CA Real Estate Law Chapter 2

Agent - Principal

is one who acts for or represents another, called the principal in delings with a third person - AGENCY RELATIONSHIP

General Agent

has the authority to perform all necessary acts for the principal within a specified area
has broad powers to act for the principal

Special Agent

Specified agent is limited to those acts specifically set forth in teh agency agreement
RE agent is normally a special agent of an owner with authority to locate a buyer for a property or a property for a buyer

Power of Attorney

- is a written agreement whereby a principal appoints an agent known as an ATTORNEY IN FACT to act in their place
- normally given for specific purposes - to sign a deed when the owner isn't available - SPECIFIC POWER OF ATTORNEY
- GENERAL POWER OF ATTORN

Express Agency

-is an agency created by a specific agreement - either written or oral
- most agencies are express agencies
- listings are the written agency agreements used to authorize an agent to procure buyers or lessees or to locate property for purchase or lease or

Implied Agency

- most agencies are express agencies created by a written or oral agreement
- an implied agreement is not the result of a stated agreement but is created by the actions of the parties that indicate reasonable intent to form an agency
- agents should know

Ostensible Agency

- an agency is either actual or ostensible
- if one person causes others to believe that another person is their agent when it isn't true - the courts can declare the principal bound due to the existence of an apparent or ostensible agency
- an agency is

Agency of Estoppel

- when an ostensible agency is created and a third person reasonable acts to that person's detriment based on the belief of the existence of the agency - the person who allowed the ostensible agency to exist would be estoppel (barred) from denying the exi

Agency by Ratification

- by accepting the benefits of an agreement made by an unauthorized agent or by an agent who has exceeded their authority >> a prinicpal can form an agency by ratification
- if a principal had the authority to permit the unauthorized act at the time it wa

Dual Agency

- a dual agency exists when an agent represents two principals who are negotiating with each other and have conflicting interests
- any conduct that reasonable leads a buyer to believe that a seller's agent is representing both buyer and seller might crea

Agency Disclosure

- bc of misunderstandings by buyers/sellers as to whom the agent represents and what the agency duties are - CA now requires the agent to provide a written agency disclosure to the parties for the sale/purchase/exchange/or lease of 1-4 units and mobile ho

3 Steps with Agency Disclosure

-- Disclose -- written explanation of the types of agency relationships that are possible
-- Elect -- a decision about the type of agency relationship for the transaction
-- Confirm -- written signed confirmation of agency - usually part of purchase agree

Facilitator Position for a Broker

- some states allow a broker to take on this position - broker isn't considered an agent but rather a third party middleman w/ no advocacy or fiduciary duties to either buyer/seller
- broker still has duties of confidentiality w/ info received from either

Dual Agency rules

- compensation is an indication of an agency >> an agent need not be compensated for an agency relationship to exist
- the fact that the buyer doesn't directly pay the broker doesn't mean that the broker is not the buyer's agent
- broker who acts for more

Designated Agency

- one agent in a brokerage office represents the buyer - another agent in the same office represents the seller
- creates possible conflict of interest bc both agents are under the same broker
- CA doesn't authorize designated agencies

Burden of Proof of Agency

- is on the person who seeks to benefit by the existence of the agency
ie an agent seeking compensation from a principal or a principal who wishes to prove that a person was in fact their agent to establish the existence of agency duties

Express Authority

- agents have the stated authority given to them in teh agency agreement- EXPRESS AUTHORITY

Equal Dignities Rule

- a person can't orally authorize an agent to perform an act that is required to be in writing
- if the statute of frauds requires the act to be in writing - the agency agreements - such as listings and sales contracts must be in writing to eb legally enf

Implied Authority

- agents have implied authority to perform the acts reasonably necessary to accomplish the purpose of the agency

Customary Authority

- authority implied by the agent's position
- a person dealing with an agent could assume that the agent has the authority customary for such an agency
- secret limitations on the agent's authority that aren't known by persons dealing with the agent do no

Delegation of Agent's Authority

- unless expressly authorized by the principal - an agent doesn't have authority to delegate agency duties
Exceptions: mechanical acts (erecting signs, making repairs), acts the agent cannot lawfully perform (attorney acts), acts that commonly are delegat

Fiduciary Duty - Duties of an Agent

- an agent has a duty of trust and must protect the principal's interests
- agent must act in a manner that is consistent with the best interests of the principal
- agent must not obtain any advantage over the principal by misrepresentation, duress, or ad

Dual Agency Situation - agent is obliged to both Seller and Buyer as follows:

- a fiduciary duty of utmost care, integrity, and loyalty in any delaings with either the buyer or seller
- duty to exercise diligent, reasonable skill and care in the performance of the agent's duties
- a duty of honesty, fair dealings, and good faith
-

Full Disclosure - Fiduciary Duty

- notice to an agent = notice to the principal
- agent has a duty to inform the principal of any facts that would be likely to influence the principal in making a decision
- unless instructed by the owner to not present such an offer, or unless the offer

Due Care

- agent must exercise reasonable or due care in carrying out the duties of the agency
- RE agents' duties are based on their having the higher knowledge and skills required of a RE licensee

Loyalty

- agent can't (w/o permission) disclose to third parties any confidential facts about the principal or agency that would not be in the principal's best interests - duty continues even after the agency has terminated
- dual agent can't disclose to one prin

Honesty

- agent must fully disclose all material facts to the principal
- agent must do so in a fair and honest manner so as not to prejudice the judgement of the principal
- agency duty of fairness and honesty extends to all persons the agent is dealing

Accounting

- agent has a duty to account for all funds received or disbursed and must remit funds due the principal in a prompt manner

Integrity

- agent's moral conduct in dealing must be beyond reproach
- agent should strive to eliminate even the appearance of conflict of interest
- others should be able to rely on the agent's word
- agent cannot compete with the principal - a buyer's agent may n

Obedience

- agent has a duty to obey the lawful instructions of the principal
- agent who fails to obey lawful instructions or exceeds the authority granted could be held liable for resulting damages

Agent's Duty to Third Persons

- agent has a duty of honest and fair dealings with others
- principal and agent could be held liable for the agent's misrepresentation, fraud, or failure to disclose to third party detrimental info that the agent knew or should have known
- an agent who

Tort - Liability of Agents

- its a civil wrong or violation of a duty - agents are personally liable for their torts and crimes even when committed at the direction of the principal
- Civil Wrongs - TORTS - include libel, slander, trespass, negligent injurty to others, assault
^^ p

Liability of Agents

- agent who doesn't disclose to third parties that they are acting in an agency capacity - can be held personally liable by the third party
- a third party who suffers injury bc of a breach of contract can seek recovery from teh agent or principal - not b

Liability of Principals

- Respondeat Superior - a master is liable for the actions of servants or employees
- Vicarious liability - created not by an act of the principal but bc the agent was acting for the principal -- principal is liable for the acts or omissions of a RE agent

Breach of Agency

- either the principal or teh agent might breach the agency
- principal wrongfully terminates the agency agreement - the agent is entitled to damages
- listing contracts provide for full commission should the principal wrongfully terminate
- agent can't f

Termination of Agency

1. Expiration of its term
2. Extinction of the subject matter - ex destruciton of the property
3. Death - death of either principal or agent terminates the agency
4. Renunciation - either the principal or the agent can renounce the agency - that party cou

Agency Coupled with an Interest

- agent has an interest in the subject matter of the agency - agency is created to benefit the agent or a third party
- an agent who has an interest in a property -- the interest can't be terminated by death, incapacity, or by unilateral acts by prinipal