Agency Relationships, Fiduciary Duties, and Contracts
Creating the relationship
Agency is consensual: the client authorizes the licensee to act, and the licensee accepts. Kentucky recognizes seller and buyer agency, disclosed dual agency, and designated agency when the required written disclosures and consents are used. Agency is not created by a single showing, a phone call, or an open house; it is created by the agreement and the parties' conduct.
Fiduciary duties
Memorize COLDAC: care, obedience, loyalty, disclosure, accounting, and confidentiality. Honesty and fair dealing are owed to customers and the public. Traps: revealing a seller's bottom-line price, failing to present all offers, acting for both sides without written consent, and assuming confidentiality ends at closing (it does not).
Contracts
Real estate contracts need offer, acceptance, consideration, capacity, and lawful purpose. The statute of frauds requires land contracts, deeds, and leases over one year to be in writing and signed by the party to be charged. Use written agency and listing agreements; state the term, compensation, and scope. Contingencies (financing, inspection, appraisal) allocate risk. "Time is of the essence" makes deadlines enforceable.
Traps
A customer is not a client; do not give customer-level information the weight of fiduciary advice. The principal broker is responsible for associate conduct. Present offers promptly and objectively even if they are low or come from a relative.
Worked example: Seller says, "I'll take $250,000 but will go to $240,000." The agent must not tell the buyer the $240,000 floor. The agent may say the seller has authorized a response to a written offer. Rule of thumb: disclose facts about the property, protect the client's negotiating leverage.