California Real Estate Practice Exam

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What is it called when a broker acts on behalf of a principal without authorization and later the principal accepts the action?

Agency by ratification
Unauthorized agency act
Principal acceptance
Broker prerogative

The correct answer is: Agency by ratification

When a broker acts on behalf of a principal without authorization, it is known as an unauthorized agency act. This means that the broker did not have permission from the principal to act on their behalf. However, if the principal accepts the action after it has been taken, it becomes an agency by ratification. This is when the principal retroactively approves or adopts the action of the broker. Option C, principal acceptance, is not the correct term for this scenario. Option D, broker prerogative, is also incorrect as it suggests that the broker had the right to act without authorization, which is not the case.