Real Estate 1 Flashcards

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Questions and Answers

What is the individual who represents the interests of another person called?

Agent

What do you call the agent of an agent?

Subagent

Who is the party that hires the agent?

Principal

What is the fiduciary relationship between the principal and the agent called?

Agency Signup and view all the answers

What term describes the principal in a transaction?

Client Signup and view all the answers

What do you call a third party that the agent does not represent?

Customer Signup and view all the answers

Who is the broker that finds the buyer called?

Co-operating broker Signup and view all the answers

What is based on a formal agreement between the parties regarding agency?

Express agency Signup and view all the answers

What happens in an implied agency?

It occurs when parties act as if they have agreed to an agency. Signup and view all the answers

What must the broker do according to the duty of obedience?

Obey all legitimate instructions of the principal Signup and view all the answers

What does the duty of loyalty require from the broker?

The broker must be faithful to his principal. Signup and view all the answers

What must an agent disclose to the client?

Relevant information Signup and view all the answers

What is the agent required to keep confidential?

Personal information disclosed by the client Signup and view all the answers

What is a relationship based on trust and confidence called?

Fiduciary relationship Signup and view all the answers

What document gives another person the power to act on one's behalf?

Power of attorney Signup and view all the answers

What is an attorney-in-fact?

The person to whom power of attorney is given Signup and view all the answers

Under what circumstances can an agent disclose confidential information?

Court order or client authorization Signup and view all the answers

What is the broker held accountable for in a fiduciary relationship?

The principal's assets Signup and view all the answers

What does reasonable care require of a broker?

To act in the principal's interests Signup and view all the answers

What is the practice of using commingled funds as the broker's own money called?

Conversion Signup and view all the answers

Which of the following can terminate an agency agreement? (Select all that apply)

Mutual agreement Signup and view all the answers

What is an agency relationship where the agent has an interest in the subject called?

Agency coupled with an interest Signup and view all the answers

What is a designated agent?

A person authorized by the broker to act for a specific principal Signup and view all the answers

What does single agency mean?

The agent represents only one party in a transaction Signup and view all the answers

In what situation does a seller become the principal?

When they contract with a broker to market their property Signup and view all the answers

When a buyer contracts with a broker, who is the client?

The buyer Signup and view all the answers

What is undisclosed dual agency?

Representing two principals without knowledge or consent Signup and view all the answers

What does disclosed dual agency entail?

Representing both the buyer and the seller with informed consent Signup and view all the answers

What is a latent defect?

A hidden structural defect not discoverable by ordinary inspection Signup and view all the answers

What does 'caveat emptor' mean?

Let the buyer beware Signup and view all the answers

What obligates a buyer to compensate an agent?

Exclusive buyer agency agreement Signup and view all the answers

When does a broker only get paid if they find the property purchased?

Exclusive agency buyer agency agreement Signup and view all the answers

What kind of agreement allows the buyer to use multiple brokers?

Open buyer agency agreement Signup and view all the answers

What does it mean for a buyer to be 'ready, willing, and able'?

Prepared to buy on the seller's terms and has the means Signup and view all the answers

What is known as broker cooperation?

Sharing commission between listing and selling brokers Signup and view all the answers

What is fraud in the context of real estate?

Intentional misrepresentation of a material fact Signup and view all the answers

What does negligent misrepresentation involve?

Agent should have known a statement was false Signup and view all the answers

What is negligent omission?

Accidental failure to perform an act Signup and view all the answers

What does puffing mean in real estate?

Exaggerating a property's benefits Signup and view all the answers

What is encapsulation in the context of asbestos?

Often safer than removal Signup and view all the answers

What is radon?

A colorless and odorless radioactive gas Signup and view all the answers

What is abatement?

The method by which an environmental hazard is reduced Signup and view all the answers

What are stigmatized properties?

Properties considered undesirable due to past events Signup and view all the answers

Study Notes

Key Real Estate Terms

Agent: Represents the interests of another person in a transaction.
Subagent: An agent of an agent, usually referring to the selling agent under the listing broker; limited in Louisiana unless written agreement exists.
Principal: The person who hires the agent, typically the buyer or seller.
Agency: The fiduciary relationship that exists between the principal and agent.
Client: Synonymous with principal, the one who enlists the agent's services.
Customer: A third party involved in the transaction whom the agent does not represent.
Co-operating Broker: The broker responsible for finding a buyer.

Types of Agency Relationships

Express Agency: Established through a formal agreement with specified terms, which may be written or oral, but must be in writing per Louisiana law.
Implied Agency: Formed through the actions of the parties, indicating agreement to an agency; can involve granting power of attorney.
Single Agency: Representation of one party in a transaction with fiduciary duties owed solely to that party.
Disclosed Dual Agency: Representation of both the buyer and seller with their informed consent; requires disclosure.
Undisclosed Dual Agency: Representing two parties without their knowledge; generally illegal and may occur unintentionally.

Duties of the Agent

Obedience: The agent must follow all lawful instructions from the principal.
Loyalty: The agent must prioritize the principal's interests and avoid conflicts of interest.
Disclosure: Any relevant information must be disclosed to the client; failing to do so is a breach of duty.
Confidentiality: Personal information disclosed by the client must remain confidential, even after the agency relationship ends.
Accountability: Agents must manage the principal's assets responsibly and maintain separate accounts.
Reasonable Care: Agents must act in the principal's best interests and communicate important information promptly.

Legal Concepts

Fiduciary Relationship: Built on trust and confidence; the agent owes specific duties to the principal.
Power of Attorney: A document granting another person the authority to act on one's behalf.
Attorney-in-fact: The individual designated to act under a power of attorney.
Conversion: The misuse of a client's funds for personal use, considered a serious violation.

Types of Property Agreements

Exclusive Buyer Agency Agreement: The buyer must compensate the agent if they purchase any property outlined in the contract.
Exclusive Agency Buyer Agreement: The agent earns a commission only if they locate the property purchased.
Open Buyer Agency Agreement: Allows buyers to engage multiple brokers; compensation is due only to the broker who finds the purchased property.

Property Disclosures and Liabilities

Latent Defect: Hidden defects in property not discoverable through ordinary inspection should be disclosed.
Caveat Emptor: Historical principle of "let the buyer beware," placing the burden on buyers to uncover defects.
Fraud: Intentional misrepresentation of material facts in a transaction.
Negligent Misrepresentation: Misstatements made by an agent who should have been aware of the inaccuracies.
Puffing: Exaggeration of a property's advantages without legal consequences unless misleading.

Environmental Hazards

Radon: A hazardous gas that is colorless, odorless, and derived from radioactive decay.
Abatement: The process by which environmental hazards are reduced.
Encapsulation: A safer method of managing asbestos compared to removal.
Stigmatized Properties: Properties considered undesirable due to past events affecting their reputation.

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Description

Test your knowledge of essential real estate terminology with these flashcards. Each card provides a definition for key terms such as 'Agent,' 'Subagent,' and 'Principal.' Perfect for anyone looking to deepen their understanding of the real estate industry.