Difficulty: Hard

Average Score: 40%

In a jurisdiction where the common law of agency governs, when does the agency relationship between a seller and a listing broker end?

Rationale

When a transaction has occurred as specified in the listing agreement, the agency relationship between a seller and a listing broker ends.

The agency relationship is typically concluded upon the completion of the transaction as outlined in the listing agreement, which defines the terms under which the broker represents the seller. Once the conditions of the agreement are fulfilled, the broker's duties to the seller cease.

A (agency never expires) YOUR ANSWER

This choice inaccurately suggests that the agency relationship is perpetual, which is not the case. Agency relationships are established for specific transactions and terms, and they conclude when those terms are met or when either party terminates the agreement according to its provisions.

B (when all closing documents have been signed) YOUR ANSWER

While signing all closing documents is an important step in finalizing a real estate transaction, it does not necessarily mark the end of the agency relationship. The relationship concludes when the transaction specified in the listing agreement is completed, which may extend beyond merely signing documents.

C (when the deed or mortgage is signed and recorded) YOUR ANSWER

Although signing and recording the deed or mortgage is a significant part of concluding a real estate transaction, it may not represent the termination of the agency relationship. The agency may still exist until all stipulations of the listing agreement are fulfilled, as there may be additional obligations outside of the deed or mortgage itself.

D (when transaction has occurred as specified in the listing agreement) CORRECT

This is the correct choice, as the agency relationship ends when the transaction is fully executed as detailed in the listing agreement. This includes the completion of all necessary actions and terms laid out in the agreement, thus fulfilling the broker's obligations to the seller.

Conclusion

The agency relationship between a seller and a listing broker is inherently tied to the terms outlined in the listing agreement. It is designed to conclude once the specified transaction is completed, ensuring that both parties have met their obligations. Understanding when this relationship ends is critical for both real estate professionals and sellers to ensure clarity and compliance with legal standards.

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