Actual Authority
Definition and meaning of Actual Authority in real estate.
Actual authority is the specific power that a principal intentionally confers upon an agent, either through explicit written or oral instructions, or through actions that imply such consent.
In more detail
This legal concept defines the boundaries of what a real estate agent, property manager, or attorney-in-fact can legally do on behalf of their client. Actual authority is divided into express authority, which is detailed in a written agreement like a listing contract, and implied authority, which includes necessary tasks required to carry out the express orders.
If an agent acts within their actual authority, their actions legally bind the principal to agreements made with third parties. If they exceed this authority, the principal may not be bound, and the agent could face legal liability for breach of duty.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Also known as | Real authority |
| Types | Express authority and implied authority |
| Established by | Written listing contracts, power of attorney, or verbal agreements |
A home seller signs a listing agreement giving their real estate broker the actual authority to market the property and list it on the local service.
Frequently asked questions
What is the difference between actual authority and apparent authority?
Actual authority is the power explicitly given to the agent by the principal, whereas apparent authority arises when a principal leads a third party to believe the agent has power, even if they do not.
Can actual authority be granted verbally in real estate?
While some actual authority can be implied or spoken, most states require major transactions, like selling a home, to have written authorization under the statute of frauds.
What happens if a property manager exceeds their actual authority?
The property owner may legally reject any unauthorized contracts, and the property manager could be held personally liable to the third party for any damages caused.
Related terms
Sources & references
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