Law of agency

Question 1

What is agency?

Answer 1

An agency exits when one person, the agent, acts for or on behalf of another person, the principal, also known as the client.

Question 2

What is the relationship of fiduciary.

Answer 2

meaning that it is a relationships based on trust.

Question 3

The purpose of TRELA

Answer 3

Texas Real Estate License Act (TRELA) is to protect the public against unscrupulous brokers and sales agents.

Question 4

The Duties of principal to agent

Answer 4

CRIP:
Compensation
Reimbursement
Indemnification
Performance

Question 5

Compensation

Answer 5

refers to the fact that the agent should be paid on the completion of the agency.

Question 6

Reimbursement

Answer 6

refers to the fact the pricipal should reimburse the agent for expenses incurred on behalf of the principal, above and beyond the expenses related to the sale itself.

Question 7

Indemnification

Answer 7

means that the principal will protect the agent from suffering a loss due to the agent’s reliance on informed received from the principal.

Question 8

Performance

Answer 8

means the principal is expected to perform as promised in the agency agreement.

Question 9

The most desirable method of creating an agency relationship with a buyer, sellar, landlord, or tenant is to do so in ________.

Answer 9

writting

Question 10

Agency by estoppel

Answer 10

created when a principal inadequately supervises an agent. The agent takes on power that go beyond the scope of authority given by the principal.

Question 11

Express authority

Answer 11

a written listing agreement or buyer representation agreement is evidence that the agency relationship exists and provides the agent with express authority.

Question 12

Implied Authority

Answer 12

Weekend and evening showings are standards practice in residential real estate, and this authority is defined as implied authority.

Question 13

Fuduciaries

Answer 13

They are held to the highest amount of good faith, are required to exclude all selfish interest, are prohibited form putting themselves in positions where personal interest and representative interest will conflict and must, in any direct

Question 14

The three Classifications of Agency

Answer 14

Universal Agency
General Agency
Special Agency

Question 15

Universal Agency

Answer 15

Universal agency is created with a power of attorney.

Question 16

General Agency

Answer 16

an example is property manager.

Question 17

Special Agency

Answer 17

The special agent is not able to bind (obligate) the principal because he or she is not allowed to sign or accept any terms or conditions on behalf of the principal. The special agent must only follow the instructions of the principal.

Question 18

OLDCAR

Answer 18

Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable Care

Question 19

Obedience

Answer 19

An agent is obligated to follow all of the lawful instructions of a client.

Question 20

Loyalty

Answer 20

means putting the interests of a client first.

Question 21

Accounting

Answer 21

If a broker holds any funds for a client or a customer, the funds are held in trust, and the broker must place them in a separate account set up for this purpose.

Question 22

Commingling

Answer 22

is mixing clients’ funds with a broker’s business, operating, or personal funds, and TRELA prohibits it.

Question 23

Conversion

Answer 23

More serious offense would be conversion. When a broker spends his or her client’s funds without authorization, that broker is guilty of conversion.

Question 24

How to secure the buyer

Answer 24

Securing the buyer is the best accomplished by using a buyer’s representation agreement to establish the broker’s agency relationship with the buyer formally.

Question 25

How to secure a listing

Answer 25

As with the seller, once you represent the buyer, you must disclose that representation at your first contract with any other party. The disclosure may be oral or in writing.

Question 26

Oral Agency Agreements

Answer 26

They are legal in Texas and is enforceable against the agent.

Question 27

An oral agency agreement is unenforceable against the client. T/F

Answer 27

True

Question 28

Subagency Relationship

Answer 28

Two conditions must both be met to have a subagency relationship. 1. The sale must be a cooperative sale, and 2. The buyer must be an unrepresented customer.

Question 29

At any time can the parties terminate the agreement. T/F

Answer 29

True by mutual agreement

Question 30

When is the agency terminated?

Answer 30

-Death or incapacity of either party. If the broker or client dies or is determined to be insane, the agency agreement is terminated. -Revocation of the broker's license.

Question 31

Even though the broker now has a fiduciary duty to the buyer, he also has the on-going duty of confidentiality to the seller because of the former listing agreement. For how long?

Answer 31

The duty of confidentiality lasts forever unless the broker is required by law or a court order to disclose the information.

Question 32

TREC's Advertising Rules

Answer 32

-Team names must end in the word "team" or "Group." -Do not use Company, brokerage -Sponsoring Broker's name requires to be at least 1/2 the size of the largest contact information on the advertisement.

Question 33

All social media media advertising must contain the required information either on each advertisement or may contain a direct link that leads to the required information. What is the rule?

Answer 33

The rule is one click away.

Question 34

In Texas, most _____ prepare a Seller's Disclosure Notice, and the seller is responsible for its accuracy.

Answer 34

sellers

Question 35

Stigmatized Properties

Answer 35

this type of properties is sold with a deep discount on the sales price.

Question 36

Murder on the premises

Answer 36

Many buyers object to living on a property where a murder has occurred.

Question 37

Death on the property

Answer 37

Some buyers will decide against buying a property in which anybody has died for any reason.

Question 38

Suicide

Answer 38

suicide is in much the same category as a natural death on the property. some ascribe more

Question 39

Paranormal Activity

Answer 39

Most potential buyers will avoid a property purported to be haunted.

Question 40

Types of Listing agreements

Answer 40

Open Listing Exclusive Agency Exclusive right to sell Net listing

Question 41

Open Listing

Answer 41

gives the seller the right to list the property with multiple competing brokers and to sell the property personally without liability for payment of a commission.

Question 42

Exclusive right to sale

Answer 42

Real estate brokers recommend this listing, which grants and exclusive right to sell the property during the listing term.