A California seller files for Chapter 7 bankruptcy while a listing agreement is in effect. What is the most accurate statement about the impact on the listing agreement and the agent's authority to act?
Correct Answer
B) The bankruptcy trustee assumes control of the estate and may assume or reject the listing as an executory contract, so the seller cannot direct the agent
Chapter 7 puts the estate in the trustee's hands. A listing agreement is an executory contract the trustee may assume or reject, and until that happens the seller no longer directs the agent. Other choices: bankruptcy plainly does alter existing contracts, which is much of its point; there is no rule requiring consent from both seller and court to market; and the listing is not automatically assigned, because assumption is a choice the trustee makes.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In real estate, a client is someone to whom the agent owes fiduciary duties through an agency relationship, while a customer is a third party to whom the agent owes only honesty and fair dealing.
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
More Laws Of Agency Fiduciary Duties Questions
Under California law, the agency disclosure requirements apply to which types of property?
Under California law, when must a buyer's agent give the agency disclosure form to the buyer?
A broker who fails to promptly disclose their dual agency status is subject to:
A broker’s fiduciary obligation to protect a seller’s confidential information continues:
A broker has an exclusive agency listing on a property. If the owner sells the property, the broker is entitled to:
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