Maine Real Estate License Practice Exam

When does an agency relationship typically commence?

1. When the parties have an oral agreement

2. After the first showing of a property

3. Upon writing and mutual agreement

4. Once payment is received by the agent

The correct answer is: Upon writing and mutual agreement

An agency relationship typically commences upon writing and mutual agreement because this ensures that both parties have a clear and documented understanding of their roles and responsibilities. A written agreement helps to formalize the relationship, providing legal protection and clarity for both the agent and the principal. It outlines the terms of the relationship, including obligations, duties, and the scope of services provided. Although an oral agreement can establish an agency relationship, it may be harder to enforce compared to a written one. Additionally, while the first showing of a property could imply the beginning of an agency relationship, it does not guarantee that both parties have formally agreed to the terms, which is crucial. Lastly, receiving payment does not in itself establish an agency relationship; it is the agreement and mutual understanding that are foundational to this dynamic. Thus, the emphasis on a written and mutual agreement captures the necessary legal framework that defines agency in real estate.