California Real Estate SalespersonLaws of Agency and Fiduciary DutiesHard
A broker holds a limited power of attorney coupled with a financial interest in property she is authorized to sell on behalf of an incapacitated principal, using proceeds to satisfy a debt owed to her. Which characteristic distinguishes this arrangement from an ordinary agency relationship?
- AIt automatically terminates upon the principal's incapacity
- BIt can be freely revoked by the principal at any time without consequence
- CIt requires no written authorization since the broker has a personal stake
- DIt is an agency coupled with an interest and cannot be unilaterally revoked by the principal
Show answer & explanationAnswer & explanation
Correct answer: D. It is an agency coupled with an interest and cannot be unilaterally revoked by the principal
An agency coupled with an interest exists when the agent has a genuine personal interest in the subject matter beyond mere compensation, such as security for a debt. Unlike ordinary agencies, this type survives the principal's incapacity and cannot be revoked by the principal alone, because doing so would defeat the agent's underlying interest.
Why the other options are wrong
- A. Incorrect; agency coupled with an interest specifically survives incapacity, unlike ordinary agency.
- B. Incorrect; this is precisely the opposite of what distinguishes this special agency type.
- C. Incorrect; written authorization is still generally required regardless of the agent's personal stake.
Agency Coupled With an Interest
A special agency where the agent holds a personal legal or financial interest in the subject property, making the agency irrevocable by the principal and durable beyond incapacity or death.
- Survives principal's death or incapacity.
- Cannot be revoked unilaterally by the principal.
- Distinguished from ordinary agencies that terminate more easily.
Memory trick: Skin in the game means the principal can't just kick the agent out.