What defines an Agency Agreement?

An Agency Agreement is defined as the agreement between a principal and an agent for representation. In real estate, this relationship is crucial because it establishes the duties and responsibilities of the agent towards the principal, who is typically the client looking to buy, sell, or manage property. The agreement outlines the scope of authority the agent has, such as negotiating on behalf of the principal, and sets the expectations for both parties regarding communication, confidentiality, and the duration of the agreement.

This relationship is foundational in real estate transactions, as it creates a legal framework within which the agent operates, ensuring that the principal's interests are prioritized and protected. The principal relies on the agent's expertise and guidance throughout the real estate process, making this agreement essential for successful transactions.

In contrast, the other options focus on specific functions or documents in real estate but do not capture the essence of the agency relationship itself. For instance, a contract for property maintenance involves terms related to upkeep and service but does not define representation. Similarly, a transaction record between buyer and seller pertains to the documentation of an agreement but not to the agency itself, and a lease agreement governs the terms between lessor and lessee rather than establishing an agency relationship. Thus, the correct definition is the agreement that