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welcome to audio quizlets my name is lisa mark and i am here to walk you through an audio version of my quizlets that i created for the humber real estate salesperson program i'm a student like you and i found these notes to be really helpful before i took each of my exams here are some tips on how to use this course it was designed so that you could passively listen at first at the gym or in the car just listen take in all the information and make sure you understand it rewind and repeat sections if you don't understand it the first time i pause in between each part where thinking is required if you hear me pause you should be thinking about the information i just said this will help you retain the information then when you're comfortable with the content covered i want you to sit down with no distractions around and re-listen to each module again when i ask a question i want you to hit pause think about it try to answer the question on your own then hit play to hear the answer see how you do i want you to repeat this process until you feel comfortable enough to take your exam anyway those are my tips i hope they are helpful good luck now let's get to module one course two module one explaining services available to a seller or a buyer under ontario law how is an agency relationship defined it's the relationship between two parties in which one party the agent accepts responsibility for representing the other party the principal in dealing with a third party while common law uses the terms principal and third party what terms does riba use instead client and customer the underlying relationship of the brokerage salesperson seller and buyer is based on what the common law of agency in relation to a contract how is a third party defined as someone who is not directly connected with a legal transaction but may be affected by it or supporting one of the people involved for example a lawyer home inspector etc under reba what is the equivalent for the legislative term for agency representation in a real estate transaction who is the agent the brokerage in a real estate transaction who is usually the principal a seller or a buyer agency is also known as what representation a listing or seller agency agreement or a buyer agency agreement is also known as what a representation agreement an agreement of purchase and sale is also known as what an agreement or the conveyance of an interest in real estate dual agency is also known as what multiple representation what is another word for purchase acquisition what is another word for sale divestiture who are the parties to a real estate transaction the seller and buyer what type of relationship does a sales person have with their brokerage from a legal perspective an employee slash employer relationship with authorization to trade on behalf of their respective brokerages once an agency relationship is established between a brokerage and a client does the agreement apply to all brokers and salespersons employed by the brokerage yes everyone must protect the client's best interests define brokerage according to reba the agent who is authorized to trade in real estate on behalf of others don't forget the agent is actually the brokerage not the salesperson this is a common misconception a principal is also known as what a client what is a principle it's someone who authorizes an agent to act on their behalf in an agency relationship and provides information and lawful instructions to the agent regarding the transaction when a brokerage represents a seller when listing a property who is the principal the seller when a brokerage represents a buyer when showing properties for sale who is the principal the buyer what is the comparable term to third party under reba a customer representing only the seller would consider a buyer as what a third party what does fiduciary refer to in relation to a representation agreement a relationship of trust with one or more parties an agent meaning the brokerage as a fiduciary has the legal obligation to do what act in the principal's best interests so this could be the seller or the buyer depending on who their client is in a fiduciary relationship what are the agents obligations to the principal also known as the client full disclosure of all facts known obedience they must obey the lawful instructions of the principle confidentiality all info that is confidential will not be disclosed competence to provide all services competently and accounting responsibility of handling all documents and funds related to the transaction define authority in legal terms it's the legal power or right given by a principal and accepted by the agent to act on the principal's behalf in business transactions with a third party and is typically analyzed in terms of actual and implied authorities what is an example of actual authority a seller gives the brokerage authority to offer their property for sale what is an example of implied authority the brokerage will determine the best marketing methods to offer the property for sale it's not specified in detail in the contract but allows the agent to get the job done properly this is why it's implied because it's not literally spelled out under reba what is single agency called single representation define a single agency relationship when there's one agent a brokerage representing one principal a seller or buyer within a transaction with a third party define a dual agency relationship there is one agent a brokerage representing two or more principals sellers and or buyers within the same transaction what is dual agency called under reba multiple representation which is a form of concurrent representation what is the legal term used when a brokerage represents two clients for example two competing buyers at the same time concurrent representation which is also known as multiple representation under common law how can you legally enter into an agreement verbally or in writing what is required by reba to enter into an agreement a written agreement what is an implied agreement it's an agreement created by the words and actions of one party which leads the other party to believe there is an agency relationship when no formal acknowledgement of the relationship exists therefore it's an implied agreement what are the three recognized forms of agreement written verbal and implied under common law but not reba what are the three ways an agreement can be formed by ratification by estoppel or by operation of law define an agency relationship by ratification it's when the authority is granted retroactively for example the agent has acted without authority or in excess of the authority granted the principal then agrees to be bound by such unauthorized actions this is an agency relationship by ratification define an agency relationship by estoppel it's when a principal leads a third party to believe that they are being represented by the agent and that the agent has the authority to act on behalf of the principal for example a principal acts like they already have a relationship with the brokerage it must be provable by words or actions that the brokerage has the authority this is an agency relationship created by estoppel define an agency relationship by operation of law when a duty created by circumstance is imposed on an agent to act on behalf of the principal where previously no agency relationship existed this relationship is based on established legal principles rather than by formal agreement this is rare but happens in emergency situations again this is an agency relationship as defined by operation of law in what ways can an agency relationship be terminated by an agreement completion of performance which is automatic once the obligations of the agreement are fulfilled mutual agreement a cancellation form is signed by both parties expiry or revocation which may be either lawful or unlawful if a brokerage isn't at fault for failing to provide services cancellation by principle is unlawful and they could be liable for damages in what ways can an agency relationship be terminated by operation of law impossibility of performance for example the subject matter of the agency ceases to exist like if a fire destroys the house it's impossible to sell it isn't it this is impossibility of performance illegality so the agency's purpose or relationship is unlawful for example fraud or the brokerage's ceasing operations and won't be registered any longer agency relationships can be terminated by operation of law if death mental incapacity or bankruptcy happens in real estate when does termination of an agency agreement happen after completion or performance when the sale is completed not when an offer is accepted a seller or buyer representation agreement is required to have both what dates an effective date and an expiration date if a salesperson's registration under reba is terminated during a sale what happens to the agreement with a buyer who was working with that salesperson nothing remember the agreement is between the brokerage and the buyer not the sales person themselves another salesperson would just take over the transaction after an agreement is terminated there are continuing responsibilities to the principle based on the fiduciary obligations owed under the relationship what fiduciary obligations are still owed to the principal even after termination of an agency relationship confidentiality of personal information maintaining utmost loyalty and protecting the principal's best interests what document details the actual authorities granted by a buyer or seller a representation agreement what is the actual authority it's the specific activity the brokerage is permitted to perform what is the implied authority this allows the brokerage to complete the task properly efficiently and competently a seller grants express authority to a brokerage to offer their property for sale what are some examples of a seller's express authorities to a brokerage allowing buyers to fully inspect the property placing a for sale or sold sign on the property and giving the exclusive authority to make all advertising decisions to the brokerage these are express authorities granted by a seller to a brokerage when their property is for sale a buyer grants express authority to the brokerage to seek out suitable properties for the buyer to view what are some examples of a buyer's express authorities to a brokerage to locate a suitable property the brokerage's entitlement to receive and retain a commission paid by the seller or the listing brokerage and providing information as needed to third parties retained by the buyer to assist in the transaction these are express authorities given by the buyer when they sign a buyer representation agreement what are some examples of implied authority consented to by a seller delegation so the brokerage delegates activities to salespersons to carry out the seller's instructions showings and negotiations deposit or trust account notices for example a notice received by a brokerage that a buyer has fulfilled a condition in an offer and is deemed to be notice received by the seller these are all implied authorities consented to by a seller when they sign a seller listing agreement what are some examples of implied authority consented to by a buyer delegation so the brokerage delegates activities to salespersons to carry out the buyer's instructions relevant fax and presentation where the brokerage obtains and presents relevant facts for consideration negotiations the brokerage arranges showings and assists in negotiations and notices for example a notice received by a brokerage that an offer has been accepted is deemed to be notice received by the buyer these are all examples of implied authority consented to by a buyer what are the consequences if an agent acts outside of the scope of the authority granted the agent could be liable to the principal for any injuries or for breach of contract does a brokerage or salesperson have the authority to sign a contract on behalf of a principal no unless precise and clear authority is granted but even with approval this can put the brokerage in a position with legal ramifications so a brokerage would first ask for an extension to the offer so that the seller can sign themselves as this is much less risky even though delegation of duties is an implied authority what is a brokerage not allowed to do under agency law involve other brokerages in the marketing or selling process the agency obligation is particular to that original brokerage only delegation such as this would need to be documented in a listing agreement true or false brokerages have an implied authority to receive all or part of the purchase price false they can only receive a deposit relating to the purchase which is now considered monies held in trust for the seller upon completion of the transaction the buyer receives a credit towards the purchase price for the deposit amount the deposit monies themselves are usually applied later to the commission owed by the seller to the brokerage true or false a brokerage cannot incur expenses on behalf of the principal or seek reimbursement without express authority true typically an agreement with a principal will identify the commission or remuneration paid to the brokerage which includes any expenses incurred if the principal requests extra services for example alternate forms of advertising the agent can seek additional reimbursement but only if agreed to by the principal what duties does the principal owe to the agent the duty of indemnification the duty of remuneration and the duty regarding any other obligations agreed to define duty of indemnification the agent must act according to the lawful instructions of the principle and in doing so may not be held responsible for any liability claim loss cost damage or injury resulting from these acts as a general rule of agency the principal must compensate an agent for loss or damage incurred in carrying out lawful acts a buyer completes the purchase of a property but shortly after taking possession discovers that there is a latent defect to the land or improvements is the brokerage liable no the brokerage should be indemnified as the buyer was required to make their own enquiries to confirm the condition of the property this is an example of duty of indemnification however if the agent acts unlawfully or negligently or is in breach of duty the principal has no duty to indemnify the agent defined duty of remuneration it's the obligation of the principal to pay the brokerage for the services agreed to and provided as part of the agency relationship between the parties essentially it's the right to get paid define duty regarding any other obligations agreed to the principal must perform any other obligations as agreed to by both parties in the representation agreement it's strongly recommended that any other obligations be formally documented in the representation agreement rather than agreed to verbally in order to avoid any misunderstandings what does the phrase duty of care refer to it's the standard of care and skill provided by a salesperson to a client or customer what limited responsibilities are owed to a customer under duty of care to provide information to perform functions if any and limited disclosure and privacy obligations an important note customers are not given advice as the act of providing advice can unintentionally alter a customer relationship to that of a client this is an important distinction remember customers do not get advice from the sales person what responsibilities are owed to a client under duty of care this involves everything done for that client including providing advice what are two examples of disclosures that must be made to a customer any material facts known or that ought to be known by the salesperson and any direct or indirect interest held by the salesperson or brokerage related to a trade what are some ways of ensuring duty of care as a salesperson seek advice be aware of your limitations and recommend third-party experts accuracy and documentation making sure contracts are worded properly etc being informed staying up to date on relevant issues impacting property ownership zoning taxation etc and making inquiries don't rely on info from others do your due diligence and confirm accuracy of the information what are the general obligations of a brokerage and sales person owed to a client to exercise care and skill to ensure honesty to perform mandate to obey instructions when lawful to act in person to negotiate favorable terms to maintain confidentiality and to disclose information what are the general obligations a brokerage and sales person owes to a customer there's only two exercise care and skill and ensure honesty list the fiduciary obligations owed to clients to not misuse confidential information not make a secret profit to maintain the utmost loyalty to disclose conflicts and to avoid conflicts of interest these are the fiduciary obligations owed to clients fiduciary obligations are based on what three fundamental premises loyalty the client's best interests are always taking priority here best interests and trust and confidence the client relies on advice given what obligations are owed to clients and customers under reba disclosure agency relationship forms to deliver agreements offers and statements as soon as possible to account so keeping proper records regarding money etc and safeguarding the deposit by placing it into a trust account remuneration provisions for example allowable commission structures as we learned in course one and not to induce breach or make certain promises these are all obligations owed to clients and customers under reba what is a real estate trust ledger used for it's used to maintain a written record of all monies received and held in trust and every transaction relating to that money for example disbursement of the funds and interest earned can you verbally promise a client something no it must be in writing signed by the person making the guarantee and delivered to the party to whom the guarantee is made how soon must a copy of the representation or listing agreement be given to the client or customer after signing immediately the next day even is prohibited also an important note if there is more than one seller or buyer they each need their own copy what is the minimum content to be included in any written representation or customer service agreement the start and expiry date commission obligations description of the service options available and services to be provided by the brokerage under the agreement how quickly must a signed copy of the agreement of purchase and sale be provided to the client or customer at the earliest opportunity for example the next day is okay it's not like a representation or a listing agreement single representation is to single agency as multiple representation is to what dual agency what are the two categories of representation single representation and multiple representation if a brokerage represents two or more principles for example the seller and buyer within the same transaction this is known as what multiple representation what are the basic obligations under a seller single representation to market the property and promote the seller's best interests advise the buyer that the brokerage is the representative of the seller to act as the seller's representative to obey lawful instructions and fulfill fiduciary obligations to exercise reasonable care and skill and to negotiate favorable terms for the client to disclose material facts to buyers timely presentation of offers and counter offers to discover and disclose all relevant and material facts to the seller to keep seller fully informed to obtain expert advice and to comply with regulatory requirements these are all the basic obligations under a seller single representation what are the basic obligations under a buyer single representation to locate property and promote the buyer's best interests to advise the seller that the brokerage is the representative of the buyer to obey lawful instructions and fulfill fiduciary obligations to exercise reasonable care and skill to seek out available properties and discover and disclose all relevant and material facts about those properties to obtain expert advice timely presentation of offers and counter offers to keep the buyer informed and disclose competing offers to negotiate favorable terms and to comply with regulatory requirements these are all basic obligations under a buyer single representation what happens if written consent is not provided by all parties for multiple representation the brokerage is required to release one of the clients from their agreement so they can seek representation elsewhere what information cannot be disclosed unless instructed in writing to do so by the client during multiple representation the amount the seller might accept for example an amount other than the listing price the amount the buyer might pay the motivation behind the seller's listing of the property or the buyer's purchase of the property the personal information of the seller or buyer and any information related to previous negotiations of the property for example the terms of an offer received by the seller may not be disclosed to the buyer what are the two chronological steps undertaken during multiple representation disclosure before a representation agreement and disclosure before an offer what must be explained to the client about multiple representation before an offer is made the fact that the brokerage proposes to represent more than one client in respect of the same trade and the differences between the obligations the brokerage would have if it represented only one client in respect of the trade including any differences relating to the disclosure of information or the services that the brokerage would provide if a seller is working with abc realty and a buyer is working with abc realty as a customer is this an example of single or multiple representation single a customer versus a client is being provided services by the brokerage not representation when dealing with a property that is for sale by owner a seller's brokerage will sign a customer service agreement with the seller what is this agreement used for to confirm the brokerage is not the representative of the seller to provide the brokerage with the authority to obtain additional information about the property to detail the commission to be paid by the seller and to obtain authorization to apply the deposit to reduce the commission payable during a private sale of a property when is a customer service agreement typically signed by a brokerage and the seller before showing the property to a buyer what are two reasons a customer service agreement might be signed with a buyer the seller is represented by the brokerage already therefore this would avoid multiple representation and a buyer selects to receive services only rather than being represented as a client these are two reasons a customer service agreement might be signed with a buyer what is a customer service agreement with a buyer used for to confirm that no commission is paid for any customer service provided by the brokerage unless otherwise agreed to and it also confirms the brokerage is not the representative of the buyer what is the minimum required information that must be given to a seller or buyer before an agreement can be signed service alternatives services being provided multiple representation representation and obligations representation and customer service service limitations and obtaining written acknowledgement what are the benefits of defining and documenting services as soon as possible to avoid situations where an implied agreement is unintentionally created based on the words and actions of a salesperson and to reduce the risks inherent in a seller or buyer misunderstanding the services to be provided what steps are required by a sales person to ensure due diligence when representing a seller confirming the seller has made all necessary disclosures as required by law discovering all relevant information and material facts regarding the transaction making appropriate disclosures to other parties as required demonstrating competence skill and judgment when providing opinions advice or information and referring a seller to a third-party professional when the advice or opinion is beyond the education or experience of a salesperson when do due diligence obligations begin with a seller before any relationship has been established what are some property features that should be noted during a visual walk through the lot meaning the size shape landscaping and quality of any improvement such as fence or deck the structure the age condition and overall appeal of it the features and benefits so upgrades renovations and unique aspects which would be highlighted in the listing and concerns meaning defects safety hazards and repairs needed to enhance the property's marketability who selects the listing price of a property the seller the sales person can give their advice to a client about pricing and give comparative market analysis but it's really the seller's choice in the end what type of selling cost should a salesperson make a seller aware of moving fees legal fees and the commission to the brokerage including applicable hst define the irrevocable time period it's a time and date included in an offer which identifies the length of time the party has to accept the offer when the irrevocable time period runs out that offer is null and void who will dictate the manner in which an offer is presented the seller how long can an irrevocable time period be anywhere from several hours to several days what are the four potential outcomes in a negotiation scenario win win win lose lose lose or no outcome when does sub-agency occur this happens when the seller is a client of the listing brokerage and a cooperating brokerage has a buyer who is a customer what is sub-agency it's extending the ability to represent the principal to another brokerage the other brokerage would then be deemed a sub agent and they now owe fiduciary duties to the principal what are three reasons a seller might choose to be a customer instead of a client if the seller has previous experience in selling property if the seller would like to sell privately as for sale by owner but would like to let people know it's available by putting it on the mls and cost savings associated with reduced services cost should a salesperson inform a buyer about when purchasing their new home legal fees land transfer tax and closing costs when is it particularly important to verify all the information provided by a seller about a property when the property is for sale by owner because there is no brokerage working with the seller who would have confirmed these details first what services can a sales person offer when a buyer is at the offer stage preparing offers and advising on conditions clauses and other terms attending the offer presentation whenever possible to promote the buyer's best interests versus sending the offer to the listing salesperson via email and negotiating the offer on behalf of the buyer what limitations are there when a buyer is a customer no obligation by the salesperson to research or verify property defects the salesperson can't provide advice to a customer including what price to offer or what terms to include in an offer there is no obligation to act in the best interests of the customer buyer but they are still required to treat the buyer fairly honestly and with integrity and there's no obligation to keep the buyer's information confidential a salesperson must tell their seller client everything they know about the buyer customer but the buyer must be told this in advance before any information is shared what does the code of ethics dictate about communication with a client of another brokerage that communication must only happen through the sales person from the other brokerage never the client directly there is one exception if the listing brokerage has given written permission for a salesperson to communicate directly with their client if your brokerage is representing a client but they are working with another salesperson can you contact them directly you should only communicate through their salesperson even if they are with the same brokerage as you just a note though this isn't actually part of the code of ethics but it's generally an accepted best practice if a person approaches you directly and indicates they are unhappy with their brokerage can you encourage them to cancel their agreement and sign with you instead no the code of ethics strictly prohibits you from encouraging a client of another salesperson or brokerage to break an existing contract can a salesperson encourage a buyer to break an existing agreement of purchase and sale if it means that a buyer might buy their own listing instead no this is forbidden by the code of ethics congratulations you have completed module 1 explaining services available to a seller or buyer you