27. According to common law, an agency relationship is created when
Answer: A
An agency relationship is created when a working agreement is reached between a licensee and a principal.
An agency relationship is established when there is a mutual agreement between a licensee and a principal, indicating that the licensee will act on behalf of the principal in real estate transactions.
A) a working agreement is reached between a licensee and a principal.
This option is correct because an agency relationship fundamentally relies on the agreement and consent between the parties involved. When a licensee and a principal establish a working agreement, it signifies the intent for the licensee to represent the principal's interests in a real estate context.
B) the licensee submits a written offer to the seller.
This option is incorrect as merely submitting a written offer does not create an agency relationship. An agency relationship requires a prior agreement that allows the licensee to act on behalf of the principal, which is not established solely by making an offer.
C) a real estate firm registers with the state licensing department.
This option is incorrect because the registration of a real estate firm with the licensing department is a regulatory requirement and does not establish an agency relationship. The agency relationship is specific to the agreement between a licensee and a principal, independent of the firm's registration.
D) a licensee shows property that is listed with his responsible broker to a potential buyer.
This option is also incorrect. While showing property is part of the duties a licensee may perform, it does not in itself create an agency relationship. There must be an explicit agreement between the licensee and the principal for an agency relationship to exist.
Conclusion
In summary, the establishment of an agency relationship is primarily based on the mutual agreement between the licensee and the principal, as highlighted in option A. The other options fail to represent the foundational requirement of consent and agreement, which is essential for creating an agency relationship in real estate practices.