Chapter 7 Real Estate Brokerage and the Law of Agency

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Chapter 7 Real Estate Brokerage and the Law of Agency
2013-11-06 20:15:06
NC Real Estate Exam

Modern Real Estate Practice in NC 8th Edition
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  1. Agent
    a person authorized to act on behalf of another
  2. Subagent
    agent of an agent
  3. Principal
    the person who hires an agent to act on their behalf
  4. Fiduciary
    A relationship in which the agent is placed in the position of trust and confidence to the principal.
  5. Brokerage
    The business of bringing buyers and sellers together
  6. Broker
    a person who is licensed to list, lease, buy, exchange, auction, negotiate, or sell interest in real property for others and to charge a fee for services.
  7. Universal agent
    empowered to do anything the principal (client) could do personally.
  8. General Agent
    Represents the principal in a broad range of matters.
  9. Special Agent
    Represents the principal in one specific act or business transaction only, under detailed instruction.
  10. Creation of Agency
    Accomplished by a written listing or property management agreement with a property owner; a written or oral buyer agency agreement; or a dual agency agreement.
  11. Agency Relationships (2 types)
    • Express agency - based on formal agreement between the parties
    • Implied agency - results from the behavior of the parties.
  12. Termination of Agency (6 ways)
    • Completion, performance, or fulfillment of purpose of agency
    • Destruction or condemnation of the property
    • Expiration of the terms of the agency
    • Mutual agreement of all parties to the contract
    • Breach by one of the parties, who may be liable for damages
    • Operation of law, i.e. bankruptcy of the principal.
  13. Single agency
    one in which an agent/firm represents only one party in a transaction.
  14. Buyer's agent
    represents a buyer as an agent to find property that meets the buyer's specifications, as set out by the buyer agency agreement.
  15. Dual Agency
    when an agent/firm represents two principals in the same transaction
  16. Designated Agent
    authorized by the broker to act as the exclusive agent of a specific principal in a dual agency situation.
  17. Fiduciary duties (LOADS)
    • Loyalty - an agent must place the principal's interests above those of all others
    • Obedience - agent must act in good faith at all times, with obedience toward the principal's instructions that are legal and ethical
    • Accounting - agent must be able to report the status of all funds received from or on behalf of the principal.
    • Disclosure - an agent is duty-bound to inform the principal of any information concerning the transaction that might reasonably influence the principal's decision, particularly those mandated by law.
    • Skill, care & diligence - agent must exercise a reasonable degree of care.
  18. Material Facts (4)
    Facts about the property itself, relating directly to the property, relating directly to ability of parties to complete the transaction, and facts of special importance to the party.
  19. Puffing
    legal exaggeration of a property's benefits
  20. Fraud
    the intentional or willful misrepresentation or omission of a material fact to harm or take advantage of another person.
  21. Negligent misrepresentation
    occurs when a broker should have known that a statement about a material fact was false.
  22. Negligent omission
    occurs when a broker did not disclose a material fact that the broker should have known.
  23. Stigmatized properties
    undesirable due to events, not the condition of the property.
  24. Does the death or serious illness of an owner or occupant of a property or the presence of a sexual offender in the area constitute a material fact that must be disclosed by licensees in NC?
  25. Willful Misrepresentation
    intentionally misinforming any party involved in a transaction about a material fact
  26. Willful omission
    intentionally failing to disclose a material fact
  27. Independent contractor
    Receives commission with no withholding, has freedom to set hours and accomplish goals, does not relieve the broker of liability for related work activities of the broker, and must comply with IRS requirements for a qualified real estate agent.
  28. Employee
    May receive salary and benefits, broker required to withhold Social Security, income taxes, broker-in-charge sets hours, duties, and other specifics, and whose broker-in-charge has liability for related work activities of the licensee.