Agency by Necessity
Definition and meaning of Agency by Necessity in real estate.
Agency by necessity is an agency relationship that is created by law in an emergency situation where it is impossible to contact the principal, and immediate action is required to protect the principal's property or financial interests. In these rare cases, a person is granted the legal authority to act as an agent without prior consent.
In more detail
For a court to recognize an agency by necessity, several strict conditions must be met. There must be an actual, immediate emergency, it must be practically impossible to communicate with the property owner, and the agent's actions must be taken in good faith to prevent loss.
In modern real estate, this concept is less common due to instant global communication, but it can still arise. For instance, if a property manager cannot reach an owner during a natural disaster, they may have the authority to contract for emergency repairs.
Key facts
| Category | Buying & Selling |
|---|---|
| Prerequisite | An immediate emergency and the inability to contact the principal |
| Legal justification | To prevent imminent physical or financial loss to the property |
| Modern status | Rarely invoked today due to instant communication technology |
A property manager is unable to contact an overseas owner when a pipe bursts, so they hire a contractor to repair the water damage, acting under the doctrine of agency by necessity.
Frequently asked questions
Does a neighbor have agency by necessity to fix my property?
Typically no, agency by necessity usually requires an existing relationship, such as a property manager or bailee, rather than a well-meaning neighbor.
Can an agent by necessity charge the owner for their expenses?
Yes, if the court finds a valid agency by necessity existed, the agent has the right to be reimbursed by the principal for expenses reasonably incurred to protect the property.