AGENCY & CONTRACTS — EXAM CHEAT SHEET

CALCO: Valid Contract Elements

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Statute of Frauds — MUST BE WRITTEN

✓ Purchase agreements ✓ Listing agreements ✓ Buyer rep agreements ✓ Options ✓ Leases > 1 year

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Contract Status Quick ID

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Offer & Acceptance Rules

Revocation: Offeror may revoke ANY TIME before acceptance is communicated

• Holding offer open (no $) = NOT binding

• Option agreement ($ consideration) = BINDING; cannot revoke during option period

Mirror Image Rule: Acceptance must match offer exactly

• Any change = COUNTEROFFER (original offer dies)

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Listing Agreement Types

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Breach Remedies

Buyer Defaults

• Seller retains earnest money = liquidated damages (primary remedy)

• OR sue for specific performance (if buyer solvent & liquidated damages inadequate)

Seller Defaults

• Buyer recovers earnest money (refunded)

• OR sue for specific performance (available because real estate is unique)

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OLD CAR: Fiduciary Duties (Client Only)

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Agency Relationship Types

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🚨 NAR Settlement (Aug 17, 2024) — HIGH YIELD

MLS Compensation Offers PROHIBITED

• Buyers MUST sign written buyer-broker agreement BEFORE any property tour

• Agreement must state: (1) specific compensation $, (2) buyer owes only agreed amount regardless of seller offer, (3) MLS non-publication of compensation

Seller's Options:

• Still may offer buyer-agent compensation OFF-MLS (negotiated separately)

• No public MLS compensation display

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Agency Creation & Termination

Created By: Express agreement | Implied conduct | Ratification

Ends By: Performance | Expiration | Mutual agreement | Revocation | Renunciation | Death/incapacity | Destruction of subject matter

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Agency Disclosure Rule

• When: At first substantive contact

• Format: In writing

• Acknowledgment: Client must acknowledge in writing

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Contract Termination Methods

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KEY FORMULAS & THRESHOLDS

Earnest Money: Liquidated damages if buyer defaults (seller keeps) Specific Performance: Available to either party (real estate is unique) Commissions: Always negotiable — price-fixing with competitors = antitrust violation

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High-Yield Pairs (Easily Confused)

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Element	Definition	Key Rule
Competent Parties	Legal capacity (age, sanity, not under duress)	Minors cannot contract
Agreement	Offer + acceptance (mirror image rule)	Any modification = counteroffer; original dies
Legality	Lawful purpose	Illegal contracts = void
Consideration	Exchange of value ($ or promise)	Must be present on BOTH sides
Output	Writing (Statute of Frauds)	ALL real estate contracts must be written
Status	Enforceable?	Example
Valid	✓ Yes	Properly signed purchase agreement
Void	✗ No	Illegal purpose (unlicensed agent commission)
Voidable	⚠ One party only	Minor buyer; can rescind by minor only
Unenforceable	✗ Not in court	Oral real estate contract (missing writing)
Type	Broker Commission	Owner Can Sell?	Who Gets Commission?
Exclusive Right to Sell	✓ Paid by broker	No	Listing broker (even if owner finds)
Exclusive Agency	✓ Paid if broker finds	✓ Yes (no commission)	Listing broker only if they procured
Open	✓ Only procuring broker	✓ Yes (no commission)	First broker to procure
Net	✓ Seller sets net; broker keeps over	✓ Yes (no commission)	Ethically problematic; not recommended
Duty	Definition	Client	Non-Client
Obedience	Follow lawful instructions	✓	✗
Loyalty	Put client first; no conflicts	✓	✗
Disclosure	Reveal all material facts	✓	✓ Customer duty
Confidentiality	Protect client secrets	✓	✗
Accounting	Handle funds properly	✓	✓ Customer duty
Reasonable Care	Professional standard	✓	✓ Customer duty
Type	Fiduciary To	Written Consent?	Permitted?
Seller's Agent	Seller only	Express agreement	✓
Buyer's Agent	Buyer only	Written buyer-broker agreement required	✓
Dual Agent	Both (limited)	Written informed consent BEFORE showing property	⚠ Check state law
Designated Agent	Each party separately (same firm)	✓	✓
Transaction Broker	Neither (ministerial only)	Varies by state	✓
Method	Result
Rescission	Cancel contract + return to pre-contract status
Assignment	Transfer rights to new party; original still liable
Novation	New party substituted; original RELEASED from liability
Accord & Satisfaction	New agreement replaces old; resolves dispute
Concept A	Concept B	Difference
**Rev