Agency
Agency law defines the relationship between a licensee and the person the licensee represents. This chapter explains how agency is created, the fiduciary duties owed, and how agency ends. Colorado modifies these national concepts through its transaction-broker default and prohibition on dual agency, which are covered in the state chapters.
Creating Agency and Fiduciary Duties
An agency relationship is usually created by an express agreement but can also arise by implication or ratification. Once created, the agent owes fiduciary duties often summarized as care, obedience, loyalty, disclosure, accounting, and confidentiality. These duties require the agent to put the principal's interests first. The client is the principal, while a customer is a party the agent deals with but does not represent.
Types of Agents and Disclosure
A special agent has limited authority for a specific task, which is typical in real estate. A general agent has broader ongoing authority, such as a property manager. Licensees must disclose whom they represent so that buyers and sellers understand the relationship. Misrepresenting representation or failing to disclose material facts can lead to liability and license discipline.
Termination of Agency
Agency ends by completion of the purpose, expiration of the term, mutual agreement, or revocation. It can also terminate by operation of law through death, incapacity, or bankruptcy of a party. Even after agency ends, the duty of confidentiality about the former client's information generally continues. Knowing how and when agency terminates protects both the licensee and the client.