Modern Real Estate Practice in Pennsylvania 12th Edition

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

2. 16 Agency • 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

3. 16 Agency • 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

4. 16 Agency

5. 16 Agency • 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

6. 16 Agency • 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

7. 16 Agency • 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

8. 16 Agency • 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

9. 16 Agency • In Pennsylvania • Agent of buyer/tenant • Agent of seller/landlord • Dual agent for both parties in the same transaction • Transaction licensee (nonagent)

10. 16 Agency Single Agency

11. 16 Agency • 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

12. 16 Agency • 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

13. 16 Agency • 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

14. 16 Agency • 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.

15. 16 Agency • 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

16. 16 Agency • 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