Chapter 3: Agency, Brokerage, and Ethical Considerations

Question 1

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

Answer 1

agent

Question 2

laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition

Answer 2

antitrust laws

Question 3

person authorized to act under a power of attorney

Answer 3

attorney-in-fact

Question 4

one who buys and sells for another for a fee

Answer 4

broker

Question 5

a real estate broker retained by a prospective purchaser, who becomes the buyer’s principal or client and to whom fiduciary duties are owed

Answer 5

buyer’s broker (buyer’s agent)

Question 6

the one by whom a broker is employed in an agency relationship (aka a principal)

Answer 6

client

Question 7

standards of conduct adopted by the National Association of REALTORS

Answer 7

Code of Ethics

Question 8

payment to a broker for services rendered, such as in the sale or purchase of real property

Answer 8

commission

Question 9

problem when serving best interest of both the client and oneself

Answer 9

conflict of interest

Question 10

written explanation of agency relationship presented to buyers and sellers

Answer 10

Consumer Information Statement (CIS)

Question 11

third party in a transaction owed honest treatment but not owed fiduciary responsibilities

Answer 11

customer

Question 12

one who works for both the seller and the buyer

Answer 12

disclosed dual agent

Question 13

revealing to another any pertinent information

Answer 13

disclosure

Question 14

representing both parties to a transaction

Answer 14

dual agency

Question 15

salesperson whose broker pays social security, regulates hours, etc.

Answer 15

employee

Question 16

a form of malpractice insurance for real estate licensees

Answer 16

errors and omissions (E&O) insurance

Question 17

one legally placed in a position of trust and confidence

Answer 17

fiduciary

Question 18

a relationship of trust and confidence between trustee and beneficiary, attorney and client, or principal and agent

Answer 18

fiduciary relationship

Question 19

intentional deception that harms another

Answer 19

fraud

Question 20

intentional fraud and/or deliberate lying

Answer 20

fraudulent misrepresentation

Question 21

one authorized to act for his or her principal in a wide range of matters

Answer 21

general agent

Question 22

designation awarded by the National Association of REALTORS after specific study

Answer 22

Graduate, REALTOR Institute (GRI)

Question 23

salesperson who sets his or her own hours and who is not covered by income tax withholding

Answer 23

independent contractor

Question 24

unintentional misleading of a buyer committed in ignorance

Answer 24

innocent misrepresentation

Question 25

illegal sharing of a commission with seller

Answer 25

kickback

Question 26

problem with the property not discoverable by ordinary prudent inspection

Answer 26

latent defect

Question 27

rules governing conduct of agents

Answer 27

law of agency

Question 28

a contract between a property owner (as a principal) and a licensed real estate broker (as agent) by which the broker is employed as agent to sell real estate on the owner's terms within a given time, for which service the landowner agrees to pay a commission fee

Answer 28

listing agreement

Question 29

agreement between a buyer and seller on major points

Answer 29

meeting of the minds

Question 30

a NJ law requiring that communities be alerted to the presence of convicted sex offenders. All contracts and leases must include a statement advising purchasers and lessees that a list of any known sex offenders who live in the area may be obtained from the county prosecutor

Answer 30

Megan's law

Question 31

private nationwide organization of salespersons and brokers

Answer 31

National Association of REALTORS

Question 32

fraud committed, not necessarily on purpose, by someone who should have known better

Answer 32

negligent misrepresentation

Question 33

statewide group of real estate licensees who choose to join

Answer 33

New Jersey REALTORS (NJR)

Question 34

In NJ, licensees must disclose conditions beyond the limits of the property, such as hazardous waste disposal site, that may be considered material facts by a prospective purchaser

Answer 34

off-site conditions

Question 35

a written instrument authorizing a person , the attorney-in-fact, to act as an agent on behalf of another person

Answer 35

power of attorney

Question 36

1. a sum lent or employed as a fund or investment as distinguished from its income or profits. 2. the original amount (as in a loan) of the total due and payable at a certain date. 3. a main party of a transaction - the person for whom the agent works

Answer 36

principal

Question 37

the broker responsible for bringing about a sale

Answer 37

procuring cause

Question 38

exaggerated or superlative comments or opinions made to induce buyers to buy; not as representation of fact and thus not grounds for misrepresentation

Answer 38

puffing

Question 39

one who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction

Answer 39

ready, willing, and able buyer

Question 40

a registered trademark reserved for the sole use of members of the National Association of REALTORS

Answer 40

REALTOR

Question 41

a person who performs real estate activities while employed by or associated with a licensed real estate broker

Answer 41

salesperson

Question 42

one authorized by a principal to perform a single act or transaction

Answer 42

special agent

Question 43

degree of competence normally expected of a licensee

Answer 43

standard of care

Question 44

a broker's sale associate, or cooperating broker in a multiple listing system, in relationship to the principal who has designated the broker as an agent

Answer 44

subagent

Question 45

a licensee who works with a buyer, seller or both, without representing either one in an agency relationship

Answer 45

transaction broker

Question 46

an agent who has authority to represent the principal in all matters that can be delegated

Answer 46

universal agent