Principal duties to an agent: Which statement is correct?

• A. To pay commission
• B. Duty to indemnify the agent
• C. Commission is due when the title has been exchanged for money
• D. If a seller and buyer conspired to wait for the listing to expire and finish the deal, the brokerage will be entitled to the commission

Answer: (A)

The key obligation of a principal to an agent is to compensate the agent for the services provided. In a real estate relationship, the agent earns their commission under the terms of the agreement when their efforts lead to a sale and the transaction closes (or as otherwise specified in the contract). Indemnification or reimbursement can come into play in certain circumstances, but they’re conditional and not as universal as the duty to pay the agreed commission. Timing and entitlement of a commission can also depend on contract specifics and other factors like protections or closing requirements, but the principal’s fundamental duty remains paying the commission for the agent’s work.