Legal responsibility a broker holds for the actions of their affiliated agents performed within the scope of their work.
Why Vicarious Liability matters on the exam
This term belongs to Agency. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Vicarious Liability
Every Freehold question shows why the right answer is right — and cites its source.
The legal principle under which a broker may be held liable for the wrongful acts of an affiliated licensee performed within the scope of their real estate duties is called:
Novation, substituting a new party or obligation in place of the original one entirely
Subrogation, one party stepping into the legal shoes of another after paying a claim
Escheat, property reverting to the state when an owner dies without heirs or a will
Vicarious liability
Show answer & explanation
Vicarious liability — Vicarious liability holds a broker responsible for an agent's acts committed within the scope of the agency relationship, even without the broker's direct involvement.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
Vicarious liability primarily concerns which relationship?
Between two entirely unrelated brokerages competing over that very same listing
Between a home buyer and their mortgage lender
Between an appraiser and the lender
Between a broker and the affiliated licensees acting on the brokerage's behalf
Show answer & explanation
Between a broker and the affiliated licensees acting on the brokerage's behalf — Vicarious liability arises from the broker-agent relationship, holding the broker accountable for acts an affiliated licensee performs within the scope of that relationship.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
A brokerage is sued after an agent misrepresents square footage to a buyer. The buyer's attorney names both the agent and the broker as defendants even though the broker never spoke with the buyer. This is most likely an application of:
Vicarious liability
Escheat
Adverse possession of the property
The doctrine of laches
Show answer & explanation
Vicarious liability — Because the agent's misrepresentation occurred while conducting brokerage business, the broker can be named as a defendant under vicarious liability principles even absent personal involvement.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
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