Exam (elaborations)
CALIFORNIA REAL ESTATE PRACTICE CHAPTER 1 ROCKWELL SLIDES QUESTIONS AND ANSWERS
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CALIFORNIA REAL ESTATE PRACTICE CHAPTER 1 ROCKWELL SLIDES QUESTIONS AND ANSWERS
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Name: Score:83 Multiple choice questions
Definition 1 of 83
Your loyalty and confidentiality are enormous benefits to the buyer.
You must put the buyer's interests ahead of anyone else's, and you must not disclose the
buyer's confidential information.
For many buyers, the most important confidential information is their bottom line—how much
money they are willing to pay for the property.
When the buyers know that you are representing them, they can freely discuss their financial
situation, how badly they want the property, and what they are willing to pay for it.
They know that you will keep that information confidential.
Liability and agency
Loyalty and confidentiality
Agency disclosure requirements
Obedience and good faith
Definition 2 of 83
You could be paid a flat fee--a specific amount that is payable if the buyer purchases any
property you find for him.
Flat fee
Percentage fee
Facts about the transaction
Actual fraud
,Definition 3 of 83
-Finder: No agency relationship with either party
-Finder CAN'T participate in negotiations
A person may act as a finder or middleman in a transaction without acting as an agent to either
party.
The finder can only introduce a seller and a prospective buyer.
Any actions beyond that will create an agency relationship.
A person can be involved in a transaction without forming an agency relationship with either
party.
Such a person is known as a finder or middleman, and may be compensated with a finder's fee.
A finder may arrange an introduction between an owner of real property and a prospective
purchaser, but the finder may not perform any other activity in the transaction.
A finder does not need to have a real estate license to receive a finder's fee.
If you are acting as a finder, you don't owe fiduciary duties to either party.
In fact, this is one situation when you should avoid fulfilling fiduciary duties.
Anything beyond a mere introduction will create an agency relationship.
As a licensee, if you participate in the negotiations or take any action on behalf of either party,
you will be considered an agent, with all of the duties that agency entails.
Crossing the line from finder to agent without making a proper agency disclosure can subject
you to disciplinary action and loss of your finder's fee.
How an Agency is Created
Termination by the parties
Agency disclosure
Finder or middleman
,Definition 4 of 83
An agent owes fiduciary duties to her principal and also owes certain duties to other parties.
Narrator:
Under agency law, a real estate agent owes specific duties to her client, the principal.
As we mentioned, the duties owed to the principal are often called fiduciary duties.
When working on behalf of her client, a real estate agent also owes certain duties to other
parties.
We'll start by discussing the fiduciary duties an agent owes to the principal, then look at the
duties an agent owes to other parties.
There are five fiduciary duties:
-utmost care;
-obedience and good faith;
-accounting;
-loyalty; and
-disclosure of material facts
You owe these five fiduciary duties to your principal from the time the agency relationship
begins through the closing of the transaction, or sometimes even after the transaction has
terminated.
You owe these agency duties regardless of whether your principal is the buyer or the seller.
Creating an agency relationship
Real estate agency duties to principal
Cooperation and compensation' clause
Real Estate Agency Duties
, Definition 5 of 83
-Vicarious liability
-Imputed knowledget
-In California: Principal is assumed to know what agent knows
If an agent negligently or intentionallys fails to live up to his agency responsibilities and duties,
he may find himself liable for the harm he causes.
A principal may also be held liable for harm caused by her agent's actions.
Let's look at two concepts related to liability in an agency relationship:
-imputed
-knowledge
-vicarious liability
Vicarious liability
Liability and agency
Loyalty and confidentiality
Obedience and good faith
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