Understanding agency law
REALTORS® and their clients work within a legal
relationship called agency that exists between the client
and the brokerage.
 An
agent represents the client on behalf of the brokerage.
The essence of the agency relationship is that the agent
is authorized to represent the client in a real estate
transaction. Agents are obligated to protect and promote
the best interests of their clients and generally have
the following legal and ethical duties.
- Loyalty - to protect their client’s negotiating
position and to work honestly in the best interests
of their client.
- Obedience - to carry out all lawful instructions
of their client.
- Confidentiality - to keep the confidences of their
client.
- Competence - to exercise reasonable care and skill
in performing all assigned duties.
- Disclosure - to disclose all relevant information
known by the agent that may influence their client’s
decisions.
- Accounting - to account for all money and property
held by the agent while acting for their client.
The client has the duty to pay any agreed
compensation to the brokerage.
Single Agency occurs when both the buyer
and seller are represented by their own agent from different
brokerages. Each agent owes their client the duties
described above.
Dual Agency occurs when one agent, or
two agents from the same brokerage, concurrently represent
the buyer
and seller, or two or more buyers, on a transaction.
Since the dual agent(s) represent two
clients with conflicting interests, his/her loyalty,
confidentiality and disclosure obligations change. The
dual agent must disclose to both clients all known defects
and information that may materially affect the marketability
or value of the property. There is open disclosure of
all information to the clients with the following exceptions. The dual agent will not, without prior written permission
of the applicable client, disclose to the other client(s):
- That the buyer will pay a price higher than the
price offered or a countered price;
- That the seller will accept a price less than the
listed price;
- The reason the seller is selling and the buyer
is buying; and
- For multiple buyers, the terms and conditions of
competing offers.
It’s important to understand what
legal responsibilities your real estate salesperson
has to you and to other parties in the transactions.
Ask your salesperson to explain what type of agency
relationship you have with him or her and with the brokerage
company. |
