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:
- the client requests (in writing or verbally) the Licensee keep in confidence,
- relates to the client’s negotiating position.
- 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.
CONFIDENTIAL INFORMATION MUST BE KEPT CONFIDENTIAL FOREVER, AFTER THE AGENCY RELATIONSHIP WITH THE CLIENT HAS BEEN COMPLETED.
- 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.