Unit 3: Agency, Brokerage, and Ethical Considerations

Question 1

agent

Answer 1

one who transacts business/manage affairs by another with authority from the latter

Question 2

antitrust laws

Answer 2

laws designed to prohibit price fixing

Question 3

attorney-in-fact

Answer 3

person authorized by another to act under a power of attorney

Question 4

buyer’s agent

Answer 4

agent that works for the buyer

Question 5

buyer’s broker

Answer 5

a real estate broker/agent who becomes the buyer’s principal

Question 6

client

Answer 6

whom a broker is employed to in an agency relationship

Question 7

Code of Ethics

Answer 7

standards of conduct adopted by RELATORS

Question 8

commission

Answer 8

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

Question 9

conflict of interest

Answer 9

problem when serving best interests of both the client and oneself

Question 10

Consumer Information Statement (CIS)

Answer 10

written explanation of agency relationships presented to buyers and sellers

Question 11

customer

Answer 11

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

Question 12

disclosed dual agent

Answer 12

brokers taking both parties as principals

Question 13

disclosure

Answer 13

revealing to another any relevant information

Question 14

dual agency

Answer 14

representing both parties in a transaction (both the buyer and the seller)

Question 15

errors and omissions (E&O) insurance

Answer 15

a form of malpractice insurance for real estate licensees

Question 16

fiduciary

Answer 16

one placed in a position of trust and confidence

Question 17

fiduciary relationship

Answer 17

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

Question 18

fiduciary responsibilities

Answer 18

Care: brokers must have more real estate knowledge than the average person
Obedience: agent must obey all of client’s lawful instructions
Accounting: agents must not take any secret profit, and must put all $ in escrow account
Loyalty: agent must place principal’s interest above others/their own
Disclosure: agent must pass on material information, all written information must be presented within 24hrs

Question 19

fraud

Answer 19

intentional deception that harms another

Question 20

fraudulent misrepresentation

Answer 20

intentional fraud/deliberate lying

Question 21

general agent

Answer 21

one authorized to act for his/her principal

Question 22

independent contractor

Answer 22

salesperson who sets their own hours and isn’t covered by income tax withholding; contrasted with an employee

Question 23

innocent misrepresentation

Answer 23

unintentional misleading of a buyer done in ignorance

Question 24

kickback

Answer 24

illegal sharing of a commission with seller

Question 25

latent defect

Answer 25

problem not discoverable by normal prudent inspection

Question 26

law of agency

Answer 26

rules governing conduct of agents

Question 27

listing agreement

Answer 27

contract by which the owner retains a broker to find a buyer

Question 28

meeting of the minds

Answer 28

when there is an agreement between the two parties

Question 29

Megan's Law

Answer 29

law requiring that communities be alerted to the presence of sex offenders

Question 30

National Association of REALTORS (NAR)

Answer 30

private nationwide organization of brokers and salsespersons

Question 31

New Jersey REALTORS

Answer 31

statewide group of real estate licensees who choose to join the organization

Question 32

negligent misrepresentation

Answer 32

fraud committed by someone who should've known better (not necessarily on purpose)

Question 33

off-site conditions

Answer 33

conditions beyond the limits of the property (i.e. hazardous waste disposal site)

Question 34

power of attorney

Answer 34

written authorization allowing one person to act on behalf of another

Question 35

principal

Answer 35

the one employing the agent; the client

Question 36

procuring cause

Answer 36

the broker who brings about a sale

Question 37

puffing

Answer 37

harmless exaggeration as salesmanship

Question 38

ready, willing, and, able buyer

Answer 38

one qualified and prepared to purchase

Question 39

REALTOR

Answer 39

a registered trademark for reserved for the sole use of members of the NATIONAL ASSOCIATOR of REALTORS

Question 40

special agent

Answer 40

one authorized to act for another in a specific transaction

Question 41

standard of care

Answer 41

competence normally expected by a licensee

Question 42

subagent

Answer 42

agent of an agent

Question 43

transaction broker

Answer 43

one who facilitates a transaction without functioning as an agent

Question 44

universal agent