Agency Chapter 7 Quiz

Agency and Salespersons

• Salespersons of a listing broker act as agents of the owner (A) or can also be classified as subagents of the owner (D).

Contractual Capacity

• Contractual capacity is required from the principal, agent, and the person signing a deed as grantor. None of these roles are exempt from requiring capacity (D).

Factors Determining Agency Existence

• Determining if an agency exists involves analyzing the actions of the parties, source of compensation to the agent, and parties’ agreements. The presence of a listing agreement is not a determining factor (D).

IRS Independent Contractor Requirements

• For real estate salespersons to be treated as independent contractors by the IRS, they must meet specific criteria, including having a written contract stating their status. Working full time in sales is not a requirement (B).

Broker-Owner Relationship

• The relationship between a real estate broker and an owner who lists property is classified as a special agency (C).

Equal Dignities Rule

• The equal dignities rule stipulates that if an act related to agency must be in writing, then the agency for that act must also be documented in writing (D).

Formation of Agency

• An agency formed after the act of the agent is known as an agency by ratification (C), indicating acknowledgment of the agent's actions.

Claiming Agency to Hold Parties Liable

• A primary motivation for asserting that someone acted as an agent for another party includes holding multiple parties liable, particularly when one has greater assets (B).

Fiduciary Duty of an Agent

• The fiduciary duties of an agent encompass full disclosure, diligence, and honesty, collectively ensuring the agent acts responsibly on behalf of the principal (D).

Termination of Agency

• Various circumstances can lead to the termination of an agency, including the death of the principal, renunciation by the agent, or incapacity of the agent (D).