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Types of Agency Relationships and Legal Limitations of Power of Attorney

1(a) You are a recent real estate sales licensee. You have been approached by Bob, who wishes to purchase a condominium for his elderly mother. He says he has authority to do so, as he has a "power of attorney". Explain the type of agency relationship created by a power of attorney. For Bob's case, discuss the legal limitations of power of attorney that he should be careful of.

(b) The condominium unit needed new flooring, so after purchasing the unit, Bob asked Cushioned Comfort to come over and provide a quote. The salesperson, Mark, measured the unit and showed Bob some samples. Bob chose a carpet type and Mark wrote up a contract between Cushion Comfort and Bob. Mark and Bob signed the contract, and Bob was given a copy of it, as well as one of Mark’s business cards showing he is a salesperson for Cushion Comfort. Bob was in the process of throwing out the old carpet when he got a call from the owner of Cushion Comfort. The owner told Bob that Cushion Comfort was not able to meet the terms set out by Mark, and that since Mark did not have permission to enter into a contract for that amount, Cushion Comfort is not bound to the contract. Is there a valid and binding contract? Discuss the relevant law as to whether or not Mark can bind Cushion Comfort to a contract.

(c) Before purchasing the property, advice was sought by Bob from Willie Wunder, a Real Estate agent, to ensure that his mother would not be saddled with any issues such as a "leaky condo". Wunder stated to Bob that he reviewed the necessary documents of the condominium complex and did not notice anything unusual. In actuality, Wunder only partially read the documents and had trouble understanding a majority of what he read. Six weeks into her possession of the condominium, Bob's mother receives a registered letter requesting payment of the $10,000 special assessment to repair the water damaged common area caused by a faulty building envelope. Upon further review, Bob discovered that the condominium documents had clearly discussed the $10,000 special assessment. Bob is very upset and would like to know the following:

Under agency law, what duty or duties did Wunder owe Bob? What are the potential consequences for Wunder’s actions?

(d) Bob's mother sold her home to Mr. Walker, a kindly gentleman and avid gardener, who said he noticed her fabulous fruit trees on his Sunday stroll and decided to knock on her door to see if she would sell her property to him. Bob's mother thought the price seemed reasonable and signed the contract, without concern for her hearing and seeing difficulties given her extreme age. Bob has since found out that Mr. Walker was a real estate sales licensee, who bought a row of houses that Sunday with the intent of building a condominium complex on the property. No fruit trees will remain standing. And, after commissioning an independent appraisal, Bob now discovers that the price paid was less than two-thirds of the market value at the time of sale. Is the contract valid? Explain why or why not, and what option(s) may be available to Bob’s mother.

Validity of Contracts: Authority to Enter Into a Contract


(e) When Bob's mother is no longer able to live on her own, Bob decides to rent the unit, which is allowed by the bylaws of the complex. What are the requirements that Bob would need to meet in a rental agreement? Explain how a residential tenancy differs from a commercial tenancy. If Bob subsequently decided he wanted the tenant to vacate the unit, explain briefly the various reasons Bob could use to terminate this tenancy agreement.

2(a) Youareselling your home, which has a large mortgage with favourable rates. You want to know whether a new purchaser can assume this mortgage.


(i) Explain when assumption of a mortgage may occur, and also discuss whether you could bear any liability if the mortgage is assumed.

(ii) Would novation of the mortgage be a better idea? Explain when novation may occur, and any liability you could face.

(b)   You are able to sell your property and now your financial advisor suggests that you should invest your new windfall in mortgages. He lists the various types of mortgages available. Discuss at least three different types of mortgages, relating their advantages and disadvantages to a mortgagee from a legal standpoint, in particular with respect to the security involved.

1. You must examine and review three recent cases outlining breaches of professional ethics orstandards in some area of real estate  For those interested in researching the Appraisal Institute of Canada, please note that AIC's policy is to not publicly disseminate results of professional ethics investigations, unless ordered by a disciplinary committee. However, other real estate associations or related organizations do publish disciplinary decisions related to breaches of professional ethics. The following are examples of organizations that publish this kind of information:

BCReal Estate Council: canlii.org/en/bc/bcrec

LawSociety of BC: canlii.org/en/bc/lsbc

CertifiedGeneral Accountants of BC:

www.bccpa.ca/members/regulatory/ethics-and-discipline/disciplinary- summaries/legacy-disciplinary-notices/discipline-summaries-of-cga-bc/archived-cga-bc- disciplinary-summaries


The cases you choose should be ideally reported from the disciplinary body, although court cases can be used, if necessary.


(a) Prepare a brief write up on each of the three cases, including the following information (as best as possible, given available data):

For each case, relate the relevant 
Discuss the practical aspect of what transpired (e.g., transferred trust funds, ).
State the ethical breach which occurred as a result of the acts 
Discuss factors taken into account by the disciplinary committee, hearing officers, Benchers, 
Wasst are decisis followed? 
Discuss the relevant legislation or regulation 

(b) Discuss the similarities and differences of the three cases regarding the offences, persons, and sentences or outcomes.

(c) Explain vicarious liability and discuss who could be held liable for any losses that might occur relating to this principle. Make reference to all relevant legislation in your answer. If any of the professional ethics cases that you chose above relate to employees or include employee issues, please include reference to those cases in your answer.

2. Locate a commercial lease that you can 

(a) Answer the following questions:

Whatis the name of the landlord?
Whatis the name of the tenant?
Whatis the description of the premises rented?
Whatdate did the lease start?
Whatis the duration of the lease or term?
Canthe lease be renewed, and if so, how?
Howmuch notice is required for renewal?
Canthe lease be registered? Explain why or why 
Whatrent is charged?
Whatpayments are set out, in terms of taxes, utilities, ?
Whopays for repairs and improvements?
Arethere any special covenants, conditions, exceptions, or reservations?
Whattype of tenancy is this?
Isthis a gross or net lease? In your answer, briefly explain the 
Isthere a required security deposit, and if so, how much is it and how much will be returned to the lessee?
Maythe lease be assigned or sublet? Explain the 
Whatare the landlord’s obligations under the lease, both those set out and those implied?
Whatare the tenant’s obligations under the lease, both those set out and those implied?
Howmay this lease be terminated?
Whatis the concept of interesse termini? Explain whether it is 
Whatremedies are set out for breach of the lease?

(b) From the perspective of a prospective tenant, discuss the advantages and disadvantages in this lease. Would you advise a prospective tenant to lease this property? State the reasons for your advice.

Types of Agency Relationships and Legal Limitations of Power of Attorney

1(a) When a client comes or enters into an agency contract with a licensee, the agency agreement will definitely constitute the powers that the principal is permitting the agent. However, the agent cannot exercise any authorities away from those given under the agreement. In Bob’s case, Specific Agency is created, and it gives the representative a limited power to only one specific business highlighted in the agreement (Fields & Fields, 2018). This agency involves the licensee about Bob's mother needs (Cameron, 2011). He should ensure that he fulfills his mother's requirements to avoid her mother (principal) from removing him as her agent.

(b) The condominium unit needed new flooring, so after purchasing the unit, Bob asked Cushioned Comfort to come over and provide a quote. The salesperson, Mark, measured the unit and showed Bob some samples. Bob chose a carpet type, and Mark wrote up a contract between Cushion Comfort and Bob. Mark and Bob signed the contract, and Bob was given a copy of it, as well as one of Mark’s business cards showing he is a salesperson for Cushion Comfort. Bob was in the process of throwing out the old carpet when he got a call from the owner of Cushion Comfort. The owner told Bob that Cushion Comfort was not able to meet the terms set out by Mark and that since Mark did not have permission to enter into a contract for that amount, Cushion Comfort is not bound to the contract. Is there a valid and binding contract? Discuss the relevant law as to whether or not Mark can bind Cushion Comfort to a contract.

For the contract to be valid, certain elements must be considered. In this case, Mark and Bob had a legal purpose to get into the contract. Both parties were competent they were of the right age and sound mind in time of the agreement (Donahue at el 2016). However, agreement by offer and acceptance was not followed to the latter. The owner of the cushion comfort was not involved in the process, and his sales person had no permission of getting into the contract. Therefore, this contract will not be binding since the owner was not contented and involved. If Bob needs the carpets, he can legally get into a new contract with the owner of the cushioned comfort (Ricchetti & Murphy 2010).

(c) Before purchasing the property, advice was sought by Bob from Willie Wunder, Real Estate agent, to ensure that his mother would not be saddled with any issues such as a "leaky condo." Wunder stated to Bob that he reviewed the necessary documents of the condominium complex and did not notice anything unusual. In actuality, Wunder only partially read the documents and had trouble understanding a majority of what he read. Six weeks into her possession of the condominium, Bob's mother receives a registered letter requesting payment of the $10,000 special assessment to repair the water damaged common area caused by a faulty building envelope. Upon further review, Bob discovered that the condominium documents had discussed the $10,000 special assessment. Bob is very upset and would like to know the following:

Validity of Contracts: Authority to Enter Into a Contract

Under agency law, what duty or duties did Wunder owe Bob? What are the potential consequences for Wunder’s actions?

Under the agency law, real estate agents must meet their end of the jobs. However, Wondur did not meet the agreed results to Bob. He was supposed to be loyal and keep the interests of Bob ahead of any other; he also owed Bob a disclosure despite him not understanding all the content in the agreement (Cameron 1993).  Real estate’s agent should offer reasonable care to the buyers and advise them accordingly Wunder owed this to Bob.  Since Wunder actions cost Bob 10000$, there were consequences for his actions. His reputation as an agent could have been tarnished in the social media platforms to make sure that he does not repeat the same mistake until he is thoroughly knowledgeable about his job description (Martindale at al 1931). Bob should have opted to sue this agent and let him pay the extra cost that they owe since it was his mistake.

(d) Bob's mother sold her home to Mr. Walker, a kindly gentleman, and avid gardener, who said he noticed her fabulous fruit trees on his Sunday stroll and decided to knock on her door to see if she would sell her property to him. Bob's mother thought the price seemed reasonable and signed the contract, without concern for her hearing and seeing difficulties given her extreme age. Bob has since found out that Mr. Walker was a real estate sales licensee, who bought a row of houses that Sunday with the intent of building a condominium complex on the property. No fruit trees will remain standing. And, after commissioning an independent appraisal, Bob now discovers that the price paid was less than two-thirds of the market value at the time of sale. Is the contract valid? Explain why or why not, and what option(s) may be available to Bob’s mother.

Bob's mother signed the contract under pretense. The contract is not valid because bobs mother was an old woman who could barely see and the other party pretended to be another person during the time of signing the contract (Freidman & Scheiber 1981). The option that Bob has is to prove fraud. Contract fraud involves the seller (bobs mother) being misled by the buyer (licensee) because the licensee wants a different result from the contract (Galaty et al., 2001). The American Bar Association states that fraud exists when any statement from the contract is substantially different from the truth and in our case this is what happened.

(e) When Bob's mother is no longer able to live on her own, Bob decides to rent the unit, which is allowed by the bylaws of the complex. What are the requirements that Bob would need to meet in a rental agreement? Explain how a residential tenancy differs from a commercial tenancy. If Bob subsequently decided he wanted the tenant to vacate the unit, explain briefly the various reasons Bob could use to terminate this tenancy agreement.

Duty of Real Estate Agents: Breaches

Bob should include the name of the tenant, terms of the tenancy, rent, deposit and fee repair and maintenance and restrictions to any illegal activity in the rental agreement. A residential tenancy is a contract between the landlord and the tenant to use the property for an existing agreement. The property is to be used for residence and not for profit no commercial services should be conducted in a residence house such as sales of goods or any other activity that generates profit (Adams 2004). Rent for occupation is paid at the end of every month as agreed. On the other hand, a commercial tenancy is an agreement between the landlord and a business tenant for use in commercial activities such as sales of goods, services and manufacturing to generate profit. The premise is a business house and cannot be used for living. Rent is done per square footage the tenant occupies and in other cases; there is an added percentage from the gross received by the tenant.

Bob can give the tenant a lot of reasons as to why he needs them to vacate the unit. One of the reasons that bob can give is that he wants to sell the property to a different person thus requiring them to vacate. He can also tell them that he wants to renovate the house and lease it to a commercial tenant if it was residential and vice versa. He will be required to give notice to the tenant after he has explained his reason for the lease termination.

2(a). You are selling your home, which has a large mortgage with favorable rates. You want to know whether a new purchaser can assume this mortgage.  

(i) Mortgage assumption is the transfer of the mortgage loan to the buyer name, and the seller is no longer liable for the loan. A purchaser can assume loan if he can lock a lower interest rate. This can save him money if the rate is lower than the current rate. As the seller, there will be no liability if the price of the house is higher than the mortgage and also since the name on loan is no longer his (Forts & Ramcy, 2015).

(ii) Novation agreement can also be a good idea whereby the purchaser, seller and the institute that offered the loan come into an agreement and removes the seller from the equation of the loan and transfer the loan obligation to the purchaser. This can happen if the purchaser is willing to extend this loan. Their liabilities are limited since you are no longer involved in the loan mortgage.

(b) You can sell your property, and now your financial advisor suggests that you should invest your new windfall in mortgages. He lists the various types of mortgages available. Discuss at least three different types of mortgages, relating their advantages and disadvantages to a mortgagee from a legal standpoint, in particular concerning the security involved.

There are different types of mortgage a person can consider when buying a home. Fixed rate mortgage is one of them. This is the type where the interest rates do not change throughout. The advantage of this mortgage is that you will have peace of mind since you already aware of what you are to pay. The disadvantage is the interest rate can be much higher than what is in the market at times. The other type is the adjustment mortgage where the interest rate will change at times (Muchlinskiat at al., 2008). You only know when they change but not with how much. The advantage is that you enjoy the benefit of lower interests at times while the disadvantage is that you can have a high interest and be unable to pay it n time. The third type of the mortgage is the government insured home loans; this means that if the borrower fails to pay the mortgage, the government will ensure the lender pay for the lose (Pyhrr, Seiler & Wofford, 2011). The advantage is that the loan type gives you an option to put forth down payment with a small rate of the house price. The disadvantage is that you have to incur the extra cost of paying for the insurance.

Different Types of Mortgages

1. a) First Case

Trevor William Maxwell Inglis

According to the Council’s discipline committee, Trevor was found to have committed professional misconduct through participating in the deceptive transaction by fabricating an offer and claiming that the offer was on client’s property. He also made a false statement to the committee in his response to the issues he is facing. In my opinion, Trevor committed conduct unbecoming a license himself as well intending to retaliate against his fellow listing agent.

2nd Case

This second case is about the Consent Order Proposal submitted Hao Yan. In this case, Yan committed professional misconduct that also led to the suspension of his license for two weeks.

Finally, the last case involves Anthony Roland Boos who is the Managing Broker of Cascade Realty Ltd. He was found to have committed an offense and was reprimanded. He was to pay a penalty fee due to the misconduct.

b) In all these three cases, there were breaches of the Real Estate Agents Act and Sale of Land Act through altering with some important information that misleads the buyer thus attracted penalties for non-compliance.

c) Vicarious liability is a circumstance where an individual is held accountable for conducts or omissions of another individual in an employment location context, an employer can be liable for conducts or may be omissions of the employees, given that it can be verified that they indeed happened during their employment contract (Adam, 2013). In reference to the above-reviewed cases, this can be related to Anthony Roland issue where both of them in all the three cases were held responsible for the damages caused in each case.

Answers to the questions

  1. The name of the landlord in the lease is Temple CB LLC California.
  2. The name of the tenant is Okra Energy Inc. which is based in California.
  3. The premises to be rented are business halls in the City.
  4. The lease started on 1st December 2013
  5. The lease covers the period from the start until 31st May 2020
  6. A renewal of this lease can be done for five more years provided the tenant offers a minimum of a 120-day notice before the expiration of the agreement.
  7. Rent is paid monthly at a rate of $100000
  8. The tenant has been obligated to pay a refundable $20000 as security sum to the landlord at the beginning of the agreement. Secondly, the tenant is liable for leasehold interest as stipulated in Leased Premises. Thirdly, the tenant as advised by the landlord shall be paying the real estate taxes as outlined in the Leased Premises.
  9.  The landlord is responsible for paying for all the repairs and improvements in the premises for as long as the agreement holds.
  10.  One condition that exists in this agreement between the tenant and landlord is that a 5% additional penalty is given to a tenant for late remuneration of the monthly rent.
  11. This type of tenancy is company let given that tenant is an incorporated body, that is, LLC.
  12. In a gross lease, the landlord agrees to pay all the expenses such as utilities and even taxes in some cases while in a net lease, the tenant is responsible for all the taxes, utilities and also maintenance. (Eissen, 2011). Therefore, in this case, the agreement is a net lease.
  13. The full amount of $20000 which is the security deposit is returned to the tenant
  14. The tenant may sublet the premises provided they write of such intentions to the landlord. The difference between lease assignment and lease renting is that in the former, all rights are transferred from the tenant to the new owner while in the former; a tenant may allow another tenant to use the premises temporarily (Friedman & Scheiber, 2012).
  15. The landlord is responsible for paying for any negligence or omission that can be directly associated with the subject. Additionally, there is an implied obligation such as that of being accountable to the tenant once the property is partially or fully destroyed by fire.
  16. In the agreement, it is precisely stated that the tenant has an obligation of ensuring that the property they have rented is maintained in good condition. Moreover, there is an implied obligation given that they have the right to erect interior designs however it will be at their own risk. This means that the tenant will be entirely held accountable by the authorities (Sion, 2018).
  17. The lease may be terminated by writing a notice to the tenant and asking them to clear all taxes and outstanding rent arrears for the period in question. On the other side, the tenant may also terminate the contract by clearing the taxes and asking for their security deposit.
  18. Interesse termini are the right of the lessee to enter the leased property. The agreement, in this case, gives the lessee who is the tenant the right to access, repair and develop the premises to a certain extent. However, in this case, no interest is paid to the landlord.

(b) You can sell your property, and now your financial advisor suggests that you should invest your new windfall in mortgages. He lists the various types of mortgages available. Discuss at least three different types of mortgages, relating their advantages and disadvantages to a mortgagee from a legal standpoint, in particular concerning the security involved.

Net lease advantages to the tenant are they have control over cost, and the rent charges are lower and more property control. However, the tenant might is not able to plan early, and the operating costs might be higher at times. I would advise a tenant to use net lease since there is a lot of controls and the rent is lower.

References  

Adams, K. A. (2013). A manual of style for contract drafting. Chicago: ABA, Section of Business Law, 94(5), 62-64.

Cameron, J. G. (2011). Michigan real property law: Principles and commentary. Ann Arbor, Mich: Institute of Continuing Legal Education , 36(29), 8.

Donahue, D. J., Quinn, P. D., Grandilli, D. C., & Donahue, D. J. (2016). Real estate practice in Ontario. Journal of Canadian Studies, 52(2), 538–569.

Eissen, V. (2011). The Oxford Handbook of International Investment Law. International Journal of Legal Information, 39(1), 93–96.

Fields, C. K., & Fields, K. C. (2018). Contemporary real estate law. Survey Review, 50(359), 107–121

Friedman, L. M., & Scheiber, H. N. (2012). American law and the constitutional order: Historical perspectives. Cambridge, Mass: Media History Monographs, 20(2), 1–31.

Sion, A. (2018). A real estate contract: At what point and to what extent does it become binding? PM World Journal, 7(8), 1–11.

Pyhrr, Stephen A., Michael J. Seiler, and Larry E. Wofford. 2011. “Review Articles: A Supplemental Account of the History of the American Real Estate Society.” Journal of Real Estate Literature 19 (2): 235–81.

Pyhrr, S. A., Seiler, M. J., & Wofford, L. E. (2011). Influencing Real Estate Thought and Decision Making Through Research and Education: The Past, Present, and Future of ARES. Journal of Real Estate Research, 33(2), 127–178.

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