Broker of record at firm with five experienced associate licensees becomes hospitalized for long-term mental health treatment. What happens to listing agreements?
Correct Answer
B) Mental incapacity terminates listing agreements
Under California agency law and general contract law principles, mental incapacity of the principal (the broker, who is the contracting party on listing agreements) terminates the agency relationship as a matter of law. The listing agreement is a contract for personal professional services tied specifically to the broker's license and judgment — when that capacity is lost, the contract cannot continue. The DRE does not step in to supervise the associates, and the associates themselves are not parties to the listing contract, so no legal mechanism exists for them to simply continue servicing those listings without new agreements.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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- → A Rhode Island licensee encounters a listing contract is drafted. What should the licensee remember?
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- → Which Rhode Island rule applies when a listing agreement lists property with a multiple listing service?
- → A Rhode Island licensee encounters a listing agreement lets the principal broker retain a portion of deposit money upon buyer default. What should the licensee remember?
- → A Hawaii licensee is reviewing the commission asks to inspect escrow and trust records. What is the best answer?
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