Question 1

What is an undisclosed principal in Florida agency law?

Accepted Answer

Undisclosed principal: a person who authorizes an agent to act on their behalf without revealing their identity to third parties. The third party: deals with the agent believing the agent is acting on their own behalf (not knowing that a principal exists). In FL: the undisclosed principal is bound by the agent’s authorized acts (the third party can enforce the contract against the principal once their identity is discovered). The agent: is also personally liable on the contract (because the third party believed they were contracting with the agent). Common: in real estate (a buyer uses an agent to purchase property without revealing the buyer’s identity).

Question 2

When can a third party sue an undisclosed principal in Florida?

Accepted Answer

Suit against principal: the third party can sue the undisclosed principal when: the third party discovers the principal’s identity, the agent was acting within the scope of their authority, and the contract was within the agent’s actual or apparent authority. The third party: can choose to sue either the agent or the principal (or both). Election: once the third party discovers the principal: they must elect to pursue either the agent or the principal (in some jurisdictions; FL follows the general rule that both remain liable until the judgment is satisfied). The principal: can raise any defenses they would have had against the agent.

Question 3

What are the ethical considerations of undisclosed principals in Florida real estate?

Accepted Answer

Ethics: FL law does not prohibit undisclosed principals in real estate (it is common for buyers to use LLCs or agents to hide their identity). However: the agent must not make misrepresentations (if asked directly: "Who is the buyer?" the agent should not lie; they can decline to answer), the agent must comply with disclosure requirements (Section 475.278: the brokerage relationship must be disclosed; the principal’s identity need not be), and the seller may have concerns (some sellers want to know who they are selling to; the contract should address any buyer-identity requirements). Common use: celebrities, developers, and investors use undisclosed principals to avoid: driving up the price, attracting media attention, or tipping off competitors.

Undisclosed Principal Agency Law

Undisclosed Principal in Florida Agency Law

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Third-Party Rights

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