Maine Real Estate License Practice Exam

If a licensed agent leaves their brokerage firm, what happens to the contracts associated with their clients?

1. The contract stays with the original company

2. The contract moves to the new company with the agent

3. The contract is null and void

4. The contract becomes voidable

The correct answer is: The contract stays with the original company

When a licensed agent leaves their brokerage firm, the contracts associated with their clients remain with the original brokerage. This principle is grounded in the legal framework governing real estate transactions, where the brokerage is recognized as the entity that holds the listings and contracts, rather than the individual agent. Real estate agreements typically specify that the brokerage, as the licensed entity, retains ownership of contracts even if an agent changes affiliations. This ensures continuity and consistency in client representation and maintains the contractual relationships established by the brokerage. While agents may build strong personal relationships with their clients, those relationships operate under the umbrella of the brokerage's authority and legal ownership of the contracts. This means that the original company continues to have the responsibility to manage and fulfill the terms of those contracts, unless an explicit agreement is made otherwise during the transition. In contrast, other choices suggest different outcomes that are not reflective of the actual practices and legal standings in real estate. A contract moving with the agent or becoming void would disrupt the stability of client service and could lead to legal complications. Therefore, the correct understanding is that upon the agent's departure, client contracts remain legally with the original brokerage.