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Ch 3 California Real Estate Questions

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1) Who is considered the Principal in a real estate relationship? Define 'agency' as
according to the California Civil Code. Explain what is a Fiduciary Relationship, how
is it created and how does it obligate the agent?
- As mentioned in the book, the California Civil Code defines ‘agency’ as the
representation of another person called a principal, by an agent, in dealings
with third persons. In real estate terms, an agency is a representative of a
buyer or a seller in a real estate market. Another mention in the California
Civil Code, an agent would be considered the Principal in a real estate
relationship.
- A Fiduciary Relationship, as defined by the book, is when a real estate agent
is appointed by the principal seller to represent the seller in negotiations with
the buyer. This relationship consists of loyalty, obedience and more
importantly, confidentiality. Because of these, this relationship obligates the
agent to act in the best interest of the Principal.
2) Explain the 3 ways a real estate agency is created, be specific. Which one of the three is
the most common?
- By Ratification, this way in creating real estate agency is the least common
and matter of fact, there is no agency in existence with this idea. The idea of
ratification according to the book, is when a person or persons, acts behave of
another person or a principal, without that person knowledge or authorization.
If a principal finds this relationship or results beneficial, he/ or she will then
be aware of the relationship thus creating an approval of an unauthorized act
or a Ratification.
- By Agreement (most common), is when a principal appoints in writing or
word of mouth, a real estate agent to represent him/her in a sell or a buy of a
real estate. This is done by using what is called a Listing Agreement which
authorizes a real estate agent in a sell of a principal’s property.
- By Estoppel, this way is essentially opposite of the Ratification method. In
estoppel, a principal authorizes an agent to sell a property. Estoppel occurs
when the principal finds out the agent did not act properly on his/ her behalf.
3) Explain the difference between an independent contractor and an employee of a real
estate office.
- An independent contractor, as defined by the book, is when an individual is
hired to accomplish result with no supervision required thus not needing a real
estate agency or an office. However, an employee of a real estate office can

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1) Who is considered the Principal in a real estate relationship? Define 'agency' as according to the California Civil Code. Explain what is a Fiduciary Relationship, how is it created and how does it obligate the agent? - - As mentioned in the book, the California Civil Code defines ‘agency’ as the representation of another person called a principal, by an agent, in dealings with third persons. In real estate terms, an agency is a representative of a buyer or a seller in a real estate market. Another mention in the California Civil Code, an agent would be considered the Principal in a ...
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