Law tricks that make agency click

Fee simple is the highest form of property ownership. SAD helps you remember the three types. Recognize Subject to Condition by BOP language (But, On condition that, Provided). Recognize Determinable by SUD language (So long as, Until, During). Absolute has no conditions at all.

Joint tenancy includes the right of survivorship — when one owner dies their share passes automatically to the surviving owners. All 4 PITT unities must exist at the same time when the joint tenancy is created. Missing any one unity means you have a tenancy in common instead.

As a landlord or tenant You Will Suffer Periodically — this sentence gives you all 4 tenancy types. Tenancy for Years has a fixed end date. Periodic renews automatically. At Will either party can end it anytime. At Sufferance is a holdover tenant — lease expired but tenant stayed.

A lease missing any of these four elements may be unenforceable. LAND is easy to remember because a lease is always about land — or the property on it. These are the minimum requirements — most leases contain much more but must have at least these four.

Easement by prescription is similar to adverse possession but for use rights rather than ownership. The use must be OAC — Open (visible, not hidden), Adverse (without the owner's permission), and Continuous for the statutory period (varies by state, typically 5-20 years).

Easements don't last forever — ADAM E LEE gives you all 8 ways they can end. Merger is particularly important — when the dominant and servient estates come under the same ownership, the easement terminates automatically since you can't have an easement on your own property.

Adverse possession allows someone to claim legal ownership of land they have occupied for a statutory period without the owner's permission. Think of PANCHO Villa — he took what he wanted openly and continuously. All 6 elements must be met for the full statutory period.

WASTO covers every legal method of acquiring real property. Transfer is the most common — voluntary sale or gift. Will and Succession handle death scenarios. Accession covers improvements and additions. Occupancy includes adverse possession and abandoned property claims.

A broker earns their commission when they produce a buyer who is RAW — Ready to buy now, Able to buy financially (qualified), and Willing to buy at the seller's terms. If a seller refuses a RAW buyer, the broker may still be owed their commission even if the sale doesn't close.

OLD CAR covers all the fiduciary duties a real estate agent owes their client (principal). These are the highest duties in law — breaching any one of them can result in license revocation and legal liability. Loyalty is the most important — the agent must always put the client's interests first.

DEC is the sequence agents must follow for agency disclosure. First Disclose the agency relationship options, then allow the client to Elect their choice, then Confirm the election in writing. This process protects both agent and client and is required by law in most states.

PETE represents the four powers government holds over private real property. Police power is the broadest — zoning, building codes, environmental laws. Eminent Domain takes property for public use with just compensation. Taxation creates a lien. Escheat takes property when owner dies with no heirs and no will.

Care: exercise reasonable skill and care. Obedience: follow all lawful instructions. Accounting: account for all funds. Loyalty: put client's interests above all others including your own. Some states add Disclosure and Confidentiality — making it COALD or OLD CAR.

Seller's agent (listing agent): represents the seller, owes fiduciary duties to seller. Buyer's agent: represents the buyer. Dual agency: represents both buyer and seller in the same transaction — legal in most states but requires informed written consent from both parties. Transaction broker: facilitates without full fiduciary duties.

Federal law prohibits discrimination in housing based on: Race, Color, National origin, Handicap (disability), Sex, Familial status (children under 18), Religion. Many states add additional protected classes (sexual orientation, age, source of income, marital status). Exemptions are very narrow.

Steering: guiding buyers to or away from certain neighborhoods based on race, religion, or other protected class. Blockbusting (panic peddling): inducing homeowners to sell by suggesting a protected class is moving into the neighborhood. Both are federal violations even if done subtly.

Competent parties: legal age and mental capacity. Offer and acceptance (mutual agreement/meeting of minds): one party offers, other accepts without changes. Lawful object: contract purpose must be legal. Consideration: something of value exchanged by both parties (money, promise, services).

Void contract: has no legal effect from the beginning — as if it never existed. Example: contract for an illegal purpose. Voidable contract: valid and enforceable UNLESS the disadvantaged party chooses to cancel. Examples: contract signed by a minor (minor can cancel), contract signed under duress, fraud.

The Statute of Frauds requires certain contracts to be in writing and signed to be enforceable. Real estate contracts always fall under this. Includes: purchase agreements, listing agreements, leases over one year, buyer representation agreements. Verbal agreements for real estate are generally unenforceable.

Financing contingency: buyer can cancel if they can't get the loan. Inspection contingency: buyer can negotiate or cancel based on inspection findings. Appraisal contingency: protects buyer if property appraises below purchase price. Sale of buyer's home contingency. Removing contingencies makes offers stronger.

Buyer deposits earnest money (typically 1-3% of purchase price) into escrow when offer is accepted. If buyer defaults without valid reason: seller may keep earnest money as liquidated damages. If seller defaults: buyer gets earnest money back plus may sue for specific performance.

Because every piece of real estate is unique, money damages are often inadequate remedy for breach. Courts can order specific performance — compelling the party to go through with the sale. More commonly sought against sellers (who have unique property) than buyers.

Sherman Antitrust Act prohibits competitors from conspiring to fix prices. Real estate agents cannot: agree with other brokers on commission rates, agree to divide markets (allocation), agree to boycott certain brokers. Commissions are ALWAYS negotiable between broker and client.

Exclusive right to sell: listing broker gets commission even if owner finds the buyer. Most protective for broker. Exclusive agency: broker gets commission UNLESS seller finds buyer directly. Open listing: non-exclusive, any broker who brings buyer earns commission, broker who sells gets paid.

Original 1968 act: Race, Color, National Origin, Religion, Sex. 1988 amendments added: Familial Status (families with children under 18), Handicap/Disability. Prohibited acts: refusing to sell/rent, steering (directing buyers/renters toward or away from areas based on protected class), blockbusting (inducing owners to sell by warning of minority move-ins), redlining (refusing loans in certain areas), discriminatory advertising. Exemptions: owner-occupied buildings with 4 or fewer units (Mrs. Murphy exemption), single-family homes sold/rented without a broker (with restrictions).

Client (principal) vs. Customer: agent owes fiduciary duties only to client — customer gets honest and fair dealing. Types: Seller's agent (lists property, owes fiduciary to seller), Buyer's agent (represents buyer), Dual agent (represents both — requires written consent, reduced duties), Designated agent (different agents in same firm represent each party). Subagency: cooperating agent represents seller, not buyer — largely obsolete. All agency must be disclosed in writing. Non-representation: transaction broker/facilitator assists without representing either party.

Salesperson (agent): must work under a licensed broker. Cannot receive commission directly from public — must receive from their broker. Broker: additional education and experience, can operate independently or employ salespersons. Associate broker: holds broker license but works under another broker. Managing broker: responsible for the office and all licensees. License violations: commingling (mixing client funds with personal), conversion (using client funds for personal use), secret profits, misrepresentation. Disciplinary actions: suspension, revocation, fine, probation.

Exclusive Right to Sell: broker earns commission regardless of who finds the buyer — most common, best protection for broker. Exclusive Agency: broker earns commission UNLESS owner sells it themselves. Open Listing: seller can list with multiple brokers — only the broker who finds the buyer earns a commission. Net Listing: broker earns everything above a net price set by seller — legal in some states but discouraged (conflict of interest). All listing agreements must be in writing, include expiration date, and commission rate.

Lead-based paint: federal law requires disclosure for homes built before 1978 — seller must provide EPA pamphlet and buyer has 10-day inspection right. Asbestos: common in homes built before 1980 — must disclose known presence. Radon: colorless, odorless gas — second leading cause of lung cancer. Buyer has right to test. Mold: must disclose known moisture intrusion and mold — health and structural concerns. Underground storage tanks (USTs): oil tanks on property — potential contamination liability. CERCLA (Superfund): federal law that can make property owners liable for cleanup even if they didn't cause contamination.

Constructive eviction: landlord fails to maintain the property in habitable condition (breach of the implied warranty of habitability), making the premises unfit for the purpose leased — tenant has no choice but to vacate. Elements: (1) landlord's substantial breach of duty, (2) tenant notifies landlord and landlord fails to correct, (3) tenant vacates within a reasonable time. Result: tenant's rent obligation ends. Actual eviction: landlord physically removes tenant or locks them out — illegal without court order. Self-help eviction (changing locks, removing belongings) is illegal in most states.

Lis pendens (Latin: "suit pending"): notice filed in public records that litigation affecting the title or right to possession of a specific property is pending. Clouds title — buyers and lenders will refuse to proceed until resolved. Anyone who buys property subject to lis pendens takes it subject to the outcome of the lawsuit. Quiet title action: a court proceeding to clear title disputes — establishes who has legal title when there is a competing claim (adverse possession, boundary dispute, missing heir, forged deed). Court issues a judgment that "quiets" all competing claims.

Partition: any co-owner can bring a court action to force division of co-owned property. Partition in kind: physically divide the property (works for land, rarely practical for a house). Partition by sale: court orders property sold and proceeds divided among co-owners proportionally — most common when physical division is impractical. Used when: divorcing spouses, business partners, heirs who inherit together and disagree. Important: a joint tenant can sever joint tenancy and convert to tenancy in common by transferring their interest — then brings partition action. Cannot partition what you don't co-own.

Property manager is a general agent (ongoing authority for broad range of acts). Key duties: screen and select tenants (using Fair Housing compliant criteria), collect rents and security deposits (held in separate trust accounts — never commingled), pay operating expenses, maintain property (habitability), provide accounting to owner, enforce lease terms, handle maintenance and repairs, market vacancies. Security deposits: held in trust, itemized accounting within statutory period of move-out (typically 14-21 days). Fiduciary duties to owner apply to ALL funds. Property management agreement needed — sets fees, authority, term.

Sherman Antitrust Act applies to real estate. Four per se violations (illegal regardless of intent or effect): Price fixing — competing brokers agreeing to charge the same commission rate. Market/territory allocation — competing brokers agreeing to divide up geographic areas. Group boycotts — agents agreeing not to work with a particular broker. Tie-in agreements — requiring purchase of one service to get another. Commissions are always negotiable — agents must never suggest otherwise or imply there is a "standard" rate. Penalties: criminal fines up to $100 million for companies, imprisonment for individuals, treble damages in civil suits.