Texas Law Agency: Unit 1 - Agency Concepts Flashcards

Texas Law Agency: Unit 1 - Agency Concepts Flashcards

A license holder working with a buyer-customer could NOTThe answer is recommend a negotiating strategy. The customer is entitled to factual information about the property; however, assistance with advice, opinion, and negotiating are services reserved for the client.Nearly every state requiresWritten or oral disclosure of agency In which of the following situations might an unintended agency be formed?The answer is a broker representing a seller provides a customer advice on making an offer. The customer could interpret the advice as an agency relationship.What happens if a license holder inadequately discloses agency representation?The answer is the license holder may not be paid a commission. Such undisclosed relationships can be grounds for not paying a brokerage commission or may be used as a basis to rescind a purchase contract between a buyer and a seller. Many potential problems, even lawsuits, may be avoided by adherence to timely and accurate agency disclosure requirements.Appraisal management companies are regulated by which of the following agencies?The answer is TALCB. The Texas Appraiser Licensing and Certification Board is the state agency that has jurisdiction over appraisal management companies.When a real estate license holder acts as an agent for a buyer or a seller, the license holder acts in which of the following capacities?The answer is fiduciary. When real estate license holders act as agents, they are acting in a fiduciary capacity. A fiduciary is a person who is entrusted, by another person, with property or power for the benefit of the person who entrusts the fiduciary with such power or property.Can the buyer in a real estate transaction ever be considered a client?Yes, if the buyer has a buyer's agent.What happens if a license holder does not explain, in writing, to a customer that the license holder represents the other party?The answer is the license holder's actions may accidentally create implied agency. The agent is only required to disclose agency orally (or in writing); the customer does not have anything in writing other than the IABS Notice, unless the party consents to intermediary agency, which does require written consent. Absent intermediary agency that is properly consented to, the unrepresented customer might at best only get an oral statement disclosing the license holder's representation of the other party. A license holder's behavior may create implied agency.A main purpose of TRELA is to establishduties of license holders in dealing with the public.One of the principals to a real estate transaction is considered which of the following?The answer is a party. The principals to a real estate transaction are considered parties to the transaction. A broker is not a party in the real estate transaction but may be a party to a listing agreement.

Broker Becky is negotiating a listing agreement with seller Sue. Which of the following is NOT an example of items Becky is free to negotiate with Sue?The answer is whether to disclose foundation problems to prospective buyers. While an agent is not yet acting as a fiduciary of the client when negotiating a listing agreement with the client, and the agent is free to negotiate certain terms of the listing, whether to disclose material defects is not negotiable. A license holder must disclose material defects.To which of the following persons is a fiduciary duty owed?The answer is client. In the real estate profession and almost 35 times in the TREC rules, the principal that the fiduciary is serving, or owes a duty of loyalty to, is frequently called the client, as distinct from a customer to whom fiduciary duties are not owed.A broker who assumes responsibility for the real estate brokerage activities of a sales agent is called a sponsoring broker.What may result from the license holder providing advice or opinions to a party in a real estate transaction?The answer is the license holder may unintentionally become the party's agent. Because of the ease with which agency relationships may be created, and in the absence of any required formalities or written agreements, a real estate license holder may be held to be an unwitting agent in a so-called unintended or accidental agency. In essence, if you act as the advisor for any party or give opinions to any party, you may find that you have unintentionally become the agent for that party. Note, however, that agency is voluntary.Indicate whether the following statement is true or false and

why: A broker may negotiate the terms that the firm will

take for the listing.The statement is true; for example, commissions are fully negotiable.Which of the following terms is synonymous with the term "client"?The answer is none of these. An agent is a fiduciary of a client. An agent does not represent a customer; there is no agency relationship with a customer.Which of the following is regulated by TREC? The answer is home inspectors. According to the TREC

website, TREC regulations affect:real estate brokers and

sales agents;education providers for real estate and inspection courses;inspectors;easement or right-of-way (ERW) agents;residential rental locators (a.k.a. apartment locators);residential service companies (a.k.a. home warranty companies); andand time-share developers.Appraisers area regulated by the Texas Appraiser Licensing and Certification Board (TALCB).Which of the following is evidence that a license holder has disclosed her agency relationship to a party she represents?The answer is both of these. A written and signed listing agreement or buyer representation agreement is evidence of the fact that an agency relationship is disclosed to a party the license holder represents. Such agreements explain the duties and responsibilities of the license holder with respect to the party represented.

Joe is a licensed broker with a small business in Texas. He is a sole proprietor. Which of the following is TRUE regarding Joe's license(s) if his business engages in real estate brokerage in Texas?The answer is Joe does not need to have a business license for his sole proprietorship. A broker can be an individual or a business entity (Limited Liability Company, Company, Limited Partnership, etc.). Any business entity other than a sole proprietorship must have a real estate broker license to engage in real estate brokerage on behalf of another for valuable consideration.Broker Joe is an intermediary in the sale of Christine's home to Della. What can Joe tell Della about Christine and/or the property absent Christine's consent?The answer is the house has foundation problems. Joe is required to disclose material defects about the property of which he is aware. Joe may not, however, disclose confidential information to Della without Christine's consent.Which of the following is authorized to promulgate statutes regarding the licensing of real estate agents in Texas?The answer is the Texas Legislature. The Texas Legislature enacts statutes or laws governing real estate license holders. The Texas Real Estate Commission regulates real estate license holders and is authorized to adopt rules governing them.A law enacted by the legislature isThe answer is statutory law. The laws are drawn from both common law and statutory law. Common law is law that has evolved by custom or by court decisions (case law), and it is contrasted with statutory law, which is enacted by legislatures.Which of the following fiduciary duties is limited in intermediary representation?The answer is loyalty. Under the intermediary exception to traditional agency and fiduciary duties, an intermediary is prohibited by law from truly representing or protecting the interests of either of the intermediary's two clients at the expense of the other. Loyalty and full disclosure are limited in an intermediary transaction. Instead, the intermediary broker must, by law, remain impartial to both principals/clients. Even in an intermediary transaction, the agent must maintain the confidentiality of the client she represents.Caveat emptor ("let the buyer beware") is becoming less important as courts put more responsibility on the license holder for disclosure.What is the license holder's role during and after negotiating the terms of a listing agreement with a seller?The answer is the license holder is an advocate for his firm during negotiations but is a fiduciary of the seller after signing the agreement. Once the negotiations for your broker's best interests in the listing agreement are complete and you have a signed listing agreement for your broker to become the agent for the owner, your role shifts as you now take on your broker's role as agent/fiduciary to the owner. You are no longer a sales agent trying to sell the owner services provided by you and your broker. From this point on, your interests and your broker's best interests in the transaction must be subordinated to the best

interests of your client.A fiduciaryThe answer is handles money or property for the client. A fiduciary relationship is often coupled with an agency relationship in real estate transactions.Which of the following is a primary source of law regulating real estate license holders?

TRELA Which of the following is an example of treating a customer honestly and fairly?The answer is providing accurate information to the customer. Dealing honestly and fairly does not mean treating the customer equally, relative to the client/principal.Dealing honestly does not mean telling the customer or the