California Real Estate Practice Exam

Mr. "O" intentionally causes Mr. "G" to believe that a real estate broker is his agent. In fact, the broker is not Mr. "O's" agent. However, under the above conditions, the agency relationship is:

1. Actual

2. Implied

3. Nonexistent

4. Ostensible

The correct answer is: Actual

The situation described illustrates an "ostensible" agency relationship, which is characterized by one party causing another to believe that a third party is acting as their agent. In this case, Mr. "O" is leading Mr. "G" to believe that a real estate broker is his agent, even though that is not the case. This misrepresentation creates an impression of agency, allowing Mr. "G" to potentially rely on the actions of the broker as if there were a real agency relationship in place. In terms of agency types, an actual agency relationship requires a clear agreement between the principal and the agent, signifying that the agent is authorized to act on the principal's behalf. In this scenario, since there is no agreement in place and the broker is not recognized as an agent of Mr. "O," the agency relationship cannot be classified as actual. The term "implied" refers to a situation where an agent's actions suggest an agency relationship, but here, Mr. "O" is actively deceiving Mr. "G." By analyzing the nuances of this scenario, it becomes evident that the best description of the relationship is "ostensible." This type of agency deals with the perceptions created by one party's actions, and it's