Agency law: your assurance of fair play
Would you raise an eyebrow if you discovered your dentist owns the candy shop down the street? Would you be uneasy knowing the mechanic who fixes your car’s brakes moonlights as a tow truck operator?
These examples may be a little far-fetched, but they demonstrate the point. You’d have cause to be extremely wary of the conflicts of interest that could arise from business relationships like these. It’s basically why agency law was established – to protect you from real estate agents who claim to work in your best interest while actually working for another party.
Under agency law, the agent legally owes you the duties and obligations associated with agency: utmost care, integrity, confidentiality and loyalty.
A real estate agent must disclose, in writing, whose interests he represents in any real estate transaction. He may represent either the buyer or the seller, and in some cases he may even represent both involved in the same transaction. The important thing is that the agent discloses this information as required by law.
The types of agency relationships:
Buyer’s agent – The agent works only for the buyer, sworn to confidentiality and to work to find the best deal for the buyer. If a seller reveals anything they wouldn’t want the buyer to know in front of the buyer’s agent, it’s his duty to report that information back to the buyer.
Seller’s agent – The real estate agent is legally and ethically bound to work solely on behalf of the seller. The seller’s agent will seek the best terms possible for the seller, and owes no obligation to the buyer other than the duty to disclose any defects regarding the condition of the property.
As a seller,expect complete confidentiality. As a buyer, watch what you say in front of the seller’s agent. The seller’s agent is obliged to disclose any information that might benefit his client.
Dual agency – In some cases, the same agent (or agents from the same brokerage) represent both the seller and buyer. In this situation, the broker has a duty to be impartial. The nature of the dual agency must be disclosed to clients, and the client is required to acknowledge their understanding of the relationship in writing.