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Ratification

DEFINITION

Approval or authorization of an act typically by a vote or in the context of real estate by the direction of the principal.

EXPLANATION

Ratification is the approval or authorization of an act. Agency by ratification occurs when an individual conducts unauthorized real estate activity on behalf of another party, but which the “principal” later accepts and recognizes. (Although the other party is technically not a principal until he or she accepts the agent’s actions.)

If the principal does agree to an agency by ratification, all of the agent’s actions are ratified, not just a portion of them. Furthermore, if the principal is informed of the unauthorized actions of the agent and fails to reject those actions, they enter into an agency by ratification by default.

An agency by ratification is established when the principal accepts the unauthorized actions of the salesperson. This means a party will inaccurately claim to be an agent for someone else when, in fact, members of said party are not; however, this claim may be leveled should the party act in that capacity and the principal recognizes it. For example, imagine that a real estate agent finds a buyer for the seller of a house without an agreement. If the agent has the buyer sign a purchase contract, the only required activity for the transaction to occur is for the seller to provide his or her signature. The seller’s acceptance signifies a ratification of the transaction. Much like other real estate agreements, the agreement must be in writing.

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