Champions School of Real Estate - Law of Agency Exam

Obedience - Answer- an agent is obligated to follow all of the lawful instructions of a client Loyalty - Answer- putting the interests of a client first Disclosure - Answer- disclosing of all information relating to the property and other parties in a transaction Confidentiality - Answer- Any confidential information learned about a client must be kept confidential forever Accounting - Answer- if any funds are held for a client or a customer, these funds are said to be held in trust and must be placed in a separate account for business Reasonable Care - Answer- a requirement that an agent exhibit competence and expertise, keep clients informed, and take proper care of their properties General Agent - Answer- an individual with the right to represent his or her principal in a particular type of transaction or business. Special Agent (Limited Agent) - Answer- a special agent must simply follow the instruction of the principal IRS Independent Contractors - Answer- Pay own expenses, cannot be made to make meetings, cannot be made to attend seminars, cannot be made to work set hours, should not be offered insurance or retirement Agency Termination - Answer- - expiration of time, - accomplishment of purpose, - revocation, - renunciation, - cancellation or - operation of law Sherman Antitrust Act - Answer- illegal to set rates of commission, they must always be set between broker and client Principal Duties - Answer- CRIP (Compensation, Reimbursement, Indemnification, Performance) Compensation - Answer- Refers to the fact that the agent should be paid on the completion of the agency Reimbursement - Answer- refers to the fact that the agent should be reimbursed by the principal for expenses incurred on behalf of the principal Indemnification - Answer- The principal will protect the agent from suffering a loss due to the agent's reliance on information received from the principal Performance - Answer- Principal is expected to perform as promised in the agency agreement A Valid Listing agreement should include - Answer- signatures of all the owners and listing agent, a legal description of the property including the street address, list price set by the seller, a start and end date, a compensation agreement Disclosure of All Material Facts - Answer- The license holder must disclose all facts that he or she knows of or should reasonably be expected to know that materially affect the value of or desirability of the property. This includes disclosure of agency, property condition, and environmental hazards. Agency by actual authority - Answer- exists when an individual grants express authority to the agent to perform some act Ostensible Agency - Answer- When actions lead another person to assume that one is an agent Agency by Ratification - Answer- Occurs when an agent acts without prior authorization, and the principal, upon learning of this action, accepts it. Agency by Estoppel - Answer- created when a principal inadequately supervises an agent agency coupled with an interest - Answer- When a broker is the owner of a property that is being sold, or when a broker is interested in buying a property Express Authority - Answer- authority declared in clear, direct, and definite terms Implied Authority - Answer- Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. Commingling - Answer- mixing client's funds with the business, operating, or personal funds of a broker, and is prohibited by the License Act Conversion - Answer- when a broker spends his or her client's funds without authorization Stigmatized Property - Answer- any stigma that relates to a material defect in the property must be disclosed, psychological stigma is not Dual Agency - Answer- The practice that allows a real estate firm to represent both the buyer and seller with their written permission intermediary - Answer- process that makes it possible to bring client buyers and sellers together while at the same time representing their best interests the written consent to practice intermediary is obtained when - Answer- the seller signs a listing agreement and the buyer signs a buyer's representation agreement The intermediary process begins when - Answer- the buyer is ready to negotiate the purchase of one of the broker's listings (in-house sale)