Unit 9: Real Estate Agency

Vocabulary flashcards covering the concepts, laws, duties, and types of relationships in real estate agency based on Unit 9.

Agency

The fiduciary relationship between the principal and the agent by which the agent is authorized to represent the principal in one or more transactions.

Agent

The individual who is authorized and consents to represent the interests of another person in dealings with a third person.

Principal

The individual who hires the agent and delegates to that agent the responsibility of representing the principal's interests.

Fiduciary

The relationship in which the agent is held in a position of special trust and confidence by the principal.

Client

The principal in a real estate transaction for whom a real estate broker acts as agent.

Customer

The third party or nonrepresented consumer who is not a principal but for whom some level of service may be provided and who is entitled to fairness and honesty.

Nonagent

Someone who works with a buyer and a seller assisting one or both parties with the transaction without representing either party's interests; also called a facilitator, intermediary, or transaction broker.

Common law

The rules established by tradition and court decisions.

Statutory law

The laws enacted by the legislature.

Administrative law

The rules and regulations created by real estate commissions and departments, as authorized by the legislature.

Caveat Emptor

A common law doctrine meaning "let the buyer beware."

Multiple Listing Service (MLS)

A system created by brokers to share information about properties they listed, which expedited sales by increasing property exposure.

Express agency

An agency relationship created by an oral or written contract between the parties in which they formally state their intention to establish an agency.

Listing agreement

A written employment contract (seller representation agreement) which authorizes the broker to find a buyer or a tenant for the owner's property.

Buyer representation agreement

An express agency relationship between a buyer and a broker that stipulates the responsibilities expected from the broker in finding a property.

Implied agency

An agency relationship that occurs when the parties act as though they have mutually consented to an agency, even if they have not entered into a formal agreement.

Gratuitous agency

An agency relationship that exists even if no fee or commission is involved.

COLD-AC

A memory tip for the six common-law fiduciary duties: Care, Obedience, Loyalty, Disclosure, Accounting, and Confidentiality.

Care

The fiduciary duty of agents to exercise a reasonable degree of skill and expertise while transacting the business entrusted to them by principals.

Obedience

The fiduciary duty obligating an agent to act in good faith and follow the principal's lawful instructions in accordance with the contract.

Loyalty

The fiduciary duty requiring that the agent place the principal's interests above those of all others, including the agent's own self-interest.

Disclosure

The agent's duty to keep the principal informed of all facts or information that might affect a transaction, including material defects or the purchaser's ability to complete a sale.

Accounting

The duty of an agent to report the status of all funds received from or on behalf of the principal and avoid illegal acts like commingling or conversion.

Confidentiality

A key element of fiduciary duties where an agent may not disclose the principal's personal information, such as financial condition or urgency to sell/buy.

Commingling

The illegal act of mixing client monies with personal or general business funds.

Conversion

The illegal use of entrusted money, such as from an escrow account, for purposes other than intended.

Universal agent

A person empowered to do anything the principal could do personally; this scope of authority is virtually unlimited.

General agent

An agent who represents the principal in a broad range of matters related to a particular business or activity, such as a property manager or a sales associate for a broker.

Special agent

Authorized to represent the principal in one specific act or business transaction only; for example, a real estate broker hired by a seller to find a buyer.

Single agency

A relationship where the agent represents only one party to a transaction, providing fiduciary duties exclusively to that principal.

Dual agency

A relationship in which the agent represents two principals (e.g., buyer and seller) in the same transaction, requiring equal loyalty to both.

Designated agency

A process where a broker assigns one sales associate to represent the seller and another to represent the buyer in an in-house sale, ensuring each principal has a specific representative with fiduciary responsibility.

Puffing

The legal exaggeration of a property's benefits, though considered unethical for REALTORS®.

Fraud

The intentional misrepresentation of a material fact used to harm or take advantage of another person.

Negligent misrepresentation

Occurs when a real estate professional should have known that a statement about a material fact was false, resulting from culpable carelessness.

Latent defect

A hidden structural defect that would not be discovered by ordinary inspection, which a seller typically has a duty to disclose.

Stigmatized properties

Properties that society has found undesirable because of events that occurred there, such as a homicide, suicide, or illegal drug manufacturing.

Megan's Law

Federal legislation that promotes state registration systems for sex offenders and allows the public to access names and residences of registered offenders.