This concludes Chapter 11. Below is a brief summary which you can review before you take your chapter quiz. 

An Agent is a person who is empowered by contract to represent the interest of someone called a Principal. The relationship between the two is called an agency relationship and the agent is called a Fiduciary.

Creation of Agency: Written or expressed; Implied; Ostensible Agency; Ratification. 

In California, there are three ways to create agency: by agreement, by ratification, and by estoppel.  

When an agent works FOR a principal, that person is a client.  When an agent works WITH a person, that individual is a customer.  

Types of Agents: Universal, General, Special, Single and Dual Agent.

A Good Agent chooses who he/she wishes to represent; Communicates the decision to all parties; Conducts business in a manner that is consistent with the choices made and communicated.

An agent owe his/her principal: Care; Obedience; Accounting; Loyalty; Notice (Disclosure).

Things an agent owes 3rd party customers: Honesty, Accuracy and Disclosure of defects.

1. Puffing- is an exaggeration or superlative comment. Unethical, but legal.
2. Fraud- deception intended to cause a person to give up property or a lawful right.
3. Latent Defects- something that is known to the seller, but not to the purchaser and not readily discoverable by inspection.

Material defects must be disclosed regardless of whom the agent represents.

Dual Agency: a broker CAN represent both parties in a transaction. Dual agency is legal, but only with the knowledge and consent of both parties. 

Commissions:

• To collect a commission, it is required to be a licensed real estate broker or salesperson under a broker; have been employed by the principal under a valid contract and the procuring cause of the sale (a salesperson can only accept a commission from his or her own broker).
• The commission are negotiable and can be a percentage of sale price, a Flat Fee or salary or a combination of both.
• The fact that one party pays a commission does NOT create an agency relationship. 

Sherman Antitrust Act prohibits Price Fixing, Group Boycotts and Division of markets by location or price.

Brokers and Salespeople are responsible for their own FICA and Social Security.

All independent contractors should have an "Independent Contractor's Employment Contract" that clearly defines their responsibilities and obligations. 

Listing Agreements (between seller and broker): Exclusive right to sell; Exclusive Agency; Open; Net Listing; Agency Coupled with an Interest.

A seller may withdraw a listing before the broker spends time and money. However, the owner CANNOT cancel a listing to sell a property directly to a buyer brought by the broker.

Agency Disclosure Requirements:

• Disclosure Regarding Real Estate Agency Relationship Form: all real estate agents must provide a written disclosure to the buyer and the seller, regardless of which party to the transaction the agent represents.
• Agreements: a copy of all real estate-related agreements and documents, must be given to the signing party immediately after the document is signed, under the Commissioner's Regulations.
• Record Keeping: ALL broker's and salesperson's records be maintained for a minimum of 3 years.
• Emergency Broadens Authority: in an emergency, an agent has expanded authority, if it is clearly in the interests of the principal, and in situations in which there is no time to obtain instructions from the principal. 

A broker deposit the buyer's money in the appropriate account within 3 business days following receipt of the funds. If a broker accepts a check as an earnest money deposit, then he must make full disclosure to the seller.

During the time between the receipt of the check by the broker and the acceptance of the purchase offer by the seller, the broker must record a receipt of the check on broker's trust fund records and hold the check in a safe place.

Promissory notes are NOT equivalent to cash.

Commingling (mixing a client's money with the agent's personal funds) is illegal. Conversion, also illegal, is the unlawful misappropriation and use of a client's funds by a licensee.

The Transfer Disclosure Statement (Identifies items of value on the property) must be provided by both seller and broker within 3 days after the deposit receipt is signed.

Real Estate Agent: holds either a broker or salesperson license, and negotiates sales for other people.

Real Estate Broker: A license holder allowed to employ other real estate agents.

Real Estate Salesperson: holds a salesperson license, and MUST be employed a real estate broker. 

Broker Associate: A real estate broker who has entered into a written contract to act as the salesperson/agent of another broker.

A subagent for the seller has fiduciary duties to BOTH the seller and the appointing broker.

A cooperating agent is one who attempts to find a buyer for the other broker's listing and then to act as the buyer's agent, rather than the subagent of the seller. A cooperating broker is a non-listing broker who also works to sell the listed property.

Agreements between brokers do NOT NEED to be in writing. An agreement between a broker and a salesperson must ALWAYS be in writing. 

Real estate licensees may still be treated as independent contractors for both federal and state personal income tax purposes, depending upon the fact situation. 

An individual will not be considered an employee for state income tax purposes if:

1. The individual is licensed by the Department of Real Estate and is performing brokerage services as a real estate licensee on a commission basis;
2. Substantially all remuneration for such services is related directly to sales rather than the number of hours worked;
3. The real estate services are performed pursuant to a written agreement between the individual and the supervising broker.