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?

Representing a client in a single real estate transaction. Signup and view all the answers

Which agency classification would typically allow for ongoing authority?

General agency. Signup and view all the answers

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

It enables clear delineation of authority and responsibility. Signup and view all the answers

What is true about the termination of a special agency?

It typically ends upon completion of a specified goal. Signup and view all the answers

What distinguishes special agency from general agency?

Special agency is focused on specific actions with limited duration. Signup and view all the answers

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

General agency holds binding authority. Signup and view all the answers

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

The sponsoring broker. Signup and view all the answers

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

Universal Agency Signup and view all the answers

What legal instrument is commonly used to grant universal agency?

Power of Attorney Signup and view all the answers

What limitation does special agency have compared to general agency?

Special agency cannot accept offers without permission. Signup and view all the answers

What is a characteristic of general agency concerning property management?

It necessitates ongoing authority for various tasks. Signup and view all the answers

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

When a principal is abroad and needs assistance. Signup and view all the answers

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

They have the authority to bind the broker. Signup and view all the answers

How does universal agency differ from general agency?

Universal agency is broader and applies to all business matters. Signup and view all the answers

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

To perform specific actions on behalf of the client. Signup and view all the answers

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

General agency due to ongoing obligations. Signup and view all the answers

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

The roles of brokers, sales agents, and clients. Signup and view all the answers

Why is universal agency considered rare in real estate?

It applies only in special cases. Signup and view all the answers

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

The capacity to fully agree on behalf of the principal. Signup and view all the answers

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

To perform specific actions on behalf of the principal Signup and view all the answers

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

Accept an offer on behalf of the principal Signup and view all the answers

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

The broker and all sponsored agents Signup and view all the answers

What distinguishes general agency from special agency in real estate?

General agency has a broader scope of authority 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?

The principal (broker) Signup and view all the answers

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

General agency Signup and view all the answers

How is agency typically created in a real estate context?

By signing a buyer-broker agreement Signup and view all the answers

Which scenario represents special agency in real estate?

A real estate agent representing a seller in listing their home Signup and view all the answers

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

Special agencies have a specific objective with an end date Signup and view all the answers

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

The clients remain with the sponsoring broker Signup and view all the answers

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

Specific tasks outlined in agreements Signup and view all the answers

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

The principal (broker) only Signup and view all the answers

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

Commission rates vary and are negotiated between the principal and the broker Signup and view all the answers

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

They cannot bind their principals to agreements Signup and view all the answers

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.