Agency by Ratification
Definition and meaning of Agency by Ratification in real estate.
Agency by ratification is a legal relationship created when a principal approves and accepts the unauthorized actions of an agent after the actions have already occurred. This retroactive approval binds the principal to the contract or transaction as if the agent had been authorized from the beginning.
In more detail
In real estate, this occurs when an agent acts without prior permission but the principal later signs off on the deal. For the ratification to be legally binding, the principal must have full knowledge of all material facts surrounding the transaction. If the principal accepts the benefits of the transaction, such as keeping a buyer's deposit, courts will often find that ratification has occurred.
This concept is important for protecting parties who acted in good faith, believing the agent had authority. However, relying on ratification is risky because the principal has no obligation to approve the unauthorized acts.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Also known as | Ratified agency |
| Key requirement | Principal's full knowledge of facts |
| Main risk | Principal may refuse to ratify |
A real estate agent signs a listing agreement on behalf of a homeowner who is out of the country without a power of attorney, and when the homeowner returns, they approve the signature and proceed with the sale.
Frequently asked questions
Can a principal reject an agent's unauthorized actions?
Yes, a principal has the right to reject any unauthorized actions taken by an agent, in which case no agency relationship is formed and the agent may be held personally liable.
Does ratification have to be in writing?
In many states, if the underlying contract must be in writing (such as a home sale contract under the statute of frauds), the ratification of the agent's authority must also be in writing.