Classification Of Agency
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Questions and Answers

What is the main characteristic of a special agency?

  • It applies to all transactions without limitations.
  • It is typically ongoing and indefinite.
  • It allows unlimited authority for the agent.
  • It restricts authority to specific acts as directed by the principal. (correct)

Which of the following describes general agency?

  • It is synonymous with universal agency.
  • It allows the agent to perform multiple acts within a defined scope. (correct)
  • It grants authority for a broad range of activities without limitation.
  • It focuses only on one specific act.

In a universal agency, what is the extent of the agent's authority?

  • It encompasses all matters concerning the principal. (correct)
  • It is limited to a specific transaction.
  • It can only be terminated by the principal.
  • It is the same as a general agency.

What is an example of a situation where a special agency would be appropriate?

<p>Representing a client in a single real estate transaction. (B)</p> Signup and view all the answers

Which agency classification would typically allow for ongoing authority?

<p>General agency. (C)</p> Signup and view all the answers

Why is the concept of agency important in a broker-client relationship?

<p>It enables clear delineation of authority and responsibility. (B)</p> Signup and view all the answers

What is true about the termination of a special agency?

<p>It typically ends upon completion of a specified goal. (B)</p> Signup and view all the answers

What distinguishes special agency from general agency?

<p>Special agency is focused on specific actions with limited duration. (A)</p> Signup and view all the answers

What is a primary difference between general agency and special agency?

<p>General agency holds binding authority. (C)</p> Signup and view all the answers

In a general agency relationship, who bears responsibility for the actions of the agents?

<p>The sponsoring broker. (C)</p> Signup and view all the answers

Which type of agency empowers an agent to represent a principal in all business matters?

<p>Universal Agency (C)</p> Signup and view all the answers

What legal instrument is commonly used to grant universal agency?

<p>Power of Attorney (B)</p> Signup and view all the answers

What limitation does special agency have compared to general agency?

<p>Special agency cannot accept offers without permission. (D)</p> Signup and view all the answers

What is a characteristic of general agency concerning property management?

<p>It necessitates ongoing authority for various tasks. (C)</p> Signup and view all the answers

In what situation might universal agency be employed in real estate?

<p>When a principal is abroad and needs assistance. (B)</p> Signup and view all the answers

Why are general agents crucial for brokers in fulfilling fiduciary duties?

<p>They have the authority to bind the broker. (A)</p> Signup and view all the answers

How does universal agency differ from general agency?

<p>Universal agency is broader and applies to all business matters. (B)</p> Signup and view all the answers

What is a primary function of a special agent in a real estate context?

<p>To perform specific actions on behalf of the client. (B)</p> Signup and view all the answers

What powers does a licensee require to serve as a property manager?

<p>General agency due to ongoing obligations. (B)</p> Signup and view all the answers

What aspect of agency relationships is depicted in the Agency Relationship Triangle?

<p>The roles of brokers, sales agents, and clients. (A)</p> Signup and view all the answers

Why is universal agency considered rare in real estate?

<p>It applies only in special cases. (B)</p> Signup and view all the answers

What does the term 'binding authority' mean in the context of agency?

<p>The capacity to fully agree on behalf of the principal. (A)</p> Signup and view all the answers

What is the primary role of a special agent in a real estate context?

<p>To perform specific actions on behalf of the principal (C)</p> Signup and view all the answers

Which of the following actions can a special agent NOT perform?

<p>Accept an offer on behalf of the principal (B)</p> Signup and view all the answers

In a real estate agency relationship, who primarily owes fiduciary duties to the client?

<p>The broker and all sponsored agents (A)</p> Signup and view all the answers

What distinguishes general agency from special agency in real estate?

<p>General agency has a broader scope of authority (D)</p> Signup and view all the answers

If an agent poorly represents the interests of their clients, who is ultimately responsible for the agent's actions?

<p>The principal (broker) (B)</p> Signup and view all the answers

Which type of agency involves managing all of a principal's affairs within specified areas?

<p>General agency (C)</p> Signup and view all the answers

How is agency typically created in a real estate context?

<p>By signing a buyer-broker agreement (A)</p> Signup and view all the answers

Which scenario represents special agency in real estate?

<p>A real estate agent representing a seller in listing their home (A)</p> Signup and view all the answers

What is one key characteristic of special agencies compared to general agencies?

<p>Special agencies have a specific objective with an end date (B)</p> Signup and view all the answers

What happens to client relationships if a licensed salesperson switches brokerages?

<p>The clients remain with the sponsoring broker (D)</p> Signup and view all the answers

In special agencies, what type of tasks can a broker assign to their agents?

<p>Specific tasks outlined in agreements (D)</p> Signup and view all the answers

Who is responsible for the actions of a sponsored licensee in a general agency relationship?

<p>The principal (broker) only (A)</p> Signup and view all the answers

Which of the following is true regarding the negotiation of commissions in real estate?

<p>Commission rates vary and are negotiated between the principal and the broker (B)</p> Signup and view all the answers

What is a common limitation placed on special agents in real estate?

<p>They cannot bind their principals to agreements (A)</p> Signup and view all the answers

Flashcards

Special Agency

A type of agency where the agent's authority is limited to specific acts or tasks as directed by the principal.

General Agency

The principal grants the agent broad authority to act on their behalf in a particular area or business.

Universal Agency

The most extensive form of agency, where the agent has the power to act on behalf of the principal in all matters.

Power of Attorney

A legal document that grants someone the power to act on behalf of another. It usually gives the authorized person broad authority to handle financial, legal, and medical decisions.

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Special Agency

The type of agency most commonly used in a broker-client relationship.

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General Agency

The type of agency most commonly used in a broker-salesperson relationship.

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Special Agency in Real Estate

A real estate agent representing a client in a transaction. Their authority is specifically for that transaction and is not unlimited.

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General Agency in Real Estate

A real estate broker managing a team of salespeople. They have authority to oversee the team's operations and activities.

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Binding authority

The ability of an agent to bind their principal to an agreement or contract.

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General agency in property management

The authority granted to a property manager by a property owner to manage the property on their behalf.

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Broker's liability

The responsibility a broker has for the actions of their sponsored licensees.

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Universal agency example

A situation where a principal is unable to handle their own affairs and grants a universal agent (often a family member) the power to make decisions for them.

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Universal agency in real estate

A scenario where a principal overseas grants a universal agent power of attorney to sell their property in their absence.

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Agency classifications

The types of agencies that exist in real estate, including special agency, general agency, and universal agency.

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Role of a special agent

The role of a special agent, which is to perform specific actions on behalf of a principal.

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Role of a general agent

The role of a general agent, which is to have a broader scope of authority and act on behalf of a principal for ongoing tasks.

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Role of a universal agent

The role of a universal agent, which is to have the highest level of authority and act on behalf of a principal for all business matters.

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Listing Agreement

An agreement that grants a real estate broker the authority to act as a special agent for a client, typically used for listing properties or representing buyers.

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Buyer-Broker Agreement

A document that grants a real estate broker the authority to act as a special agent for a client in the process of purchasing a property.

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Duties of a Special Agent

The duties of a special agent in real estate include listing properties, showing properties, and representing the client's interests in negotiations.

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Special Agency ≠ Binding

Special agents cannot bind their principals to agreements or contracts. The principal maintains the right to make final decisions. For example, a real estate broker cannot accept an offer on behalf of their client, the seller.

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Agency Created at the Broker Level

The agency relationship in real estate is established at the broker level, meaning that the broker and all sponsored agents owe fiduciary duties to the client, not just the individual salesperson who signed the agreement.

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Fiduciary Duties of Broker and Agents

The broker and all sponsored agents are responsible for fulfilling fiduciary duties to the client, even if the agreement was signed with a specific agent.

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Commission Negotiation

The commission rate is negotiated between the principal (client) and the broker, not the individual agent.

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Listing Transfer with Broker Switch

If a salesperson moves to a different brokerage, the agency relationship remains with the original broker, as it was established with the broker, not the individual salesperson.

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Authority of a General Agent

A general agent's authority is often ongoing and covers the principal's business interests within a specified area. The specifics of the authority should be clearly defined.

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Broker-Licensee General Agency

A classic example of general agency in real estate is the relationship between a broker and a sponsored licensee. The broker is the principal and the licensee is the agent.

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Broker's Liability for Licensee Actions

The broker is responsible for the actions of their sponsored licensees, as they have granted them the authority to represent clients. This includes the licensee's actions as both special and general agents.

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General Agency Relationship

A general agency relationship exists between a broker and their sponsored licensees, allowing the licensees to act as special agents for the broker's clients. The broker is responsible for the actions of their licensees.

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Study Notes

Agency Classifications

  • Agency relationships are not always unrestricted; they come with varying degrees of authority.
  • Three main classifications exist: special, general, and universal agency.

Special Agency

  • Definition: Restricts an agent's authority to specific tasks for a single objective.
  • Duration: Typically temporary, ending upon completion of the objective.
  • Scope: Least extensive of the three.
  • Real Estate Example: The relationship between a broker and client. Listing agreements and buyer-broker agreements establish this special agency.
  • Actions Included: Listing a property, showing it to potential buyers, representing the client's interests at an open house.
  • Non-Binding: Special agents cannot obligate their principal. A broker cannot accept an offer without the client's approval.
  • Broker-Client Relationship: Agency is created at the broker level, not the salesperson level. All sponsored agents of a broker also have a fiduciary duty to the client.

General Agency

  • Definition: Authorizes an agent to manage all aspects of a principal's affairs within a specified area.
  • Scope: Broader than special agency, but narrower than universal agency.
  • Duration: Often ongoing.
  • Real Estate Example: The relationship between a broker and their sponsored licensee. It allows a licensee to act in the capacity of a special agent for the broker's clients.
  • Broker-Licensee Relationship: Brokers are responsible for their sponsored licensees' actions. A broker is responsible if a sponsored licensee acts poorly.
  • Binding Authority: General agents typically have the power to bind their principal (broker), meaning their actions are legally binding on the broker.

Universal Agency

  • Definition: Grants the agent the broadest authority, allowing them to act on behalf of the principal in all matters.
  • Scope: The most extensive form of agency.
  • Rare Occurrence: Uncommon in real estate.
  • Power of Attorney: Usually granted through a power of attorney document, which formally designates authority.
  • Real Estate Example: A principal abroad may give an agent power of attorney to handle the sale of their property.
  • Binding Authority: Universal agents have the power to legally bind their principal to decisions made on their behalf.

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Description

This quiz explores the concept of special agency within the context of real estate. You'll learn about the limitations of authority, actions included, and real-world examples of agency relationships. Test your knowledge on how special agency differs from general and universal agency.

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