Texas Real Estate Agency: Chapter 2 Graded A

Texas Real Estate Agency: Chapter 2 Graded A An example of a general agency relationship would be one that exists between the sales associates and the broker. Special agency occurs when the principals give an agent a limited authority to act on their behalf. Brokers can buy a property listed with them under which of the following conditions? Only if full disclosure is made to the seller of the broker's involvement as a purchaser. Which statement is TRUE of listing agents? They must present every written offer to the seller. A salesperson owes all of the following fiduciary duties EXCEPT prepare a power of attorney for the buyer. A listing agent tells a buyer-customer that the seller is under pressure to sell because of a pending divorce and possible foreclosure. Such disclosure is unacceptable because of the fiduciary duty owed the owner. Sally, as an agent for the seller, listed and subsequently sold George's town house. She did not tell George that a major zoning change in progress would allow business use in the area, thus increasing property values. Which statement is TRUE? Sally was required to disclose the change because it was a material and pertinent fact. Which is NOT a fiduciary obligation owed to a client? Inspection A material fact is one that a reasonable person might feel is important. A customer is entitled to all of the following the broker's opinion of value. Universal agency gives a very broad and general scope of power to the agent to act for the principal. General agency is more restricted than in universal agency. The agent is authorized to conduct an ongoing series of transactions for the principals and can obligate them to certain types of contractual agreements. Special agency sometimes known as a limited agency, authorizes the agent to perform only those acts permitted by the principal. Fiduciaries are held to the highest amount of good faith, are required to exclude all selfish interest, are prohibited from putting themselves in positions where personal interest and representative interest will conflict. The most important obligations a fiduciary owes to a principal can be remembered by using the "OLD CAR" memory device: (1) obedience, (2) loyalty, (3) disclosure, (4) confidentiality, (5) accounting, and (6) reasonable care and diligence. Reasonable care and diligence Real estate agents are held to a standard of care that requires, among other things, that they be knowledgeable concerning the land, the title, and the physical characteristics of the property being sold. Obedience The agent has an obligation to follow the lawful instructions of the client. Loyalty Agents must always act in the best interest of their clients and must be loyal to the trust placed in them. Disclosure A key point related to loyalty is the obligation of the agent to make a full, fair, and timely disclosure to the client of all known facts relevant or material to the transaction. Full disclosure relating to the property regardless of whether the fact is favorable or unfavorable, i.e. property defects, defects in the title, ... . Full disclosure of relationship The real estate agent must disclose to client any special relationship that might exist between the broker and any of the broker's associates and the other parties in the transaction. Full dislcosure of other offers Unless instructed otherwise by the Seller, the listing agent should continue to present all offers until the transaction is closed. Full disclosure of information Because the licensee's relationship with the client is that of a fiduciary, licensees must always place the interest of the client above that of their own interest. Full disclosure regarding status of earnest money deposits. The buyer, not the broker, is responsible for depositing the earnest money with an escrow agent on final signing of the contract by all parties. Full disclosure of buyer's financial condition. The seller's agent must disclose to the seller all information, good or bad, regarding the buyer's financial condition. Full disclosure of property value. Disclosure of property value is a very important part of an agent's fidcuciary duty to the client. Real estate agents provide a broker price opinion (BPO) or a comparative market analysis (CMA) to a consumer. Full disclosure of commission split. The listing agent must disclose to the seller the existence of any fee-sharing arrangement with a cooperating broker. Full disclosure of contract provisions. Before executing any document that is intended to be legally binding the licensee is obligated to discuss the provisions of the contract with the client. Confidentiality The duty of loyalty requires that the agent keep confidential any discussions, facts, or information about the principal that should not be revealed to others. Accounting Money received by a broker as a result of transactions such as purchase contracts or property management agreements are trust funds and are frequently held by the broker for the benefit of the principal. Minimum Service Requirements A party's agent has a fiduciary duty to provide certtain defined minimum services to their client, services that cannot be passed to the other broker in the transaction.