Humber/Ontario Real Estate Course 4 Exam Practice

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What does the term "agency" refer to in the common law?

Regulatory duties excluding fiduciary duties.
The relationship between a seller as the principal and the buyer as the agent.
The relationship between the real estate brokerage and their client.
A contractual agreement to share commissions among agents.
A mandate to enact public policy.
A duty to provide legal advice to clients.

The correct answer is: The relationship between the real estate brokerage and their client.

The term "agency" in common law primarily refers to the relationship between a real estate brokerage and their client. This relationship is characterized by the brokerage acting on behalf of the client (the principal) to facilitate real estate transactions. Agency outlines the obligations and duties that the brokerage owes to the client, which include loyalty, disclosure, confidentiality, obedience, and accounting. This framework ensures that the interests of the client are prioritized and protected throughout the process, as the agency relationship establishes trust and fiduciary responsibilities. In real estate, this relationship is crucial because it defines how agents must conduct themselves and the level of care they owe their clients in negotiations and transactions.