RealTown Words

An actual agency relationship that arises by the actions of the parties rather than by express agreement. For example, an owner knows a broker is showing the owner’s vacant lot to prospective buyers without authority to do so. Unless the owner takes steps to stop such unauthorized showings, the law considers that third parties have just cause to believe the broker to be the owner’s agent. Thus, the owner could become liable for certain acts of the “owner’s broker.” This situation is an ostensible agency because on the surface an agency appears to exist. Once this type of agency is created, the owner is prevented (by estoppel) from denying its existence.