Aceable Law of Agency Exam Review, Verified Solution

Aceable Law of Agency Exam Review, Verified Solution Here are the four major types of agency acts: Listing Buying Leasing Property Management TREC's purpose is to regulate educational and licensing programs that maintain standards AND interpret legislation that affects the real estate profession — primarily the Texas Real Estate License Act (TRELA). Integrity Satisfy to the commission (TREC) that the candidate meets and exceeds their character standards (honesty, trustworthiness, and integrity). Competence Demonstrate competence by passing the licensing exam. Broker: An individual licensed by TREC to perform brokerage duties; sponsors sales agents to represent clients on their behalf Sales agent: An individual holding a sales agent license from TREC who is sponsored by a broker License holder A broker or a sales agent licensed by TREC REALTOR A licensed sales agent who is a member of the National Association of REALTORS®. Brokers are liable for all sponsored actions committed by their sales agents. Sales agents represent their broker in all transactions in real estate dealings and transactions. Listing Agent: A broker representing a seller in a real estate transaction, a.k.a. seller's agent, seller's broker, or listing broker Buyer's Agent: A broker representing a buyer in a real estate transaction, a.k.a. selling agent, buyer's broker, or selling broker Tenant's Agent A broker representing a tenant in a real estate transaction Landlord's Agent: A broker representing a landlord in a real estate transaction Principal The major parties of the transaction (the buyer and seller or landlord and tenant) or a party who has authorized an agent to represent them Client (principal) Anyone who has an agency relationship with you or your broker is your client Customer A party to the transaction who has an agency relationship with another license holder Third Party All non-client parties to a transaction, including real estate professionals Types of Principles: Seller: Party seeking to sell their property in a real estate transaction Buyer: Party seeking to buy property in a real estate transaction Tenant: Party who occupies land or property rented from a landlord Landlord: Party who rents land or property to a tenant Client Vs Customer: A broker/agent works for a client. A broker/agent works with a customer. Agency relationships require the consent of both parties (client and agent), which can be demonstrated by one of three methods: Written agreement Oral agreement Action Agency relationships are fiduciary relationships; The client's interest must always come first. the principal authorizes: the agent to represent their interests. The fiduciary duties (OLD CAR) obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care Real estate brokerage is a type of agency Express Authority when a client has given an agent explicit permission for an action. Express authority can be given both verbally or through a written agreement. Implied authority when an agent takes actions that are considered customary for the profession in order to represent their agent's interests. Agency by ratification is when a license holder acts without authorization on behalf of a principal and the principal accepts those actions after the fact, thus affirming the actions taken and creating retroactive agency. Ostensible agency occurs when a principal allows a license holder to act in such a way as to cause a third party to believe that the license holder is the principal's agent. Agency by estoppel is agency imposed by law when it is determined that ostensible agency existed. occurs in an environment of ostensible agency. Special Agency (Limited Agency) (broker-client) the most limited type of agency relationship. unable to make decisions that may bind or obligate their principals. all sponsored sales agents in that brokerage also owe that client fiduciary duties. General Agency (sales agent-broker) most common type of agency between brokers and their sales agent Gives agents more power AND Holds the principal (broker) responsible for actions performed by their agent Principal: The broker is the principal of the agent. Agent: The sales agent is the agent of the broker. help the broker fulfill their fiduciary duties to their clients Universal Agency (child-parent as executor of will) most broad type of agency general power of attorney: agent has the actual power to sign legal documents on behalf of their principal. the duty of obedience does not apply if the principal's instructions are illegal or unethical in any way. The license holder must disclose who they are representing in the transaction upon first contact Information About Brokerage Services (IABS) serves to establish broker minimum duties and to disclose the types of representation available to the parties right up front. required method to provide that information to those parties. IABS must be given at first substantive communication about a specific property. Substantive communication or substantive dialogue meeting or written communication that involves a serious discussion relating to a specific property. Duty of Honesty License holders are expected to never mislead parties to a transaction Duty of Fairness License holders are expected to act in a manner that is fair to all parties intermediary representation. agents' duties become limited third party Any individual in a real estate transaction who is not your client Duties Owed to Third Parties Honesty Fairness Full disclosure of the condition of the property A listing agent can help a buyer with the process of obtaining financing Material Fact A fact that could possibly persuade a buyer or seller to change their decision if they knew about it as opposed to a trivial fact. license holders must disclose: all KNOWN information disclosures that are required are included in the TREC form, Seller's Disclosure Notice. (This form is to be completed by the seller) If the seller does not give the notice as required before signing the contract, allows the buyer to terminate the contract for any reason within seven days after receiving the notice or before closing, whichever is earlier. A defect item that was installed or is attached to the home and has an imperfection. a malfunction something is designed or built to perform a certain function and no longer does so. Permitted disclosures disclosures that are not required, but also not forbidden. (death on a property does NOT have to be disclosed if it was from natural causes, an accident unrelated to the property, or suicide.) unlawful disclosures, disclosures that you are legally forbidden from making stigmatized property. something that happened there (murder, crime, death on property, ghosts) the safest way to enter into an agency relationship written agreement seller agency relationship between a real estate agent and the seller in the brokerage of homes (established in a listing agreement) Open Listing: Seller will pay any broker who brings a buyer who purchases the property. right to list the property with multiple competing brokers Net Listing Seller establishes a minimum acceptable net price and will pay the broker the difference between the minimum price and the final sales price. broker's commission comes from the difference between the seller's established minimum price and the price that the buyer is willing to pay. Exclusive Agency Listing Seller has an exclusive relationship with an agent but has the right to sell the property to named prospects for a lesser (or none) commission to the listing broker. Exclusive Right-to-Sell Listing: The most common type of listing. The seller guarantees the named broker receives a commission if the property is sold even if the seller brings the buyer themselves. subagent sales agent showing a property to a buyer is not representing the buyer but rather, the seller. earned When an agent produces a ready, willing, and able buyer and the seller accepts the offer law of agency a seller's agent can only state terms that are included in the listing agreement. Do Not Write the starting date as the day that you plan to put the listing on the MLS. Do Write the starting date as the day the sellers sign the listing agreement. (This keeps you and your broker fully covered.) seller disclosure honestly discloses and provides buyers with all the information about any defects, hazards, or conditions in the property unlawful for sellers to intentionally hide serious property defects Agency Disclosure if the broker or any of the broker's agents are acting on their own behalf whether real estate agents and brokers are licensed or have potential conflicts of interest Everyone in the transaction is entitled to know who the agent is working for. agent and broker duties and the responsibilities owed to the buyer if the agent or the broker has relatives that have any personal interest in the transaction Intermediary disclosure whether the broker is representing them exclusively exclusive buyer agency contract with an agent agrees to being represented exclusively by that agent. beneficial to both the buyer and the agent protection period period of time after the buyer's representation term ends in which the agent can still get compensation for their role in a transaction. No later than 10 days after the agreement ends