Chapter 3 - Agency, Brokerage, and Ethical Considerations Flashcards Preview

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Flashcards in Chapter 3 - Agency, Brokerage, and Ethical Considerations Deck (34):
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Agent

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

1

Antitrust laws

Most common antitrust violations are price-fixing and allocations of customers to markets. Under the Sherman Act, people who fix prices may be subject to a misdemeanor and punishable by a maximum $1,000,000 fine and 10 years in prison. In a civil suit may recover triple the value of actual damages plus attorney fees.

2

Attorney-in-fact

Person authorized to act for another in a legally binding capacity. Agency created by a power of attorney, a legal written authorization that stipulates specific areas of authorization. The agent acting in such capacity is known as attorney-in-fact.

3

Broker

In the real estate business, a broker is defined as a person who is licensed to assist others in real estate transactions and to receive compensation for those services.

4

Buyer's agent

A prospective buyer or a person seeking property to rent can also be a principal and hire a broker as a buyer's broker or a buyer's agent. In this type of relationship, the buyer is the client and the seller is the agent's customer.

5

Code of Ethics

Code of conduct adopted by members of the National Association of REALTORS*. All members of NAR are expected to subscribe to this code of conduct.

6

Commission

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

7

Consumer Information Statement(CIS)

Statement real estate agents are required to furnish before any discussion of a seller's/landlord or buyer's/tenant's motivation or financial situation is initiated. If no motivation or discussion has taken place, the agent must furnish before any property is listed. Does not require it to be signed to acknowledge receipt - if signed must be retained for six years. Sellers and buyers must acknowledge receipt of the CIS on all offers, contracts and leases.

8

Customer

A prospective buyer or a person seeking property to rent can also be a principal and hire a broker. to act as a buyer's broker or buyer's agent. In this type of relationship, the buyer is the client (the person to whom specific duties are owed) and the seller is the agent's customer. (whom the agent must treat honestly).

9

Dislosed dual agent

Means that the broker is representing both parties in the same transaction at the the same time. Not illegal, but undisclosed dual agency is. Dual agency in NJ is legal if the broker: explains the duties that may not be available, discloses any other business relationships, obtains the buyer's and sellers written informed consent (in addition to the CIS), and advises that each party may want to consult an attorney.

10

Discloure

In new Jersey licensees must disclose to a buyer and defects of a material nature that effect the physical condition of the property.

11

Errors and Omissions (E&O) Insurance

real estate industry's equivalent to medical malpractice insurance. Subject to limitations, it defends against many circumstances but does not cover fraud.

12

Fiduciary

One legally placed in a position of trust. A fiduciary relationship as between trustee and beneficiary, attorney, and client, or principal and agent. The confidential relationship carries with it certain duties that an agent must perform (COULD). Care, Obedience, Accounting, Loyalty and Disclosure.

13

Fraud

Intentional deception that harms another. Fraudulent misrepresentation is intentional fraud and/or deliberate lying.

14

General Agent

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

15

Graduate, REALTOR* Institute (GRI)

Designation awarded by the National Association of REALTORS* after specific study.

16

Innocent misrepresentation

Unintentional misleading of a buyer committed in ignorance.

17

Kickback

Return of part of the commission as gifts or money to sellers are prohibited. Illegal for broker to share commission with anyone who is not licensed as a salesperson or broker except in certain circumstances to a buyer.

18

Latent defect

Problem with property not discoverable by ordinary prudent inspection. Licensees must disclose defects that are uncoverable. These defect would include such things as water seepage, unused oil tanks in the basement, and sloping floors.

19

Listing agreement

A contract between a property owner (as principal) and a licensed real estate borker (as agent) by which a the broker is employed as agent to sell real estate on the owners terms within a given time, for which service the landowner agrees to pay a fee. Must state whether subagency is being offered to cooperating firms and whether seller has authorized sharing of commission with subagents, buyer's brokers or transaction brokers. An "Addendum to Real Estate Listing/Commission Agreement must be included with every listing contract.

20

Meeting of the minds

Is said to have taken place when the parties are in agreement on price, payment and financing method.

21

Megan's Law

Requires that a community be alerted to the presence of convicted sex offenders enacted in New Jersey in 1995. all contracts and leases on residential real estate that are prepared by a licensee must include a Megan's law statement. Licensees are not permitted to inquire about or give any information regarding the presence of convicted sex offenders in the neighborhood. a buyer's broker can suggest that a concerned client check the New Jersey police website.

22

Consumer Fraud Act

lists in detail all sorts of misleading, fraudulent acts and include penalties up to $10,000 for the first violation. Law offers exemptions from liabilities to licensees who can prove they had no actual knowledge, a diligent effort was made to learn the truth and the broker or salesperson was relying on information provided by q home,e inspector or similar specialist. government employee or sellers property disclosure statement

23

Negligent misrepreresentation

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

24

Offsite conditions

In New Jersey, licensees must disclose conditions beyond the limits of a property, such as a hazardous waste disposal site, that may be considered material facts by a prospective purchaser. Two discloures are required. One refers to new construction; the other, to resales. The new construction notice includes a five-day period for cancellation, the rsale does not include a similar right of recision.

25

Principal

A main party to a transaction for which the agent works.

26

Procuring cause

Broker responsible for bringing about the sale.

27

Puffing

Extravagant statements of opinion ("this house has the most gorgeous view in the world are permissible, as long as they are offered as opinions without any intentions to deceive.

28

Ready, willing and able buyer

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

29

Special agent

One authorized by a principal to perform a single act or transaction. a real estate broker is traditionally a special agent hired by a buyer or seller to locate a willing seller of a suitable property or a willing buyer. as a special agent, the broker is not authorized to bind or sell the property or to bind the principal to any contract.

30

Standard of care

agent must exercise a reasonable degree of care and diligence while transacting business on behalf of the principal. Brokers are expected to possess expertise in real estate matters above that of average persons, and may be liable to the principal for any loss resulting from negligence or carelessness.

31

Subagent

A broker's sales associate,or cooperating broker in a multiple listing system, in relation to the principal who has designated the broker as an agent.

32

Transaction broker

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

33

Universal agent

Has authority to represent the principal in all matters that can be delegated. He or she can transact on behalf of the principal without prior permission.