Agency & ethics decoded: authority, duties, CEA rules & AML

The single most-tested distinction in Paper 1 is who holds a LICENCE and who is REGISTERED. Get the vocabulary wrong and you lose easy marks, because the exam deliberately swaps the terms to catch you.

• •The ESTATE AGENT — the firm — holds a LICENCE granted by the Council for Estate Agencies (CEA). Only the firm is 'licensed'.
• •A SALESPERSON is REGISTERED with CEA THROUGH one licensed estate agent. A salesperson is never 'licensed' — they are registered.
• •A salesperson may be registered with only ONE estate agent at any given time. You cannot split yourself between two firms.

Passing the RES exam is a PREREQUISITE for registration, not a licence to operate. It qualifies you to be registered as a salesperson; it does not entitle you to run your own agency.

Doing estate agency work without valid registration (for example, letting a registration lapse, or acting before registration is confirmed) is an OFFENCE under the Estate Agents Act — not a mere administrative slip.

Agency law turns on AUTHORITY: the power of an agent to affect the legal position of the principal. There are two broad families — actual and apparent — and actual splits into two.

• •Actual EXPRESS authority — spelled out, e.g. in the estate agency agreement or written instructions ('market my flat at $650,000').
• •Actual IMPLIED authority — not stated but reasonably necessary to carry out the express task (e.g. authority to place a property listing follows from being told to find a buyer).
• •Apparent / OSTENSIBLE authority — the agent has no actual authority, but the principal's conduct leads a third party to REASONABLY BELIEVE the authority exists.

The critical exam point on apparent authority: where a third party reasonably believes the authority exists, the principal is BOUND even though the agent had no actual authority. The principal's own representation, not the agent's word, is what creates it.

Applied scenario: a seller tells buyers 'my agent handles everything for me' and lets the agent negotiate for months. The agent then agrees a price slightly below the seller's private floor. Because the seller's conduct clothed the agent with apparent authority, the seller can be bound to the third party — the remedy is against the agent internally, not an escape from the deal.