Agency
What is 'apparent authority' in real estate agency and what risk does it create?
AA. Authority clearly stated in the listing agreement
BB. Authority that a third party would reasonably believe an agent has based on the principal's conduct, even if actual authority was not granted; creates principal liability if the third party relies on it✓ Correct
CC. Authority of an agent to sign contracts on behalf of the principal
DD. The agent's right to show property without the seller present
Explanation
Apparent authority arises when the principal's words or conduct lead a reasonable third party to believe the agent has authority they were not actually granted. For example, if a seller allows an agent to represent they have authority to accept offers, the seller may be bound even if actual authority wasn't given.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
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