Humber/Ontario Real Estate Course 2 Exam Practice

From a real estate perspective, which statement about agency is correct?

1. It is detailed under 'Agency Responsibilities' in professional regulations.

2. It is formed between the seller as the agent and the brokerage as the principal.

3. It originates from common law.

4. It does not include fiduciary responsibilities.

5. It only arises from formal written agreements.

6. It is defined by statutory regulations alone.

The correct answer is: It originates from common law.

In the context of real estate, the correct statement about agency is that it originates from common law. Agency relationships in real estate are based on common law principles, which have evolved over time through court decisions. Common law governs the duties and responsibilities of agents to their clients, including obligations such as loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care. The other options are incorrect for the following reasons: A. While agency responsibilities are indeed detailed in professional regulations, the concept of agency itself originates from common law. B. Agency is typically formed between the client (e.g., seller or buyer) as the principal and the real estate agent (not brokerage) as the agent, not the other way around. D. Fiduciary responsibilities, which include duties of loyalty, care, obedience, disclosure, and accounting, are inherent in an agency relationship in real estate. E. While formal written agreements can help define the terms of an agency relationship, agency can also be created through actions or implied agreements. F. While statutory regulations may provide additional guidelines or requirements regarding agency relationships, the fundamental principles of agency in real estate are based on common law.