Unit 4 Flashcards
1
Q
This law clarifies the relationship of brokers to buyers and sellers; applies only to residential sales
A
The Brokers’ Relationship Act
2
Q
When a person authorizes another individual to act for him and asks that person to perform certain (or many) tasks, it is said that he hires an _________.
A
Agent
3
Q
A person who is empowered by contract (or action) to represent the interest of someone (you) called a Principal or client
A
Agent
4
Q
When a person (an agent) who is empowered by contract (or action) to represent the interest of someone (you) called a Principal or client. This type of relationship is called?
A
A Fiduciary Relationship
5
Q
Means one of utmost trust and loyalty
A
Fiduciary Relationship
6
Q
When one person is empowered by another to represent him in any transaction, it is called an
A
Agency Relationship
7
Q
The law that defines agency relationships is called
A
The Law of Agency
8
Q
The agency relationship is governed by
A
statutory law
9
Q
Laws that are currently on record in the country
A
statutory law
10
Q
Procedures that have set by precedent of cases that have gone before.
A
Common law
11
Q
To create an agency relationship you must have:
A
- A Principal/clients/s (or principals)
- A task to be done (will generally determine how much work or how deep the agency relationship will be)
- An Agent
12
Q
Name the four types of agency
A
Universal Agent
General Agent
Agency coupled with an Interest
Special Agent
13
Q
Handles all delegated business of the Principal. Has the Power of Attorney and is called an Attorney-in-Fact.
A
Universal Agent
14
Q
The Universal Agent has the Power of Attorney and is called an
A
Attorney-in-Fact
15
Q
An example of a Universal Agent would be
A
A person who is hired or appointed by an estate to handle the real estate affairs of a deceased individual.
16
Q
Handles multiple transactions of a principal/client.
A
General Agent
17
Q
An example of a General Agent in real estate would be
A
Property Management.
18
Q
All sales associates who work under a broker are agents of that broker, meaning that they have a fiduciary responsibility and a loyalty to that broker. What type of agency is this?
A
General Agent
19
Q
When the real estate licensee is a partner in the ownership of the property as well as represents the partners in an agency relationship.
A
Agency coupled with an Interest
20
Q
Handles one transaction for one seller of one property. Most common type of real estate representation.
A
Special Agent
21
Q
The broker can represent several sellers on one house each at one time but never:
A
The seller and buyer for a transaction.
22
Q
What are the three ways that an agency relationship is created?
A
Written or Expressed Agency
Implied Agency
Ratification of Agency
23
Q
Created when a written or oral contract is entered into where the parties state the intent of their relationship in a contract. Usually the contract is in writing.
A
Written or Expressed Agency
24
Q
Is created by the Act of the Parties. The acts or conduct of the parties involved indicate that they have a relationship. This type of agency by the acts of the parties is sometimes difficult to prove and difficult to sustain since there are no clear written rules.
A
Implied Agency
25
In this contract the seller could hire a broker to list, show, advertise and sell a property and in exchange, the seller will pay the broker a certain amount of money or a percent of sale.
Written or Expressed Agency
26
Is always created after the fact. The principal accepts the conduct of a person who acted without prior authorization as the principal's agent, such as a licensee who shows a property without a current listing agreement and then the seller agrees to work with the person (creating an agency) to sell the property. This type of agency relationship is very difficult to prove, and may have other legal problems.
Ratification of Agency
27
An example of this type of agreement is when a person hails a taxi, gets in the taxi, tells the driver where he wants to go and the driver takes him there. The clear indication is that the driver and the passenger have an implied relationship that the driver will drive and the passenger will pay.
Implied Agency
28
An old English statute passed in 1677; adopted in almost all of the United States . Its purpose is to prevent fraud among the parties by requiring that all contracts be in writing, and signed by all the parties to be charged
Statute of Frauds
29
A transaction where the seller is informed and knowledgeable about what he is selling and the buyer is informed and knowledgeable about what he is buying. The buyer and seller are not related to each other, but because of their independent knowledge are on equal footing. Each is acting in his own self interest. If brokers are involved, one broker represents the seller; a different broker from a different company represents the buyer.
Arms-Length-Transaction
30
Let the buyer beware
Caveat Emptor
31
When an agency relationship is created the Principal (seller in this case) is called a Client. In this situation there is no relationship between the broker and the buyer.
Seller (client) - Agent
32
In this relationship the buyer has representation and is called the client. The broker has no relationship to the seller at all.
Buyer (client) - Agent
33
Representing both buyer and seller at the same time with the same commitment and dedication to both. Illegal under Florida law
Dual Agency
34
Both the seller and buyer are aware of the agency relationship and both agree to be represented equally and with all the requirements of agency all at the same time. This is illegal under Florida law.
Disclosed Dual Agency
35
One of the parties (either the buyer or seller) is unaware that a dual agency exists. This situation may lead to the unfair disclosure of information that one party does not want the other party to know. This is illegal under Florida law.
Undisclosed Dual Agency
36
One who assists in some or all of the duties as assigned by the Agent to do a job for a Principal. When a broker assumes the role of Agent, all sales associates under that broker take on this role
Subagent
37
In any real estate transaction the relationship between the parties must be clearly understood by all parties so that they can negotiate fairly. If the seller is represented by an agent, the buyer must also understand their relationship: if the buyer is represented by an agent, the seller has the right to understand that relationship. Applies to residential sells. Required of the broker, but buyer does not have to sign. This is called:
Disclosure
38
Disclosure rules do not apply to:
Non residential transactions
The rental or leasing of real property, unless an option to purchase all or a portion of the property with four or fewer residential units.
Auctions
Appraisals
Dispositions of any interest in business enterprises or business opportunities, except for property with four or fewer residential units.
39
Florida law allows for four types of agency relationships. These are:
No Brokerage Relationship
Single agent broker
Transaction broker
Designated Sales Associate
40
An agent who represents either the buyer or the seller in the transaction but not both
Single agent broker
41
When the Agent represents one side or the other in a transaction but not the party who is given the form.
No Brokerage Relationship
42
An agent who provides limited representation to a buyer, a seller or both, in a real estate transaction but does not represent either in a fiduciary capacity
Transaction broker
43
A special case for non-residential transactions where two licensees under the direction of one broker act as single agents. One represents the buyer and one the seller. In this case both buyer and seller must verify assets of more than $1 million.
Designated Sales Associate
44
"It shall be presumed that all licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established, in writing, with a customer."
Presumption of transaction brokerage
45
This means that the buyer or seller have no representation in the transaction but the broker will help them both complete the transaction. There is no loyalty involved in this transaction, nor any fiduciary responsibility for the side not represented.
No Brokerage Relationship Obligations
46
Under No Brokerage Relationship Obligations, a form is used when working with For Sale By Owner, when the buyer wants to purchase such a property. The broker gives notice that even without representation, the broker owes certain duties to others. These are:
Deal with all parties honestly and fairly;
Disclose all known facts that materially affect the value of residential property which are not readily observable to the buyer (such as change in zoning);
Account for all funds entrusted to the licensee (such as earnest money deposits etc.).
47
A broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction
Single Agent
48
The buyer or seller who has hired the agent is called the:
Principal
49
FL LAW REQUIRES THAT REAL ESTATE LICENSEES OPERATING AS SINGLE AGENTS DISCLOSE TO BUYERS AND SELLERS THEIR DUTIES. The following duties are:
Dealing honestly and fairly;
Loyalty;
Confidentiality;
Obedience;
Full disclosure;
Accounting for all funds;
Skill, care, and diligence in the transaction;
Presenting all offers and counteroffers in a timely manner, unless a party has previously
directed the licensee otherwise in writing; and
Disclosing all known facts that materially affect the value of residential real property and are not readily observable.
50
A broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction but does not represent either in a fiduciary capacity or as a single agent.
Transaction broker
51
Duties of a transaction broker include:
Deal honestly and fairly
Account for all funds entrusted to the broker
Use skill, due care and diligence in the transaction
Disclose all known facts that materially affect the value of residential real property and are not readily observable to the buyer
Present all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing
Provide limited confidentiality, unless waived in writing by a party. This limited confidentiality will prevent disclosure that the seller will accept a price less than the asking or listed price, that the buyer will pay a price greater than the price submitted in a written offer, or the motivation of any party for selling or buying property, that a seller or buyer will agree to financing terms other than those offered, or any other information requested by a party to remain confidential.
Provide any additional information that are mutually agreed to.
52
Occasionally, for a variety of reasons, it becomes necessary for a single agent to become a transaction broker. This change can be made at any time during the relationship between an agent and principal, provided:
The agent gives the transition disclosure and the principal consents to the transition before a change in the relationship. To be in order, the single agent must have made the single agent disclosure before, or at the time of entering into a listing agreement or an agreement for representation or before showing of property, whichever occurs first. Must use the Transition format, in its correct form and correct information. The disclosure must be in writing and signed by principal/client when implemented.
53
Give an example of when a single agent becomes a transaction broker.
Suppose that a single agent represents the seller in the transaction. That single agent finds the buyer for the property. In order to treat both parties fairly, he asks the seller's permission to switch to a transaction broker. The seller agrees and then the broker must file the correct paperwork.
54
In any real estate transaction other than a residential sale where the buyer and seller have assets of $1 million or more, the broker may honor the request of the parties and designate sales associates to act as single agents for different customers in the same transaction. These single agents have the duties of a single agent as in 475.278(3) including disclosure requirements. In addition to the disclosure requirements, the buyer and seller shall both sign disclosure stating that the broker use this form of representation.
Designated Sales Associate
55
If a licensee fails to provide or adhere to the provisions of disclosure, the Commission may:
deny an application for licensure, registration, permit or renewal;
place the licensee, registrant or permitee on probation;
suspend a licensee, registration or permit,
impose an administrative fine not to exceed $1,000 for each count;
issue a reprimand;
do any or all of the above.
56
Persons who identify themselves as agents and their customers as clients may create an “implied disclosure” if the customer is led to believe that the associate is working in a fiduciary capacity. It is important for sales associates to identify themselves as either transaction brokers or sales associates and the people they work for as customers.
All brokerage relationships are determined by the broker – sales associates may not create an agency relationship without the express permission his or her employing broker.
The Commission will prosecute a licensee for failure to give the agency disclosure form(s) before, at the time of, entering into a listing agreement or an agreement for representation or before the showing of property, whichever occurs first, when dealing in residential property.
57
A broker is required to keep and make available to the department such books and records as will enable the department to determine if such a broker is in compliance with Florida real estate Statutes. Each broker shall preserve one legible copy of all books, accounts, and records, including disclosure documents for at least ____ years from the date of the document.
5
58
Documents must be kept for ___ years after any legal proceedings.
2
59
Agency is Terminated when:
The fulfillment of the purpose of agency is completed (the transaction is completed).
The time limit has expired as stated in the agreement. (The listing agreement expires or a buyer's agreement expires),
Breach or cancellation by one of the parties is given: renunciation by the broker ("I quit") or revocation by the principal ("You're fired").
Mutual consent is given. (Both agree that it is mutually acceptable that it is in the best interest of all the parties to terminate the agreement.),
Death or incapacitation of either party occurs. (Seller or broker dies)
Destruction of the property or a change in the property is caused by outside forces. ( A change in zoning or condemnation etc,),
Bankruptcy of either party or foreclosure of the property occurs
60
A third party who is a potential customer
Prospect
61
A third party in the transaction whom the agent does
| not represent.
customer or prospect
62
an agent of the seller or owner
listing broker
63
An agent who works for the listing broker and who obtained the listing is the:
listing agent
64
A broker who represents a buyer is the:
buyer's broker
65
A broker or salesperson who represents
| tenants is a:
tenant representative
66
A legally enforceable real estate agency agreement between a real estate broker and a
client, authorizing the broker to perform a stated service for compensation.
A listing agreement
67
A listing agreement is a ________ agreement because it
requires the agent to perform the stated service but does not obligate the client to perform unless the broker does. If the broker does nothing, the client has no obligations. However, an agent who fails to make a diligent effort to perform may breach the contract.
unilateral
68
Name the three main types of owner listing agreements.
exclusive right-to-sell (or lease); exclusive agency; and open listing.
69
an authorization to enter a listing in a multiple listing service
Multiple listing
70
also called exclusive authorization-to-sell, or the exclusive. Is the most widely used owner agreement. Under the terms of this listing, a seller contracts exclusively with a single broker to procure a buyer
or effect a sale transaction. If a buyer is procured during the listing period, the broker is entitled to a commission, regardless of who is procuring cause. Thus, if
anyone-- the owner, another broker-- sells the property, the owner must pay the listing broker the contracted commission.
exclusive right-to-sell
71
Also known as, open, is a non-exclusive authorization to sell or lease a property. The owner may offer such agreements to any number of brokers in the
marketplace. The broker who is the first to perform under the terms of the listing is the sole party entitled to a commission. Performance usually consists of being the procuring cause in the finding of a ready, willing, and able
customer. If the transaction occurs without a procuring broker, no commissions are payable. Rare in residential brokerage. Brokers generally shy away from
them because they offer no assurance of compensation for marketing efforts.
open listing
72
One in which an owner sets a minimum acceptable amount to be received from the transaction and allows the broker to have any amount received in excess as a commission, assuming the broker has earned a commission according to the other terms of the agreement. For example, a seller requires $75,000 for a property. A broker sells the property for $83,000 and receives the difference, $8,000, as commission. The owner's "net" may or may not account for closing costs. Generally regarded as unprofessional today, and many states have outlawed them.
net listing
