Realtors® and their clients work within a legal relationship called Agency. This exists between the client and the Agent.
An Agent represents the client. 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 Agent via the Agents Brokerage.
Single Agency occurs when both the Buyer and Seller are represented by their own Agent. Each Agent owes their client the duties described above.
Dual Agency occurs when one Agent concurrently represent the Buyer and Seller, or two or more Buyers, on one 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.