Post on 23-Feb-2016
description
© 2010 by Cengage Learning
Chapter 21________________The Principal-Broker Relationship: Agency
© 2010 by Cengage Learning
Agency
Created when one person delegates to another the right to act on his behalf.
General agency – the right to bind the principal to perform a particular act.
Principal = Property owner Agent = Broker Client = Principal
© 2010 by Cengage Learning
Establishing Authority
Written – contractual agreement. Implied – custom in the industry Ostensible – conduct of the parties. Ratification – agency established after the fact. Estoppel – due to principles failure to maintain
due diligence over the agent who exercises powers not granted him.
© 2010 by Cengage Learning
Commission
Skills and Knowledge
PrincipalAgent
Agency Relationship
© 2010 by Cengage Learning
• Care• Obedience• Accounting• Loyalty
(Competence and expertise)(Lawful instructions)(For funds received)(Principal’s interest first)
Broker’s Obligation to Principal
© 2010 by Cengage Learning
Said withoutchecking the facts
Not said and facts not checked
Said wronglyto mislead
Unsaid in orderto mislead
A Facts BrokerKnows
B Facts BrokerDoes not know
Disclosure Liability
© 2010 by Cengage Learning
Red Flags “As Is” Puffing Lead-based paint disclosure on homes built
prior to 1978 Home Inspections
© 2010 by Cengage Learning
Buyer Agency
The exact opposite theory from the traditional seller representation.
Here the principal or client is the buyer! Agent owes the care of agency duties to
buyer.
© 2010 by Cengage Learning
Agency Disclosure Agency relationships can be created without
written agreements and consumers must be informed who the agent represents so there is a clear understanding of the agent’s role in a transaction.
Many states now require disclosure forms.
© 2010 by Cengage Learning
© 2010 by Cengage Learning
Information
Owner disclosure information Interstate land disclosure statements Antitrust laws
◦ Price fixing◦ Boycotting
Errors and Omission insurance
© 2010 by Cengage Learning
Key Terms Agent Boycotting Commingling Dual agency Middleman
Ostensible authority Price fixing Principal Puffing Third parties