Chapter 8

Flashcards covering key concepts from real estate principles, fiduciary duties, Fair Housing laws, and related regulations.

Who hires an agent to act on their behalf in a real estate transaction?

Principal

What is the role of an agent in real estate?

The person authorized to act on behalf of the principal.

What does the acronym OLD CAR stand for in fiduciary duties?

Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care & skill.

What are material facts in a real estate transaction?

Information that could influence a buyer’s or seller’s decision and must be disclosed.

What are trust funds in real estate?

Money held by an agent on behalf of others that must be accounted for properly.

What are the common law duties to all consumers?

Honesty, Fair dealing, Data privacy.

What does the 'O' in OLD CAR stand for?

Obedience - agents must follow lawful instructions from their principal.

What must an agent disclose to their client?

All material facts that could affect the transaction.

What does 'confidentiality' mean in agency relationships?

Agents must protect their client’s private information - price, terms, motivation.

What is the difference between fiduciary duties and duties to all consumers?

Fiduciary duties apply to clients; honesty, fair dealing, and data privacy apply to everyone.

What does 'reasonable care and skill' require from agents?

Agents must meet professional standards and act competently.

The acronym for fiduciary duties is __.

OLD CAR

Agents owe __, __, and __ to all consumers, not just clients.

honesty, fair dealing, data privacy

The duty of __ requires agents to protect client info like price and motivation.

confidentiality

The duty of __ means agents must properly handle and report client money.

accounting

What is a facilitator in real estate?

Also called a transaction broker or non-agent, provides services without fiduciary duties except confidentiality.

What is the definition of special agency?

Agent is authorized to perform specific tasks (e.g., listing broker to seller, buyer’s broker to buyer).

What does general agency involve?

Agent performs ongoing tasks for a business (e.g., salesperson to broker, property manager to owner).

What is universal agency?

Agent acts in place of principal with full authority and requires written power of attorney.

What is an express agreement in real estate?

Agency created verbally or in writing, where only written agreements allow commission collection.

What is the only fiduciary duty a facilitator owes in Minnesota?

Confidentiality.

What happens if a licensee performs agent duties without a written contract?

The relationship defaults to facilitator.

How do special and general agency differ?

Special = specific tasks; General = ongoing business duties.

What is required to create universal agency?

Written power of attorney.

Can verbal agreements create agency in real estate?

Yes, but only written agreements allow for commission collection.

What is another term for a facilitator in real estate?

Non-agent, transaction broker.

Universal agency requires a ___ and gives the agent the title .

written power of attorney, attorney-in-fact.

Only __ agreements are enforceable for commission collection.

written.

What type of agency allows a broker to perform specific tasks like listing or buyer representation?

special agency.

What is implied agency?

Created through an agent’s actions — not through a written or verbal agreement.

What is single agency in real estate?

Agent represents only one party in a transaction (either buyer or seller).

Define dual agency.

One brokerage represents both buyer and seller in the same transaction; can be one or two agents.

What is designated agency?

A brokerage assigns different agents to represent each party in the same transaction.

What types of information must be kept confidential in MN dual agency?

Price, terms, and motivation - unless written permission is given.

What creates implied agency?

The agent’s actions, even without a written agreement.

What is required for dual agency to be legal in Minnesota?

Mutual written consent from both parties.

What kind of conflict can arise in dual agency?

The agent may struggle to fully represent both parties’ best interests.

What must a dual agent keep confidential unless written permission is given?

Price, terms, and motivation.

How do dual agency and designated agency differ?

Dual = same brokerage represents both parties; Designated = different agents within the same brokerage represent each party.

Dual agency requires __ from both parties.

mutual written consent.

In Minnesota, what is the only fiduciary duty a facilitator owes?

confidentiality.

A single agent represents __ party in a transaction.

one.

What are the three types of confidential info in MN dual agency?

price, terms, motivation.

What does designated agency involve?

Brokerage assigns separate licensees to represent each client in the same transaction; requires consent.

What is an independent contractor in real estate?

Works under a broker but controls how work is done; pays self-employment tax.

What does it mean to be an employee in a brokerage context?

Broker controls both what work is done and how it’s done; employer withholds income taxes.

When must the agency disclosure form be provided?

At first substantive contact with any consumer.

What are material facts?

Must be disclosed to all parties, includes anything that could affect a buyer’s or seller’s decision.

What is the purpose of designated agency?

To allow separate agents to represent each party while avoiding dual agency conflicts.

What must be in writing for an independent contractor relationship to be valid?

An Independent Contractor Agreement.

What is substantive contact?

The point when meaningful conversation about buying/selling begins, prompting agency disclosure.

What must licensees disclose in writing if they have a personal interest in a property?

That they are a principal or have a financial interest.

What is the Fair Housing Act of 1968?

Federal law prohibiting discrimination in housing based on protected classes.

What does the Civil Rights Act of 1866 prohibit?

Discrimination based on race, applicable to all property transactions.

What do the protected classes under Fair Housing include?

Race, religion, color, sex, familial status, handicap, national origin.

What must an agent do before showing property to a buyer or seller?

Disclose who they represent to the other party or their agent.

What happens if agency representation changes during a transaction?

It must be disclosed immediately to all parties.

Can an agent withhold a buyer’s full-price offer from the seller?

No - material facts like price must be disclosed.

What does the Fair Housing Act protect against?

Discrimination based on race, religion, color, sex, familial status, disability, and national origin.

What is the key difference between the Civil Rights Act of 1866 and the Fair Housing Act of 1968?

1866 protects race only; 1968 includes seven protected classes.

The Fair Housing Act of 1968 prohibits discrimination in __ transactions.

housing.

What protected classes were added in 1988?

Familial status and disability.

Before showing property, agents must disclose __.

who they represent.

If both buyer and seller are represented by the same brokerage, __ is required.

written consent from both parties.

What is steering in real estate?

Directing buyers/renters to or away from certain areas based on protected class.

What is blockbusting?

Inducing panic selling by suggesting demographic changes will lower property values.

What is redlining?

Denying or delaying services based on neighborhood demographics.

What constitutes a familial status violation under Fair Housing?

Charging different terms to families with children, illegal under Fair Housing Act.

What are the exemptions to the Fair Housing Act?

Owner-occupied 4-unit buildings, single-family homes sold without broker, religious housing - but racial discrimination is never exempt.

What should a broker do if a client asks them to discriminate?

Refuse and cancel the relationship – discrimination is illegal.

What constitutes illegal advertising under Fair Housing?

Requiring renters to be from a specific religion.

What is the legal term for directing mixed-race couples to different buildings?

Steering.

What is the term for suggesting neighbors sell because minorities are moving in?

Blockbusting.

What is the rule regarding racial discrimination under Fair Housing exemptions?

Racial discrimination is never exempt - always illegal.

Refusing to provide credit or info based on neighborhood demographics is called __.

redlining.

Steering, blockbusting, and redlining are all __ under the Fair Housing Act.

violations.

Senior housing may legally exclude __.

families with children.

The Fair Housing Act prohibits offering different terms based on __.

protected class.

What is the HUD complaint deadline?

Must be filed within 1 year of alleged discrimination.

What is the civil lawsuit deadline for housing discrimination?

Must be filed within 2 years of alleged discrimination.

What must be displayed in every brokerage office?

Equal Housing Poster.

What is the Americans with Disabilities Act (ADA)?

Federal law ensuring equal access to public accommodations for disabled persons.

What constitutes reasonable accommodation under the ADA?

Removal of barriers or installation of aids if 'readily achievable.'

What is considered a public accommodation?

Any private entity with facilities open to the public.

What are tenant modifications under the ADA?

Disabled tenants may modify property at their expense and must restore it afterward.

What happens if a broker doesn’t display the Equal Housing poster?

The burden of proof shifts to the broker in a discrimination complaint.

What is the difference between HUD complaints and civil lawsuits?

HUD = 1 year deadline; Civil lawsuit = 2 years.

What does ADA require of new commercial construction?

It must be accessible to disabled individuals.

What are examples of reasonable accommodations under the ADA?

Ramps, widened hallways, TDDs for the deaf.

Can disabled tenants make modifications to rental units?

Yes - at their own expense, and they must restore the unit afterward.

HUD complaints must be filed within __ year(s).

1.

Civil lawsuits for housing discrimination must be filed within __ year(s).

2.

ADA requires removal of and provision of if 'readily achievable.'

barriers, auxiliary aids.

Failure to display the __ poster can shift the burden of proof to the broker.

Equal Housing.

What is the Equal Credit Opportunity Act (ECOA)?

1974 law prohibiting credit discrimination, adding marital status, age, and public assistance to protected classes.

What does the Community Reinvestment Act (CRA) require?

Lenders to support local community investments - grants, bonds, and down payment assistance.

What is the Truth in Lending Act (TILA) - Regulation Z?

Requires lenders to disclose the true cost of financing and is enforced by CFPB.

What does the Americans with Disabilities Act (ADA) ensure?

Equal access to public accommodations and requires reasonable accommodations if 'readily achievable.'

What are the three protected classes the ECOA adds beyond Fair Housing?

Marital status, age, public assistance.

What does the CRA require lenders to do?

Invest in local communities through development programs and assistance.