Unit 4: Real Estate Brokerage and Law of Agency Flashcards
(34 cards)
agency
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.
agency by ratification
An agency relationship that is established after the fact.
agent
one who acts or has the power to act for another. A fiduciary relationship is created under the the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be their agent.
antitrust laws
Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Violations of antitrust laws in the real estate business generally involve price-fixing, allocation of customers to markets, or agreement to boycott competitors.
appointed license holder
A license holder associated with and appointed by an intermediary broker to communicate with, carry out instructions of, and provide opinions and advice to whom the license holder is appointed.
brokerage
for a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property
buyer representation agreement
A contract that establishes a broker-buyer agency relationship.
caveat emptor
“let the buyer beware”
client
aka principal, the person who employs an agent to perform a service for a fee, may be a buyer, a seller, an owner, or a person seeking a property to rent
commingle
mixing funds from a real estate transaction with personal monies. this is illegal.
commission
Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
consumer
customer
A prospective buyer, seller, lessor, or lessee.
employee
- Must have income tax and Social Security tax withheld from wages by the broker.
- May receive “employee benefits” from broker.
express agency
An agency created by specific agreement, whether written or oral, of principal and agent, for example, written listing agreements or buyer representation agreements.
fiduciary relationship
A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.
fraud
The intentional misstatement of fact made with intent to deceive or made with reckless disregard of the truth, and that actually does deceive.
general agent
One authorized by the principal to represent the principal in a broad range of matters, for example, a property manager.
implied agency
An agency created by acts or words of principal and agent, an agency inferred by circumstances.
independent contractor
- Assumes responsibility for paying own income tax and Social Security tax.
- Cannot receive any “employee benefits” from broker.
- Must have a written contract.
- Must be compensated on production.
Most real estate agents are independent contractors.
Information About Brokerage Services (IABS)
The law requires that “at the time of a license holder’s first substantive communication with a party,” a license holder is required to provide a “written notice,” IABS.
intermediary broker
A broker who is employed to negotiate a transaction between both parties and who for that purpose may be an agent of both parties to the transaction, acting fairly so as not to favor one party over the other.
law of agency
defines the rights and duties of the parties in a real estate transaction—the principal, agent, and customer
listing agreement
A contract between a landowner (as principal) and a licensed real estate broker (as agent) by which the broker is employed to sell real estate on the owner’s terms within a given time, for which service the landowner agrees to pay a commission.
