Legally, agency refers to a strict, defined legal relationship. In the case of Real Estate, agency is a relationship that a broker, Managing Broker, or residential Leasing Agent (representing the Sponsoring Broker) may have with buyers, sellers, Landlords, or Tenants.

Those who hire are clients, and those who are hired are Agents.

A Real Estate Licensee becomes an Agent, through a contractual agreement, whether expressed or implied. At this point, the Real Estate Licensee actually becomes a legal, loyal Agent obligated to work for the client’s best interests at all times, so long as those interests are within the law.

Definitions – Statutory (Real Estate License Act of 2000)
Key terms of the law of agency under Article 15 of the Real Estate License Act of 2000 are defined as follows:

  • Agent – The individual who is authorized and consents to represent the interests of another person. In the Real Estate business, a firm’s Sponsoring Broker is the Agent and shares this responsibility with the Licensees who work for them.
  • Agency- A relationship in which a consumer has given consent (express or implied) to a Real Estate Licensee to represent the consumer in a real property transaction. Consent may be given to a Licensee directly or through an affiliated Licensee.
  • Brokerage agreement – An agreement, made verbally or set out in writing, for an Agent or firm to provide brokerage services to a consumer and to receive compensation for providing those services.
  • Client – The person or entity that a Licensee represents in a real property transaction.
  • Compensation – Payment (monetary or otherwise) made to a person or entity for executing services for a client or customer.
  • Consumer – A person or entity for whom an Agent provides services, which are only to be provided by a Licensee, or a person or entity who seeks such services from a Licensee.
  • Confidential information – Information given by a client to a Licensee during the term of a brokerage agreement that:
  1. the client requests (in writing or verbally) the Licensee keep in confidence,
  2. relates to the client’s negotiating position.
  3. could do damage to the client’s negotiating position if disclosed.

This information must not be shared unless:

  • the client gives authorization for the Licensee to share the information,
  • the information must be shared by law, or
  • the information is revealed by some person or entity other than the Licensee.


  • Customer – A person or entity for whom a Licensee is providing services (excluding ministerial acts) but who is not represented by the Licensee in an agency relationship
  • Ministerial Acts – informative or clerical service provided by a Licensee to a consumer. Providing ministerial acts is not equivalent to active representation.