Humber/Ontario Real Estate Course 4 Exam Practice

What authority does a real estate brokerage have under a representation agreement?

1. To change zoning of properties.

2. To perform functions through implied and express authorities in a representation agreement.

3. To commit the buyer or seller to financing agreements.

4. To receive full payment directly from the buyer.

5. To list all property types irrespective of owner’s consent.

The correct answer is: To perform functions through implied and express authorities in a representation agreement.

A real estate brokerage operates under a representation agreement, which grants it certain authorities based on the agent-client relationship established through that agreement. By performing functions through implied and express authorities, the brokerage can act on behalf of the client in a number of essential ways. Express authority comes from the specific terms laid out in the representation agreement, while implied authority arises from the actions necessary to fulfill the obligations set forth in that agreement. This means that the brokerage can perform certain tasks, like negotiating offers, marketing the property, or communicating with other agents, as long as those actions align with the client's best interests and are within the scope of the agreement. The official powers granted to the brokerage are thus limited to what the client has consented to, ensuring that the client's interests are protected. The other choices suggest actions that either exceed the normal scope of a brokerage's authority under a representation agreement or imply a lack of required consent from clients or property owners. For example, changing zoning requires governmental approval, while committing clients to financing agreements or listing properties without consent goes beyond normal practices that a real estate brokerage can engage in.