RE Law Ch.3 Fiduciary Responsibility: General and Special Agency

  1. What is general agency?
    where the principal has complete responsibility for the acts of the agent performed within the scope of agency; hince real estate transaction.

    -the agent is authorized to conduct a series of transactions involving a continuity of service.
  2. In the concept of real estate brokerage, one may think of the sponsoring broker-salesperson relationship as being a ________ agency.
    • general
    • -create liability for the broker when acting within the scope of the broker's authority
    • -liability without fault on the employer; broker is responsible for agent, even if the broker did not know about agents acts.
  3. A broker can designate in writing that another licensee (office manager, team leader, etc.) will be responsible for the day-to-day supervision of sponsored salesperson, which keeps the broker from being responsible for the actions of that salesperson.
    false; a broker can designate that another licensee supervise the sponsored salesperson, but the broker is still responsible for the sponsoring salespersons actions
  4. What does e.g. and i.e. stand for?
    • e.g.; for example
    • i.e.; that is, namely, or in other words
  5. The broker is responsible for any property management and advertising activities conducted by the sponsored salesperson.
  6. The broker must maintain business records such as disclosures, commission agreements, work files, contracts, and related addenda, property management contracts, appraisal related records, and sponsorship agreements for at least ___ years from the date of closing or termination of the contract.
  7. Each broker is required to maintain written policies to be sure that salespersons are properly trained, comply with TREC advertising rules, and maintain records retention requirements, as well as properly maintaining all trust accounts.
    true; Also broker must deliver or provide correspondence on all Texas Real Estate Commission activities, proposed rules, and new rules adopted by the TREC.
  8. All compensation agreements between a broker and sponsored salespersons must be in writing.
  9. If a real estate agent is buying real estate for his/her own account, and a misrepresentation or other misconduct occurs, is the sponsoring broker liable for that kind of conduct?
    • -It depends on how the real estate agent conducted himself in the negotiations and transactions;
    • ---If the licensee participated in the transaction as an agent, it may create liability for the broker.
    • ---If the property was clearly purchased for the agent personally, it would not.

    • -Several factors are examined in making the determination:
    • 1. was the act committed within the time and space limits of the broker's sponsorship;
    • 2. was the act committed at least in part by serving the principal; and 
    • 3. is it incidental to or part of the authorized conduct of the agent?
  10. What is special agency?
    • -limited scope of responsibility
    • -the principal is not responsible for the acts of his/her agent.
    • -created primarily to conduct a single transaction; no continuity of services.
    • -this type of agency is created in the real estate agent's typical listing or buyer's representation agreement.
  11. In Texas, the real estate broker is primarily recognized to be a special agent, engaged by others to negotiate bargains or contracts for the sale or lease of real estate between other people for which the broker is paid a commission.
  12. The broker has no authority to complete a sale or make representations on behalf of the seller without the seller's authority or expressed authority.
  13. If a broker made an outrageous representation (the house has a solid gold fireplace), could the seller be bound by such misrepresentation because he selected that broker to represent him?
  14. Could a real estate agent bind the seller by making a misrepresentation as to the status of title?
    think about it...
  15. Who pays mostly for the title policy?
  16. Sellers being held bound by the misrepresentation or misconduct of their agents is a __________ in Texas.
    gray area; Texas has not adopted this theory, but the "gray areas" are developing
  17. Agent is not reliable for misrepresentation from the seller of the property.
    true; unless the agent knew of it or "gray areas"
  18. If you, as an agent, discover that a defect exists that wasn't disclosed, what should you do?
    • Have a long, careful conversation with the seller. It is better to lose the listing than to expose both of you to liability
    • -Keep notes and backup info for all such conversations and file them; may be your only defense.
  19. One can begin a transaction as a special agent and become a general agent as the transaction develops.
    • true; this can happen if the principal gives an agent the scope of control and authority to "stand in his shoes".
    • -EX: comments like "take care of the property while I'm gone," may create a situation where the broker can bind the principal.
    • **Becareful not to overstep and accept liability for responsibilities not clearly stated to you.
  20. What is nonagency?
    • - a transaction broker; Colorado
    • - is not an agent for either party, has not fiduciary responsibilities to the parties and collects a fee.
    • -Under Colorado law, the duties of a transaction broker include:
    • 1. presenting offers and counteroffers in a timely manner;
    • 2. advising the parties and keeping them informed;
    • 3. accounting for money and property received;
    • 4. assisting the parities in complying with contractual terms and conditions; and
    • 5. disclosing certain info.

    **Problems regulating, get paid even if agent does not follow through

    -They just bring people together and don't represent anyone, and don't have any duties.
  21. Over ____ states have adopted a "nonagency" theory of some kind; most are deemed "transaction brokers".
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RE Law Ch.3 Fiduciary Responsibility: General and Special Agency
real estate law general and special agency