A real estate broker lists a property for sale. A buyer approaches the broker directly, expressing interest in purchasing the property. The broker explains to the buyer that they represent the seller, but offers to show the buyer the property and present their offer. No written agreement is signed between the buyer and the broker. What type of agency, if any, has most likely been created between the broker and the buyer?
- AExpress agency
- BDesignated agency
- CNo agency relationship
- DImplied agency
Show answer & explanationAnswer & explanation
Correct answer: C. No agency relationship
In California, merely showing a property and presenting an offer to a buyer by a seller's agent does not, by itself, create an agency relationship with the buyer, especially if the broker clearly states they represent the seller. The broker is acting as a facilitator for the buyer, but without an express or implied agreement to represent the buyer's interests, no agency is formed with the buyer. The broker's primary duty remains to the seller, with a duty of honest and fair dealing to the buyer.
Why the other options are wrong
- A. Express agency requires a clear, explicit agreement, which is absent here.
- B. Designated agency occurs in dual agency situations where one agent is assigned to represent one principal; this scenario does not depict dual agency with a designated agent for the buyer.
- D. Implied agency could arise from actions, but the broker's explicit declaration of representing the seller and merely facilitating the buyer's offer typically prevents the formation of an implied buyer agency.
Creation of Agency by Conduct (Implied Agency)
An agency relationship that arises from the actions, conduct, or words of the parties, rather than from a formal written or oral agreement, but requires the understanding and acceptance of the relationship by both parties.
- No formal agreement needed
- Based on actions and behavior
- Can be unintentional, leading to legal issues
- In California, specific disclosures and agreements are required for buyer representation
Memory trick: Agency can be written, spoken, or silently shown.