California Real Estate SalespersonLaws of Agency and Fiduciary DutiesMedium
A listing agreement states the agency relationship exists 'until the property is sold, or the listing period expires, whichever occurs first.' Escrow closes and title transfers to the buyer. What effect does this have on the listing broker's agency relationship with the seller?
- AThe agency converts automatically into a property management agreement
- BThe agency automatically terminates because its purpose has been fully accomplished
- CThe agency continues indefinitely until formally terminated in writing
- DThe agency continues until the broker is paid the full commission
Show answer & explanationAnswer & explanation
Correct answer: B. The agency automatically terminates because its purpose has been fully accomplished
An agency relationship terminates by operation of law once its purpose has been fully accomplished, such as the successful close of escrow on the sale of the property. No further written termination is needed because the agency's objective — completing the sale — has been achieved.
Why the other options are wrong
- A. Incorrect; nothing in the facts suggests conversion to a management agreement.
- C. Incorrect; agency does not require a separate written termination once its purpose is fulfilled.
- D. Incorrect; unpaid commission does not keep an already-completed agency alive.
Termination by Fulfillment of Purpose
An agency automatically ends once its stated objective has been fully accomplished, such as the successful completion of a sale.
- No formal written termination is required.
- Applies once escrow closes/title transfers.
- Distinct from termination by expiration, death, or revocation.
Memory trick: Mission accomplished, agency concluded.