Unit 5 Agency Relationships (California Real Estate Principles)

Vocabulary flashcards covering key terms related to agency relationships in California real estate principles.

Agency

A legal relationship in which a principal authorizes an agent to act as the principal’s representative when dealing with third parties; creates a fiduciary relationship.

Principal

The party who authorizes the agent to act on their behalf in a real estate transaction.

Agent

A licensed real estate professional authorized to represent the principal in dealings with third parties.

Third party

The person with whom the agent interacts in a transaction (e.g., buyer, seller’s customer).

Fiduciary relationship

A relationship of trust and confidence in which the agent owes duties of loyalty, care, and disclosure to the principal.

Special agent

An agent authorized to perform a specific task or operate within a limited scope.

General agent

An agent authorized to perform a broader range of tasks on behalf of the principal.

Actual authority

Authority given by the principal, either expressly or impliedly, to the agent.

Ostensible (apparent) authority

Authority a third party reasonably believes the agent has, based on the principal’s conduct or representations.

Power of attorney

A written document giving a person legal authority to act for another; two main types are special (limited acts) and general (all business).

Attorney-in-fact

The person who holds power of attorney and acts for the principal.

Single agency

When a broker represents only one party (buyer or seller) in a transaction.

Dual agency

When one broker represents both the seller and the buyer in the same transaction, with informed written consent.

Subagent

A broker delegated by the listing agent to represent the seller in finding a buyer.

Cooperating broker

A broker who assists another broker by locating a buyer and may act as a subagent or buyer’s agent.

Listing agent

The broker who represents the seller under a listing agreement.

Selling agent

The broker who presents offers and may work with either the buyer or as a subagent.

Buyer’s agent

The broker representing the buyer in a transaction.

MLS (Multiple Listing Service)

A cooperative listing service that exposes property to MLS participants and sets terms for cooperation and compensation.

Procuring cause

The broker whose efforts produced a ready, willing, and able buyer; determines entitlement to the commission.

Safety clause

A clause protecting the listing broker’s commission if the owner sells to a protected buyer after the listing ends.

Listing agreement

A written contract by which a seller hires a broker to sell property; types include exclusive right to sell, exclusive agency, open listing, and net listing.

Exclusive Right to Sell (RLA)

An exclusive contract where the seller must pay the broker a commission if the property is sold within the listing period by anyone.

Exclusive Agency listing

An exclusive contract where the seller pays the broker a commission only if the broker procures a sale; seller may sell without paying a commission.

Open listing

A non-exclusive listing allowing multiple brokers to offer; only the procuring broker earns a commission; no fixed termination date.

Net listing

A contract where the broker earns the amount above the seller’s net price; disclosure required; often restricted/illegal in many places.

Option listing

A listing where the broker has the right to purchase the listed property; broker may be a principal as well.

Buyer representation agreement

A contract by which a buyer hires a broker to represent the buyer; often an Exclusive Right to Represent Buyer.

DEC (Disclose, Elect, Confirm)

Process for agency disclosure: disclose the agency relationship, have all parties elect, and then confirm the agency in writing.

AD form (Disclosure Regarding Real Estate Agency Relationships)

The required written disclosure describing agency relationships, provided to seller and buyer before listing or offers.

AC form (Confirmation of Real Estate Agency Relationships)

Form used to confirm the agency relationship in the purchase contract or separately.

COALD

Acronym for the agent’s duties to the principal: Care, Obedience, Accounting, Loyalty, Disclosure.

Misrepresentation

False statements or concealment of a material fact; types include innocent, negligent, and fraudulent.

Puffing

Exaggerated opinions not presented as facts; not always grounds for misrepresentation.

Customer

A third party who interacts with the licensee but is not represented by that licensee (not a client).

Associate licensee

A licensed real estate salesperson or broker-Associate who works under a supervising broker.

Trust funds; commingling

Money entrusted to a broker; must be deposited promptly into a trust or neutral escrow account; commingling is illegal.

Prohibited disclosures by dual agent

A dual agent cannot disclose price or value-related information without express consent of the applicable party.

Termination of agency

Agency ends by expiration, full performance, destruction of the property, death/incapacity, mutual agreement, or agency coupled with an interest.

Agency coupled with an interest

An agency in which the agent has an interest in the subject of the agency and cannot be revoked.

Representative Capacity Signature Disclosure (RCSD)

Form showing the capacity in which a representative signer acts (individual vs. representative of an entity).