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General Agent

DEFINITION

Agent with the authority to execute broad tasks with the intent of managing a business.

EXPLANATION

A general agent is the most common type of real estate agent and makes up the bulk of real estate agent representation. General agents represent the principal in real estate transactions such as buying, selling, and renting property. These agents can deal in any type of property, be it residential, commercial, industrial, or mixed use buildings, and do not require a special license.

The duties of a general agent include: drafting real estate paperwork, showing properties, and closing transactions. They have the legal authority to perform any acts required to buy and sale real estate within the confines of the law.

A general agent is a party that is authorized at the discretion of the principal to engage in real property transactions over a sustained period of time. (Civil Code Section 2295) A general agent is hired with the understanding that he or she is required to perform multiple tasks. Unlike other agents, a general agent is an agent that has a wide range of authority with regard to the decision-making process and acts on behalf of the hiring party with the capacity to execute various positions, including real property transactions.

In a general agency, the broker of the agent can be held responsible for the acts of the general agent. This means if the agent acts unlawfully, the broker could then be sued for the actions of the agent.

Example

Edwin, a successful businessman, wants to upgrade and buy a home. As a busy man who travels the world, Edwin does not have the necessary time to find a home and be involved in negotiations. Edwin has an assistant whom he trusts greatly. His manager Rachael is given the authority to act on behalf of Edwin and find a new home and sell his existing one.

What is the official role of Edwin’s manager Rachael?

Rachael is technically considered a general agent because of the wide ranging authority granted to her. Not only is Rachael responsible to find the new home, but she is also responsible to sell the house. Clearly the extent of  Rachael’s role means Rachael is a general agent.

Difference Between a General Agent and Special Agent

A special agent is an individual tasked with conducting a single transaction that, once completed, terminates the agency dynamic. According to the civil code, a special agent is distinguished from a general agent in that a general agent is employed with a broad scope of responsibilities, while a special agent has a specific task to perform, with no continuity of service. Understanding the difference between a general and special agent plays a central role in defining the roles of the agent and the agency dynamic.

Agents and brokers are special agents because their task is to represent the buyer or seller and their role does not extend beyond that. A general agent might, however, perform the tasks of a general agent, along with some potentially additional tasks such as getting the borrower approved for a loan. Real estate brokers typically do not have the authority to make decisions on behalf of the principal, unless the principal authorizes such actions.

Real estate brokers and agents do not have the authority to act as a general agent, because they are not licensed as such. Real estate agents by law are licensed as special agents. A special agent legally is defined as a party who performs a onetime act on behalf of another with the expectation of receiving a commission upon the execution of the property transaction. Because a real estate broker is almost always a special agent that can only act on behalf of the principal, rather than act for the principal, a broker must be authorized with a power of attorney to act in place of the principal.

For example, a broker does not have the authority to convey title on behalf of the principal, unless he or she was is granted authority in writing to carry out such duties. The authority given to brokers grants the broker the right to solicit offers from prospective buyers, thereby granting them the right to be compensated regardless of who the buyer is or how the property is sold.

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