medium · National Real Estate Exam
An agent is authorized only to 'find a buyer'. The agent tells a prospective buyer that the seller will take back a second mortgage for 10% of the price. The seller has never discussed this.
If the buyer sues to enforce the second mortgage, why would they likely lose?
- Because the agent's promise was oral, and oral promises about property financing terms are unenforceable under the Statute of Frauds.
- Because seller-financed second mortgages are prohibited outright under federal RESPA lending guidelines and disclosure rules.
- Because the agent lacked a written, notarized power of attorney authorizing them to sign binding loan documents on the seller's behalf.
- Because 'finding a buyer' does not carry the implied or apparent authority to settle complex financing terms on the seller's behalf.
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