Laws of Agency Champions Texas Real Estate-Exam Questions and Answers

Fiduciary - Answer- A relationship based on trust Agency - Answer- A relationship between two parties Customer - Answer- A person who receives limited brokerage services without establishing an agency relationship/Also known as 3rd party. Client - Answer- Also known as the principal who engages the professional advice or services of another, called an agent, and whose interests are protected by the speci c duties and loyalties of an agency relationship. Many of these duties are outlined in a listing or buyer/tenant representation agreement Act that makes it illegal to practice any act of real estate brokerage without a license? - Answer- Texas Real Estate License Act agency relationship - Answer- When one person, the agent, acts for or on behalf of another person, the principal, who is also known as the client. principal - Answer- the one who hires and gives authority to the agent Agent - Answer- A broker who represents a seller, landlord, buyer or tenant. (2) Sales agent or broker license holders who represent the broker with whom they are associated Texas Real Estate License Act (TRELA) - Answer- Was passed 1939. Created to enforce and administer the act in 1949. The purpose of the Act is to protect the public against unscrupulous brokers and sales agents. Two types of licenses - Answer- Broker/Sales Agent If a broker has more than one place of business...What is required for each office? - Answer- branch office license is required for each location/not necessary to have a licensed broker at each location Federal law dictates that commissions are a matter of __________________________ - Answer- Negotiations When dealing with a customer, the broker has duties of ____________________________________________. - Answer- disclosure, honesty, fairness and competency A seller becomes a client by entering into a ___________________ with the broker - Answer- listing agreement A buyer becomes a client by entering into a ___________________________ agreement with the broker. - Answer- buyer representation License holder - Answer- A person licensed by the Texas Real Estate Commission (TREC) to act as a broker or sales agent in a real estate transaction. Subagent - Answer- A license holder not associated with the seller's broker, but who is representing the seller through a cooperative agreement, often through membership in a Multiple Listing Service (MLS), with the seller's broker. Cooperative Broker - Answer- A broker selling the listing of another broker. A cooperative broker may complete the transaction as a subagent of the listing broker, or may represent the buyers under an agency agreement; he also known as the other broker Broker license holder - Answer- An individual holding a broker's license issued by TREC. Brokers may act independently in conducting real estate transactions, or may engage other broker or sales agent license holders to represent them in the conduct of their real estate business Sales agent license holder - Answer- An individual holding a license issued by TREC an agent of the sponsoring broker. He or she may conduct business only through his or her sponsoring broker Broker Associate - Answer- A broker associated with and conducting all of his or her business as an agent of another broker Sales Associate - Answer- A sales agent or broker license holder associated with and conducting business as an agent of his or her sponsoring broker Seller's Agent - Answer- A broker representing the seller in a real estate transaction, also referred to as a Seller's Broker, Listing Broker, or Listing Agent Buyer's Agent - Answer- A broker representing the buyer in a real estate transaction, also referred to as a Buyer's Broker, Selling Broker, or Selling Agent. Landlord's Agent - Answer- A broker representing a landlord in a real estate transaction Tenant's Agent - Answer- A broker representing a tenant in a real estate transaction License holders have two levels of responsibility - Answer- Public/Fiduciary Duties to Customer - Answer- a. Honesty b. Disclosure of material facts c. Handle all funds with care d. Be responsible for written or oral statements Duties to Client - Answer- a. Put the interests of the client rst b. Give full disclosure to the client (advice and opinions in addition to disclosing all pertinent facts - both material and other) c. Exhibit trust and honesty d. Exercise good business judgment e. Be loyal to the principal f. Be competent Duties of Client to Agent - Answer- Compensation,Reimbursement, Indemnification,Performance Compensation - Answer- The fact that the agent should be paid on completion of the agency Reimbursement - Answer- The fact that the agent should be reimbursed by the principal for expenses incurred on behalf of the principal, above and beyond the expenses related to the sale itself. 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- The principal is expected to perform as promised in the agency agreement. Section 1101.651 of the License Act lists _______________ specific violations that can result in the suspension or revocation of a real estate license - Answer- 30 The Texas Real Estate Commission is not concerned with an agent's earnings and does not involve itself in ___________________________ - Answer- dispute fees The commission can deny licensure to an applicant based on the applicant's _______________________ - Answer- moral character Special agency - Answer- Also known as limited agency General agency - Answer- The right to represent the principal in a particular type of transaction or business Express authority - Answer- Authority that comes from specific instructions, either oral or written Universal agency - Answer- The power to act for the principal in all transactions Agency by ratification - Answer- Established when an agent acts without prior authorization and the principal accepts it Agency by actual authority - Answer- When an individual grants express authority to the agent to perform some act. e authority granted may be in oral or written form Ostensible agency - Answer- When actions lead another person to assume that one is an agent. EX: If the property owner learned of the misrepresentation and made no effort to correct it agency by estoppel - Answer- When a principal inadequately supervises an agent. The agent takes on powers that go beyond the scope of authority given by the principal 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, we have agency coupled with an interest implied agency - Answer- An agency created by acts or words of the principal and agent; an agency inferred by circumstances. Three Types of Agencies - Answer- 1. Universal agency 2. General agency 3. Special agency A license holder sponsored by a broker will act as the ________________________ of that broker - Answer- general agent The Broker is responsible for these things of a sponsored agent? - Answer- Compliance with fair housing laws Compliance with advertising regulations Use of promulgated forms Compliance with regulations for disclosure Compliance with all aspects of the Texas Real Estate License Act listing agreement/buyer-tenant representation agreement establish what agency relationships? - Answer- special agency relationship between broker/seller-tenant OLDCAR - Answer- fiduciary duties to client Obedience;Loyalty;Disclosure;Confidentiality; Accouting;Reasonable Care 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- broker spends his or her client's funds without authorization