Agency Relationships, Fiduciary Duties, and Representation Disclosures
Establishing the relationship
Montana requires licensees to disclose whom they represent early in the conversation and to put agency agreements in writing. A licensee may serve as the seller's agent, the buyer's agent, or a dual agent only with the written informed consent of both parties. Know that a brokerage may designate individual licensees to represent each side, but unless that written consent exists, treat the entire brokerage as one agent in exam questions.
The fiduciary duties
Memorize the set: loyalty, obedience to lawful instructions, disclosure, confidentiality, accounting, and reasonable care and diligence. Add good faith and fair dealing for everyone, client or not.
The traps questions are built on
- Confidentiality never shields property facts. A dual or buyer's agent must disclose known material defects, latent problems, and anything that would affect a reasonable buyer's decision.
- Compensation does not create agency. A cooperating broker paid by the seller is still the buyer's agent if the agreement says so.
- Implied agency can arise from conduct, so avoid giving advice or acting beyond the disclosed role.
- Confidentiality survives termination of the agreement.
- A dual agent cannot advocate for one side, cannot share one party's price limits with the other, and must give both clients full information.
Worked example: a buyer tells a dual agent their true ceiling is $340,000 while the listing is $325,000. The agent must not tell the seller. The agent may say the offer is at list price and let the seller negotiate on the merits.
Rule of thumb: disclose early, get it in writing, and never let a fiduciary duty become an excuse to sit on a material defect.