At an open house, a listing agent engages in extended conversation with a prospective buyer, discussing the buyer's needs and financial situation in a way that leads the buyer to reasonably believe the agent is representing them. No written agreement exists. Under California law, what type of agency relationship may have been created?
Correct Answer
B) Ostensible agency, arising from conduct that causes a third party to reasonably believe a representation exists
Under California Civil Code §2300, ostensible agency exists when a principal causes a third party to reasonably believe another person is acting as their agent. In a listing context, the broker's conduct — through the actions of the listing agent — can create an ostensible agency with the buyer if that conduct reasonably leads the buyer to believe they are being represented. This exposes the agent and broker to fiduciary-like obligations and potential liability even without a written agreement.
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A real estate broker enters into a listing agreement with a seller and assigns a salesperson to handle the listing. Under California law, who holds the agency relationship with the seller?
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