California Real Estate Practice Exam 2025 - Free Real Estate Practice Questions and Study Guide

A warranty of authority is a guarantee from the principal (person or organization giving authority) that they can legally hold the agent responsible for any actions they take on the principal's behalf. This means that the principal will take responsibility for any legal or financial consequences of the agent's actions within the scope of their authority. Option A, limited liability for the salesperson, is incorrect because a warranty of authority does not limit liability for the salesperson, but rather holds the principal responsible. Option B, the agent's right to make decisions, is incorrect because a warranty of authority does not guarantee the agent's right to make decisions, but rather clarifies the extent of their authority. Option D, the confidentiality of client information, is incorrect because a warranty of authority is not related to the confidentiality of client information, but rather to the principal-agent relationship.