41. 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 understanding and agreement between the licensee and the principal, outlining the terms of their partnership and responsibilities.
A) a working agreement is reached between a licensee and a principal
This option is correct because the formation of an agency relationship fundamentally relies on the agreement between the parties involved. The agreement sets forth the expectations, duties, and rights of both the licensee and the principal, thereby establishing the legal framework for their relationship.
B) the licensee submits a written offer to the seller
This option is incorrect because merely submitting a written offer does not establish an agency relationship. While it is an important action in real estate transactions, it does not create the necessary mutual agreement and understanding that define an agency.
C) a real estate firm registers with the state licensing department
This option is incorrect as the registration of a real estate firm does not initiate an agency relationship. Registration is a regulatory requirement but does not involve the mutual consent or agreement between a licensee and a principal needed to form an agency.
D) a licensee shows property that is listed with his responsible broker to a potential buyer
This option is incorrect because showing property does not inherently create an agency relationship. This action can occur without a formal agreement being in place, and thus it does not fulfill the criteria for establishing an agency.
Conclusion
The correct answer, A, clearly identifies that an agency relationship is established through a working agreement between the licensee and the principal, which is essential for defining their roles and responsibilities. The other options fail to capture the necessary elements of mutual agreement and understanding that are crucial for establishing an agency relationship.