Chapter 6_updated

Chapter 6_updated - Chapter 6: The Law of Agency Hua Sun...

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Unformatted text preview: Chapter 6: The Law of Agency Hua Sun Department of Accounting and Finance California State University, San Bernardino Feb 3, 2009 Hua Sun (CSUSB) The Law of Agency Feb 3, 2009 1 / 46 The Concept of Agency Most of the agency laws are covered by California Civil Code. An agent represents a principal in dealings with a third person. I Power of attorney authorizes an agent to act in the capacity of the principal. F Special power of attorney applies to a specific act or acts. F General power of attorney applies to all business or other dealings of the principal. I Real estate practice involves many overlapping agency relationships. I seller (buyer) v.s broker; broker v.s associated salesperson; principal broker v.s associated broker Who may take part in an agency relationship I A principal must have legal ability to enter a contract, although role of agent has greater flexibility. I A real estate agent must be licensed by the state (and be at least 18 years old). Special agent versus general agent I Special agent carries out specific act or transaction. General agent not limited to single act or transaction. Hua Sun (CSUSB) The Law of Agency Feb 3, 2009 2 / 46 The Concept of Agency: Discussion Broker Bob is engaged by Ramon to sell his home. I Broker Bob is a special agent for that purpose. The agency relationship will terminate when Bob sells the house. Broker Bob appoints Sally as a salesperson. I Salesperson Sally is a general agent for Broker Bob, because of the broad authority given to Sally on dealing with brokerage business. Hua Sun (CSUSB) The Law of Agency Feb 3, 2009 3 / 46 The Concept of Agency Delegating authority: authorization by principal is required in general I A subagent assists the agent. I Clerical or administrative subagent needs not to be authorized by principal. I A cooperating broker is a broker other than the listing broker who sells the listed property. F Historically, cooperating broker is treated as subagent of seller. (buyer is assisted by the cooperating broker) F Currently, listing agreement stipulates whether owner has made subagency optional or mandatory (via MLS service). F If unauthorized by listing agreement, cooperating brokers are agents of listing broker or the agent of buyer (if specified in an agency agreement). I Cooperating split is division of compensation between listing broker and cooperating (selling) broker. I Multiple listing service (MLS) enables broker participants to share information on properties. I Pocket listing is a violation of MLS, can be done only with sellers authorization. Hua Sun (CSUSB) The Law of Agency Feb 3, 2009 4 / 46 The Concept of Agency: Discussion Broker Maya employs an administrative assistant, who performs secretarial duties that doesnt require a real estate license. Broker Maya employs his assistant without approval of his clients. Is there a problem?...
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Chapter 6_updated - Chapter 6: The Law of Agency Hua Sun...

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