1. Real Estate Principles Tenth Edition Real Estate: An Introduction to the Profession Tenth Edition

2. Chapter 21 The Principal-Broker Relationship: Agency _________________________________

3. 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

4. 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.

5. Commission Skills and Knowledge Principal Agent Agency Relationship

6. Care Obedience Accounting Loyalty (Competence and expertise) (Lawful instructions) (For funds received) (Principal’s interest first) Broker’s Obligation to Principal

7. Said without checking the facts Not said and facts not checked Said wrongly to mislead Unsaid in order to mislead A Facts Broker Knows B Facts Broker Does not know Disclosure Liability

8. Red Flags “As Is” Puffing Lead-based paint disclosure on homes built prior to 1978 Home Inspections

9. 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.

10. 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.

11. Information Owner disclosure information Interstate land disclosure statements Antitrust laws Price fixing Boycotting Errors and Omission insurance

12. Key Terms Agent Boycotting Commingling Dual agency Middleman Ostensible authority Price fixing Principal Puffing Third parties