New York Real Estate Salesperson ExaminationLaws of AgencyEasy
A real estate salesperson is working with a seller under a valid listing agreement. The seller informs the salesperson that they have accepted an offer from a buyer. Before the closing, the seller unexpectedly dies. What happens to the listing agreement?
- AIt becomes voidable at the option of the buyer.
- BIt is transferred to the seller's heirs, who can choose to continue or terminate it.
- CIt is automatically terminated.
- DIt remains valid and binding on the seller's estate.
Show answer & explanationAnswer & explanation
Correct answer: C. It is automatically terminated.
The death of either the principal (seller) or the agent (broker) automatically terminates an agency agreement. This is because agency is a personal contract.
Why the other options are wrong
- A. The death of the principal terminates the agency, it does not just make it voidable for the buyer.
- B. The agreement is terminated; it does not transfer to heirs for their discretion.
- D. Agency agreements are personal contracts and generally do not bind the estate upon the principal's death.
Termination of Agency by Death
The automatic termination of an agency relationship upon the death of either the principal or the agent.
- Agency is a personal contract.
- Death automatically ends the relationship.
- Cannot be continued by heirs or estate without new agreement.
Memory trick: Completion, mutual consent, expiration, or operation of law, ends the show.