A licensee has signed a 90-day exclusive agency agreement with a seller. Upon the death of the seller, which of the following is true of the licensee's agency?
The agency agreement automatically terminates.
The death of the seller results in the automatic termination of the agency agreement, as agency relationships require a living principal to maintain their validity. When a principal (in this case, the seller) dies, the agency relationship ceases to exist, and the licensee no longer has the authority to act on behalf of the seller.
This statement is accurate because the death of the seller nullifies the agency agreement, as agency relationships are inherently tied to the living status of the principal. Without a living seller, the licensee cannot continue to represent the seller’s interests.
This option is incorrect because the agency does not automatically transfer to the seller's heirs upon the seller's death. The heirs may have their own rights and interests in the property, but the original agency agreement does not extend to them unless a new agreement is established.
This choice is misleading as the agency relationship cannot continue after the seller's death. Even if the property remains unsold, the death of the principal means that the agency has ended and the licensee can no longer act on the seller's behalf.
This statement is also incorrect because the settling of the seller's estate does not reinstate the agency agreement. The agency relationship is terminated upon the seller's death, regardless of any ongoing estate proceedings.
In summary, the death of a seller who has entered into an exclusive agency agreement leads to the automatic termination of that agreement. The agency relationship is contingent upon the principal being alive, and thus any actions taken by the licensee following the seller’s death would be unauthorized. This principle underscores the importance of the principal's existence in maintaining valid agency relationships in real estate transactions.
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