Unit 4: Real Estate Brokerage and Law of Agency Terms

Agency

The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

Agency by Ratification

An agency relationship that is established after the fact.

Agent

One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed a real estate broker.

Appointed Liscense Holder

associated with and appointed by an intermediary broker to communicate with, carry out instructions of and provide opinions and advice to the parties to whom the license holder is appointed.

Brokerage

For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.

Buyer Representation Agreement

A contract that establishes a broker- buyer agency relationship.

Caveat Emptor

A Latin phrase meaning “ let the buyer beware”

Client

The person who employs an agent to perform a service for a fee.

Commingle

Commission

Consumer

Customer

One who purchases or sells property without being represented by an agent

Employee

One who works under the supervision and control of another. The employer is obligated to withhold income taxes and social security taxes from the compensation of an employee.

Express Agency

An agency created by specific agreement, whether written or oral, of principal and agent.

Fiduciary relationship

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

Fraud

A misstatement of material fact made with intent to deceive or made with reckless disregard of the truth, and that actually does deceive.

General agent

One authorized by the principal to represent the principal in a broad range of matters, for example, a property manager.

Implied agency

An agency created by acts or words of principal and agent; an agency inferred by circumstances

Independent Contractor

Someone retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which she performs the act.

Information about Brokerage Services (IABS)

An notice that license holders must provide summarizing broker agency positions available.

Intermediary Broker

A broker who is employed to negotiate a transaction between both parties and who for that purpose may be agent of both parties to the transaction, acting fairly so as not to favor one party over the other.

Listing Agreement

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

Misrepresentation

an unintentional misstatement of a fact; incorrect or misleading representation

Principal

1. A sum lent or emplyed as fund or investment, as distinguished from its income or profits. 2. The amount of the note due and payable. 3. A main party to a transaction— the person for whom the agent works.

Procuring Cause

The effort that brings about the desired result, Under an open listing, the broker who is procuring cause of the sale receives commission.

Puffing

Exaggerated or superlative comments or opinions not made as representations of fact and thus not grounds for misrepresentation.

Ready, willing and able buyer

One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.

Special agent

One authorized by a principal to perform a single act or transaction; a special agent for a seller is authorized to find a ready, willing, and able buyer for a particular property; a special agent for a buyer is authorized to assist a byer in locating and negotiating the purchase or a property

Subagent

A license holder who represents a principal through a cooperation with a consent of a broker representing the principal and who is not sponsored by or associated with the principal’s broker.

Texas Deceptive Trade Practices- Consumer Protection Act (DTPA)

Makes it illegal to use false, misleading or deceptive acts or practices in the advertising or offering for sale, selling, or leasing of any real or personal property.