RE Law Ch.2 Creation of the Agency Relationship

The flashcards below were created by user Blue2xa88 on FreezingBlue Flashcards.

  1. It takes two parties to create an agency, the principal and the agent; but for law of agency to work, it requires three parties: the principal, agent and...
    third party (customer)
  2. Abilene housing is low.
  3. Most companies are 5% commission of sale; but you can't say the commission is fixed.
    true; you set your own rate
  4. A fiduciary relationship between an agent and principal can arise early in a transaction before any any employment contracts.
    true; refer to the five articles of ch.1
  5. What is a gratuitous agency?
    one that arises when an agent undertakes to give advice or professional service to another person for no compensation.
  6. Even if agency is voluntary and gives advice and help for no fee, fiduciary duties still arise.
    • true; gratuitous agency; also true for lawyers
    • -if the info the agent gives is incorrect, the agent can be held liable in a gratuitous agency.
  7. In what ways could a consumer think that a friend who is a licensee is his or her agent?
    just be sharing info; be cautious
  8. Discussion: In the absence of a formal agreement, what might create an agency relationship?
    think about it...just by sharing info; 5 ethic Articles ch.1
  9. The source of compensation should be disclosed to all parties.
  10. Even though no commission is earned, an agency relationship can be created.
  11. What steps should be taken by a sponsoring broker to prevent a salesperson's misconduct from creating a court suit?
    think about it...pg14-15
  12. In general, courts have held that agency relationships are created by one of the three methods: actual authority, ostensible authority, or ratification. Explain these types of relationships.
    -Actual authority: there must be a meeting of the minds; consent of both principal and agent, which can either be expressed or implied (words or actions), and some control by the principal over the agent

    -Ostensible authority: aka estoppel or apparent authority; agency relationship without the agent even knowing it; occurs when the conduct on the part of the principal would lead a reasonably prudent purchaser to believe that the agent had the authority he or she purports to exercise; 1) the principal knowlingly permitting an agent to hold himself out as having requisite authority; or 2.) the principal may, by lack or ordinary care, lead a reasonably prudent purchaser to believe that he actually has such authority by what the agent says or does; Two elements must be established: 1. the principal must have held the agent out in other instances, or in the particular transaction, as possessing authority to be an agent, or he must have knowingly agreed in the agent's authority; and 2. the person dealing with the agent must have relied on the conduct of the principal to the third party's damage or loss; either case requires the principal's participation to create an ostensible agency.

    -Ratification: when the principal ratifies (approves) the acts of the agent after the agency function has been performed; principal had no knowledge of the unauthorized acts or his or her agent, retains the benefits of the transaction after acquiring full knowledge.
  13. Agency relationship can be verbal, but if it is not in writing, it is very difficult for a real estate agent to sue the seller for commission.
  14. List actions that a principal could do that would lead a third party to believe an agency exists.
    think about it....give info, had past transactions; anything said or unsaid
  15. Discussion: As a consumer, what special competencies, skills, and knowledge would you expect a licensee to have?
    think about it...knowledge of real estate, the market, able to see defects with property, how to get price down, laws and codes of building things, what houses are available, if any are coming on the market, that they are going to get the best deal for you, for them to be understanding and respectful of your budget.
  16. Discussion: What real estate related jobs do you think should require a real estate license?
    think about it; handing personal info, putting clients interest first, finding them a good deal, etc.
  17. Section 535.4 of the regulations provides that a person conducting brokerage business from another state by mail, telephone, the Internet, e-mail, or other medium is considered ___________________________, it all of the prospective buyers, sellers, landlords, or tenants are legal residents of this state.
    acting within this state
  18. A net listing is what? Why is it not the best kind of listing?
    • -a listing agreement in which the broker's commission is the difference (net) between the sales proceeds and an amount desired by the owner of the real property
    • -usually the principal insists upon a net listing
    • -not the best kind of listing because the broker might place their interests above the principals or there is a chance the agent doesn't get anything or a very low amouont
  19. What is the best kind of listing?
    exclusive right to sell; only you have the right to sell and get a commission even if the seller finds someone to buy the property
  20. A licensee can appraise real property for others and for compensation without being licensed or certified as an appraiser.
    false; the licensee must be licensed or certified as an appraiser under the Texas Occupations Code, Ch. 1103
  21. CMA stands for what?
    Comparative Market Analysis
  22. A real estate licensee may, for a separate fee, provide an opinion of value or comparative market analysis, which does not conform with the Uniform Standards of Professional Appraisal Practice of the opinion or analysis is prepared with a written statement containing the following language:
    "This is an opinion of value or comparative market analysis and should not be considered an appraisal. In making any decision that relies upon my work, you should know that I have not followed the guidelines for development of an appraisal or analysis contained in the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation."
  23. When referring a prospective buyer, seller, landlord, or tenant to another person in connection with a proposed real estate transaction is an act requiring the person making the referral to be licensed if the referral is made with expectation of receiving valuable consideration of anything over the value of...
  24. Licensee cannot pay a non-licensed person commission anything worth over $50.00.
    true; for referrals you can advertise $50.00 gift cards
  25. What are exemptions from having to have a real estate license?
    • -an attorney at law licensed in this state
    • -an attorney-in-fact
    • -a public official
    • -an auctioneer licensed; auction real estate, but nothing else
    • -a person acting under a court order or under authority of a will or a written trust instrument
    • -a person employed by an owner in the sale of structures and land on which said structures are situated, provided such structures are erected by the owner in the due course of the owner's business
    • -on-site manager of an apartment complex
    • -an owner or the owner's employees in renting or leasing his own real estate whether improved or unimproved
    • -transactions involving 1. the sale, lease, or transfer of any mineral or mining interest in real property; 2. involving the sale, lease, or transfer of cemetery lots; 3. involving the renting, leasing, or management of hotels, or motels; and 4. the sale of real property under a power of sale conferred by a deed of trust or other contract lien.
  26. The Texas Real Estate License Act requires an employment agreement to be in writing in order to be enforceable.
  27. If one is to be a buyer's broker, the broker must do what in order to claim commission?
    1. one needs to get a commission agreement in writing and signed by the person who was supposed to pay the commission, or

    2. one should be sure that an alternative commission is to be paid by the buyer in the event the seller refused to pay a commission.
Card Set:
RE Law Ch.2 Creation of the Agency Relationship
2016-09-05 00:58:01
real estate law relationship

real estate law agency relationship
Show Answers: