Agency Relationships & the Licensee.pptx

Agency Relationships & The
Licensee
The Real Estate School of Nevada
CE.5845001-RE (Classroom)
3 hrs - Agency
Copyright 2021 Real Estate School of Nevada, Inc. All Rights Reserved.

Housekeeping
 No phones or texting during the class.
 Please make sure that you sign in.
 Restrooms
 Direct attention to instructor.
 Refrain from distracting activities.
 Breaks
 Instructor Evaluations
 Attendance sign out
 Certificates of Completion
Copyright 2021 Real Estate School of Nevada, Inc. All Rights Reserved. 2

AGENCY RELATIONSHIPS
AND THE LICENSEE
Objectives:
 Review the definitions of agency and all duties of
agency
 Review and discuss the specific fiduciary duties of a
licensee
 Review the creation of agency and the forms necessary
to do so
 Review the different types of agency relationships
 Review and define the parties in an agency relationship
 Review single, multiple, and assigned agencies
 Review the forms used in disclosing and creating
agency
 Review NRS and NAC relating to agency and the
licensee’s responsibilities to all involved in an agency
relationship

What is Agency?
 By law, agency is a relationship in which
one party (the agent) acts on behalf of,
and under the control of, another (the
principal), in dealing with third parties.
 Agency relationships can be expressed or
implied.

Definitions:
Agency
NRS 645.0045 “Agency” defined.
1. “Agency” means a relationship between a
principal and an agent arising out of a brokerage
agreement whereby the agent is engaged to do
certain acts on behalf of the principal in dealings with
a third party.
2. The term does not include a relationship
arising solely from negotiations or communications
with a client of another broker with the written
permission of the broker in accordance with the
provisions of subsection 2 of NRS 645.635.

Definitions:
NRS 645.009 “Client” defined.
“Client” means a person who has entered into a brokerage
agreement with a broker or a property management
agreement with a broker.
NRS 645.040 “Real estate salesperson” defined.
Within the meaning of this chapter, a “real estate
salesperson” is any person who, as an employee or as an
independent contractor, is associated with a licensed real
estate broker or registered owner-developer to do or to
deal in any act, acts or transactions set out or
comprehended by the definition of a real estate broker
in NRS 645.030, for a compensation or otherwise.
This person is the subagent for the broker who is the special
agent.

Definitions:
 Special Agent-Broker
NRS 645.030 “Real estate broker” defined.
 1. “Real estate broker” means a person who, for another and
for compensation or with the intention or expectation of receiving
compensation:
 (a) Sells, exchanges, options, purchases, rents or leases, or
negotiates or offers, attempts or agrees to negotiate the sale,
exchange, option, purchase, rental or lease of, or lists or solicits
prospective purchasers, lessees or renters of, any real estate or the
improvements thereon or any modular homes, used manufactured
homes, used mobile homes or other housing offered or conveyed
with any interest in real estate;
 (b) Engages in or offers to engage in the business of claiming,
demanding, charging, receiving, collecting or contracting for the
collection of an advance fee in connection with any employment
undertaken to promote the sale or lease of business opportunities or
real estate by advance fee listing advertising or other offerings to
sell, lease, exchange or rent property;
 (c) Engages in or offers to engage in the business of property
management; or
 (d) Engages in or offers to engage in the business of business
brokerage.

Definitions:
 Special Agent-Broker
NRS 645.030 “Real estate broker” defined. (cont.)
 2. Any person who, for another and for compensation,
aids, assists, solicits or negotiates the procurement, sale,
purchase, rental or lease of public lands is a real estate
broker within the meaning of this chapter.
 3. The term does not include a person who is employed
by a licensed real estate broker to accept reservations on
behalf of a person engaged in the business of the rental of
lodging for 31 days or less, if the employee does not perform
any tasks related to the sale or other transfer of an interest in
real estate.

Definitions:
 Principal - the client of the Broker
 Customer- the client of the cooperating
broker
 3rd parties- all other parties in the
transaction such as title, insurance,
lenders, etc.

Real Estate Contracts
that create Agency
 Exclusive Right to Sell
 Exclusive Agency to Sell
 Buyers Brokerage Agreement
 Property Management Agreement
 Lease
 Residential Purchase Agreement
(O&A)

Real Estate Agency
 Nevada Contracts:
◦ Exclusive Right to Sell (see NRS 645.320)
 This is the most common listing contract used in
Nevada.
 Your local board will have these available to you.
 This discusses the duties of the listing agent/broker
when an agency relationship is established.

Real Estate Agency
◦ Exclusive Agency contract to list
 This discusses the duties of the listing
agent/broker when an agency relationship is
established through this contract.

Real Estate Agency
◦ Buyer Brokerage Agreement
 This does not need to be in writing to
establish an agency relationship. But it does
need to be in writing in order for the contract
to be enforceable.

Real Estate Agency
◦ Property Management Contract
 This creates an agency relationship
between the homeowner and the property
manager/broker.

Real Estate Agency
◦ Residential Purchase Agreement
 Revised in May 2014
 This establishes an agency relationship for
the duration of this singular contract.

NRS ON AGENCY
NRS 645.252 Duties of licensee acting as agent in real estate
transaction. A licensee who acts as an agent in a real estate transaction:
1. Shall disclose to each party to the real estate transaction as soon
as is practicable:
(a) Any material and relevant facts, data or information which the
licensee knows, or which by the exercise of reasonable care and diligence
should have known, relating to the property which is the subject of the
transaction.
(b) Each source from which the licensee will receive compensation as
a result of the transaction.
(c) That the licensee is a principal to the transaction or has an interest
in a principal to the transaction.
(d) Except as otherwise provided in NRS 645.253, that the licensee is
acting for more than one party to the transaction. If a licensee makes such
a disclosure, he or she must obtain the written consent of each party to the
transaction for whom the licensee is acting before he or she may continue
to act in his or her capacity as an agent. The written consent must include:
(1) A description of the real estate transaction.
(2) A statement that the licensee is acting for two or more parties
to the transaction who have adverse interests and that in acting for these
parties, the licensee has a conflict of interest.

NRS ON AGENCY
(3) A statement that the licensee will not disclose any confidential
information for 1 year after the revocation or termination of any brokerage
agreement entered into with a party to the transaction, unless he or she
is required to do so by a court of competent jurisdiction or is given written
permission to do so by that party.
(4) A statement that a party is not required to consent to the
licensee acting on behalf of the party.
(5) A statement that the party is giving consent without coercion
and understands the terms of the consent given.
(e) Any changes in the licensee’s relationship to a party to the
transaction.
2. Shall exercise reasonable skill and care with respect to all parties
to the real estate transaction.
3. Shall provide the appropriate form prepared by the Division
pursuant to NRS 645.193 to:
(a) Each party for whom the licensee is acting as an agent in the real
estate transaction; and
(b) Each unrepresented party to the real estate transaction, if any.

NRS ON AGENCY
4. Unless otherwise agreed upon in writing, owes no duty to:
(a) Independently verify the accuracy of a statement made by an
inspector certified pursuant to chapter 645D of NRS or another
appropriate licensed or certified expert.
(b) Conduct an independent inspection of the financial condition
of a party to the real estate transaction.
(c) Conduct an investigation of the condition of the property
which is the subject of the real estate transaction.

NRS ON AGENCY
NRS 645.254 Additional duties of licensee entering into
brokerage agreement to represent client in real estate
transaction. A licensee who has entered into a brokerage
agreement to represent a client in a real estate transaction:
1. Shall exercise reasonable skill and care to carry out the
terms of the brokerage agreement and to carry out his or her duties
pursuant to the terms of the brokerage agreement;
2. Shall not disclose confidential information relating to a client
for 1 year after the revocation or termination of the brokerage
agreement, unless he or she is required to do so pursuant to an
order of a court of competent jurisdiction or is given written
permission to do so by the client;
3. Shall seek a sale, purchase, option, rental or lease of real
property at the price and terms stated in the brokerage agreement
or at a price acceptable to the client;

NRS ON AGENCY
4. Shall present all offers made to or by the client as soon as
is practicable, unless the client chooses to waive the duty of the
licensee to present all offers and signs a waiver of the duty on a
form prescribed by the Division;
5. Shall disclose to the client material facts of which the
licensee has knowledge concerning the transaction;
6. Shall advise the client to obtain advice from an expert
relating to matters which are beyond the expertise of the licensee;
and
7. Shall account for all money and property the licensee
receives in which the client may have an interest as soon as is
practicable.
NRS 645.255 Waiver of duties of licensee prohibited.
Except as otherwise provided in subsection 4 of NRS 645.254, no
duty of a licensee set forth in NRS 645.252 or 645.254 may be
waived.

NRS ON AGENCY
IMPLIED AGENCY
NRS 645.260 One act constitutes action in capacity of
broker or salesperson. Any person, limited-liability company,
partnership, association or corporation who, for another, in
consideration of compensation by fee, commission, salary or
otherwise, or with the intention or expectation of receiving
compensation, does, offers or attempts or agrees to do,
engages in, or offers or attempts or agrees to engage in, either
directly or indirectly, any single act or transaction contained in
the definition of a real estate broker in NRS 645.030, whether
the act is an incidental part of a transaction, or the entire
transaction, is acting in the capacity of a real estate broker or
real estate salesperson within the meaning of this chapter.

NRS ON AGENCY
EXPRESSED AGENCY - IN WRITING
NRS 645.320 Requirements for exclusive agency
representation. Every brokerage agreement which includes
a provision for an exclusive agency representation must:
1. Be in writing.
2. Have set forth in its terms a definite, specified and
complete termination.
3. Contain no provision which requires the client who
signs the brokerage agreement to notify the real estate broker
of the client’s intention to cancel the exclusive features of the
brokerage agreement after the termination of the brokerage
agreement.
4. Be signed by both the client or his or her authorized
representative and the broker or his or her authorized
representative in order to be enforceable.

FIDUCIARY DUTIES
 CARE
◦ The agent must exercise a reasonable degree of care
while representing the principal or dealing with the
customer.
◦ Reasonable skill is part of the care we give to our clients
and customers.
◦ While always having the client's best interests in mind, it
is assumed that a licensee has reasonable skill to
complete a transaction with the knowledge necessary to
keep the principal educated as to the transaction.

FIDUCIARY DUTIES
 OBEDIENCE
◦ The fiduciary relationship obligates the agent to act in
good faith at all times, obeying the principal’s instructions
in accordance with the contract.
◦ This does not include any actions that are unlawful or
unethical.
 LOYALTY
◦ The duty of loyalty requires that the agent must place the
principal’s interests above those of all others, including the
agent’s own self interest.
◦ Multiple Representation agency can be difficult as it may
not be possible for some agents to be loyal to both parties
equally.

FIDUCIARY DUTIES
• DISCLOSURE
• The agent is to keep the principal informed of all facts regarding
the property and the transaction, as necessary.
• The disclosure of material facts are paramount, and lack of
disclosure could bring a complaint of misrepresentation to the
agent and the broker.
• There are several state and local disclosures that are required in
the transaction files kept in the broker’s office.
• ACCOUNTING
• The Agent must be able to provide an accounting of any monies
that are received from, or on behalf of, the principal.
• CONFIDENTIALITY
• An agent may not disclose any confidential information or facts
about the principal without the expressed written permission.
• This includes general conversation about the transaction around
strangers or colleagues.

MULTIPLE REPRESENTATION
 Consent to act form is required to be approved by both the
buyer and the seller and in writing.
 see attached form
 It is divided into sections:
1. information section for the property address, licensee’s name and
license number, brokerage, and seller and buyer names
2. paragraph that recites the legal authorization that allows a broker
to act for more than 1 party in a Real Estate Transaction and
states the requirement for written client authorization
3. identifies the broker and licensee’s conflict of interest, the duty of
confidentiality, and the requirement for each client to also receive
a Duties Owed disclosure
4. paragraph that informs the buyer and seller that they are not
required to accept this type of representation
5. Client’s acknowledgment of receipt of the form and a statement
that consent is being granted without coercion
6. Client’s signature block, and broker signature block

TERMINATION OF AGENCY
 End of term
 Completion
 Destruction
 By operation of Law
 Mutual agreement
 Breach of contract
 Death

END-OF-COURSE QUIZ
 You are now ready to take your end-
of-course quiz.

END-OF-COURSE QUIZ
1. One of the duties a licensee owes to a
customer is loyalty.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
2. Prohibited conduct of a licensee would
include misrepresentation and fraud.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
3. The principal in a transaction is the buyer
or seller.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
4. The buyer’s agency agreement is required
to be signed by all parties to the purchase
agreement.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
5. If you agree to show clients houses, and it
is verbally agreed that you will represent
them in a transaction, this is considered an
expressed agency.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
6. The real estate salesperson is the special
agent in a listing contract.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
7. A sub-agent is your transaction coordinator
who has no license.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
8. The death of the salesperson will terminate
an agency relationship.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
9. One of the ways an agency relationship is
terminated is by court order.
A. TRUE
B. FALSE

END-OF-COURSE QUIZ
10. Multiple representation does not need to
be agreed to by all parties in the transaction.
A. TRUE
B. FALSE

Agency Relationships & the Licensee.pptx

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