law test 2 cheat sheet

law test 2 cheat sheet - A real estate broker is a person...

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A real estate broker is a person hired to negotiate a sale or purchase of real estate for a commission. Real estate brokers are required to be licensed by the state in which they transact business. A listing agreement is the contract of retention between the seller or purchaser of real estate and the broker. The listing agreement is required to be in writing pursuant to the statute of frauds. There are three basic types of listing agreements. An exclusive right to sell arises where the broker is entitled to a commission even when the owner or another broker is the procuring cause of sale. An exclusive agency arises when the owner is free to sell the property without incurring liability for the broker’s commission (if another agent sells it, still pay commission). A broker is not entitled to a commission in an open listing arrangement where the owner or another broker is the procuring cause of sale. A broker is entitled to a commission if he or she is the procuring cause of the sale. The commission should be established at the time that the listing agreement is entered into and is usually set as a percentage of the gross sales price. The commission is deemed earned if the broker succeeds in locating a buyer who is ready, willing and able to purchase the property. A commission is due even if the seller or buyer backs out of the sales transaction or is otherwise unable to perform. Real estate brokers are in a fiduciary relationship (a relationship of special trust and absolute loyalty) with their principals. A breach of this duty may occur when the broker informs a prospective purchaser that the seller will accept less than the list price for the property (Haynes v. Rogers). A breach may also occur if the broker receives a secret commission from the prospective purchaser in return for securing a lower sales price from the seller. Brokers also owe prospective purchasers a duty to disclose facts materially affecting the value or desirability of the offered property. The facts that must be disclosed are those facts actually known to the seller and broker and those facts that should have been known to them through the exercise of reasonable diligence. Real estate brokers must also refrain from offering legal advice to their principals or others. In this respect, brokers are permitted to fill in the blanks contained in standard real estate forms but may not give legal advice. Federal and state laws also prohibit brokers and their principals from discriminating in the public or private sale or rental of real property. The Fair Housing Act of 1968 prohibits discrimination in the rental or sale of property on the basis of race, color, religion, sex, national origin, disability, economic hardship or family status. Among the prohibitions contained in this federal statute are refusals to sell, deal or negotiate, discrimination in terms and advertising, blockbusting, using intimidation or coercion to dissuade prospective purchasers and discriminating in the procurement of financing or insurance. Principals are directly responsible for any
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