Real Estate Agency Relationships Quiz

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Questions and Answers

The main forms of real estate agency in California are seller agency, buyer agency, and dual agency.

True

A buyer’s agent has no fiduciary duties to the buyer.

False

The law requires disclosure of all problems, whether observable or not, in a property.

False

Dual agency occurs when one agent represents both the buyer and the seller in a transaction.

True Signup and view all the answers

The required agency confirmation disclosure may be included in any section of the purchase agreement.

False Signup and view all the answers

What is implied agency?

An agency relationship created inadvertently through actions. Signup and view all the answers

How can a principal terminate an agency relationship?

By mutual agreement with the agent. Signup and view all the answers

What does vicarious liability refer to in the context of agency?

The principal’s liability for the agent’s actions, regardless of approval. Signup and view all the answers

What can protect a principal from claiming a lack of agency?

Agency by estoppel. Signup and view all the answers

Which of the following is NOT a way that agency can be created?

Through joint liability. Signup and view all the answers

Match the following types of agency relationships with their descriptions:

Seller agency = Represents the seller in a transaction Buyer agency = Represents the buyer in a transaction Dual agency = Represents both buyer and seller Finder or middleman = Facilitates a connection between parties without representation Signup and view all the answers

Match the following agency duties with the corresponding party they are owed to:

Duties to the principal = Loyalty and full disclosure Duties to third parties = Reasonable care and honesty Duties to the client = Confidentiality and trust Duties in disclosure = Disclosure of material facts Signup and view all the answers

Match the following methods of creating agency relationships with their definitions:

Express agreement = Written or verbal agreement between parties Ratification = Approval of an agent's actions by the principal Estoppel = Preventing a party from denying an agency relationship Implied agency = Creation of agency by the actions of the parties Signup and view all the answers

Match the following aspects of agency law with their key points:

Legal basis = Statutes and court decisions governing real estate agents Dealing with an agent = Legal equivalent of dealing with the principal Termination by actions = Ending an agency by choice of the parties Termination by law = Ending an agency due to legal reasons Signup and view all the answers

Match the following agency disclosure requirements with their consequences:

Failure to disclose = Potential legal penalties Acting in accordance with disclosures = Maintains fiduciary duties Agency confirmation = Provided to clients in writing Timely disclosure = Reduces risk of misinformation Signup and view all the answers

Study Notes

Real Estate Agency Relationships - Learning Objectives

Students should be able to discuss real estate agency law and the duties associated with fiduciary relationships.
Explain ways agency relationships can be created and terminated.
Describe agency disclosure requirements and disclosure forms, and understand potential penalties for failing to disclose information in a timely manner.
Students will identify different types of agency relationships.
Summarize the practical aspects of agency relationships in daily business activities, highlighting potential disciplinary actions or penalties.

Suggested Lesson Plan

Review Chapter 1 (Real Estate Agency Relationships) and the learning objectives.
Students complete Exercise 1.1 to assess baseline understanding of the issues.
Present the following lesson content:
Agency and agency law
Agency relationships
Agent's duties to the principal
Agent's duties to third parties

Agent's Duties to Third Parties

Agent's duties to third parties include:
Reasonable care and skill
Good faith and fair dealing
Disclosure of material facts
Visual inspection of properties, disclosing material facts and latent defects.

Agency Relationships

Agents can act as:
Seller agents
Buyer agents
Dual agents (representing both buyer and seller)
Finders or middlemen

How Agency is Created

Agency relationships can be created by:
Express agreement (listing agreement, buyer representation, or property management agreement)
Ratification
Implication
Estoppel

How Agency is Terminated

Agency relationships can be terminated by:
Action by the parties involved (mutual agreement, revocation, or renunciation)
Operation of law (expiration, fulfillment of purpose, death or incapacity, or extinction of subject matter)

Agency Disclosure

California law requires specific disclosures in real estate transactions.
Agents must give consumers specific forms (such as C.A.R. Form AD, Agency Disclosure Form and C.A.R. Form AC, Agency Confirmation Statement) and these must be done at certain times—specifically before the agreement is signed.
Key agency duties (e.g., utmost care, loyalty, honesty, accounting, disclosure of material facts) require careful consideration
Agent must follow ethical standards to avoid penalties. Different types of agency relationships are defined, including finder, dual agent, buyer agent, and seller agent.
Disclosure forms are required for residential real estate involving one to four-unit properties.
Agency relationships can be complex, and agents need to be aware of their obligations to both parties.
Agent must disclose latent defects, material facts affecting value, written offers, and conflicts of interest promptly.
Disclosure must be honest, clear, and delivered to the parties at the appropriate time.

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Description

This quiz covers the key concepts outlined in Chapter 1 of Real Estate Agency Relationships. Students will explore agency law, the creation and termination of agency relationships, and the duties owed to both principals and third parties. Test your understanding of disclosure requirements and potential penalties within real estate practices.