Texas law generally recognized four duties of care from the agent to the principal, what are they?
-performance
-reasonable care
-loyalty
-accounting
Duties of care acronym: OLD CAR or OLD CARP stand for what?
OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care
OLD CARP: obedience, loyalty, disclosure, confidentiality, accounting, reasonable care and performance
How does Texas state agency?
"A broker who represents a party in a real estate transaction or who lists real estate for sale under an exclusive agreement for a party is that party's agent"
A broker who is an agent:
-must inform the party if the broker receives material info related to a transaction to list, buy, sell, or lease the party's real estate, including the receipt of an offer by the broker; and
-shall, at a minimum, answer the party's questions and present any offer to or from the party
These are acts called...
minimum level of services
The Real Estate License Acct states that a licensee should not negotiate or attempt to negotiate with another principal with knowledge that that person is a party with an exclusive agency agreement with another broker.
true; meaning a licensee should not go behind another broker's back to reach their clients
The primary responsibility of the seller's agent is the duty of obtaining for the principal the highest price for the property. This is an example of what Duty of Care?
performance; agent doing his/her job
What agency problems can arise when the listing broker becomes the buyer?
think about it...conflict of interest, broken fiduciary duties, they are going to be looking out for the brokerage best interest, etc.
The duty of reasonable care generally implies what?
Competence (qualified or well prepared to do something) and expertise on the part of the licensee.
-disclose knowledge of material facts concerning the property and cannot become a party to any fraud or misrepresentation likely to affect the judgment of the principal.
A broker should not promise the availability of financing on a new house to encourage the sale off an old one. This is an example of what duty of care?
reasonable care
A Texas court has held that an agent can't slander the title of his or her principal by recording a document in an effort to maintain an action for the commission.
true
What are some things an agent should stay informed about to help a principal?
sales info, market data, local topics, owner's associations, municipal utility districts, deed restrictions, lead-based paint info, etc.
Obtain a copy of the Real Estate Advisor (on TREC's website). How many brokers this month have had their licenses revoked for violation of the negligence or incompetence provision?
check it out
Discuss ways in which a special agent can become a general agent because activities of the principal give the agent additional authority. Does the purchaser have the right to rely on statements, prepared by the agent on behalf of the seller even if the agent is not competent in this area?
think about it...
What are the main factors when it comes to the duty of care, Loyalty, to the principal?
-put the interest of the principal about the licensee
-convey to the principal all known info that would affect the principal's decision on whether to make, accept, or reject offers, unless the principal has agreed (in writing) otherwise;
-Keep the principal informed at all times of significant info applicable to the transaction
The duty of loyalty surrounds the duty of ________________ to your principal of all material facts known to the agent.
full disclosure
An agent must disclose to the principal that there is a potential buyer, eliminating a "double escrow" or "flip" closing. What is a flip closing?
-when a broker buys his/her own listing at a lower price, then simultaneously sells to a buyer at a higher price.
-violation of the loyalty and full disclosure duties.
A broker can breach duties of ________and _______________ if the broker fails to disclose that the value of the property has increased during the listing period and uses that knowledge to the principal's disadvantage to buy the property at below value.
loyalty
reasonable care
**Even not disclosing the subdividing the property would have a higher profit turnout.
-subdividing: the division of a lot, tract, or parcel of land into two or more lots, plats, sites, or other divisions of land for the purpose, whether immediate or future, of sale or of building development.
Seller agents have been held liable for failing to disclose a purchaser's poor financial status when the seller is financing the transaction.
True; but the broker is not responsible for the nonperformance of a party; only responsible i broker knew of their shitty finances.
If a broker has no control over the decisions of his or her principal, the broker is not responsible for that principal's direction or decision.
true: Brokers can't be held liable for the condition or nonperformance of an earnest money contract, such as the guarantee of completion of repairs.
A broker must reveal if they have a relationship with the purchaser. The disclosure that the broker may be a principal is not enough. Brokers must make the definite disclosure of their involvement with the purchaser.
true
If a seller is in a hurry to sell, the broker can buy the property as a favor and benefit from the sell with no disclosure of the benefit.
false; if the agent is profiting at the expense of his or her principal, the extent of the agent's profit needs to be disclosed.
It is a breach of fiduciary duties if the broker fails to disclose the listing agreement as an exclusive-right-to-sell listing agreement.
true
Texas law has held that the consumer is...
"ignorant, unthinking, and credulous"
DTPA
Deceptive Trade Practices Act
Under the DTPA, oral representation can stand in court.
true
Any and all funds that come into the hands of real estate agents that belong to another are trust funds for which are specific rules for _____________. They are supposed to be accounted for ____________ and deposited when?
accounting
separately
deposited on or before the second banking day following the receipt of the funds in a non-bearing real estate trust account, unless directed by their principal to do otherwise.
The commission may not investigate under this section a complaint submitted more than four years after the date of the incident involving a real estate broker or salesperson that is subject of the complaint.
true
Since Texas law allows a broker to represent both parties as principals, how does a broker determine which info is "confidential" and can't be disclosed versus those items that may make a material difference in the other party's decision to purchase? List confidential info that, in your opinion, should not be disclosed.
think about it....
Once the brokerage employment relationship terminates or the contract closes, the brokerage/agent's fiduciary duty to the principal is terminated.
false; brokerage/agent still knows confidential info of the client
What would be a "full and adequate" disclosure?
think about it...if you are working with both buyer and seller, if you know the purchaser, if you have an interest in the property, etc. think about it...
What is a cooperating broker?
buyers broker/agent
when the cooperating broker works with the selling broker, they become a subagent.
Under Texas law, a ___________ is a licensee who represents a principal through cooperation with and consent of a broker representing the principal by or associated with the principal's broker.
subagent
Do the listing broker and cooperating broker operate independently?
There may be some authority that an "independent agency" is established, rather than a subagency, since the cooperating broker may not bind the listing broker, nor vice versa.
Under the Texas Occupations Code, neither a party nor a licensee is liable under the License Act for a misrepresentation or a concealment of a material fact made by a subagent in a real estate transaction.
true; unless the party or licensee knew of the falsity of the misrepresentation or concealment and failed to disclose the party's or licensee's knowledge of the falsity of the misrepresentation or concealment
In traditional seller agency, the agreement on a commission is between the listing broker and the seller.
true; the agreement to share a commission is merely an agreement between the listing broker and the cooperating broker.
The Texas Real Estate License Act allows a broker to sue another broker for a commission or tortious interference with an employment relationship even though there is no written contract.
true
Author
Blue2xa88
ID
322931
Card Set
RE Law Ch.4 Fiduciary Obligation--Duty of Care to Principal
Description
real estate law fiduciary responsibilities to principal