43. A licensee is attempting to sell property under an exclusive agency listing. The entire block where the property is located has been condemned under the right of eminent domain. Which of the following is true of the licensee's agency relationship with the owner?
Answer: D
It is terminated.
The licensee's agency relationship with the owner is terminated due to the condemnation of the entire block under the right of eminent domain. This legal action results in the owner losing the property, thereby nullifying any existing agency agreement.
A) It is a general agency relationship.
This option is incorrect because a general agency relationship allows the agent to act on behalf of the principal in a broader scope of activities, which is not applicable here. The situation involves a specific property that has been condemned, leading to the termination of the agency.
B) It is an agency with an interest, allowing the licensee to collect a higher commission for the sale of the owner's house to the city.
This statement is incorrect as the agency relationship does not continue in this scenario. Once the property is condemned, the licensee cannot act on behalf of the owner to sell the property to the city, thus no commission can be earned.
C) It remains a special agency, allowing the licensee to handle the search for the next property purchased by the owner.
This option is incorrect because a special agency is limited to specific tasks, which in this case has been rendered impossible due to the loss of the property. The licensee cannot search for a new property on behalf of the owner since the existing agency is terminated.
D) It is terminated.
This is the correct option, as the condemnation of the property under eminent domain effectively ends the agency relationship. The owner no longer has the property to sell, and thus the licensee's authority to act on the owner's behalf is nullified.
Conclusion
The licensee's agency relationship is definitively terminated due to the legal action of eminent domain, which eliminates the owner's property rights. All other options fail to recognize the implications of condemnation on the agency relationship, as they either misinterpret the nature of the agency or suggest continuance in a situation where the agency can no longer function.