The law of agency in a real estate transaction defines the legal relationship between real estate professionals and their clients. Each state has its own agency laws that set forth the duties that real estate professionals owe to their clients and what disclosures need to be made to the clients. Traditionally, most states relied upon the common law of agency to define the scope of the agency relationship, but in recent years some states have adopted the “transactional brokerage model” where the agency relationship is defined by statute. A majority of states allow a real estate professional to represent both sides in the transaction as a “dual agent” if the clients consent to the relationship.
We've already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require a password.
Agency Disclosure Facts From NAR's 2013 Legal Scan (aka “Legal Trends Report”)
- 37% of the survey respondents reported a moderate or higher level of current disputes involving Agency issues.
- 22% of the respondents believe there is a significant need for training on Agency issues in general.
About Agency Disclosure
Consumer Group Calls for Improvement of Disclosure Laws (Real Trends, Jan. 15, 2019)
Explaining Single Agency, Dual Agency and Transaction Broker Relationships (Tough Nickel Blog, Feb. 5, 2019)
Dual vs. Single Agency Relationships in Real Estate (the balance, Oct. 2, 2018)
5 Things You Need to Know about Real Estate Disclosures (Zillow Blog, Sept. 24, 2016)
Real Estate Agents and the Closing Disclosure (CD) (National Association of REALTORS®, Dec. 8, 2015)
Manage the Controversy Around Dual Agency (REALTOR® Magazine, Apr. 15, 2014)
Dual Agent: A Misunderstood Concept (RealtyTimes, Nov. 25, 2013)
Understand Agency Relationships (REALTOR® Magazine)
A Critical Examination of Broker Minimum Service Laws, (Journal of Housing Research, 2010) E
Must I Disclose My Client Relationship? (REALTOR® Magazine, Sept. 2010)Agency Disclosure in the Real Estate Transaction and the Impact of Real Estate Policies (The Journal of Real Estate Research, July/Sept. 2009) E
Mitigating disclosure risk starts with solid recordkeeping practices. Knowing which materials to keep and how to store them is the challenge. The articles below offer some ideas for best practices and procedures. You can also take a page out of libraries' books and subscribe to the LOCKSS method (Lots of Copies to Keep Stuff Safe). Keep in mind neither digital nor print are impervious to the perils of disaster—maintaining copies in various formats and locations can often provide the greatest longevity for your records. However, ensuring the security and privacy of all copies of materials is an important factor to consider.
8 Real Estate Documents to Keep—and What Happens If You Don't (realtor.com, May 24, 2018)
Fighting the Frivolous (REALTOR® Magazine, Oct. 2012)
National Clean Off Your Desk Day: 6 Easy Tips (REALTOR® Magazine, Jan. 2012)
Standing at the Altar (Journal of Business Case Studies, July/Aug. 2011) E
Contact a legal professional (such as someone on your state Association of REALTORS®’) legal hotline to learn about the disclosure and recordkeeping requirements specific to your state. Here are some examples for Ohio and North Dakota:
Record Keeping (Ohio Association of REALTORS®)
Guidelines for Record Keeping (North Dakota Real Estate, 2008)
According to the NAR State Issues Tracker, as of October 2018, “Each of the 51 domestic jurisdictions surveyed has an extensive legislative and regulatory system addressing real estate agency matters; the three surveyed territories also address agency, but to a lesser extent. While the bulk of the existing agency frameworks were established in their current form in the mid-1990s, most of the surveyed jurisdictions have experienced changes in the past decade. Although many of these changes were conforming, not substantive, minor, or not applicable to this survey, recent significant changes generally included shifts in disclosure standards, agreement requirements, duties owed to buyers and sellers, and other compliance-specific issues.”
Of course, the law is a living and breathing organism that is always changing, so be sure to check with your state or territory’s statutory code for the most up-to-date information on agency laws in your state. Or, if you are a REALTOR®, contact your state association of REALTORS®’ legal hotline. To find your state association, please visit this page and select your state from the list.
*The jurisdictions surveyed include the 50 U.S. states, District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.
Report Raises Concerns Over Dual Agency (REALTOR® Magazine, Jan. 16, 2019)
What's Dual Agency in a Real Estate Transaction and Why Should I Avoid It? (NOLO, Oct. 27, 2018)
What Is Dual Agency? Know When It’s Right, and When to Beware (realtor.com®, Oct. 4, 2016)
Dual vs. Single Agency Relationships in Real Estate (The Balance Blog, Aug. 6, 2016)
What Is Dual Agency? (And Why You Should Beware) (Trulia Blog, July 20, 2016)
Dual Agency Can Be a Good Thing (Realty Times, Apr. 25, 2016)
Disclosure Materials From Your State
The laws and regulations for agency disclosure may vary from state to state. As a member of the National Association of REALTORS®, you can contact your State Association of REALTORS® for specific details on your state's disclosure requirements. The National Association of REALTORS® collects information on state specific legal issues in the State Issues Tracker:
National Association of REALTOR®'s State Issues Tracker (See: Agency)
Some state real estate commissions have included helpful materials on their websites regarding agency disclosure. A few examples:
Or run this search to find more government resources:
Agency Legal Cases
Dual agency case heads to California’s highest court (Inman, Sept. 7, 2016)
Contract Incentives and Effort (Journal of Real Estate Research, Oct.-Dec. 2010) E
Broker Awarded Commission from Failed Transaction (Mich. Ct. App., Nov. 20, 2008)
Broker Cannot Collect Undisclosed "Consulting Fee" (2003) (National Association of REALTORS®, Letter of the Law)
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
Real Estate Salespeople, Beware! (eBook)
Get It Together (eBook)
The Real Estate Entrepreneur (eBook)
Books, Videos, Research Reports & More
The resources below are available for loan through Member Support. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Member Support at 800-874-6500 for assistance.
Digest of Real Estate License Laws and Current Issues (Lake City, UT: Arello (published annually) HD 1383 N21d
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