What governs the actions of a real estate broker's agents?

The correct answer is that the actions of a real estate broker's agents are governed by the warranty of authority. This concept establishes that when agents are acting on behalf of a broker, they must have the authority to perform tasks and make decisions that are consistent with the duties assigned by the broker.

In the context of real estate, when an agent represents a broker, they are expected to act within the scope of their given authority, which includes managing transactions, negotiating deals, and adhering to legal and ethical standards set forth by the broker. The warranty of authority ensures that any actions taken by the agent on behalf of the broker are legitimate, binding, and can be defended if challenged. This principle encapsulates the relationship and responsibilities between brokers and their agents.

Company policy, while important in setting internal guidelines and procedures for real estate practices, does not legally bind agents in the same way the warranty of authority does. An owners' manual might provide specific operational instructions but lacks the legal implications of authority in agency relationships. The code of ethics is crucial for guiding ethical behavior in real estate transactions, but it focuses more on conduct rather than the legal scope of the agents' powers. Thus, the warranty of authority most accurately describes the legal framework that governs agents' actions