Unit 5: Consumer Relationships Flashcards
What are the 2 types of Laws?
Common Law: made by courts based on previous decisions for similar matters (precedence)
Statute Law: passed by provincial/federal gov’t
Non-representation relationships involve a real estate agent working with a party to trade in real estate…
but not acting on their behalf (customer-based). Agents would only provide facts and admin support
Representation Relationships involve an agent…
acting on behalf of a party for a trade in real estate on behalf of their brokerage (client-based).
Requires much more involvement, responsibilities and discretion
General obligations in Representation Relationship:
- Exercise Care and Skill
- Act Honestly
- Perform Mandate
- Obey Lawful Instructions
- Act in Person
- Disclose Info
- Negotiate Favorable Terms
Fiduciary duties in Representation Relationship:
- Utmost Loyalty
- To Account
- Handle Confidential Info Properly
- Avoid and Disclose Conflicts of Interest
- Not may secret profits
The Rules stipulate that written disclosure is needed …
whenever an agent receives or is about to receive confidential info from a consumer.
Written disclosures must include:
- whether the agent is in a representation relationship with another party
- The services they will supply
- Conflicts of Interest
- Any additional info that may alter their decision to move forward
Customer Acknowledgement Forms are for …
non-representation relationships (customer)
Written Service Agreements are for…
representation relationships (client)
What are the 5 Ds of Role Clarity and Consistency?
1) Discuss (types of relationships)
2) Determine (representative capacity)
3) Document (that capacity)
4) Disclose (that capacity)
5) Do (actions within that capacity)
What are the 4 circumstances when a consumer should be considered a customer?
1) When the consumer is on the opposite side of the transaction
2) When they are party to a transaction that the agent is already representing the client for
3) CoI - Buyer and seller represented by same agent
4) Consumer would like to represent themselves
Professional Standards come from requirements set out in the…
Real Estate Act
Professional Norms and Practices come from…
general consensus across profession
Ways to meet the Standard of Care include:
- Being a lifelong learner
- Seeking advice when appropriate
- Being aware of market / practice issues
- Making reasonable efforts to confirm info
- Exercising due care when prepping documents
An agent becomes liable to a customer when:
- they fail to disclose their role in a transaction
- they act but authority wasn’t granted for that action
- they cause a tort - omission or commission (civil wrong)
In Non-Representation Relationships, agents can:
- provide stats / info on comparable properties
- provide and complete standard forms / agreements
- provide names of other industry professionals / service providers without recommending one
- Deliver offers / counter-offers in a timely manner
- Communicate info to clients
- Keep customer informed about transaction progress
In Non-Representation Relationships, agents cannot:
- give confidential advice
- perform a service that requires discretion or judgement
- advocate or represent the customer’s interests
In agency, the party being represented by another party is known as the __________
Principal
___________ is the party acting on the principal’s behalf and agreeing to be under the control of the principal.
An Agent
What are the 3 types of authority that an agent may hold?
1) Express Authority: oral or written description
2) Implied Authority: actions related to carrying out express authority
3) Customary Authority: performing actions that are customary for an agent to perform
What are the limits on Authority capacity to contract?
- Capacity to delegate (if agreed in contract, but original agent still responsible)
- Capacity to incur expenses (can only seek reimbursement if express written authority from principal)
What are the 5 elements in all Representation Relationships?
1) Creation of Law (determined by courts based on actions)
2) Consensual (can be written, verbal or implied)
3) Controlled by Principal (agents must follow all lawful instructions)
4) Usually involved Fiduciary Duties (legal duty to act in best interest of principal)
5) Affects Principal’s Legal Position (principal liable for agent actions - as long as within scope of authority granted)
5 Ways that a Representation Relationship can be established:
1) By Agreement - written or oral
2) By Implication - based on conduct of parties
3) By Ratification - agent acts without or in excess of authority
4) By Estoppel - principal’s actions make 3rd party believe the agent has authority
5) By Operation of Law - agent takes immediate action to save property
_____________ gives a brokerage the sole right to represent a client.
Exclusive Representation Relationship
