Unit 6: The Law of Agency

Question 1

Agency

Answer 1

The act of representing someone else

Question 2

Agent

Answer 2

Represents the principal and has a fiduciary duty (Broker)

Question 3

Special Agent

Answer 3

Appointed to carry out a single act or transaction (Real Estate Agents)

Question 4

General Agent

Answer 4

Has broad authority to act on behalf of the client

Question 5

MLS

Answer 5

Multiple Listing Service

Question 6

Pocket Listing

Answer 6

A listing that is deliberately withheld from the MLS. This is a violation of the MLS rules.

Question 7

Cooperating Brokers

Answer 7

(Buyers Agent) Agents who try to sell a property that is currently listed for sale by a broker but who work for someone other than the listing broker.

Question 8

Cooperating split

Answer 8

The cooperating broker’s share of the commission.

Question 9

Salesperson Employment Status

Answer 9

• For Tax, Compensation, and Work Hour Requirements real estate salespeople are generally treated as Independent Contractors.
• In the eyes of the law or the department of real estate, salespersons are considered employees of the Broker.

Question 10

Single Agency

Answer 10

An agent represents only one principal.

Question 11

Dual Agency

Answer 11

The same agent represents two principals in the same transaction.

Question 12

Fudiciary Duty

Answer 12

Duty of highest good faith and loyalty

Question 13

3 Steps for Dual Agency

Answer 13

Disclose- That I am acting as a dual agent.
Elect - Choose consent
Confirm- Sign

Question 14

Ratification

Answer 14

When your actions extend your existing relationship

Question 15

Estoppel

Answer 15

Actions that prevent denial

Question 16

Listing Agreements

Answer 16

An agreement establishing an agency relationship between the Broker and the Seller

Question 17

Exclusive Authorization and Right to Sell listing

Answer 17

The most common contract in real estate. Protects the agent for payment. Regardless of who finds the buyer, the agent gets paid.

Question 18

Exclusive Agency

Answer 18

Allows the owner to sell the house on their own and not pay a commission.

Question 19

Open Listing

Answer 19

(procuring cause) A nonexclusive listing provides for a commission to the broker if the broker is the procuring cause of the sale.

Question 20

Net Listings

Answer 20

The broker’s compensation is whatever amount the property sells for over a previously agreed (net) amount.

Question 21

Option listing

Answer 21

An option listing gives the broker the right to purchase the property.

Question 22

Option Listing Disclosures

Answer 22

• No longer just acting as an agent, acting as a principal also.
• Other offers
• Anticipated Profits

Question 23

All exclusive listings must include

Answer 23

A definite termination date

Question 24

The commission is earned when:

Answer 24

When the real estate broker finds a buyer who is ready, willing, and able to purchase a property.

Question 25

The commission is paid when:

Answer 25

Escrow is closed

Question 26

Duties to third persons

Answer 26

Full disclosure of material facts.

Question 27

Death on Property

Answer 27

- Within the last 3 years, must disclose | - Beyond 3 years, disclose upon inquiry

Question 28

Unnecessary Death Disclosure

Answer 28

Do not disclose HIV or AIDs causes of death

Question 29

Easton vs. Strassburger

Answer 29

The case led to an inspection requirement. Every time you sell a house, both agents are required to conduct a visual inspection of normally accessible areas of the property. Only applies to residential 1-4 unit properties.

Question 30

Recovery Account

Answer 30

Protects the public and helps compensate victims of fraud, misrepresentation, deceit, or conversion of trust funds when they cannot collect a court-ordered judgment against a real estate licensee. Funded by 5% of all real estate license fees collected. Amount paid is limited to $50,000 per transaction and $250,000 per licensee.

Question 31

Termination of an Agency

Answer 31

- Performance- Fulfillment of agreement - Expiration of term - Death of Agent or Principal - Destruction of property - Incapacity of seller or principal - Bankruptcy - Agreement of the parties

Question 32

Generally, an agent works for:

Answer 32

the principal

Question 33

A minor:

Answer 33

Is anyone younger than 18 years of age

Question 34

Somone appointed to carry out a particular transaction is:

Answer 34

A Special Agent

Question 35

An independent contractor is distinguished by:

Answer 35

Responsibility for Social Security and other payments.

Question 36

The California Real Estate Law treats a real estate salesperson as:

Answer 36

An employee of the broker

Question 37

A salesperson is a broker's:

Answer 37

Agent

Question 38

An agency agreement to perform an act that requires a writing:

Answer 38

must itself be in writing

Question 39

To be enforceable, all real estate sales contracts:

Answer 39

Must be in writing

Question 40

As a contract, a real estate agency agreement:

Answer 40

Must meet the requirements for a valid contract

Question 41

Real estate commission rates:

Answer 41

Are not fixed by law

Question 42

All real estate agency agreements must:

Answer 42

Be in writing

Question 43

The MOST commonly used form of real estate listing agreement is:

Answer 43

The exclusive authorization and right-to-sell listing

Question 44

A real estate agent owes duties to:

Answer 44

The principal, the third person, and the subagent.

Question 45

The agent owes the principal the duty of:

Answer 45

Loyalty

Question 46

A real estate agent must make full disclosures of:

Answer 46

Material facts that are known by the agent or that would be revealed by a reasonable inspection of the property.

Question 47

The principal owes the agent

Answer 47

The duty of care.

Question 48

A real estate seller must disclose

Answer 48

Material facts concerning the property's value or desirability.

Question 49

Exaggerating a property's value or desirability:

Answer 49

is never permitted.

Question 50

The recovery account is available to:

Answer 50

people victimized by a real estate licensee.

Question 51

An agency relationship may NOT be terminated by:

Answer 51

Someone Outside the agency relationship.