What type of agreement allows one party to act on behalf of another in real estate transactions?

An agency agreement is a legal relationship in which one party, known as the agent, is authorized to act on behalf of another party, known as the principal, in real estate transactions. This type of agreement allows the agent to perform various tasks related to buying, selling, or leasing property, which can include negotiations, signing contracts, and other activities necessary to facilitate the transaction.

The key aspect of an agency agreement is the fiduciary relationship created between the agent and the principal, where the agent is expected to act in the best interests of the principal, providing loyalty and confidentiality. This relationship is foundational to real estate practice as it ensures that clients are represented and their interests are safeguarded throughout the transaction process.

Other types of agreements mentioned are related to different legal purposes. A lease agreement focuses on the rental terms between a landlord and tenant without agency representation. A partnership agreement pertains to a business arrangement between two or more parties engaging in a venture together, but it does not specifically confer the authority to act on behalf of one another in real estate transactions. A contractual agreement is a broader term that includes any formal agreement between parties but does not specifically define the agency relationship essential for real estate transactions. Hence, the agency agreement uniquely fits the definition in this context