Humber/Ontario Real Estate Course 4 Exam Practice

In an agency relationship, what is the brokerage's role?

1. Is an agent under common law.

2. Is the principal in an agency relationship.

3. Owes only fiduciary duties to a client in an agency relationship.

4. Is a third party in an agency relationship.

The correct answer is: Is an agent under common law.

In an agency relationship, the brokerage's role is to act as an agent under common law. This means that the brokerage represents either the buyer or the seller (or sometimes both) in a real estate transaction. As an agent, the brokerage has a fiduciary duty to act in the best interests of their client, which includes responsibilities such as loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care. Therefore, option A is correct. Options B, C, and D are incorrect: - Option B: The brokerage is not the principal in an agency relationship. The principal is the client that the brokerage is representing. - Option C: The brokerage owes fiduciary duties not only to the client but also to other parties involved in the transaction, such as customers and cooperating brokers. - Option D: The brokerage is not a third party in an agency relationship; it is directly involved in representing one of the parties in the transaction.