Agency, Brokerage Relationships, and Fiduciary Duties
Creating the relationship
Agency arises by express agreement, implication, estoppel, or ratification. Iowa practice centers on a written brokerage agreement that identifies the client and the type of relationship - seller's agent (listing broker), buyer's agent, dual agent, or designated agent within a firm. Subagency - a cooperating broker acting for the seller - must be disclosed and consented to; a buyer working with a cooperating broker may actually be a customer of the seller, not a client.
Fiduciary duties
The traditional six run to the client only: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. Loyalty includes avoiding self-dealing and secret profit; confidentiality survives the transaction; accounting means safeguarding money and property. To customers, a licensee owes honesty, accuracy, and disclosure of material facts - not the full fiduciary package. Dual agency (representing both sides in one transaction) requires informed written consent from both parties and limits the broker's ability to advocate for either.
Common traps
- Assuming a buyer working with a broker is automatically that broker's client.
- Believing the broker must reveal a client's motivation or maximum price - confidentiality and loyalty prohibit it.
- Confusing "customer" (no fiduciary duty) with "client" (fiduciary duty).
- Forgetting that a licensee buying or selling on his own account must disclose his licensed status in writing.
Worked example: A buyer tells her agent, "I'll go to $310,000 but start at $295,000." The agent's obligation of loyalty and confidentiality bars disclosing the ceiling to the listing side; the agent negotiates from the authorized offer, not from the client's private limit.