Law of Agency Unit 1 Questions and Answers 100% Pass

Law of Agency Unit 1 Questions and Answers 100% Pass If a buyer hires a broker under a buyer representation agreement, the principal is the: buyer. If a seller signs a listing agreement with a broker, the ________ is the listing agent. broker There is no third party customer in ________ representation. intermediary The role each party (client, broker, or customer) has in the agency relationship is determined by the type of ________ used. employment agreement Listing Agents must: work with all parties to solve problems and facilitate the closing. In a real estate transaction, the agent is the: real estate broker The law of agency is based on which of the following Latin maxims? "He who acts through another is deemed in law to do it himself" Which of the following is drawn from the rules and statutes created by various legislative and governing bodies? Statutory law agency In either the listing or the buyer representation agreements, the customer is the ________ party. third What is the result of increase real estate agency regulation? All license holders must stay current with agency laws and best practices A(n) ________ is a person who undertakes to act on behalf of and primarily for the benefit of another, such as a trustee for a trust. fiduciary A third party is: a person who is not a party to an agreement but is implicated in it. Studies have shown that most people do not understand the: principal-agent relationship. Common law agency: obtains its authority from customs originating from pre-colonial England. Listing Agents can provide all of the following services, EXCEPT they cannot: tell the buyer (customer) about other competing offers. What is the term for a legal relationship in which a person is authorized to conduct business, sign papers, or otherwise act on behalf of another person? Agency Agency should be studied because it: is the fundamental concept upon which contracts and other businesses or relationships are built. The principal is: an individual or entity that has the ultimate authority to make decisions and/or take responsibility for certain legal actions A broker works for and provides services to the: client. The ________ of statutory law agency directly affect and regulate agency relationships. statutes and rules A(n) ________ is a party to a real estate transaction who seeks the services of a real estate broker without the protection of an agency relationship. customer To prove that an agency relationship exists, evidence must show that the ________ has the right to assign a task and control the means and details of the process by which it will be accomplished. principal Confusion and misunderstanding create mistrust and frustration, which has caused the public to take a closer look at the __________ used by real estate professionals. All the choices, wording, terminology, semantics The Real Estate License Act is codified... Title 7, Subtitle A, Chapter 1101 of the Texas The Rules of the Texas Real Estate Commission are found in the Texas Administrative... Code (TAC), Title 22, Part 23, Chapters 531-543. Case Study Scenario: Seller Steve listing his home with broker Bob for $175,000, which they both agreed was a little high but a fair market price for the house. The listing was for 90 days because broker Bob thought it might take that long to get the full list price and he said he would make every effort to get that price for Steve. Therefore, Steve agreed to the 90-day listing agreement, but he really wanted to sell the house within a month. Steve indicated that he might make a concession on the price if it sold quickly within a month. The Complaint: Steve filed a complaint against broker Bob with TREC and with the local Board of Realtors®. He stated that broker Bob and his sales agent, Sally, had failed to represent his interests faithfully. The complaint stated that broker Bob and Sally told various prospective buyers that they could offer a price less than the listed price of a house. Three different prospective buyers had told Steve that, while looking at the property, sales agent Sally, had said, "It's listed at $175,000, but I'm pretty sure that an offer of $168,000 will be accepted." The Hearing: At the hearing, broker Bob confirmed that he had agreed with seller Steve that $175,000 was a fair price for the house. He also stated that Steve wanted a quick sale and might entertain a concession on the sales price. The listing was finalized with the agreed-upon listing price of $175,000 and broker Bob stated he would use his best efforts to market the property to get that price. When broker Bob discussed the listing with Sally, she interpreted seller Steve's comments to mean that he would accept approximately 5% less than the listed price for an early offer. However, seller Steve never authorized broker Bob or Sally to quote a price other than $175,000. Case study ? Subchapter N of TRELA lists the grounds for suspension or revocation of a license while acting as a broker or sales agent. Did broker Bob violate one of the subsections in TRELA §1101.652(b)? No, based on the scenario, he did not violate §1101.652(b). Hint: Broker Bob stated he would use his best efforts to get the $175,000 list price. §1101.652(b)(15) deals with deceptive practices. §1101.652(b)(20) deals with offering to sell real property on different terms that are not authorized by the owner. §1101.652(b)(26) deals with a broker sponsoring an unlicensed person. Case study ? According to the TREC Rules, broker Bob was responsible for the authorized acts of the sales agent Sally, but was not required to supervise her directly. He did not authorize her to quote a lower price; therefore, he was not responsible for her actions. Which TREC Rule addresses this aspect of broker responsibility? TAC §535.2(a) Hint: A broker is responsible for the authorized acts of the broker's sales agents, but the broker is not required to supervise the sales agents directly. If a broker permits a sponsored sales agent to conduct activities beyond the scope explicitly authorized by the broker, the broker is responsible for those acts. [§535.2(a)]. TAC §531.2 deals with Fidelity. TAC §535.16 deals with net listings. TAC §535.119(a) defines the term "lottery". Case study ? Which of the following Articles of the NAR Code of Ethics did sales agent Sally's actions violate? Articles 1 and 2 Hint: Article 1 states that REALTORS® must protect and promote the interests of their client, while treating all parties honestly. Article 2 states that REALTORS® must not exaggerate, misrepresent, or conceal pertinent facts relating to the property or the transaction. Article 4 deals with self-dealing. Article 10 discusses illegal discrimination. Article 12 states that REALTORS® must be truthful in their advertising and marketing. Article 13 deals with the unauthorized practice of law. Case study ? Sales agent Sally was penalized for quoting a price that was less than the list price. Which NAR Standard of Practice states," When acting as listing brokers or as subagents, REALTORS® shall not quote a price different from that agreed upon with the seller/landlord." Standard of Practice 12-4 Hint: Standard of Practice 12-4. When acting as listing brokers or as subagents, REALTORS® shall not quote a price different from that agreed upon with the seller/landlord. Case study ? Sales agent Sally's actions violated TREC Rules. Which of the following TREC Rules did she violate when she stated (without authorization) that the seller would take less than list price? Based on the scenario, she violated §535.156 (b and d). Hint: TAC §535.156(b) A license holder must deal honestly and fairly with all parties; however, the license holder represents only the principal and owes a duty of fidelity to such principal. (d) A license holder has a duty to convey accurate information to members of the public with whom the license holder deals. §535.161 deals with Failing to Provide Information. §533.1 deals with definitions regarding adjudicative proceedings. §535.4 (a and c) deals with License Requirements. Case study ? Sales agent Sally was fined and her license was suspended for 6 months. Which of the following sections of TRELA Subchapter N §1101.652(b) did she violate when she stated (without authorization) that the seller would take less than list price? Based on the scenario, she violated §1101.652(b)(20). Hint: §1101.652(b)(20) deals with offering to sell real property on different terms that are not authorized by the owner. §1101.652(b)(4) deals with failing to disclose a defect. §1101.652(b)(10) deals with commingling money. §1101.652(b)(32) deals with illegal discrimination. The concept of agency allows one person (principal) to employ another (agent) to: all of the choices apply. acquire property on her or his behalf. do her or his work. sell her or his goods. Which of the following is not considered a fiduciary? A ward for his or her guardian Which of the following is true regarding non-agency status? There are no TRELA provisions to support non-agency status. A buyer's agent must: get their client/principal the best possible price and terms in the acquisition of the property. A subagent is a broker who accepts a subagency offer from the: listing agent. If a seller signs a listing agreement with a broker, the ________ is the principal. seller In a real estate agency relationship, an agent is anyone who acts on behalf of another. Though a sales agent can and does act on behalf of a client, the formal relationship is with the: broker The ________ cannot assist a customer in negotiating a transaction by offering any advice, opinions, or advocacy. broker