Law of Agency 1

Question 1

Procuring Cause of Sale

Answer 1

The effort that results in the sale of property - the act of bringing a ready, willing and able buyer to a seller resulting the sale of the seller’s property.

Question 2

Duties of a Principal

Answer 2

A principal owes his agent compensation, reimbursement, indemnification and performance

Question 3

Sherman Anti-Trust Act

Answer 3

Federal law that preserves business competition by prohibiting monopolies, monopolistic practices and restraint of trade - in real estate the biggest impact is on commissions - always negotiable

Question 4

Appointed Associate

Answer 4

A licensee appointed by a broker in Texas in an intermediary situation to work with either the buyer or the seller in the transaction.

Question 5

Exclusive Agency Listing

Answer 5

A listing where one broker is the exclusive agent and will earn a commission if the property is sold, unless the seller sells it himself - the seller is competing with his broker.

Question 6

Special Agency / Limited Agency

Answer 6

A principal gives an agent the power to perform specific acts, but not to bind the principal

Question 7

Commission

Answer 7

A negotiated compensation in a broker’s employment contract

Question 8

Open Listing

Answer 8

A listing where a seller reserves the right to list with as many brokers as he chooses - he also reserves the right to sell the property himself - only a broker who brings a contract to the seller will earn a commission

Question 9

Subagent

Answer 9

An agent for a person who is already an agent for a principle - the listing salesperson under a listing broker - this is not a Texas definition

Question 10

Blind Ad

Answer 10

An advertisement that does not clearly indicate the licensed status of the party placing the ad - real estate licensees are prohibited from placing blind ads

Question 11

Agency coupled with an interest

Answer 11

Any transaction where the agent is also the seller, or the agent is also the buyer - this dual role must always be disclosed

Question 12

Broker

Answer 12

A properly licensed party who serves a principal in an agency relationship - also called an agent

Question 13

Oral Agency

Answer 13

An agency relationship created by an oral or spoken agreement

Question 14

Agency

Answer 14

The fiduciary relationship between a broker and a principal or a broker and a client

Question 15

Buyer Representation Agreement

Answer 15

An employment contract obligating a broker to act as a fiduciary to a buyer

Question 16

Implied Agency

Answer 16

Agency as a result of customary, usual or typical conditions

Question 17

Fiduciary Responsibilities

Answer 17

The responsibilities a broker has to clients in an agency relationship; includes placing the interest of the client first, full disclosure of all facts, material and other, and giving advice and opinions

Question 18

Duties of an agent

Answer 18

An agent owes his client obedience, loyalty, disclosure, confidentiality, accounting and reasonable care (old car)

Question 19

Intermediary

Answer 19

A broker in Texas who has the written permission of both the buyer and the seller to represent both parties in a single transaction.

Question 20

Dual Agent

Answer 20

A broker who has the written permission of both the buyer and the seller to represent both parties in a single transaction

Question 21

Exclusive Right to Sell

Answer 21

A listing where one broker will earn a commission when the property is sold, no matter who sells it

Question 22

General Agency

Answer 22

A principal gives an agent the power to bind him in a particular trade or business

Question 23

Designated Agent

Answer 23

A licenses appointed by a broker in a dual agency situation to work with either the buyer or the seller in the transaction

Question 24

Principal / Client

Answer 24

A party represented by a broker in an agency relationship

Question 25

Universal Agency

Answer 25

A principal gives an agent the power to transact matters of all types for him

Question 26

Fiduciary

Answer 26

A party acting for another in a position of trust - a broker, an agent

Question 27

Agency by Ratification

Answer 27

Agency established when an agent acts without permission of the principal and the principal accepts or rectifies those actions

Question 28

Agency by Estoppel

Answer 28

A principal fails to maintain due diligence over his agent and as a result the court prevents the principal from denying the agency relationship

Question 29

Public Responsibilities

Answer 29

The responsibilities a broker has to customers or third parties including honesty, fairness and disclosure of material facts.

Question 30

Management Agreement

Answer 30

An employment contract obligating a broker to act as a fiduciary to a property owner

Question 31

Fiduciary Relationship

Answer 31

The relationship based on trust - the relationship governed by the law of agency between a broker and a principal

Question 32

Listing Agreement

Answer 32

An employment contract obligating a broker to act as a fiduciary to a seller

Question 33

Ostensible Agency

Answer 33

Agency as a result of the actions of an agent and the response of others to those actions

Question 34

Customer

Answer 34

A third party - one a broker is working with, but who is not represented by that broker

Question 35

Oral Agency

Answer 35

An agency relationship created by an oral or spoken agreement

Question 36

Implied Agency

Answer 36

Agency as a result of customary,usual, or typical conditions

Question 37

Fiduciary Responsibilities

Answer 37

Responsibility broker has to clients in an agency relationship.

Placing interest of client first

Full disclosure of all facts and materials

Giving advice and opinions

Question 38

Duties of an Agent

Answer 38

Agent owes client:

O-bedience
L-oyalty
D-isclosure

C-onfidentiality
A-ccounting
R-easonable Care

Question 39

Intermediary

Answer 39

Broker in Texas who has written permission of buyer and seller to rep both parties in a single transaction

Question 40

Limited Agency

Answer 40

Principle gives agent power to perform specific acts but not to bind the principle

Also called special agency