Agency
Agency law defines the legal relationship between a licensee and the people they serve. This chapter covers how agency is created, the fiduciary duties owed to a client, the types of agency relationships, and disclosure requirements.
Creating Agency and Fiduciary Duties
Agency may be created expressly, through a written or oral agreement, or by implication from the parties' conduct. An agent owes a principal (client) fiduciary duties often summarized as OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and diligence. A customer, by contrast, is a party the agent deals with but does not represent, and is owed honesty and fair dealing.
Types of Agency Relationships
A licensee may represent the seller (seller agency), the buyer (buyer agency), or, where allowed, both parties as a dual agent with informed written consent. Some firms use designated agency, appointing different agents in the firm to each party. In transaction brokerage (a nonagency relationship recognized in many states), the licensee assists both parties without representing either.
Termination and Disclosure of Agency
An agency relationship ends by completion of its purpose, expiration, mutual agreement, or revocation. Because undisclosed dual agency is prohibited, states require timely agency disclosure so consumers understand whom the licensee represents. Even after an agency ends, the duty of confidentiality about the former client's private information generally continues.