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Inherent Authority

DEFINITION

The agent’s inherent power to act on behalf of their client, even if the act is not expressly indicated in the agency agreement. This means if the client requires the agent do X, and X requires doing Y, then the agent has the inherent authority to do Y to achieve X as long as Y does not violate the contract, the law, or the goals of the client.

EXPLANATION

The agency agreement will highlight the role of the agent and what is expected of them. Naturally, not every detail of the agent’s job can clearly be defined as each transaction is different and may require different tasks. This is referred to as inherent authority. Inherent authority refers to an agent’s ability to perform tasks that are inherently needed to successfully complete a transaction. While an agent’s responsibility varies for each transaction, certain roles do not vary, including holding an open house, creating brochures, listing the property on MLS, and other similar actions.

In case of an emergency, the agent’s authority may be increased when an immediate action is needed. While an agent cannot make decisions for the principal, agents have the authorization to perform tasks on behalf of the principal.

Inherent authority differs from actual authority which is expressly stated in the agreement. An agent has the authority to act on behalf of the principal as expressed through the agency agreement. The agreement will indicate the actual authority of the agent. Actual authority is the expressed authority of the agent according to the agency agreement. It also occurs when the principal’s words or actions cause the agent to believe he or she has the authority to carry out a specific act. Agents have the right to conduct any action to close the transaction insofar as said action is not unlawful or in violation of the agency agreement.

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