Chapter 2 Law of Agency and Broker Ethics1 New Jersey Real Estate for Salespersons and Brokers By Marcia Darvin Spada Thomson/South-Western Copyright, 2006

Chapter 2 Law of Agency and Broker Ethics2 Chapter 2 Law of Agency and Broker Ethics

Chapter 2 Law of Agency and Broker Ethics3 Chapter 2 Key Terms  Agent  Client  Consumer Information Statement  Cooperating agent  Customer  Dual agency/  Disclosed dual agent  Fiduciary  Property condition disclosure  Self-dealing  Special agent  Subagents  Transaction broker  Vicarious liability

Chapter 2 Law of Agency and Broker Ethics4 Agency Relationships Principal Customer Agent

Chapter 2 Law of Agency and Broker Ethics5 Creation of Agency AGENCY AGREEMENT Implied- Actions of the parties Express- Oral or written

Chapter 2 Law of Agency and Broker Ethics6 Types of Agency  Single agent  Seller agent  Subagent  Disclosed dual agent  Buyer Agent  Cooperating Agent  Transaction broker

Chapter 2 Law of Agency and Broker Ethics7 Broker Ethics Fiduciary Responsibilities Reasonable Care Undivided Loyalty Confidentiality Full Disclosure

Chapter 2 Law of Agency and Broker Ethics8 Seller Property Condition Disclosure Presented before buyer signs contract of sale  May help protect licensees from liability Disclosure Statement Completed By Seller Presented to buyer Optional Statement

Chapter 2 Law of Agency and Broker Ethics9 The Consumer Information Statement Used for: Sale of 1-4 unit residential property Sale of vacant 1-family lots Residential lease transactions (except short-term rentals) Brokerage agreements on residential properties

Chapter 2 Law of Agency and Broker Ethics10 Business Relationships Brokerage agreements must indicate business relationships a licensee may have with the other party in the agreement.  Seller’s agent only  Buyer’s agent only  Seller’s agent and disclosed dual agent if opportunity arises  Buyer’s agent and disclosed dual agent if opportunity arises  Transaction broker only  Seller’s agent on property for which the firm acts as the seller’s agent and transaction broker on other properties

Chapter 2 Law of Agency and Broker Ethics11 Broker Ethics and Antitrust Laws Federal Antitrust Laws and Agencies Sherman Act (1890)Clayton Act (1914) Federal Trade Commission U.S. Dept. of Justice

Chapter 2 Law of Agency and Broker Ethics12 Types of Restraints of Trade Price fixing Group boycotts Market allocation agreements Tie-in arrangements