Before you read
Test yourself first: 5 questions
Question 1 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 2 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.
Question 3 of 5
A major risk of subagency for the seller is that the seller can become liable for:
Answer: B. Because the subagent acts on the seller's behalf, the seller (principal) may be held vicariously liable for the subagent's misrepresentations, which is a key reason subagency declined in favor of buyer agency.
Question 4 of 5
A buyer takes title and keeps making payments on the seller's existing mortgage, but the lender does NOT release the seller from liability. The buyer took title:
Answer: B. Taking title 'subject to' means the buyer pays the loan but the original borrower stays liable. An assumption WITH novation releases the seller.
Question 5 of 5
A company buys an old dry-cleaner site. To preserve an 'innocent landowner' defense under CERCLA, before closing it should:
Answer: B. The innocent-landowner defense requires ALL APPROPRIATE INQUIRY before purchase — satisfied by a Phase I ESA (records + site reconnaissance). Deeds and disclaimers cannot shed Superfund's strict, joint-and-several, retroactive liability.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
The principal is generally NOT liable for an agent's independent fraud the principal knew nothing about, but a broker who should have caught it through reasonable supervision can still face discipline. Salespersons act only through their broker: they are paid only by their broker and contracts belong to the brokerage, not the individual agent.
Vicarious Liability & Supervision: FAQs
Is Vicarious Liability & Supervision 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.
