Agency by ratification occurs when:

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Agency by ratification occurs when a principal approves of an agent's actions after those actions have taken place, even if the agent originally acted without authority. This concept is significant in real estate transactions and other agency relationships because it allows for the validation of actions taken by an agent that might not have been authorized at the time. Essentially, the principal retroactively affirms the agent's actions, making them binding as if the agent had authority from the beginning.

In many situations, especially in real estate, agents may operate in good faith or under the assumption that their actions are within the realm of their authority. When the principal later reviews these actions and formally approves them, it not only legitimizes the agent’s conduct but also strengthens the relationship between the principal and the agent, leading to a more cohesive working relationship.

Understanding this concept is crucial for managing brokers and agents alike, as it helps clarify the legal ramifications of agency relationships and the importance of communication between all parties involved in a transaction.

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