STATE: Agency/Brokerage Flashcards Preview

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Flashcards in STATE: Agency/Brokerage Deck (73)
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1
Q

Nevada Agency Law

What does “Agency” mean

A
  1.   “Agency” means a relationship between a principal and an agent arising out of a brokerage agreement whereby the agent is engaged to do certain acts on behalf of the principal in dealings with a third party.
  2.   The term does not include a relationship arising solely from negotiations or communications with a client of another broker with the written permission of the broker in accordance with the provisions of subsection 2 of NRS 645.635.

NRS 645.0045 

2
Q

Broker Agrees to Net Listing, what must they do?

A
  • Broker must disclose all material facts, such as market value of a property.
    • Even if the owner only wants to clear a certain amount of money.
3
Q

Comission Rates

A
  • Comissions are always negotiable bnetween the clien and the agent.
  • Comissions rate are not set by law, the NV RE divisoin or local groups
4
Q

When is the Earnest Money Deposits payable to brokerage deposited?

A
  • must be deposited to a trust account within one (1) business day of the acceptance of the offer.
  • The broke may be subject to disciplinary action.
5
Q

What can a Broker do when they recieve a ranest money deposit?

A
  • if provided in the agreement, the broker may deposit this Buyer’s earnest money depsoits into trust account containigng money from other customers and clients within one business day of the acceptance of the offer.
  • The broker is not required to deposit the money until an offer has been accepted.
6
Q

Broker

What procedure should a sales person follow when terminating their affilation with the employing broker?

A
  • Nothing, the broker is responsible of notifying the Nevada Real estate Division of the change.
7
Q

Broker

Failure to Supervise

A

in NV, a broker may be disciplined for failing to supervise agents in his or her employment.

8
Q

Sales Person

How brokers can a salesperson be licensed with?

A

Only one

9
Q

Brokerage

How long is a RE office required to keep transaction records?

A
  • Five years.
10
Q

Brokerage

What does a broker-sales person need to do to become actively selling for a new brokerage?

A
  • To change offices, the appropriate paperwork must be given to the Real Estate division at which time a temporary permit to conduct business will be issue d and posted with the new brokerage .
11
Q

Brokerage

Who maybe a branch manger of a brokerage?

A
  • May not
    • Salespeople
  • The manager of a branch offi ce must be a licensed broker-salesperson or broker.
12
Q

Brokerage

How long does a licensee have to affiliate after parting from broker?

A
  • All compensatioLicensees have up to 30 days to affiliate with another broker, or their licenses will be inactivated according to NRS 645.n must be recieved through the employing broker.
13
Q

Brokerage

Compensation

A

All compensation must be recieved through the employing broker.

14
Q

A salesperson can work with another broker if

A
  • the employing broker consents, represent a buyer, and enter into an exclusive­ listing contract.
15
Q

What is the Brokers dutie as to a purchase and sales agreement?

A

The broker must ensure that the written purchase and sales agreement includes all terms.

16
Q

Referal Fees

A
  • A salesperson may not accept a fee from anyone other than his or her employing broker.
  • Any fees received must be disclosed to all parties to the t ransact ion .
17
Q

How are comissions determined?

A
  1. All commissions charged are freely negotiable between the agent and the principal.
  2. Commission rates are not set by the Nevada Real Estate Commission or by agreement between local brokers. It does not have to be paid by cash or a cashier’s check .
18
Q

When must a refund be made for a Subdivided Land Sale and time-share?

A
  • Subdivided land sales and time-share refunds must be made within 15 days of a written request for cancellation.
19
Q

Can a Corporate Broker hold a Seperate Broker’s license?

A
  • may hold a separate broker’s license to do business as an individual.
20
Q

Real Estate Company rep both buyer and seller

A
  • Both parties must agree to the dual agency with the Consent to Act Form. Payment of the fees to the broker does not determine representation.
21
Q

Who long does ageny need to maintain Confidential information?

A
  • must remain confidential for one year.
    • Examples include the offer received while the property was listed with the agent. Physical inform at ion about the property must always be disclosed.
22
Q

B no agency Agreement, Sales person from RE company can show bB a in-house listinf if

A
  1. Agency disclosure.
  2. The disclosure would be requi red since the sales person represents only the sell er.
23
Q

Single Agency

A
  • A Broker or Agent represents the interests of the one party in Buying or Selling only.
  • The single agency may be for either party, seller or buyer.
    • Additiona lly, an office may appoint an agent to work exclusively with one party (appointed agency) .
    • With informed consent , an agent may work with a buyer client and a seller client in the same transaction.
24
Q

What is required for a Dual Agency

A

Both parties must give their consent.

25
Q

When should an Agent Disclose Rep of seller?

A
  • as soon as it is practical so that the buyer understands that the buyer is not being represented.
26
Q

What is the Agency Disclosure Requirement?

A
  • Agency representation is not about the property; rather, it is about the duties and obligations to a client and a customer.
    • In Nevada, the Duties Owed by a Nevada Real Estate Licensee . Form details these duties .
27
Q

Buyer Declining representation

A
  • Only give Customer Level Service
    • The Duties Owed by a Nevada Real Estate Licensee Form is required in all real estate transactions involving a licensee .
28
Q

Does the broker need authorization to place a listing on MLS (Sub Agency)?

A
  • The seller must agree to placing the listing in ,MLS with this offer sub-agency. In this case, the broker acted upon his own initiative without the seller’s authorization.
29
Q

When does all necessary agreements in brokerage Relationship due?

A
  • The agency positions must also be confirmed in the offer and acceptance or an attachment t heret o.
30
Q

What happens if a Broker is Absent?

A
  • A designated office manger must be named by the broker
    • THe designated officver manger must be a real estate broker-sales person
    • The designated office manager must have 2 years active experience in the last 4 eyars.
31
Q

How long can a Broker be absent?

A
  • A broker shall not be absent from his or her business for 30 days or more if he or she is the only broker in his or her office unless he or she inactivates his or her license or otherwise notifies the Real Estate Division in advance .
32
Q

Requirements of assiged agency

A
  • Assigned agency within a brokerage is an option that requires disclosure to the client s.
    • In this case, the broker can assign an agent to repre sent -t he- buyer and assign a salesperson to represent the seller .
33
Q

When is Comission Earned?

A
  • The commission is earned when the broker finds a ready, willing and able buyer however the commission is seldom paid before the close of escrow.
34
Q

Earnest Money Deposit

A

The agent works for the broker so the earnest money deposit cannot be placed in the broker’s trust account, as it would create a conflict of interest. The earnest deposit must be placed in a neutral escrow account and that account must be in Nevada.

  • her own property
35
Q

When can a exclusive right to sell not be terminated?

A

An agency coupled with an interest is more than a personal service contract . A seller may not unilaterally terminate a listing, without cause, when the agency is coupled with an interest. An example of an agency coupled with an interest is when a broker pays on the seller’s mortgage debt to avoid foreclosure.

36
Q

Broker starting business

A

One member of broker must be the qualificaitons of a real estate broker for a partnership, corp

37
Q

on-site managers

A

One-site, on-site managers are specifically exempt from licensing laws.

38
Q

Collecting a Comission you don’t need to prove

A

It is not necessary to prove that the broker was the procuring cause when there is exclusive right to sell listing.

39
Q

Dual Agency

A

A single Broker or Agent represents both Buyer and Seller typically in a limited agency relationship, not representing the best interests of either party.

40
Q

Sub-Agency

A
  • One Broker represents the Seller in an agency relationship.
  • “Selling agents” who work with buyers are “subagents” of the listing broker and actually represent the Seller. Buyers are unrepresented.
  • * Rarely Used anymore due to lawsuits
41
Q

Limited or Ministerial

A

A listing Broker provides limited services to an unrepresented buyer.

42
Q

Whe does an Agency Occurs

A
  • when one person (the agent), with the consent of another person (the principal), undertake to represent and act on the principals account with third-person and usually in business matter
43
Q

Is an Agency Relationship created because a Consent to Act form is Signed?

A
  • It is important to note that an agency relationship is not created because a party signs either a Duties Owed or Consent to Act form.
    • Accordingly, it is irrelevant whether a brokerage agreement is oral or written, or whether a licensee is acting on his or her own behalf, a Duties Owed form or Consent to Act form, must be given to and signed by the licensee’s client.
      *
44
Q

Is an agency created with a COnsent to act form?

A
  • The agency relationship is not created because a party signs either the Duties Owed or Consent to Act forms.
45
Q

Is an agency created with a COnsent to act form?

A
  • The agency relationship is not created because a party signs either the Duties Owed or Consent to Act forms.
46
Q

Can a Licenese be liable for a implied Agency?

A
  • Even with a signed “Authorization” form, if the buyer’s broker starts performing agency duties for the seller outside those authorized by statute, the broker may be held liable for creating an “implied agency”.
    • When the “Authorization” form is used, the buyer’s broker still retains all the agency duties and responsibilities to his or her client, the buyer.
    • This authorization is not a “Consent to Act” form substitute.
      *
47
Q

Do you need a Consent to Act for in an Assigned Agency Situation?

A
  • not need to use the “Consent to Act” disclosure form nor receive the approval of the clients.
    *
48
Q

Brokerage Agreement

What is an Implied Agency?

A
    1. Implied agency is where the licensee acts as the agent of the client with the intention of representation and the client tacitly accepts those services even though there is no expressed (oral or written) brokerage agreement.
  1. In 2007, the Nevada legislature defined “agency” for real estate licensees as the relationship between a principal and an agent arising out of a brokerage agreement in which the agent is engaged to do certain acts on behalf of the principal in dealings with a third partyNRS 645.0045. Therefore, to create an agency relationship, there must first be a brokerage agreement.
  2. A brokerage agreement is defined as an oral or written contract between a client and a broker in which the broker agrees to provide real estate related services in exchange for valuable consideration.NRS 645.005
  3. This definition of agency seems to preclude the trap of unintentional agency, however; as brokerage agreements may be oral, there is the possibility that a licensee’s conduct may lead a party to the reasonable expectation that an oral brokerage agreement exists and therefore, the licensee is that party’s agent.
  4. Here we must draw a distinction between the end of the agency and the termination of a party’s rights under the brokerage agreement
  5. Some of those rights, such as the licensee’s duty of confidentiality, are statutorily identified as extending past the revocation or termination of the brokerage agreement - in the case of confidentiality it is one year NRS 645.254(2).
  6. Agency may also end when the brokerage agreement has an end or termination date and that date comes and goes without the broker’s efforts procuring a successful transaction.
  7. Each exclusive representation brokerage agreement is required to have in writing a specified and complete termination dateNRS 645.320(2).
  8. Unless there is an agreement to the contrary, a brokerage agreement may be terminated by either party
  9. A client can refuse to be represented by, or work with, a broker-salesman or salesman; however, the brokerage agreement continues in force as the agency is with the broker not the salesperson.
  10. The fact that a client does not want to continue being represented by a certain licensee does not automatically release the client from an obligation to pay compensation under the brokerage agreement.
  11. Nevertheless, the broker may still have rights under the original brokerage agreement for the collection of compensation NRS 148.420 and NRS 148.330.
  12. Since the brokerage agreement is with the broker, if a broker-salesperson or salesperson dies, the brokerage agreement continues in place.
  13. It is then between the broker and client to determine if the brokerage agreement should continue with the services of a different broker-salesperson or salesperson or whether the brokerage agreement will be canceled.
  14. If the broker dies, the broker’s agency representation as evidenced by the brokerage agreement ends. In either case, whether the death is of the broker or his or her brokersalesman or salesman, the client continues to be responsible for paying any compensation earned by the broker before the licensee’s death
  15. A licensee is under the duty not to disclose the client’s confidential information for one yet ar after the revocation or termination of the brokerage agreement NRS 645.254 (2)
  16. For example, it is nonfeasance if the licensee does not provide a copy of the brokerage agreement to the client (NRS 645.300); malfeasance if the licensee discloses a client’s confidences (NRS 645.254(2)); and misfeasance when a licensee overlooks some material term of the purchase agreement (NRS 645.254(4)).
  17. For example, failing to put a definite termination date on an exclusive brokerage agreement eliminates the broker’s right to collect a commission regardless of whether the client was harmed
  18. A broker’s legal relationship with the client starts with an employment contract called a brokerage agreement. In the brokerage agreement, the broker promises to provide real estate related services for valuable consideration.
  19. A listing contract is a seller’s brokerage agreement; a buyer’s brokerage agreement is with a buyer.
  20. Specialized brokerage agreements such as commercial, advance fee, manufactured home, and listing with option to purchase, as well as property management agreements, are discussed in their own sections.
  21. There are only two parties to a brokerage agreement, the client and the broker
  22. Independent Contractor – Most non-broker licensees (salesperson and broker-salesperson) are independent contractors; nevertheless, by law they cannot enter into their own brokerage agreements with clients.
  23. Who Pays – For a valid brokerage agreement, the client does not need to be the one who pays the broker. L
  24. Brokerage Agreements are employment contracts and like other contracts, they have the same formation requirements.
  25. Brokerage agreements may be oral or written.NRS 645.005
  26. Nevada has no mandatory brokerage agreement form. Though there is no required form, Nevada’s Attorney General has stated the Real Estate Division is within its authority to adopt regulations governing the content of brokerage agreements
  27. Oral Contracts: Oral brokerage agreements are legal contracts in which a broker agrees to represent a client with the intention or expectation of compensation and there is no written contract. No oral brokerage agreement may be exclusive. NRS 645.320
  28. Written Contracts: Though it is legal to have oral brokerage agreements, all exclusive agency brokerage agreements must be in writing. Under Nevada law, written brokerage contracts have certain statutory requirements regarding terms, form, and distribution NRS 645.320.
  29. 2 To verify compliance with these laws, the Real Estate Division requires each brokerage agreement be kept by the broker for five years from the date of closing or last activity on the tr ansaction.NAC 645.650.
  30. Intend to be Bound: Before entering into any electronically created brokerage agreement, the licensee should be aware of an issue concerning NRS 719, the statutes regulating electronic contracts, and NAC 645, the administrative code regulating real estate licensees
  31. The intent of the Real Estate Commission in NAC 645.613 was to require proof a client agreed to sign the brokerage agreement.
  32. Specifically, the Commissioners did not want only “the clicking of an acceptance box,”28 either on the internet or in an e-mail, to create a binding brokerage agreement
  33. Completion of the contract’s purpose: The purpose of any brokerage agreement is the employment of a broker by a client to perform real estate related services for compensation.
  34. Though a brokerage agreement ends, each party may continue to have certain responsibilities stemming from the contract.
  35. Some of these, such as the licensee’s duty of confidentiality, are statutorily identified as extending past the revocation or termination of the brokerage agreement - in the case of confidentiality, it is one year. NRS 645.254 (2).
  36. With an oral brokerage agreement, if the contract does not have a termination date it will remain effective for a “reasonable time.”
  37. All written brokerage agreements must have a set termination date.3
  38. Each exclusive representation brokerage agreement is required to be in writing and have a definite, specified and complete termination date agreement is required to be in writing and have a definite, specified and complete termination date.
  39. A brokerage agreement may end upon the occurrence of a specific event. For example, a seller may be attempting to sell a home due to a job transfer
  40. The listing contract has both a specific termination date and alternatively, a clause that provides the brokerage agreement will terminate 24 hours after the seller gives the broker proof of her transfer date.
  41. The listing contract has both a specific termination date and alternatively, a clause that provides the brokerage agreement will terminate 24 hours after the seller gives the broker proof of her transfer date.
  42. An unconditional release is when both the broker and the client mutually agree to terminate the brokerage agreement and end the relationship.
  43. The termination of the brokerage agreement does not release the broker from certain statutory duties such as confidentiality.
  44. A client has the right to refuse to work with any specific broker-salesman or salesman; however, as the brokerage agreement is with the broker, the brokerage agreement continues in force.
  45. When this happens, the broker may transfer the client to another agent or release the client from the brokerage agreement.
  46. The seller could terminate the brokerage agreement based on the impossibility of performance. The performance need not be totally impossible, only highly impractical.
  47. Breach: The brokerage agreement may be terminated when either party breaches it.
  48. Recording a Lis Pendens: The brokerage agreement is a contract for services. The only way to enforce its terms is either through ADR or court action. U
  49. Unfortunately, some licensees believe they can record a lis pendens to stop the ex-client’s escrow when there is a dispute about compensation or the brokerage agreement.
  50. As an employment contract, the brokerage agreement is not a claim for title to, or possession of, real property. T
  51. For example, by “operation of law” a duly executed brokerage agreement may be avoided by a client who is a minor.
  52. Nevertheless, the broker may still have rights under the original brokerage agreement for the collection of compensation.NRS 148.420 & NRS 148.330.
  53. The broker has rights under the original brokerage agreement and could sue the estate should it not pay her.
  54. If the broker-salesperson or salesperson dies, the brokerage agreement continues in place because the brokerage agreement is with the broker. I
  55. If the broker dies, historically, the brokerage agreement automatically ends; however, by regulation, another licensed broker may act in the deceased’s broker’s place for up to sixty (60) days after the original broker’s death.
  56. b. After Termination - When the brokerage agreement terminates, the broker must stop representing the client, remove any personal property from the seller’s property (such as signs), account to the client for all funds, keep the client’s confidences, and do nothing to harm the ex-client or interfere with the transaction even if the broker believes he or she is still owed a commission. NRS 645.252 (1)(e), NRS 645.310 (1), NRS 645.254 (2).
  57. This is a contract clause that gives the broker the right to collect a commission for a set time after the brokerage agreement ends. To collect a commission, the broker must have introduced the property or buyer to the client during the brokerage agreement period. U
  58. Unless the brokerage agreement allows for the broker to collect if the broker is the procuring cause, upon the end of the broker protection period, the seller may sell the property to a buyer procured by the broker and not owe the broker a commission.
  59. An open brokerage agreement is where the broker has no exclusive representation of the client – the client may hire any number of other brokers.
  60. An open brokerage agreement allows the seller to sell the property without owing a commission. The courts favor the client in determining the level of representation. The more “open” the contract, the better for the client.
  61. Open brokerage agreements may be oral or written. All oral brokerage contracts are considered “open.” All written brokerage agreements are also presumed to be open unless the contract’s terms or title state it is exclusive
  62. Implied Brokerage Agreements: Though not favored by the courts, under some circumstances, a court will find a broker is owed compensation under an implied brokerage agreement.
  63. In Morrow v. Barger, (1987),48 the court found an implied brokerage agreement after the written listing ended. Claire Morrow was a broker who had a written open listing with the Bargers to sell their ranch. During the listing period, Morrow showed the property to three potential buyers. When the written brokerage agreement ended, the sellers instructed Morrow to continue marketing the property – which she did. After a while, the sellers stopped communicating with Morrow. Eventually, Morrow learned that the Bargers personally sold the property to all three buyers in a complicated escrow. Morrow sued for her commission and won. The court said Morrow had an implied open listing; therefore, she was entitled to a commission
  64. b. Specific Terms - The law identifies only four provisions that must be included in an enforceable exclusive brokerage agreement. These are: 1. The agreement must be in writing; 2. It must be signed by both the broker and the client or their authorized representatives; 3. The contract must have a definite termination date; and 4. The agreement may not require the client to notify the broker of the client’s intention to cancel the exclusive features of the brokerage agreement once the agreement is terminated NRS 645.320
  65. By and large, other than certain requirements for specialized brokerage agreements, all other contract terms are negotiable.
  66. c. Buyer’s Brokerage Agreements – In a written buyer’s brokerage agreement, all the required terms of the exclusive listing agreement apply. 54 Additionally, though not law, the Real Estate Division has identified various elements that, at a minimum, should be in a buyer’s brokerage agreement. These include: “specified terms, duration, compensation, services agreed upon, and the ability of a client to cancel for non-performance. … Any special services, circumstances and/ or conditions should be spelled out in the agreement.
  67. d. Missing Elements = No Compensation – If an exclusive brokerage agreement is not in writing or if it is missing a necessary legal provision, the broker will be unable to collect a commission.
  68. A faulty exclusive brokerage agreement cannot become an open brokerage agreement. Failure to include a fixed termination date makes the agreement voidable by the client and removes the broker’s ability to claim payment under alternative legal theories of compensation.5
  69. a. By Other Brokers – Once a valid exclusive brokerage agreement is in place, a licensee may not, for personal gain, induce any party to break that contract in order to substitute a new agreement. A licensee who violates this statute may be subject not only to civil action from the harmed broker, but the Real Estate Commission may impose a $10,000 fine and other administrative sanctions. NRS 645.630 (1)(l).
  70. The brokerage agreement is an employment contract between the client and the broker.
  71. A seller and buyer cannot, in their purchase agreement or through escrow instructions, attempt to modify the terms of the brokerage agreement without the consent of the broker
  72. Unless specifically agreed to in the brokerage agreement, a seller cannot refuse to pay a broker because the property was listed at one price but the seller accepted a lower price. A
  73. A seller may not refuse an offer from a buyer, wait until the brokerage agreement has expired, and then sell the property to that buyer in order to not pay the broker’s commission.
  74. Most listing agreements have the compensation paid directly by the client. Most buyer brokerage agreements are oral and have the compensation paid by a third party, usually the listing broker.
  75. With most brokerage agreements, the broker provides the written agreement and often any dispute over contract terms is decided in the client’s favor.
  76. The client cannot refuse to accept offers above the net price waiting for the brokerage agreement to terminate and then accept a lower offer. I
  77. Quantum meruit cannot be used to collect compensation when there is a faulty exclusive brokerage agreement.
  78. To be protected by the commercial claim law, the brokerage agreement must be in writing and state what services the broker will provide and what disposition the client desires: for example, sale, purchase, exchange or lease of the commercial real estate NRS 645.8705.
  79. Since a brokerage agreement is an employment agreement, it is a contract for services and not a claim on the real property. If the owner breaches the brokerage agreement, the broker’s remedy is a claim upon the owner’s net proceeds - in other words, a claim over the owner’s personal property. The claim is not a claim or lien upon the seller’s real estate and does not attach to the real property.NRS 645.8761
  80. An agent for the broker may not waive the broker’s claim right even if that agent is otherwise authorized to bind the broker to the brokerage agreement.
  81. Any waiver of the broker’s right must be done by the broker on or before the date the brokerage agreement is signed.
  82. Any brokerage agreement that requires a client to provide money up-front for brokerage services qualifies as an advance fee agreement.NRS 645.002 & NRS 645.004. 102. NRS 645
  83. Though no specific forms are currently required, the Real Estate Commission is authorized to establish forms for advance fee brokerage agreements. It may also require reports and forms for the review and audit of advance fee agreements NRS 645.324
  84. An advance fee brokerage agreement must be in writing with a detailed description of the broker’s services and a date of performance. The broker must identify the total amount of the advance fee and when payment is due.1NAC 645.675.
  85. No Guarantee: Additionally, the brokerage agreement cannot imply or guarantee there are tenants or buyers immediately or soon to be available, nor that the property will be purchased, sold, exchanged or leased due to the broker’s services.
  86. Unlike many contracts, there can be no provision in the brokerage agreement that relieves or exempts the broker from those oral representations or promises.1
  87. The brokerage agreement may be an Exclusive Right to Sell and provide for the payment of compensation to the broker out of the proceeds of the property’s sale.
  88. The payment of any commission must be confirmed by the court contingent upon the sale of the property through the broker’s efforts. Even with a brokerage agreement, the court may determine which broker is the procuring cause of the sale and award that broker the commission.1
  89. When an estate’s personal representative signs the brokerage agreement, the representative has no personal liability to the broker and the estate itself is not liable to the broker unless a sale is made and confirmed by the court.
  90. Similarly, a court-appointed guardian may enter into a brokerage agreement to sell a ward’s real property. The requirements and commission restrictions are the same as for those properties being sold from probateNRS 159.1385
  91. Bankruptcy is federal law that can have a profound effect on the sale of real property and any brokerage agreement.
  92. Considered here are general rules regarding the brokerage agreement when a party files for bankruptcy under Chapter 7 - liquidation or “straight” bankruptcy.
  93. There are three major instances in which a broker may be confronted with a brokerage agreement subject to the bankruptcy law: 1. When the broker has an existing, valid listing agreement and the seller files for bankruptcy; 2. When the broker’s buyer-client files for bankruptcy; and 3. When the broker is hired by the bankruptcy trustee to sell the bankrupt estate’s real property.
  94. As such, the bankruptcy trustee or the court (they are not the same) can either accept or reject the brokerage agreement. Even if the trustee accepts the contract, the court may reject it.
  95. If the trustee and court accept the existing brokerage agreement, the court may modify the compensation.
  96. If the buyer has not executed a purchase agreement, any brokerage agreement the buyer has may be terminated since the debtor no longer has control over the assets necessary to purchase any property
  97. considered a “professional” and therefore, compensation under the brokerage agreement must be approved by the bankruptcy court
  98. By definition, a property manager’s employment agreement is not a brokerage agreement;115 it is a written employment contract between a client and broker in which the broker accepts compensation to manage the client’s propertyNRS 645.0192
  99. A property management agreement must be in writing - no oral agreements are enforceable. It must include the term of the employment; however, unlike general brokerage agreements that require a specific termination date, a property management agreement may contain an automatic renewal (roll-over) provision.
  100. If the manufactured home has been converted to real property, any legal brokerage agreement may be used.
  101. If the manufactured home has not been converted, the broker must make certain disclosures; 123 however, as long as the broker is also selling the underlying real property, any legal brokerage agreement may be used. 1
  102. A broker’s employment contract with a client is called a brokerage agreement. All brokerage agreements, being contracts, must have the general contract elements. Other than Nevada laws, certain laws, such as the federal Real Estate Settlement Procedures Act and anti-trust laws, affect what the licensee must do or disclose in a real estate transaction.
  103. Special types of brokerage agreements require specific clauses or wording. Commercial brokerage, advanced fee, probate and guardianship, manufactured housing, and listing with option agreements are all specialized brokerage agreements.
  104. Property management agreements, though not technically brokerage agreements, are also specialized employment agreements between a client and a broker
  105. Brokerage agreements may be oral or written. Certain types of brokerage agreements must be in writing. For example, any brokerage agreement that authorized the broker to be the client’s sole broker, called an exclusive agreement, must be in writing. Written contracts may be created with pen and paper, or electronically.
  106. Exclusive brokerage agreements have several requirements. The agreement must contain a definite termination date; be signed by the broker and client or their authorized representatives; and must not require the client to notify the broker of the termination of the exclusive contract feature. In the brokerage agreement, the broker may limit his or her services; however, at no time may the broker limit the liability for statutorily required duties or services. Under Nevada law, only a broker is allowed to collect compensation. The salesperson or broker-salesperson may not receive or give compensation from or to, any person for real estate services other than the broker with whom he or she is licensed at the time of the transaction. The receipt of all compensation must be disclosed to the parties in the transaction.
  107. If an unrepresented buyer requests a non-listing broker to draft an offer, the broker may require the buyer to enter into a brokerage agreement. No broker is required to work for free.
  108. A legally appointed guardian of an incompetent ward may sign a brokerage agreement to sell or to purchase real property from the ward’s estate.40 However, this authority also requires court approval.
  109. The executor or administrator may sign brokerage agreements50 and sell or purchase real property with court approval.51 A devisee under a will, or an heir to an estate, does not have the right to sell real property still in the deceased’s name.
  110. The brokers’ authority and contractual rights are found in the brokerage agreements, not the purchase agreement
  111. A licensee may not disclose the client’s confidential information for one year after the revocation or termination of the brokerage agreement.
  112. Advertising: If the licensee has a brokerage agreement in place and advertises a property, the advertisement must identify the licensee’s licensed status. This disclosure must be made whether the licensee is acting as an agent or as a principal.61 If the licensee has an ownership interest in the property, the advertisement must disclose “for sale by owner-broker” (owner-licensee, ownersalesperson, etc.) NAC 645.610
  113. . Since the other party usually does not see the broker’s employment agreement (the brokerage agreement) where both the source and amount of compensation are usually identified, compensation sources are often identified in the parties’ purchase agreement.
49
Q

Brokerage Agreement

When Does a Agency arise?

A
  1. In 2007, the Nevada legislature defined “agency” for real estate licensees as the relationship between a principal and an agent arising out of a brokerage agreement in which the agent is engaged to do certain acts on behalf of the principal in dealings with a third partyNRS 645.0045. Therefore, to create an agency relationship, there must first be a brokerage agreement.
    2.
50
Q

Brokerage Agreement

What is a Brokerage Ageement?

A
    1. A brokerage agreement is defined as an oral or written contract between a client and a broker in which the broker agrees to provide real estate related services in exchange for valuable consideration.NRS 645.005
    2. This definition of agency seems to preclude the trap of unintentional agency, however; as brokerage agreements may be oral, there is the possibility that a licensee’s conduct may lead a party to the reasonable expectation that an oral brokerage agreement exists and therefore, the licensee is that party’s agent.
    3. Here we must draw a distinction between the end of the agency and the termination of a party’s rights under the brokerage agreement
51
Q

Brokerage Agreement

Does it matter if the Brokerage Agreement is written?

A
  1. Accordingly, it is irrelevant whether a brokerage agreement is oral or written, or whether a licensee is acting on his or her own behalf, a Duties Owed form or Consent to Act form, must be given to and signed by the licensee’s client.
    1. Implied agency is where the licensee acts as the agent of the client with the intention of representation and the client tacitly accepts those services even though there is no expressed (oral or written) brokerage agreement.
52
Q

Brokerage Agreement

Can an agency Terminate without procuring a successful Transaction?

A
  • Yes
  • Agency may also end when the brokerage agreement has an end or termination date and that date comes and goes without the broker’s efforts procuring a successful transaction.
    1. Each exclusive representation brokerage agreement is required to have in writing a specified and complete termination dateNRS 645.320(2).
    2. Unless there is an agreement to the contrary, a brokerage agreement may be terminated by either party
    3. A client can refuse to be represented by, or work with, a broker-salesman or salesman; however, the brokerage agreement continues in force as the agency is with the broker not the salesperson.
    4. The fact that a client does not want to continue being represented by a certain licensee does not automatically release the client from an obligation to pay compensation under the brokerage agreement.
    5. Nevertheless, the broker may still have rights under the original brokerage agreement for the collection of compensation NRS 148.420 and NRS 148.330.

1.

53
Q

Duties Owed

What should be provided to all clients?

A
  • A new Duties Owed form should be provided to each client.
  • If a client’s consent is required (as in when acting for two or more parties to the transaction) consent must be obtained – disclosure alone is insufficient to ensure consent.
  • To ensure a client understands the licensee’s basic duties, the licensee is required to provide the client and each unrepresented party with a state mandated form called the “Duties Owed by a Nevada Real Estate Licensee”. NRS 645.252(3)
  • A new Duties Owed form should be provided to each client. If a client’s consent is required (as in when acting for two or more parties to the transaction) consent must be obtained – disclosure alone is insufficient to ensure consent.
  • When an agency relationship is established the broker is required to provide the client with a state mandated disclosure form called the “Duties Owed by a Nevada Real Estate Licensee”. NRS 635.252(3)
  • Should the broker at any point in a transaction be deemed to represent more than one party, the broker must also provide the parties with a “Consent to Act” form and receive their permission before proceeding with the representation. The appropriate agency disclosure form (Duties Owed or Consent to Act if applicable) must be used in all real estate agency relationships regardless of the type of representation, i.e., single, more than one party, and assigned; or the type of real estate transaction, e.g., purchase, property management. The Duties Owed form must also be given when a licensee is a principal in a transaction.NAC 645.637.
  • It is important to note that an agency relationship is not created because a party signs either a Duties Owed or Consent to Act form.
  • Accordingly, it is irrelevant whether a brokerage agreement is oral or written, or whether a licensee is acting on his or her own behalf, a Duties Owed form or Consent to Act form, must be given to and signed by the licensee’s client.
  • A licensee who refers a potential client to another licensee does not need to provide the Duties Owed disclosure form if the referring licensee’s only activity is the referral.
  • The broker does not regularly deal with ranch or rural properties therefore, he refers the client to a broker who regularly works with this type of property. The first broker is not required to provide the rancher with a Duties Owed form.
  • Part four identifies the licensee’s conflict of interest, the duty of confidentiality, and the requirement for each client to have also received a Duties Owed form.
  • The Real Estate Commission, the body charged with hearing the Division’s disciplinary cases, has found the incorrect execution of these forms amounts to gross negligence by the licensee, therefore, it is incumbent upon each broker to ensure the Duties Owed and Consent to Act
  • a. Written vs. Verbal – Some disclosures require the use of a specific form, for example, the Duties Owed by a Nevada Licensee (agency disclosure form).NRS 645.252 (3).
  • Delivery and Acknowledgment – Any disclosure is ineffective unless it is delivered to the person to whom it is meant to inform. Some disclosure forms, such as the Duties Owed by a Nevada Licensee, incorporate a signature line for the recipient.
  • It is incumbent upon each broker to ensure the Duties Owed and Consent to Act (when applicable) forms are properly completed and signed.
  • Before an agency relationship is established the broker is required to provide the client with a state mandated form called the “Duties Owed by a Nevada Real Estate Licensee” (Duties Owed).8
  • The appropriate agency disclosure forms (Duties Owed and Consent to Act, if applicable) must be used in all real estate agency relationships regardless of the type of representation (single, multiple, or assigned) or the type of real estate transaction (purchase, lease or property management). The Duties Owed formmust also be given when the licensee is a principal in the transaction.NAC 645.637
  • Form Does Not Create Agency: The agency relationship is not created because a party signs either the Duties Owed or Consent to Act forms. These forms are strictly disclosure documents. Each form specifically states that it does not constitute a contract for services or an agreement to pay compensation.
  • Not Required on a Referral - A licensee who refers a potential client to another licensee does not need to provide the Duties Owed disclosure form if the referring licensee’s only activity is the referral.85 For example, a seller contacts a broker about representing him in the sale of his Fallon ranch. The broker does not Regularly deal with ranch properties; therefore, he refers the client to a broker who does. The first broker is not required to provide the seller with the Duties Owed form.
54
Q

Brokerage Agreement

What does an Exclusive Representation Brokerage Agreement

A
  1. Each exclusive representation brokerage agreement is required to have in writing a specified and complete termination dateNRS 645.320(2).
55
Q

Principal:

A

one who appoints an agent to represent them

56
Q

Express agency

A
  • a relationship created by an oral or written agreement between a principal and an agent
  • we have only expressed in Nevada - because a state mandated form must be presented and signed by the client and the agent when a brokerage agreement is entered in to
57
Q

Implied Agency

A
  • Agency exisits because of the conduct of the parties
  • Not possible in Nevada because of the required written disclosure form
58
Q

Agency Disclosure Form

A
  • Many states have enacted lass requiring disclosures
  • Disclosures help consumers make informed decisions
  • many brokers recommend bringing in experts to aid the consumer
  • agency dislcosures provided by the state and are required to be used in Nevada
59
Q

How to Create an Agency Relationship

A
  • A principal (also called a client) and agent can create an agency relationship by:
    • An agreement between them;
    • Ratification; (adoption and/or communication of approval)
    • Estoppel; (a decision of law) or
    • As the result of the conduct of the parties and the agent’s inherent relationship with third parties (i.e., ostensible or implied agency).
  • Agency agreements usually include names and signatures of the parties, identification of the business transaction, terms, and designated time frame. In Nevada, creation of an agency relationship must be expressly created by a state-created, written disclosure form.
60
Q

When must the agency disclosure form be presented?

A
  • The listing broker, or his or her agent,
    • must deliver the form to the seller before entering into a listing agreement.
  • The selling broker (or his or her agent)
    • must provide the form to the seller before presenting the offer.

In short, the agency disclosure cannot be made too soon, but it can be made too late. It must be made and signed before the signing of any other contracts. The disclosure form that is used is created by the state and its use is mandated by the state.

61
Q

Listing Agent Disclosure

A
  • the law requires that a listing agent must disclose to the seller whether the listing agent is acting exclusively as the seller’s agent, or as a dual agent representing both the seller and the buyer (called multiple representation in Nevada).
    • A selling agent must disclose to the buyer and seller whether the agent is acting exclusively as the buyer’s agent, exclusively as the seller’s agent, or as a dual agent representing both the buyer and seller.
    • Exclusive representation does not prevent the listing broker from representing other sellers or the selling agent from representing other buyers. If representing opposing parties, the agent must have written permission from both parties.
62
Q

Disclosure of defects

A
  • Any defects of which the licensee is aware (especially latent defects) must be disclosed to all parties.
  • A licensee is not obligated to be an ‘inspector’ (Nevada licenses inspectors), but he is legally liable if he hides a defect for the seller.
  • Latent defect
    • hidden defect
  • Patent defect
    • obvious defect
63
Q

What duties are required of an agent?

A

In general, duties owed by a licensee are as follows:

The duty of utmost care, integrity, honesty and loyalty in dealings with the agent’s principal;

The duty to exercise skill and care in performance of the services rendered by the agent;

The duty to act honestly and without fraud or deceit and to act fairly and in good faith; and

The duty to disclose all material facts known to or which should be known to the agent affecting the value or desirability of the property not known to or readily observable by the parties to the transaction.

64
Q

Duties Owed to Principals

A

Agents are never allowed to blindly obey their client. They must work within all laws and owe it to all parties to act honestly and competently. An agency relationship creates a fiduciary duty owed by the agent to the principal within the course and scope of the agency and the authority granted by the principal. The fiduciary duty owed by real estate brokers to their principals has been compared by the courts to the duty owed to the beneficiaries by a trustee under a trust.

Fiduciary duties include: loyalty; confidentiality; the exercise of utmost care (and in certain fact situations, reasonable care); full and complete disclosure of all material facts; the obligation to account to the principal; the obligation to act fairly and honestly and without fraud or deceit; and the duty to “explain” and “counsel” about that which has been disclosed, thereby helping the principal make an informed and considered decision to buy, sell, lease, exchange, borrow or lend. A salesperson owes a duty to the principal equivalent to the duty owed by the real estate broker for whom the salesperson acts. Many states, including Nevada, have enacted laws and regulations requiring agents to provide written agency disclosure forms to parties in a

real estate transaction. These disclosure forms help consumers make informed decisions.

  1. Loyalty and Confidentiality
  2. Fair and Honest Dealing
  3. General Disclosure Duties
  4. Inspection and disclsures
  5. Reasonable care and skill
65
Q

Brokerage Agreement

What does a Brokerage Agreement Create?

A
  1. Real estate brokerage agreements create a special agency wherein the broker’s authority is limited to facilitating a real estate transaction for his or her principal. Unless otherwise noted, all agency referred to in The Nevada Law and Reference Guide, is concerned with real estate agency in which the broker is the agent of the client.
    1. Nevada’s real estate brokerage statutes (NRS 645) define “agency” as the relationship between a principal (client) and an agent (broker) arising out of a brokerage agreement in which the agent agrees to do certain acts on behalf of the principal in dealings with a third party. NRS 645.0045
66
Q

Brokerage Agreement

Can a Broker or Client fire eachother?

A
  1. A client or broker can “fire” the other at any time. The Nevada Supreme Court stated “[a]bsent a contractual provision to the contrary, an independent contractor/principal agency relationship is terminable at any time at the will of the principal or the agent.”
    1. Once fired, a broker is required to stop representing the client and inform the other parties in the transaction of the change in his or her agency status
    2. A client can refuse to be represented by, or work with, a broker-salesman or salesman; however, the brokerage agreement continues in force as the agency is with the broker not the salesperson.
    3. The fact that a client does not want to continue being represented by a certain licensee does not automatically release the client from an obligation to pay compensation under the brokerage agreement.
    4. Nevertheless, the broker may still have rights under the original brokerage agreement for the collection of compensation NRS 148.420 and NRS 148.330.
      2.
67
Q

Brokerage Agreement

What happens when a Broker dies?

A
  1. If the broker dies, the broker’s agency representation as evidenced by the brokerage agreement ends.
    1. In either case, whether the death is of the broker or his or her brokersalesman or salesman, the client continues to be responsible for paying any compensation earned by the broker before the licensee’s death
      2.
68
Q

Brokerage Agreement

Brokerage Agreement Duty not to disclose

A
  1. A licensee is under the duty not to disclose the client’s confidential information for one yet ar after the revocation or termination of the brokerage agreement NRS 645.254 (2)
    2.
69
Q

Brokerage Agreement

What is the Definition of Agency Under Nevada Real Estate Brokerage Statue?

A
    1. Nevada’s real estate brokerage statutes (NRS 645) define “agency” as the relationship between a principal (client) and an agent (broker) arising out of a brokerage agreement in which the agent agrees to do certain acts on behalf of the principal in dealings with a third party. NRS 645.0045
70
Q

Brokerage Agreement

When does a Broker’s Legal Relationship begin?

A
  1. A broker’s legal relationship with the client starts with an employment contract called a brokerage agreement. In the brokerage agreement, the broker promises to provide real estate related services for valuable consideration.
    2.
71
Q

Agency Relationship

Is a agency relationship created soley from a Licensee’s negoations or communications?

A
  • an agency relationship cannot be established solely from a licensee’s negotiations or communications with a client of another broker if the licensee has received written permission from that party’s broker NRS 645.0045(2).
72
Q

Agency

Creation of agency with Client.

A
  • Duties Owed to by A Nevada Licensee RED form # 525
  • Given to, and acknowledged by, a Client. Lists the statutory duties of a Licensee and the various levels of representation.
  • Licensee
  • Client and any unrepresented party
  • “As soon as practicable” but before any documents are signed by Client.
73
Q

Authorization to Negotiate directly with seller

Authorization to Negotiate directly with seller

A
  • To forestall implied agency, a licensee is prohibited from negotiating a sale, exchange or lease of real estate with another broker’s client unless that licensee has received written authorization from the other broker for such direct communication.
    • NRS 645.635 (2). This statute also seeks to prevent the possible tort “intentional reference with a contractual relationship.”

http://red.nv.gov/uploadedFiles/rednvgov/Content/Forms/547.pdf

http://red.nv.gov/uploadedFiles/rednvgov/Content/Forms/637.pdf