Agency, Fiduciary Duties, and Representation
Creating and Defining Agency
Arizona recognizes agency relationships created by written agreement. Candidates must know the types of representation (seller/landlord, buyer/tenant, dual agency with informed written consent) and the disclosure duties that arise before a relationship is formed. Understand that a licensee may act as a transaction broker or limited representative depending on the agreement, and know the statutory disclosure form requirements. Know who is the client versus the customer, and how that distinction changes the duties owed.
Fiduciary Duties
Learn the fiduciary duties: loyalty, obedience to lawful instructions, disclosure, confidentiality, reasonable care and diligence, and accounting. Understand that confidentiality survives the termination of the relationship for material information, while other duties end. Know the duty to disclose material facts about the property regardless of representation, and the limits of confidentiality when disclosure is required by law.
Traps
Frequent traps: assuming a buyer's agent owes no duty to disclose known defects; believing dual agency is prohibited (it is permitted with informed written consent); and confusing confidentiality with a duty to conceal material facts. Another trap is treating an oral statement as creating agency when a written agreement is required.
Worked Example
A licensee representing the seller learns of a foundation problem. Rule of thumb: the duty of honesty and disclosure of material facts outweighs advocacy; the licensee must not make false statements and must disclose known material adverse facts, even while representing the seller.