Can a broker initial a contract change for their client?

QUESTION: I am the listing agent for a property, and the buyer’s agent is insisting that, as an agent for the buyer, they can initial a change to the contract for their client. It is my understanding that brokers cannot sign or initial a contract for their client without a power of attorney. Am I correct?

ANSWER: You are correct that an agent cannot act on their principal’s behalf without authority. Paragraph 20 of the Standard Form 2-T (Offer to Purchase and Contract) provides that “[a]ll changes, additions or deletions hereto must be in writing and signed by all parties.” Because neither the standard listing agreement nor the buyer agency agreement forms grant a broker the authority to sign for their client in a real estate transaction, an agent may not sign or initial for their client and bind them to a contract for real estate unless they are otherwise permitted to by law. A validly executed power of attorney would satisfy this requirement.

The North Carolina Court of Appeals case of Manacke v. Kurtz discusses some circumstances where an agent may obtain actual or apparent authority to sign for their client without a power of attorney. In your situation, however, it does not appear that the buyer has given the buyer’s agent actual or apparent authority to sign for the buyer. Therefore, the buyer’s agent does not have the authority to initial a change to the contract and make it binding on the buyer.

Even when an agent has been given proper written authority to sign or initial a document for a client, an agent would be well-advised to exercise such authority only if there is a record confirming that the client has had an opportunity to review the document itself (if at all possible under the circumstances) or at least comprehends its essential terms.

© Copyright 2016 - 2023. North Carolina Association of REALTORS®, Inc.

This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

Filed Under: Agency,