Questions and Answers
What are the three classifications of agency by scope of authority granted?
What does special agency restrict?
An agent's scope of authority to one or more specific acts as directed by the principal.
What is a significant limitation in special agency relationships?
Special agents are unable to make decisions that would bind or obligate their principals.
What authority does a general agency give to an agent?
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How does the agency created at the broker level impact the relationship with clients?
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The broker's client has a special agency relationship with the broker.
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In what kind of agency relationship does the principal hold responsibility for the agent's actions?
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What is an example of a general agency relationship?
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In a special agency, the agent has the authority to bind the principal.
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In a general agency, the agent has the authority to bind the principal.
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Who is the principal in the general agency relationship between Geni and Agent Andie?
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What kind of relationship exists between brokers and their sponsored agents?
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What is universal agency?
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Study Notes
Classifications of Agency
- Three classifications of agency by scope of authority: Special Agency, General Agency, Universal Agency.
Special Agency
- Special agency (or limited agency) restricts an agent's authority to specific acts directed by the principal, usually for a particular goal.
- Termination occurs upon completion of the task; it has the most limited scope.
- In special agency, the broker is authorized to perform defined actions for the client.
- Special agents cannot make binding decisions for their principals.
Non-Binding Special Agency Example
- Example: Seller Tim signs a listing agreement granting broker Sally special agency to market his home. Tim retains the right to accept or reject offers.
Agency Creation at Broker Level
- Agency relationships are established at the broker level, not at the salesperson level.
- Clients sign listing agreements with the broker, not directly with the salesperson.
Implications of Broker-Level Agency
- Commission rates are negotiated between the principal and broker.
- If a salesperson changes brokerages, the clients remain with the previous broker.
Broker's Perspective on Agency
- From the client's viewpoint, their broker operates as a special agent.
General Agency
- General agency allows an agent to bind the principal in specific trades or businesses (e.g., salespeople are general agents of their brokers).
- The general agency relationship with a broker allows a licensee to act as a special agent for the broker's clients.
Responsibilities in General Agency
- The general agency extends broader authority for actions compared to special agency.
- Brokers are responsible for the actions performed by their sponsored licensees.
Binding Authority
- In special agency, agents lack the authority to bind their principals.
- In general agency, agents have the authority to bind the principal.
Examples and Relationships in Agency
- Example of general agency is the relationship between a broker and a sponsored agent.
- Geni, as the supervising broker, is the principal in the general agency with Agent Andie.
- Brokers maintain a general agency relationship with their sponsored agents, protecting the fiduciary duties to their clients.
Broker-Client Relationships
- The broker operates under a special agency for their clients, authorized to undertake specific actions such as executing sales.
Universal Agency
- Universal agency is the broadest authority type, allowing agents to act and make decisions on behalf of the principal.
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Description
Dive into the classifications of agency with this flashcard quiz. Explore the differences between special, general, and universal agency to enhance your understanding of real estate principles. Perfect for Level 8 students aiming to master agency concepts.
