Humber Real Estate Course 2, Module 2, Documenting Relationships with Sellers and Buyers Questions and Answers with complete solution

"Listing brokerage commission" is also known as what on the seller representation agreement? - Total commission (then it's further split to co-operating brokerage from there). A brokerage leases a portion of a warehouse for storage, which is located close to the main office because their current location does not have sufficient space. Is this appropriate? - No. Unless the brokerage obtains the Registrar's permission to do so, it cannot store its records and documents at a place that is not its main office. A buyer views a property during an open house held by the salesperson but does not submit an offer. When the listing expires, the seller does not list the property for sale with another brokerage. Seven weeks after the expiry of the listing, the seller sells the property privately to the buyer who viewed it during the open house held by the salesperson, but the sale is not closed until after the holdover period has expired. Is commission owed to the original brokerage in this case? - Yes. Even though the transaction closed after the holdover period, the AGREEMENT was made during the holdover period. The seller would owe 5% commission to the brokerage. Can a brokerage disclose a buyer customer's information to a client seller? - Yes. With a customer there is no confidentiality required. With a client, full disclosure of all information is required. Define 'Notices' in reference to a transaction - Documents given and received by the seller. Define a listing via 'Listing Service' - The most common form of listing; the property is placed on a listing service (i.e. MLS) and the authority to list is granted to only one brokerage, however, the seller permits the listing brokerage to co-operate with other brokerages in the sale of the property.Define an 'Exclusive Listing' - The seller gives the sole right to market and sell their property to one brokerage. The brokerage is authorized by the seller to sell their property during the time specified in the agreement and on the terms agreed to. Note: Only the brokerage with whom a seller has signed an exclusive agreement is authorized to show the property to potential buyers, and the property wouldn't be advertised on a listing service. Define an 'Open Listing' - Also known as For Sale By Owner (FSBO), is when a seller does not list their property with any brokerage, however the seller is willing to allow any brokerage to show the property to a buyer. This is often identified by a sign on the property stating 'Brokers Protected', meaning the seller will co-operate with any brokerage and will compensate the brokerage who first acquires a buyer ready, willing and able to meet the terms of the listing or secures the acceptance by the seller of a satisfactory offer. Does a spouse who is not on-title have to initial each clause and sign the acknowledgement section of the form? - No. Only the spouse who is on title signs and initials as the seller for the property. The non-titled spouse will sign under spousal consent, which indicates their approval to list the property for sale. Note: Policy regarding spousal consent signatures can differ brokerage to brokerage. Does a Suspension of a Seller Representation Agreement affect the holdover period? - No. It remains the same. Does the warranty section of the buyer's representation agreement apply if the same client purchases a different type of building (i.e. residential vs. commercial) in the same geographical area, but from a different brokerage? - No. Only the same type of building (i.e. residential) falls under the warranty that the client isn't represented by any other brokerage within the stated geographical area. How long is a brokerage obligated to retain all documents and records created during the course of a trade? - For at least 6 years. Note: If a trade was contentious and may result in legal action, these files should be kept indefinitely. If a buyer agrees the brokerage should received a commission of 2.5% of the sale price of any property purchased during the term of their agreement, and the seller is providing 1.5% commission, how much commission will the buyer's brokerage make? - 2.5% as agreed to in the buyer representation agreement. (Seller pays 1.5% and buyer pays the additional 1%)If a buyer asks you about a physical condition of a property, what should you do? - Refer them to a professional. If a buyer wants to suspend their Buyer Representation Agreement, how can this be handled? - Since suspension isn't an option for Buyer Representation Agreements, the agreement should be cancelled and the cancellation change needs to be signed by both the client and the broker of record or manager of the brokerage. If a home is locked up properly after an open house, and then is broken into, is the brokerage liable for the damages? - No. The seller agrees in their representation agreement to indemnify the brokerage in case of damage, theft, vandalism or fire that may occur during the marketing process, providing the brokerage is not behaving negligently in carrying out its duties. If an agreement is cancelled, what happens if the seller sells their home during the remaining portion of the listing period OR the holdover period, what happens? - Commission is owed to the brokerage, unless there are other terms agreed to between the parties. Note: The same is owed of a Buyer who cancels their Buyer Representation Agreement. If the term of a representation or customer service agreement is more than 6 months, what must be prominently displayed on the first page, and requires an initial by the seller/buyer? - The expiry date If two sellers sign one representation agreement, is it acceptable to present them with one copy of the signed document, if they sign in person at the same time? - No. Each seller must receive their own individual copy of the signed listing agreement. In a Buyer Customer Service Agreement, what does the 'Representation and Customer Service' section of the agreement explain? - That the brokerage will not be representing the buyer and may be representing the seller. In what situations would the salesperson need to disclose the nature of the relationship to both the buyer and seller? - - The brokerage is representing both the seller and the buyer in the same transaction (i.e. both the seller and the buyer are clients)- The brokerage is representing the seller as a client and is providing services to the buyer as a customer in the same transaction - The brokerage is representing the buyer as a client and is providing services to the seller as a customer in the same transaction In what types of situations might a 'Consumer Report' be requested? - The extension of credit such as obtaining a mortgage, and entering into or renewing a tenancy agreement. In what ways can a Buyer Representation Agreement be changed? - Amendment Cancellation Assignment Note: Suspension is NOT usually available to buyers, only sellers. The buyer would simply state that they are not available to look at potential properties and, as the salesperson, you would respect that. Inducements are also known as .... - Promises Note: These must be fully agreed to in writing and should be cleared with the brokerage before making the promise. Is a seller obligated to refer any inquiries about their property to their listing brokerage? - Yes. If the seller accepts an offer during the listings period or holdover period without notifying the brokerage, the seller is obligated to pay the commission as stated in the agreement, within 5 days of the brokerage's request. Is a signature required by the client to acknowledge receipt of their copy of the representation agreement? - Yes. They must be given a copy immediately upon signing and a signature is required for receipt. Is a spousal signature of an untitled spouse required to amend, suspend, assign or cancel an agreement? - Yes. Is marketing an implied authority or an actual authority? - Actual authorityIs spousal consent required when a buyer is buying a property? - No, only when selling a matrimonial home. List the mistakes a salesperson should avoid while documenting relationships. - - Documentation errors - Incorrect words, statements and predictions - Misrepresentation - Lack of due diligence - Breach of duties, obligations and disclosure requirements