NOT created by: paying commission — compensation ≠ agency
Before you read
Test yourself first: 5 questions
Question 1 of 5
Agency created when a principal accepts or affirms the prior unauthorized acts of someone acting on the principal's behalf is agency by:
Answer: B. Agency by ratification occurs when a principal approves or accepts acts that were performed without prior authority, retroactively creating the agency.
Question 2 of 5
Dual agency occurs when:
Answer: B. Dual agency exists when the same brokerage (or agent) represents both buyer and seller in the same transaction, creating divided loyalties.
Question 3 of 5
A listing agent who, without a buyer-agency agreement, also helps a buyer write an offer on the agent's own listing risks creating:
Answer: B. Advising both the seller-client and an unrepresented buyer can create an implied or undisclosed dual agency if loyalties shift without proper disclosure and consent.
Question 4 of 5
A principal fires the agent before the listing expires and without cause. This unilateral ending of the agency by the principal is called:
Answer: B. When the principal ends the agency, it is revocation; when the agent ends it, it is renunciation. A wrongful revocation may expose the principal to liability for damages.
Question 5 of 5
An agent who walks away from the listing and stops performing, ending the agency from the agent's side, has committed:
Answer: B. Renunciation is the agent's unilateral termination of the agency; like wrongful revocation by a principal, a wrongful renunciation can expose the agent to liability.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Created by: express agreement (listing/buyer rep), implied conduct, ratification, estoppel
- NOT created by: paying commission — compensation ≠ agency
- Ends by: performance, expiration, mutual consent, revocation/renunciation (may owe damages)
- Ends by law: death/incapacity of either party, destruction of property, bankruptcy
- Agency is personal — it can't be assigned to another agent
Creating & Ending Agency: FAQs
Is Creating & Ending Agency on the real estate exam?
Yes. Agency & Fiduciary Duties is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
