What an Agent may do as the principal’s representative depends solely on what the principal authorizes the Agent to do.
A universal Agent is a person empowered to do anything the principal could do personally. The universal Agent’s authority to act on behalf of the principal is virtually unlimited. In Illinois, a written power of attorney is required to create a universal agency.
A general Agent may represent the principal in a broad range of matters related to a particular business or activity. The general Agent may, for example, bind the principal to any contract within the scope of the Agent’s authority. A Property Manager is typically considered a general Agent to the property Owner. Brokers and Managing Brokers are general Agents to their Sponsoring Broker.
The Property Management Agreement spells out the various contracts and documents which the Sponsoring Broker is empowered to sign for the Landlord. The Sponsoring Broker, in turn, can designate what contracts or documents the Listing Agent can sign for the Sponsoring Broker, which, in effect is signing for the Property Owner. So, the Agreement between the Property Owner and the Sponsoring Broker is a General Agency, usually with some limitations.
A special Agent is authorized to represent the principal in one specific act or business transaction only, under detailed instructions. As a special Agent, the Licensee may not bind the principal to a contract. The principal makes all contractually related decisions and will sign on her own. A special power of attorney is another legal means of authorizing an Agent to carry out only a specified act or acts.
A designated Agent is a person authorized by the Sponsoring Broker to act as the Agent of a specific principal. A designated Agent is the only Licensee in the company who has a fiduciary responsibility toward that principal, through the Sponsoring Broker. When one Licensee in the company is a designated Agent, the others are free to act as Agents for the other party in a transaction. In this way, two Licensees from the same Real Estate company may represent opposite sides in a transaction without entering dual agency.
Designated agency is recognized in Illinois. A Sponsoring Broker entering into a brokerage agreement (Property Management Agreement) may specifically designate those Licensees employed by or affiliated with the Sponsoring Broker to act as legal Agents of that client (Property Owner) to the exclusion of all other Licensees employed by or affiliated with the Sponsoring Broker. Relating to Property Management, the Designated Agency operation may occur when the Sponsoring Broker designates Leasing Agents or Brokers to lease units in a specific property or properties (acting as Agent for the Landlord) and designates other Leasing Agents or Brokers to handle clients who are looking for rental units (acting as Agents for Renters).
The Sponsoring Broker must take care to protect confidential information disclosed by a client to his or her Designated Agent. A Designated Agent may disclose to her Sponsoring Broker or persons specified by the Sponsoring Broker confidential information of a client for the purpose of seeking advice or assistance for the benefit of the client regarding a possible transaction. The Sponsoring Broker cannot disclose confidential information unless otherwise required by this act or requested or permitted by the client who originally disclosed the confidential information.
When an Agent or firm represents only one party (Buyer, Seller, Landlord, or Tenant) exclusively in a Real Estate transaction, this relationship is referred to as Single Agency. The Agent and firm’s fiduciary and statutory duties are provided only to that one party (the principal).
While a single agency Licensee may represent either Sellers or Buyers, that Licensee cannot represent both in the same transaction. This avoids conflict and results in client-based service and loyalty to only one client. Representing both sides of a transaction requires disclosure to both parties, two times, and the Agent becomes a facilitator – no legal agency relationship is established between the Agent and both parties.
