Agency Law – Agency Relationship

Realtors work within a legal relationship called agency.  The agency relationship exists between the client and the brokerage.

A Realtor represents the client which creates fiduciary obligations.  The Agency relationship can be created by a contract, such as a listing agreement or buyer agency agreement, or it can be implied from the actions of the parties.  It is always preferable to clarify a transaction through discussion and a written agreement.

Realtors generally have legal and ethical (fiduciary) duties inclusive of:

• Loyalty – protecting the client’s interests and to act and promote the best interests/negotiations on behalf of their client;
• Obedience – to carry out all lawful instructions of the client;
• Confidentiality – keep the confidences of their client;
• Care & Skill – to perform at a competent level expected of professionals in real estate;
• Disclosure – disclose all relevant information know by the realtor that could influence their client’s decisions;
• Accounting – must account for all money and property entrusted to the Realtor while acting for their client.

AGENCIES:

SINGLE AGENCY:
When both the buyer and seller are represented by their own Realtor from different companies (brokerages).

DUAL AGENCY:
Is a relationship in which a brokerage, a broker or a realtor represents both the buyer and the seller in the same transaction.  Dual Agency is strictly regulated.

In dual agency the realtor represents two clients with conflicting interests and therefore loyalty, confidentiality and disclosure obligations will change. The realtor in dual agency must disclose to both clients all known defects and any information that may affect the marketability or value of the property. There is open disclosure of information to the clients with two exceptions. The realtor in dual agency will not, without written permission disclose to a client – that the buyer would pay a price higher than the offered or countered price; nor that the seller will accept a price less than the property is listed for;  the reason the parties are selling or buying.