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Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 16: Agency in Real Estate.

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Presentation on theme: "Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 16: Agency in Real Estate."— Presentation transcript:

1 Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 16: Agency in Real Estate

2 16Agency Learning objectives –Identify various types of agency relationships common in the real estate profession and the characteristics of each –Describe the fiduciary duties involved in an agency relationship –Explain the process by which agency is created and terminated and the role of disclosure in agency relationships –Distinguish the duties owed by an agent to his or her client from those owed to customers –Define key terms 2 ©2012 Kaplan, Inc.

3 16Agency Real estate agency –Common-law history –Definitions: Agent Principal Agency Fiduciary Client Customer Nonagent In Pennsylvania –Consumer is recipient of any real estate service who may engage a real estate broker –Section 201 3 ©2012 Kaplan, Inc.

4 16Agency 4 ©2012 Kaplan, Inc.

5 16Agency Creation of agency –Agency relationships Express agency Implied agency Agency coupled with an interest Compensation –Client versus customer care Client is principal Agent is party hired Customer entitled to factual information, but not fiduciary duties 5 ©2012 Kaplan, Inc.

6 16Agency Fiduciary duties of an agent –Care –Obedience –Loyalty –Disclosure In Pennsylvania: must disclose any person interest Must disclose material facts –Accounting –Confidentiality In Pennsylvania: confidentiality extends beyond expiration of relationship 6 ©2012 Kaplan, Inc.

7 16Agency Termination of agency –Completion, performance, fulfillment –Death or incapacity of either party –Destruction or condemnation of property –Expiration of the terms –Mutual agreement by all parties –Breach by one of the parties –By operation of law 7 ©2012 Kaplan, Inc.

8 16Agency Limitations on authority –Universal agent Empowered to do anything the principal could do personally –General agent Represents the principal in a broad range of matters related to a particular business or activity –Special agent Authorized to represent the principal in one specific act or business transaction under detailed instructions 8 ©2012 Kaplan, Inc.

9 16Agency In Pennsylvania –Agent of buyer/tenant –Agent of seller/landlord –Dual agent for both parties in the same transaction –Transaction licensee (nonagent) 9 ©2012 Kaplan, Inc.

10 16Agency 10 ©2012 Kaplan, Inc. Single Agency

11 16Agency Types of agency relationships –Single agency Seller as principal Buyer as principal Landlord as principal Tenant as principal –Dual agency Disclosed dual agency Designated agency Undisclosed dual agency 11 ©2012 Kaplan, Inc.

12 16Agency Types of agency relationships –Nonagency –In Pennsylvania, licensee can provide the following: Communication Document preparation services Disclosure of known defects in property No negotiations Limited confidentiality 12 ©2012 Kaplan, Inc.

13 16Agency Consumer Notice –First substantive contact or first interview –Before providing any services –Before entering into agency agreement –Before entering into agreement of sale –Before learning any confidential information 13 ©2012 Kaplan, Inc.

14 16Agency Required in phone or e-mail –The real estate law requires that I provide you with a written consumer notice that describes the various business relationship choices that you may have with a real estate licensee. Since we are discussing real estate without you having the benefit of the Consumer Notice, I have the duty to advise you that any information you give me at this time is not considered to be confidential, and any information you give me will not be considered confidential unless and until you and I enter into a business relationship. At our first meeting I will provide you with a written Consumer Notice which explains those business relationships and my corresponding duties to you. 14 ©2012 Kaplan, Inc.

15 16Agency Customer-level services –Reasonable care and skill in performance –Honest and fair dealing –Disclosure of all facts the licensee knows (or should be expected to know) that materially affect the value or desirability of the property –State law may require additional services or disclosures 15 ©2012 Kaplan, Inc.

16 16Agency Environmental hazards Sellers must disclose –Lead-based paint hazards (properties built before 1978) –Sellers must complete Seller Property Disclosure Statement –Required for one- to four-family dwellings Buyers are responsible for discovery 16 ©2012 Kaplan, Inc.

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