Principles of RE I: Real Estate Brokerage and Law of Agency

Principles of RE I: Real Estate Brokerage and Law of Agency

Flashcards What is the definition of an unconscionable action?DTPA defines an unconscionable action as one that "takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree." Brokers are Held ResponsibleBrokers in Texas are strictly regulated by TRELA.They must provide their associated agents with a policy manual, ascertain the agents are well trained and keep their licenses current, and keep them informed of any changes in the License Act or the rules of the Commission. If an agent violates the License Act, it is quite likely that TREC may find the broker guilty of not supervising their sales agent properly.Customer DutiesN/A, Honesty and fair dealing, Disclosure (Agency and material facts), N/A, Accounting, Reasonable care and skill Third PartyAny person involved in a real estate transaction who is not your client Unconscionable ActionA person makes anunconscionable actionwhen theytake advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree.License at RiskRecovery under the DTPA is limited to economic damages, but if a license holder's violation of the DPTA is also a violation of Texas License Law,TREC can suspend or revoke the individual's license.Which one of the following actions is NOT likely to be a violation of the Texas Deceptive Trade Practices-Consumer Protection Act?The Deceptive Trade Practices Act prohibits the license holder from knowingly and/or intentionally deceiving the consumer in the selling or leasing of any real property.Providing a list of professionals to choose from does not violate the law.General AgencyWhereas special agency is more limited, general agency gives agents more power as the principal holds more responsibility for the actions of their agent. In a general agency, the principal is responsible and beholden to their agent's actions. They may perform more actions and do not need explicit permission for all of their actions.What is the definition of misrepresentation? Misrepresentation is an unintentional mistake, written or spoken.Litigation MitigationTo prevent lawsuits under the DTPA, real estate agents must be diligent about disclosing the known facts about a property and disclosing the source of those facts.Agents

should also:Recommend that buyers arrange an

independent inspection of the propertyAvoid offering

opinions or making exaggerated statements about the property (puffing)Keep careful notes and records regarding the transaction Client and Customer ComparisonA broker worksfora clientA broker workswitha customer Disclose to Whom?Agents are also required to disclose relevant agency relationships to third parties uponfirst contact. Oral disclosure is acceptable at initial contact, butwritten

disclosure is requiredonce substantive dialogue occurs.So who should you disclose to at first contact? Everyone,

including: visitors at an open house, the sellers who are at

the home when the agent is showing the property, or another agent they make contact with to set up an appointment or get information.Under which of the following circumstances could an agent be liable for the actions of the principal or client?An agent can be held liable for passing on suspected false information without verifying it or for intentionally

misrepresenting information to parties. Typically, an agent is not held liable for the actions of a principal unless they could have known it was false or misleading information.