What is Implied Agency?§
Implied Agency occurs when the actions, conduct, or circumstances of the involved parties suggest the existence of an agency relationship, even in the absence of a formal or written agreement. In real estate, this can happen when a broker or agent performs tasks that benefit a client, and both parties behave as if an agency relationship exists, leading to mutual legal obligations.
Examples of Implied Agency§
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Homeowner and Broker: Irwin, a homeowner, asked Bob, a broker, to help sell his home without a formal written agreement. Bob shows the house, negotiates with potential buyers, and eventually finds a buyer. Even without a written listing, the court recognized an implied agency relationship, ordering Irwin to pay Bob’s commission.
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Tenant and Agent: Jane, a tenant, frequently relies on Alice, a real estate agent, to find and show her rental properties. Though never formalized in writing, their conduct creates an implied agency where Alice acts in Jane’s best interest throughout the leasing process.
Frequently Asked Questions (FAQs)§
1. How is implied agency different from express agency?§
Implied agency is established through the actions and behavior of the parties involved rather than explicitly agreed-upon terms, whereas express agency involves a written or verbal agreement that clearly outlines the agency relationship.
2. Can implied agency be legally binding?§
Yes, implied agency can be legally binding. Courts may recognize an implied agency relationship and enforce related obligations and rights, such as payment of commissions to agents.
3. What are the risks associated with implied agency?§
Implied agency can lead to misunderstandings and legal disputes since the terms and responsibilities are not explicitly defined. Both parties may have different expectations regarding duties and compensation, leading to conflicts.
4. How can one avoid unintentional creation of an implied agency?§
To avoid unintentionally creating an implied agency, ensure all agency relationships are formalized through written agreements that clearly outline the roles, responsibilities, and compensation terms.
5. What should an agent do if they suspect an implied agency relationship is forming?§
An agent suspecting an implied agency relationship should communicate clearly with the client to formalize the relationship through a written agreement to avoid potential legal issues and misunderstandings.
Related Terms§
- Express Agency: A formal agreement creating an agency relationship, often established in writing with clear terms.
- Agency by Estoppel: An agency relationship formed when a principal leads a third party to believe that another individual is authorized to act on their behalf.
- Fiduciary Duty: The obligation of an agent to act in the best interests of the principal.
- Dual Agency: An arrangement where a single real estate agent or broker represents both the buyer and the seller in the same transaction.
Online Resources§
References§
- Goldberg, S. (2018). Real Estate Transactions. McGraw-Hill Education.
- Baker, S. (2017). Agency Law in Real Estate. Wiley.
Suggested Books for Further Studies§
- “The Law of Agency in Real Estate” by John Reilly: A comprehensive guide exploring agency law principles and their application in real estate.
- “Real Estate Law” by Marianne Jennings: Essential reading covering various aspects of real estate law, including agency relationships and implied agency.
- “Mastering Real Estate Principles” by Gerald Cortesi: A practical book for understanding the fundamental principles guiding real estate practices, emphasizing agency relationships.
