Agency Relationships and Fiduciary Duties
Creating and classifying agency
Agency arises by express agreement, implication, ratification, or estoppel. The listing broker is the seller's agent; a cooperating broker who shows the property is presumed a subagent of the listing broker unless a buyer agency relationship has been established in writing. Know single agency, dual agency (permitted only with informed written consent of both parties), designated agency (different licensees in one brokerage represent different parties), and non-agency/transaction-brokerage arrangements that provide limited services without full representation. Agency status should be disclosed early - before the customer reveals confidential information.
The fiduciary duties
The classic list: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and skill (some texts add notice). Loyalty means no secret profit, no self-dealing, no undisclosed dual compensation. Disclosure means revealing material facts about the property and the transaction - not guesswork, but known defects, and never a protected-class characteristic. Confidentiality survives termination of the relationship and cannot be breached for the agent's benefit.
A broker may be compensated by any party or by a cooperating broker, but only with full disclosure and consent. Commingling client funds with operating funds and conversion of escrow money are license-level offenses everywhere.
Traps: obedience never requires an illegal act; the duty of confidentiality outlives the listing; a dual agent cannot advocate for one side over the other, so the safe answer is "disclose fully, get written consent, and stay neutral." A cooperating broker's buyer-side information belongs to the buyer once buyer agency is established.
Rule of thumb: identify the client first, then ask which duty each answer choice is testing - usually loyalty or disclosure.