What is the definition of a "contract of agency" in real estate?

The definition of a "contract of agency" in real estate is best captured by the option stating that it is a contract that allows an agent to act on behalf of the owner. This type of contract establishes a fiduciary relationship between the agent and the principal (the owner), granting the agent the legal authority to make decisions and perform actions that represent the interests of the owner in real estate transactions.

In this relationship, the agent is tasked with duties such as marketing the property, negotiating on behalf of the owner, and ensuring that the owner’s interests are prioritized throughout the transaction process. The significance of this contract lies in its ability to empower the agent to execute their role effectively while ensuring accountability and a clear understanding of obligations.

Other choices, although relevant to different aspects of real estate, do not pertain to the definition of a contract of agency. A contract binding a tenant to a rental agreement relates specifically to lease agreements, while contracts detailing property management fees address service agreements rather than agency relationships. Lastly, a contract focused solely on marketing property lacks the broader implications of representation and fiduciary duty central to a contract of agency.