situation

Question 35

Accountability

Answer 35

To be responsible

Question 36

Advance Consent to Dual Agency

Answer 36

The seller or buyer agrees to dual agency before it occurs by indicating the same on the agency disclosure form.

Question 37

Cooperating Agent

Answer 37

A real estate agent who sells a property. The selling agent may be (1) the subagent or listing agent of the seller; (2) a buyer’s agent; or (3) a dual agent. Also called a selling agent or participating agent.

Question 38

Reasonable Care

Answer 38

The degree of caution and concern for the safety of himself/herself and others an ordinarily prudent and rational person would use in the circumstances. This is a subjective test of determining if a person is negligent, meaning he/she did not exercise reasonable care.

Question 39

Customer

Answer 39

The party the agent brings to the principal as seller or buyer of the property.