A California broker takes a net listing on a waterfront property. The seller wants to receive $900,000 net. The broker invests heavily in marketing and the property sells for $1,050,000, giving the broker a $150,000 commission — significantly more than a typical percentage-based commission. Under California law, what risk does the broker face?
Correct Answer
C) The DRE may ask whether the broker met their fiduciary duties on the price
A net listing pays the broker whatever the price exceeds the seller's number, which puts the broker's interest against the duty to get the seller the best price available. That is the exposure, and it is what the DRE looks at. Other choices: legality is not the same as safety, and the size of the spread is exactly what draws scrutiny; no rule caps the commission at six percent; and the seller does not get to void the sale over it.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
The legal ending of an agency relationship, which can occur through completion, expiration, mutual agreement, breach, death, incapacity, or bankruptcy of either party.
The fiduciary obligation to protect a client's private information and not disclose it to third parties without permission, surviving even after the agency relationship ends.
More Laws Of Agency Fiduciary Duties Questions
Under California law, the agency disclosure requirements apply to which types of property?
Under California law, when must a buyer's agent give the agency disclosure form to the buyer?
A broker who fails to promptly disclose their dual agency status is subject to:
A broker’s fiduciary obligation to protect a seller’s confidential information continues:
A broker has an exclusive agency listing on a property. If the owner sells the property, the broker is entitled to:
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