A Kentucky licensee represents a seller and receives two simultaneous written offers: Offer 1 is for $298,000 with no contingencies, and Offer 2 is for $305,000 contingent on the buyer selling their current home. The seller verbally tells the licensee, 'Just pick the best one and sign it for me — I trust you.' The licensee signs the seller's name on Offer 1 without written authorization. Under Kentucky law, what is the most accurate statement about the contract signed by the licensee?
Correct Answer
A) The contract is unenforceable because a licensee may not sign a contract on behalf of a seller without written authorization, and the Statute of Frauds requires the seller's own signature
Under KRS 371.010 (Statute of Frauds), a contract for the sale of real property must be signed by the party to be charged — here, the seller. A licensee may not sign a real estate purchase contract on behalf of a client without a written power of attorney or other written authorization. A verbal instruction to 'pick the best one and sign it' does not constitute the written authority required. The contract signed by the licensee without written authorization is unenforceable against the seller, and the licensee may also face disciplinary action under KRS Chapter 324 for unauthorized practice.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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