11.1 The Agency Relationship
11.1 The Agency Relationship
The agency relationship in real estate is the legal bond between a principal (client) and an agent (broker). The principal hires the agent as a fiduciary to act in their best interest, typically for selling, buying, or leasing property. The customer is a third party (not represented) in the transaction.
- Basic roles: Principal/client, agent (broker), and customer/prospect.
- Types of agency:
- Universal: Agent can act for principal in all matters (rare; power of attorney).
- General: Agent has broad authority for ongoing business (e.g., property manager).
- Special (limited): Agent has authority for one specific transaction (most brokerage relationships).
- Creating agency: By express agreement (oral/written) or by implication (actions).
- Terminating agency: By fulfillment, expiration, mutual agreement, incapacity, abandonment, property destruction, renunciation, breach, bankruptcy, or license revocation.
Topic 11.1 Check-In
Who Do You Work For?
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Which of the following is NOT a way an agency relationship can be terminated?
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