Humber/Ontario Real Estate Course 2 Exam Practice

Which statement about terminating an agency relationship is correct?

1. Can only be terminated by agreement through mutual consent or revocation by the principal

2. Can only be ended by the completion of the contract

3. Is terminated at the point that a sale closes and not when the buyer's offer is accepted by the seller

4. Once terminated, means that all fiduciary duties owed to the client terminate at that point in time

5. Cannot be terminated once a written agreement is made

6. Is terminated automatically if either party declares bankruptcy

The correct answer is: Can only be terminated by agreement through mutual consent or revocation by the principal

In real estate transactions, an agency relationship can be terminated in several ways, but the correct statement about terminating an agency relationship is that it can only be terminated by agreement through mutual consent or revocation by the principal. This means that both the agent and the principal must agree to terminate the agency relationship, or the principal can revoke the agency relationship unilaterally. This process ensures that both parties are in agreement on ending their professional association, protecting the interests and rights of both parties involved. The other options are incorrect for the following reasons: - Option B stating that the agency relationship can only be ended by the completion of the contract is incorrect as termination can happen before the completion of the contract under certain circumstances. - Option C is incorrect because the termination of the agency relationship is not necessarily linked to when a sale closes; it depends on the terms outlined in the agreement between the parties. - Option D is incorrect because even after the agency relationship is terminated, some fiduciary duties may continue to exist, particularly regarding confidentiality and other obligations that survive the termination. - Option E is incorrect as agency relationships can be terminated even if a written agreement is in place, given the conditions for termination are met. - Option F is incorrect as bankruptcy declarations by either party do not automatically terminate the agency relationship; it will depend on the specific circumstances and terms of the agreement. Therefore, the correct answer is A, as it accurately reflects the standard procedure for terminating an agency relationship in real estate transactions.