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All REALTORS® are required to explain the nature of their
relationship with all parties whom they contact in connection with a Real Estate
transaction.
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This is often referred to as "Agency Disclosure" since the realtor must establish
and disclose whether you will be their "Client" or their "Customer". There are substantial
differences in the duties owed and the services provided to Clients and Customers,
and you should be familiar with your options before committing to either.
DEFINITIONS
Agent:
While the term "Agent" is not specific to the Real Estate industry, most Real Estate
Salespeople, Brokers and realtors act as Agents when conducting business. An Agent
is commonly defined as any person who represents another person in a business transaction.
Fiduciary:
A person in a position of trust and confidence who must put the interests of another
person (their client) above all others.
Client:
Often referred to as a Principal, a Client is a person who asks an Agent to act
on his or her behalf during the purchase, sale, exchange or rental of a property
or business. An Agent owes their clients full fiduciary duties, such as loyalty,
confidentiality, accountability, duty of care, obedience to all lawful instructions,
and full disclosure of all pertinent facts.
Customer:
A customer is a person who has not retained an Agent to work on his or her behalf.
While a customer does not enjoy the fiduciary duties and benefits of the Client-Agent
Relationship, they are nevertheless entitled to be treated fairly, honestly and
with due care at all times.
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TYPES OF AGENCY RELATIONSHIPS:
An Agency Relationship is created when a person, known as the Client, asks another
person, known as an Agent, to act for and on their behalf in a business transaction.
In a typical Real Estate transaction, an Agency Relationship is created when a Seller
or Buyer asks a realtor to be their Agent.
There are two basic types of agency relationships:
Single Agency:
When an Agent exclusively represents a single Client's interests in a transaction,
it is known as Single Agency.
Dual Agency:
In certain circumstances an Agent may represent both the Seller and the Buyer in
a Real Estate transaction. Because a Dual Agent owes the same fiduciary duties to
both Clients, it is often difficult to ensure that everyone's best interests are
being protected. Because of this, the written informed consent of both the Seller
and the Buyer is usually required before an Agent may represent both.
While a complete discussion of agency extends well beyond this short summary, Christian Vermast, Paul Maranger and Fran Bennett
would be happy to answer any questions and provide further details.
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All Rights Reserved.
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