• Just the Basics: Agency and Brokerage Law

    Just the Basics Agency and Brokerage Law.If you have ever been confused by the various roles of real estate professionals, you’re not alone.

    Real estate brokers are licensed professionals who help consumers buy, sell and rent real property. Their business relations with consumers can take many forms: each of which is called a “brokerage relationship.”

    The roles, licensing requirements, and duties of real estate brokers and the agents who work for them, all vary.

    To make things a bit more confusing for the average person, many real estate brokers have real estate salespersons (sometimes employees, sometimes independent contractors) known as “real estate agents,” who work on the broker’s behalf to help consumers with their real estate transactions. It is the real estate agent, not the broker, that most consumers deal with. Most consumers call everyone involved in the transaction an “agent” or a “real estate agent,” regardless of their official role (broker, salesperson, assistant, etc.).

    Agency law governs the relationship between a real estate agent (i.e., the broker and salesperson) and the consumer (client). These laws (common law and statutory law) govern the duties that a real estate broker or salesperson has to his client in a real estate transaction.

    In today’s post we’ll take a brief look at the basics of agency law as they apply to real estate professionals involved in real estate transactions.

    Agents and the Law of Agency.

    An “agent” is someone who represents another (the client or “principal”)  in dealings with third parties.

    “Agency” is the legal relationship between the principal and his agent that exists when the principal delegates authority to the agent to perform acts on the principal’s behalf.

    The duty that a real estate professional (broker or salesperson) owes to a client is based in agency law and depends on which party(s) he is representing.

    What Duty Does an Agent Owe to His Client?

    Traditionally, real estate professionals were considered fiduciaries and owed their clients traditional common law fiduciary duties. This means that they owed their clients a duty to act in the client’s interest with the utmost loyalty, confidentiality, skill and care.

    While real estate professionals still must act in their clients’ best interests, the exact duties a broker or real estate agent owes to the client are now primarily defined by statute. This means that a real estate professional’s fiduciary duty varies according to his role and the laws of the state where he/she works.  Generally, however, all brokers or agents owe the client a duty of confidentiality—to protect the clients’ privacy and keep all information confidential, unless required to divulge it by a court of law.

    An agent’s duty to his client(s) also depends on which party(s) he is representing. In real estate transactions, one constant is that the agent must disclose to all parties exactly who he is representing. This means that the agent must disclose whether he is representing the buyer, or seller, or, (where allowed) both. The duties of a Buyer’s Agent, Seller’s Agent or (in states that allow it) a Dual Agent are specific and generally governed by statute.

    Real Estate Relationships.

    The world of real estate is complex and the duties of the professionals involved in real estate transactions is no exception.

    That is why we recommend that you always work with an experienced real estate attorney in all of your real estate transactions.

     

    Experience You Can Count On.

    If you are purchasing, selling, or renting real estate, or have questions about real estate transactions, brokerage issues or the law, contact us. We are experienced real estate attorneys with offices in Cumming, Georgia. With over 30 years’ experience in real estate, we serve clients throughout Georgia, including: Clayton County, Cobb County, Dekalb County, Douglas County, Fulton County, and Paulding County, among others.  To schedule your free phone consultation, call us at: 770-888-7707. Or you can contact us here.

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