California Real Estate Broker ExaminationAgencyEasy
A real estate agent is hired by a landlord to find a tenant for a commercial property. The agent successfully secures a tenant, negotiates the lease terms, and the lease agreement is fully executed. After the lease is signed, the agent discovers a new commercial property that would have been a better fit for the landlord. What is the agent's obligation to the landlord regarding this new discovery?
- ANo obligation, as the agency relationship terminated upon completion of the original task.
- BTo offer to represent the landlord in securing the new property, for an additional fee.
- CTo advise the landlord on how to break the existing lease for the better option.
- DTo inform the landlord of the new property, as it aligns with their previous needs.
Show answer & explanationAnswer & explanation
Correct answer: A. No obligation, as the agency relationship terminated upon completion of the original task.
An agency relationship terminates upon the completion of the task for which it was created. Once the agent successfully found a tenant and the lease was executed, their agency relationship with the landlord for that specific task concluded.
Why the other options are wrong
- B. A new service would require a new agency agreement, as the prior one ended.
- C. Advising a client to break a legal contract is unethical and potentially illegal.
- D. The duty of disclosure generally ends with the agency relationship.
Termination of Agency by Completion
An agency relationship automatically terminates when the objective or purpose for which the agency was created has been fully achieved or performed.
- Agency ends when task is done.
- No further duties are owed for that specific task.
- New tasks require a new agency agreement.
Memory trick: Agency ends by Death, Completion, Agreement, or Revocation/Renunciation.