General Principals of Agency

Question 1

Definitions
-Agency: used to describe the fiduciary (legal) and consensual relationship between an agent and a principal (client)
-Agency Relationship: required for the agent to provide any professional services to the principal

Answer 1

Agency and Agency Relationship

Question 2

What type of agency is established in writing through a buyer representation agreement or a listing agreement?
Clue: E________ A________

Answer 2

Express Agency

Question 3

What type of agency is created purely through the actions of the parties involved but should not be used in real estate transactions?
Clue: I_________ A________

Answer 3

Implied Agency

Question 4

The agent has six specific legal obligations that they must abide by in their dealings with the principal
-These obligations relate to the trust that the principal has placed in the agent during the transaction.
O.L.D.C.A.R: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care

Answer 4

Fiduciary Relationship
O.L.D.C.A.R: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care

Question 5

What type of relationship is this?
Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care
Clue: F___________ R______________

Answer 5

Fiduciary Relationship
O.L.D.C.A.R

Question 6

Requires the agent to obey all instructions from their principal for the duration of the agency relationship
-The agent is free to express ideas contrary to the principal and provide professional guidance on how to proceed, but in the end, the principal’s wishes should be followed, so long as the actions are not illegal or immoral.
Clue: O__________

Answer 6

Fiduciary Relationship
O.L.D.C.A.R
-Obedience

Question 7

Requires the agent to put the interests of the principal ahead of the interests of all others in the transaction (including the agent)
Clue: L___________

Answer 7

Fiduciary Relationship
O.L.D.C.A.R
-Loyalty

Question 8

The obligation of the agent to reveal any material information related to the transaction
Clue: D____________

Answer 8

Fiduciary Relationship
O.L.D.C.A.R
-Disclosure

Question 9

Nothing can be disclosed to anyone else, with just a few exceptions
-When the principal has given permission to the agent to disclose information
-When it is required by law to divulge information
-When the agent is defending themselves in a legal setting against accusations of wrongdoing
Clue: C_____________

Answer 9

Fiduciary Relationship
O.L.D.C.A.R
-Confidentiality

Question 10

Required of the agent in two areas:
-Money: the agent must account for any money (typically earnest money) that a principal contributes toward the completion of a transaction
-Paperwork: the agent must account for all paperwork related to the transactions and provide copies of all such documents to the principal.
Clue: A_______________

Answer 10

Fiduciary Relationship
O.L.D.C.A.R
-Accounting

Question 11

The efforts the agent takes are understandable and appropriate, and the agent has the expertise needed to help the client.
Clue: R__________ C_____ and S_____

Answer 11

Fiduciary Relationship
O.L.D.C.A.R
-Reasonable Care and Skill

Question 12

The person or entity (client) who enlists another party (agent) to represent them in a real estate transaction
Clue: P___________

Answer 12

Principal

Question 13

The party empowered to represent a principal (client) in a real estate transaction
Clue: A________

Answer 13

Agent

Question 14

The licensee assigned to assist the principal (client) on behalf of the agent (BIC=broker in charge)
Clue: S___________

Answer 14

Subagent

Question 15

An agent (BIC=broker in charge) who represents both the buyer and the seller in the same real estate transaction
-This occurs only with the prior informed, written, and signed consent of both parties.
Clue: D________ A_________

Answer 15

Dual Agent

Question 16

The licensee (subagent) designated by the dual agent (BIC-broker in charge) to solely represent the interests of one client in a real estate transaction in which a dual agency relationship exists
-This occurs only with the prior informed, written, and signed consent of both parties.
Clue: D__________ A__________

Answer 16

Designated Agent

Question 17

A person who performs only ministerial acts in a transaction
-This person does not represent either party in the transaction; instead, they provide information on the property, show the property, and act as a scribe for the completion and presentation of paperwork between the parties. They do not offer advice, counsel, or expertise during the offer or negotiation phases of a deal.
Clue: T___________ B__________

Answer 17

Transaction Broker

Question 18

Anyone who is not a principal (represented by the agent through a written agency agreement) in a real estate transaction
Clue: Th_____ P________

Answer 18

Third Party

Question 19

A specific third party who has chosen not to enter into an agency relationship but still requests assistance from an agent in a real estate transaction
-An agent may not provide fiduciary services (obedience, loyalty, and disclosure) to a customer. The agent, however, must still provide the customer with honesty, fair dealing, accounting for money, and reasonable care.
Clue: C____________

Answer 19

Customer

Question 20

A person who has been given written authority to legally act on behalf of another
-This written permission is called power of attorney (POA).
Clue: A__________ -in- F______

Answer 20

Attorney-in-fact

Question 21

The identity of the principal is known to all parties in the transaction
-Most residential transactions involve a disclosed principal.
Clue: D____________ Principal

Answer 21

Disclosed Principal

Question 22

The identity of the principal is not known to any third parties in the transaction, although the existence of the principal has been established.
Clue: P___________ Disclosed P___________

Answer 22

Partially Disclosed Principal

Question 23

The existence of a principal is not disclosed; instead, the agent acts as the principal and uses their own name on the contract, et al.
Clue: Und___________ P__________

Answer 23

Undisclosed Principal

Question 24

An agent who is given broad authority to conduct business on behalf of a large entity
-For example, an agent might work on behalf of a chain grocery store and could be tasked with finding and purchasing new locations for the store.
Clue: U__________ A_______

Answer 24

Universal Agent

Question 25

An agent who is given authority to work on behalf of another agent Clue: G__________ A_______

Answer 25

General Agent

Question 26

An agent who is hired by a principal -This will typically be the broker-in-charge of a firm. They will enter into an agency relationship and be given a specific level of authority to act on behalf of the principal. Clue: S__________ A________

Answer 26

Special Agent

Question 27

Definitions -Listing Agent: represents a seller in a home sale transaction -Selling Agent: represents a buyer in a home sale transaction (a cooperating agent)

Answer 27

Listing Agent VS Selling Agent

Question 28

A contract between an agent and the owner of a property -This enables the agent to act on behalf of the property owner to find potential buyers. Clue: L_________ A_______

Answer 28

Listing Agreement

Question 29

Allows the seller to hire as many agents as they want -The seller will only be obligated to pay a commission to the agent who brings the successful contract. The seller has the right to sell the property and not pay a commission to any agent. Which one is this? A. Listing Agreement: Open Listing B. Listing Agreement: Exclusive Listing C. Listing Agreement: Net Listing

Answer 29

Listing Agreement: Open Listing

Question 30

The seller hires only one agent to represent them in the sale of the property. -There are two different versions of this: -Exclusive agency: allows the seller to sell the property themselves and not pay the agent a commission -Exclusive right to sell: commits the seller to paying the agent a commission regardless of who brings the buyer Which one is this? A. Listing Agreement: Open Listing B. Listing Agreement: Exclusive Listing C. Listing Agreement: Net Listing

Answer 30

Listing Agreement: Exclusive Listing

Question 31

An agent’s relationship with a seller -The seller and the agent agree that the seller will receive a predetermined amount at closing. The agent’s commission will be the difference between the final sales price and that predetermined amount. Which one is this? A. Listing Agreement: Open Listing B. Listing Agreement: Exclusive Listing C. Listing Agreement: Net Listing

Answer 31

Listing Agreement: Net Listing

Question 32

An agent’s relationship with a buyer -The agent and the buyer obligate themselves in the same manner as sellers and agents do. Termination of the buyer representation agreement occurs in the same way. Clue: B_________ Rep____________ A________

Answer 32

Buyer Representation Agreement

Question 33

Allows the buyer to hire as many agents as they want -The only agent to receive commission is the one who facilitates the successful purchase. The buyer also reserves the right to buy the property on their own without paying commissions to an agent. Clue: O_______ B_______ Rep_____________ A______

Answer 33

Open Buyer Representation Agreement

Question 34

The buyer hires only one agent to represent them in the purchase of a property. There are two different versions of this: -Exclusive agency: allows the buyer to purchase the property themselves and owe the agent no commission -Exclusive right to purchase: commits the buyer to paying the agent a commission regardless of who facilitates the purchase Clue: E__________ B_______ Agreement

Answer 34

Exclusive Buyer Agreement

Question 35

All agency agreements must have a defied termination date. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 35

Agency Termination: Expiration

Question 36

The transaction is closed successfully. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 36

Agency Termination: Performance

Question 37

This refers to the death or incapacitation of the agent or the principal. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 37

Agency Termination: Loss of Authority

Question 38

The property is no longer viable due to comprehensive damage. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 38

Agency Termination: Destruction

Question 39

The owner no longer has the legal right to the property. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 39

Agency Termination: Loss of Title

Question 40

Either the agent or the principal is bankrupt. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 40

Agency Termination: Bankruptcy

Question 41

Termination due to circumstances which could not have been anticipated Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 41

Agency Termination: Force Majeure

Question 42

The parties agree to terminate their relationship. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 42

Agency Termination: Mutual Agreement

Question 43

The agent fires the principal. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 43

Agency Termination: Renunciation

Question 44

The principal fires the agent. Which type of Agency Termination is this? A. Expiration B. Performance C. Loss of Authority D. Destruction E. Loss of Title F. Bankruptcy G. Force Majeure H. Mutual I. Renunciation J. Revocation

Answer 44

Agency Termination: Revocation

Question 45

After already agreeing to represent the interests of one potential buyer, a real estate agent secretly chose to represent another without disclosing this information to either. What law has the agent defied? A. Antitrust Law B. Law of Agency C. Fair Housing Law D. Real Estate Law

Answer 45

Answer is B -Under the Law of Agency, an agent is allowed to represent more than one client, but only if they have the consent of the first client. If they do so secretly without informing either, then they are in violation of this law.

Question 46

What is an agreement called when the listing agent will be paid a commission regardless of who finds the buyer? A. Open listing B. Exclusive right to sell C. Exclusive agency listing D. Net listing

Answer 46

Answer is B -In an Exclusive Right to Sell agreement, the seller agrees to pay the listing agent regardless of who brings the buyer.

Question 47

Which of the following details is an agent NOT required to tell a potential buyer? A. Previous water damage B. Recent repairs to the property C. Previous owner’s occupation D. Potential hazards

Answer 47

Answer is C -Buyers have no need to know unnecessary personal information about a previous owner, therefore, an agent does not need to disclose this information.

Question 48

A broker named Kristin is showing property listed for sale through her company to a buyer named Bob. After having agency relationships explained to him, Bob refuses to sign a buyer representation agreement. What is Bob’s relationship to Kristin? A. Client B. Principal C. Fiduciary D. Customer

Answer 48

Answer is D -Anyone who does not enter into an agency relationship is considered a customer. Choices A and B both describe a buyer who has established an agency relationship with a agent. Choice C describes the role of the agent in the agency relationship with a principal.

Question 49

A seller, Manuel, signed a 90-day listing agreement with a broker, Bill. Manuel died before the listing expired. What happens? A. The listing is terminated because Manuel died. B. The listing is in effect because Manuel signed the agreement. C. The listing is binding if any offers come to the broker before the 90 days expire. D. The listing is binding on Manuel’s spouse for the duration of the 90 days.

Answer 49

Answer is A -The death of one of the parties in the agency agreement is one valid reason to terminate the agreement. The intent of the principal does not survive death, regardless of how much time was left in the agreement. In order for the broker to receive a commission for bringing a buyer for that property, the heir to the property would need to enter into a new agency agreement.