Unit 3 Agency, Brokerage, Ethical Considerations

Agent

One who undertakes to transact some business or to manage some affair for another by authority of the latter

Antitrust Laws

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition

Attorney In Fact

A person who received a written authorization to act on behalf of someone else, known as a power of attorney document

Broker

One who buys and sells for another for a fee

Buyer’s Agent

A real estate professional who is under contract to locate property for a buyer and represent the buyer’s interest in a transactions

Buyer’s Broker

A real estate broker retained by a prospective purchaser, who becomes the broker’s principal or client and to whom fiduciary duties are owed

Client

The one by whom a broker is employed in an agency relationship

Code of Ethics

Standards of conduct adopted by the National Association of REALTORS

Commission

Payment to a broker for services rendered, such as in the sale or purchase of real property

Conflict of Interest

A situation where an agent is faced with a decision from which they may stand to benefit

Consumer Information Statement (CIS)

Written explanation of agency relationships presented to buyers and sellers

Disclosed Dual Agent

An agent who has received the information, written consent to represent both parties in a transaction

Dual Agency

Representing both parties to a transaction

Employee

For tax purposes, someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees

Errors & Omissions (E&O) Insurance

A form of malpractice insurance for real estate licensees

Fiduciary

One legally placed in a position of trust and confidence

Fiduciary Relationship

A relationship of trust and confidence as between trustee and beneficiary, attorney and client, or principal and agent

Fraud

Intentional deception that harms another

Fraud Misrepresentation

Intentional fraud and/ or deliberate lying

General Agent

One authorized to act for his or her principal in a wide range of matters

Independent Contractor

Salesperson who sets his or her own hours and who is not covered by income tax withholding; contrasted with an employee

Innocent Misrepresentation

Unintentional misleading of a buyer committed in ignorance

Kickback

The illegal return of part of the commission as gifts or money to an unlicensed person

Latent Defect

Problem with property not discoverable by ordinary prudent inspection

Law of Agency

to manage some affair for another by authority of the latter

Listing Agreement

A contract between a property (as principal) and a licensed real estate broker (as agent) by which the broker is employed as agent to sell real estate on the owner’s term within a given time, for which service the landowner agrees to pay a commission or fee

Meeting of the Minds

One of the requirements for a valid contract, a meeting of the minds is reached when all parties have agreed to the terms of a contract. In NJ real estate, a meeting of the minds is said to have taken place when the parties are in agreement on price, down payment, and financing method

Megan’s Law

A New Jersey law requiring that communities be alerted to the presence of convicted sex offenders. All contracts and leases must include a Megan’s Law Statement advising purchasers and lessees that a list of any known sex offenders who live in the area may be obtained from the county prosecutor

National Association of REALTORS (NAR)

PRIVATE nationwide organization of salespersons and brokers

Negligent Misrepresentation

Fraud committed, not necessarily on purpose, by someone who should have known better

New Jersey REALTORS (NJR)

Statewide group of real estate licensees who choose to join the organization

Off Site Conditions

In NJ, licensees MUST disclose conditions beyond the limits of a property, such as a hazardous waste disposal site, that may be considered material facts by a prospective purchaser.

Power of Attorney

A written instrument authorizing a person, the attorney -in -fact, to act as agent on behalf of another person