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What is meant by single agency?
In a single agency relationship, the agent can represent only one party – either the buyer or the seller – in a single transaction, but never both.
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Why would a tenant enter into an agency agreement with a broker?
A tenant could choose to employ a broker to locate property that will meet his or her specific needs, such as retail or office space.
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What are three advantages to entering into a buyer agency agreement?
- The buyer can tailor the agreement to reflect his or her specific needs or wants.
- The broker will be willing to search in a wider market area than just in-house and local MLS listings.
- The buyer will be in a stronger negotiating position.
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Explain the difference between a buyer client and a buyer customer.
Buyer client is in a written agreement with the broker whereas the customer is not entitled to all of the services provided under the written agreement.
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How is subagency created?
Subagency is created by the agreement of the people who are involved in the transaction.
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How does a cooperating broker accept a unilateral blanket offer of subagency?
If a unilateral offer of subagency is in place, the cooperating broker accepts it by showing the property to a buyer customer.
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What obligations does a subagent of the seller owe to the seller, and what obligations does the subagent owe to the buyer?
- The subagent owes the seller the same fiduciary responsibilities he or she would owe to any client.
- The subagent owes customer level services to the buyer – honesty, fair dealing and the proper disclosure of pertinent facts that affect the value of the property.
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List the four occurrences that happen to terminate an agency relationship.
- Tasks set forth in agreement have been performed.
- The agreement term expires.
- Parties mutually agree to terminate the relationship.
- One party gives notice to the other that he/she is terminating the relationship.
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List four ways an agency agreement can be involuntarily terminated.
- Death or incapacity of either party
- Condemnation of the property
- Destruction of the property through fire, vandalism or natural disaster
- Bankruptcy
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In a___ ____ relationship, the agent can represent only one party – either the buyer or the seller – in a single transaction, but never both. He or she owes fiduciary duties to one principal and can provide advice to that client. All other parties to the transaction receive services as customers, not clients. In other words, the licensee owes honesty and fair dealing to those customers.
single agency
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If the agent enters into an agency agreement with the seller, the agent becomes the___'s agent. The seller is the ___or client. The___ ___ is the document that creates the seller agency.
- Sellers
- principal
- listing agreement
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If an agent enters into an agency agreement with a buyer, the agent becomes the____'s agent. This is also known as buyer ___. The buyer is the principal or client. In this arrangement, the agent is accountable only to the___. If a buyer decides that he or she wants client-level services, the buyer will sign a document known as an_____
- buyer
- Brokerage
- buyer
- exclusive right to represent agreement.
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A buyer's agent is required to disclose to the listing broker that he or she is___.
representing the buyer
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An agency relationship is terminated when one of the following occurs:4
- Performance
- Expiration of the agreement term
- Termination of the relationship by mutual agreement of the parties
- Termination of the relationship by one party
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Some reasons why an agency relationship may terminate involuntarily include:
- Death or incapacity of either party
- Agent abandonment
- Condemnation of the property
- Destruction of the property through fire, vandalism or natural disaster
- Renunciation by the client
- Breach of the contract
- Bankruptcy
- Revocation of the agent's license
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Sally is a subagent working for Seller Pat. What does Sally owe to Buyer Brad?
Honesty and fair dealing
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When a seller authorizes a unilateral offer of subagency to all MLS members, any agent who shows the listed property automatically becomes
A subagent
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Which of the following terminations of an agency relationship could result in legal or financial ramifications?
Contract performance
Contract expiration
Mutual agreement between broker and client
Renunciation by client
Renunciation by client
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When a seller gives permission to a broker to submit the property to the MLS, the seller is authorizing the broker to make a blanket unilateral offer of what to all the other members of that MLS?
Subagency
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Who does the selling broker represent?
Depends on the agreement
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Which of the following may not involuntarily terminate an agency relationship?
Bankruptcy
Expiration of the agreement term
Agent abandonment
Condemnation of the property
Expriation of the agreement term
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With which of the following can a broker NOT enter into a single agency agreement?
Seller and buyer
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Which of the following is not a factor of the principles of an agency relationship?
Mural consent
Authorization
Compensation
Fiduciary duties
Compensation
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What is an agent called who represents only one person in the transaction, either the buyer or the seller?
Single agent
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Define implied agency.
An implied agency is formed when the actions of the parties indicate that they have mutually consented to an agency. The persons involved may not have consciously planned to form an agency relationship. However, their actions may unintentionally, inadvertently or accidentally form the relationship.
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Define special agency.
The broker has limited, well-defined powers confined to a single transaction and is not empowered to sell the property, nor bind the principal to any contract nor exercise any authority over the seller's other affairs.
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On what classification of agency is most real estate brokerage based?
Special agency
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The agency relationship is vested only in whom?
The agent or agents named as the designated agent or agents
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What is dual agency?
Dual agency is the situation that exists when a real estate firm or a real estate licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction.
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What is undisclosed dual agency and what happens in this situation?
Undisclosed dual agency is a dual agency relationship that is not disclosed and agreed to in writing. If this situation occurs, the agent has breached his or her fiduciary responsibilities to the client.
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When must a licensee give a client an agency disclosure notice?
Before the seller signs the listing agreement or shows property to a buyer client.
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What does law mandate that a licensee provide to a client at the beginning of a designated agency relationship?
- Law requires that at the beginning of the agency relationship:
- The client receives documentation in writing that a designated agency relationship exists, unless there is written agreement between the sponsoring broker and the consumer providing for a different brokerage relationship.
- The written confirmation shows the name of the designated agent (or agents).
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What are the duties a customer can expect from a licensee?
- Licensees do have certain obligations to customers, even though they do not represent them. In general, they owe any third party:
- Honest dealing
- Reasonable care and skill
- Proper disclosure
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A seller’s licensee must disclose what kinds of things to the seller?
- Purchase offers
- Who the prospective purchasers are and if the licensee has a relationship with them in any way
- Ability of the purchaser to complete the transaction
- Ability of the purchaser to offer a higher price unless the purchaser is also a client
- Purchaser’s intention to resell the property for a profit unless the purchaser is also a client.
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What does the law say about the disclosure of latent defects?
A broker has no duty to discover “latent” material defects in a property if the seller has not disclosed these defects prior to the sale.
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– the most primary of relationships in real estate brokerage between broker and client; governed by law of agency; includes principal, agent, and customer.
Agency relationship
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Types of agency3
- Express agency – agency relationship wherein the parties formally express the intention to form an agency relationship and outline the terms and conditions of the agreement
- Implied agency – non-written agreement formed when actions of the parties indicate they have mutually consented to an agency
- Agency ratification and estoppel – arises by the actions of the parties involved rather than a written agreement; also known as ostensible agency because on the surface the relationship appears to exist
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Agent's authority
- Agency relationship is vested only in the agent or agents named as the designated agent or agents
- Contractual relationships always formed at the managing broker level
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Classifications of agency4
- Universal agency – broker is authorized to all acts that may be lawfully delegated to an agent
- General agency – gives broad powers for broker to act for the principal in matters associated with the continuing operation of a particular enterprise
- Special agency – broker has limited, well defined powers confined to a single transaction; most real estate listing contracts are special agencies
- Agency coupled with an interest – the agent has an interest in the property being sold
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broker represents both principal parties to a transaction; must have signed agreement from both parties; contains inherent conflict of interest; must be disclosed to all involved parties
Dual agency –
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– can arise unintentionally but can result in serious problems
Undisclosed dual agency
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– broker designates a licensee to act as seller agent and designates another licensee to act as buyer agent; alternate way to handle dual agency situations
Designated agency
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– also known as transaction broker, facilitator, or coordinator; broker is not agent for either party but acts as neutral party between both sides; must disclose to consumer; owes limited confidentiality
Non-agency
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– subagency is replaced by buyer agency and seller agency only
No subagency
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Agency duties to all3
- Reasonable skill and care
- Fair and honest dealing
- Disclosure
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Disclosure
– must be given to seller before listing agreement is signed; confirms that a designated agency relationship exists; includes name(s) of designated agent(s); removes confusion about who the agent is working for, lists fiduciary duties
Agency disclosure
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Agent responsible to inform client of all facts that might affect the client's interests in the transaction; includes what the agent___ ___ ___
should have known
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Disclosure of latent defects is
not required by law
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– occurs when agent is showing the prospect a property, eliciting confidential information from a prospect, executing a contractual offer to sell or lease
Substantive contact
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– when agent becomes involved in substantive contact over the phone, he/she must make the disclosure orally and follow up with a written disclosure at the first face-to-face meeting
Oral disclosure
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– informed written consent is required by law; lack of disclosure is violation of license law and can result in penalties
Dual agent disclosures
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– transaction broker must provide written notice to all parties when first becoming transaction broker or on first substantive contact, whichever comes first
Facilitator disclosures
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Substantive contact between the listing agent and a customer occurs when
The agent shows a customer the property
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Most real estate listing contracts are which kind of agency?
Special agency
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Which of the following is not true;
Brokers are liable for what they know from disclosure by the principal.
Brokers are not liable for what they have no way of knowing.
Brokers are liable for what they should know because of their skill and training.
Brokers are not liable for what they should know by inspection of the property.
Brokers are not liable for what they should know by inspection of the property.
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The body of law that defines and regulates the legal roles of an agency relationship is
Law of agency
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The licensee could be known as a transaction broker, facilitator, or coordinator in which type of agency?
Non-agency
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Properties that have an undesirable reputation due to an associated unpleasant occurrence, such as a murder or gang violence, are known as
Stigmatized properties
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An agent must inform client and customer that the agent represents the client and does not represent the customer, unless
There is dual agency
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If a client refuses to disclose material defects to a buyer, what should the agent do?
Decline of sever agency agreement
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Since the listing agreement is a contract that establishes an agency relationship, which law(s) is the relationship subject to?;
Agency law
Indiana Real Estate Licensure laws
Contract law
All of the above
All of the above
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In Indiana, contractual relationships are always formed at what level?
Managing broker
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The common form of express written agency agreement between a seller and a managing broker is
Listing agreement
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Representing both principal parties to a real estate transaction is
Dual agency
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If, on the surface, an agency relationship appears to exist, is it what kind of agency?
Ostensible agency
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An agency relationship in which the agent has an interest in the property that is being sold is
An agency coupled with an interest
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A licensee must provide ______________ of any existing agency relationships to all parties for whom he or she provides real estate brokerage services.
A written disclosure
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