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Real Estate Lesson 7 Agency Law questions with answers
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Real Estate Lesson 7 Agency Law questions with answers
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Real Estate Lesson 7 Agency Lawquestions with answers.
Agency ANS -In an agency relationship, the principal authorizes an agent to represent him in dealings
with third parties.
A real estate firm is her client's agent.
The client is the firm's principal
Subagency ANS -An agent may be authorized by the principal to delegate agency authority to a
subagent.
A real estate licensee working for a designated broker is a subagent.
General Agency law ANS -General agency law is the body of legal rules that applies to agency
relationships in most contexts.
In Washington, a state statute has largely replaced general agency law in the real estate field.
Real Estate Brokerage Relationships Act ANS -The Real Estate Brokerage Relationships Act is the
Washington statute that governs real estate agency relationships.
For the most part, it supersedes general agency law in the real estate context.
Express Agreement ANS -Most agency relationships are created by express agreement.
The principal appoints someone to act as his agent, and the agent accepts the appointment.
,A listing agreement or a buyer agency agreement is an express agency agreement.
Power of Attorney ANS -In a power of attorney, a principal appoints another person to act as his
attorney in fact and carry out actions specified in the document. (An attorney in fact does not have to be
an attorney at law.)
Express Agency Agreement Requirements ANS -An agency agreement must meet some, but not all, of
the requirements for a valid contract. Both parties must consent to the agency, both must be legally
competent, and the purpose of the agency must be lawful.
However, consideration is not required. So an agency relationship can exist even when the principal isn't
compensating the agent for her services.
Also, an agency agreement does not have to be in writing; an oral agreement can create a valid agency
relationship.
The agency begins as soon as the parties agree to it.
Creating an Agency through Ratification ANS -An agency is created by ratification if the principal gives
approval after the fact to acts that weren't authorized at the time they were performed.
The unauthorized acts may have exceeded the authority that the principal originally granted to the
agent.
Or the agent may be someone who originally had no authority to act for the principal.
The principal may ratify the agency by expressly approving the unauthorized acts.
Or, even without express approval, the principal may ratify the agency simply by accepting the benefits
of the unauthorized acts.
, Creating an Agency: Estoppel ANS -Under the legal doctrine of estoppel, a person cannot take a position
that contradicts her previous conduct, if someone else has relied on the previous conduct.
Here's how an agency may be created by estoppel: Someone (an apparent agent) acts on behalf of
another without authorization.
That other person (the apparent principal) allows a third party to believe that the actions were
authorized.
Later, however, the principal asserts that the actions were unauthorized and therefore not binding on
the principal.
If this leads to a lawsuit, the court may rule that the principal is estopped (prohibited) from denying an
agency relationship, because that would be unfair to the third party.
Creating an Agency: Implication ANS -This can occur when one person is behaving in a way that implies
that he's acting as another person's agent.
If the other person believes that the first person is acting as her agent, and the first person fails to
correct that impression, he may be held to owe agency duties to her.
Implication vs. estoppel ANS -But in an agency by estoppel, it's the principal who is required to
acknowledge the agency, for the protection of a third party.
In an agency by implication, it's the agent who has to acknowledge the agency, for the protection of the
principal.
Inadvertent agency by implication can be a problem in real estate transactions.
Creating a Real Estate Agency: Seller Agency ANS -A real estate agency relationship between a real
estate firm and a seller is ordinarily created with a written listing agreement.
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