Agency Relationships and the Practice of Real Estate
Fiduciary duties
Agency duties are remembered as OLDCAR plus reasonable care: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. Confidentiality survives termination of the agency relationship, along with the duty to account for money and property. Agency arises by express agreement, implication, ratification, estoppel, or operation of law.
Types of representation
A licensee may act as a seller's or landlord's agent, a buyer's or tenant's agent, a dual agent, or a non-agent facilitator assisting both parties without representing either. Who pays the commission does not determine who the agent represents, and that is a frequent trap. Designated agency allows one brokerage to represent both sides through different licensees when state rules permit. Alabama requires delivery of the Consumer Guide to Agency Relationships to consumers at the first substantial contact and written consent for dual agency.
Compensation and regulation
Commissions are always negotiable and never set by law or by agreement among brokers; antitrust violations arise when competitors fix fees or divide markets. A commission is earned according to the brokerage agreement, and procuring cause resolves competing claims. Referral fees may not be paid to unlicensed persons. Section 8 of RESPA bars fees for referrals of settlement-service business in federally related loans.
Vicarious liability and assistants
The broker is responsible for the acts of licensees working under the firm, and unlicensed assistants may do clerical work but may not show property, quote terms, or negotiate. Worked example: a licensee whose buyer-client asks whether the seller would take less must not reveal a confidential fact learned from a prior listing relationship; the fiduciary duty to the former client survives termination.