A valid agency requires a(n):
Audio Lesson
Duration: 2:41
Question & Answer
Review the question and all answer choices
written agreement.
A written agreement is incorrect because while it's common practice, it's not legally required to create a valid agency relationship. Agency can be established orally or through conduct.
express agreement.
attorney-in-fact.
An attorney-in-fact is incorrect because this refers to someone appointed through a power of attorney document to act on behalf of another, which is unrelated to creating a real estate agency relationship.
None of the above.
None of the above is incorrect because express agreement (option B) does create a valid agency relationship, making this option factually wrong.
Why is this correct?
Express agreement is correct because agency relationships require mutual consent, which can be established through oral or written communication. This satisfies the fundamental requirement of agency without necessitating a written document.
Deep Analysis
AI-powered in-depth explanation of this concept
Agency relationships form the foundation of real estate transactions, establishing the legal framework for how agents and principals interact. This question tests your understanding of what creates a valid agency relationship, which is crucial for practice. Agency requires mutual consent, meaning both parties must agree to the relationship. While written agreements are common and recommended, they aren't legally required in most states. The correct answer is 'express agreement' because agency can be established through express (oral or written) or implied conduct. This question is challenging because it tests the difference between best practices and legal requirements. Many students confuse what's customary with what's mandated by law. Understanding agency relationships connects to broader knowledge about fiduciary duties, disclosure requirements, and commission disputes.
Knowledge Background
Essential context and foundational knowledge
Agency relationships in real estate are governed by common law principles and state statutes. The fundamental requirement is mutual consent between principal and agent. California's Civil Code sections 2300-2343 outline agency relationships. While written agency agreements are required by California Civil Code § 1644 for broker representation, the underlying agency relationship can be established through express or implied consent. Understanding these distinctions helps agents properly document their relationships and avoid disputes over authority and commissions.
Think of agency like a handshake - you don't need a written document to agree to work together, but you do need to explicitly agree to the relationship.
When faced with questions about agency requirements, visualize a handshake to remember that express agreement (not necessarily written) is what creates agency.
For agency questions, remember that mutual consent is required, but it doesn't always need to be written. Look for 'express agreement' as the correct answer when written documentation isn't specified.
Real World Application
How this concept applies in actual real estate practice
Imagine a homeowner verbally asks a neighbor, 'If my house sells, would you be interested in buying it?' The neighbor expresses interest. The homeowner then tells their real estate agent, 'Show that house to my neighbor.' When the neighbor makes an offer, the homeowner refuses, claiming no agency existed. However, because the homeowner created an implied agency relationship with the neighbor through their conversation and request to show the property, an agency relationship likely existed, and the homeowner may be legally obligated to honor the offer.
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