Agency, Fiduciary Duties, and Brokerage Relationships
Creating and Classifying Agency
Agency arises by express agreement, implication, estoppel, or ratification. In New York the default assumption is that the listing broker represents the seller; a buyer's agent represents the buyer only after an express agreement. Compensation does not create agency - a buyer's agent paid out of the seller's proceeds still owes loyalty to the buyer. The agency disclosure form given at first substantive contact tells consumers whom the agent represents, and dual agency requires informed written consent, often structured as dual agency with designated sales associates.
Fiduciary Duties: OLDCAR
Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care. Loyalty forbids self-dealing and secret profit. Disclosure requires prompt reporting of material facts, including known latent defects and a buyer's true ability or willingness to pay more. Confidentiality protects the principal's bargaining position but never shields fraud or a known material defect. Accounting means money and documents are handled with precision. Two classic traps: confidentiality survives termination of the agency, and a seller's agent who also helps the buyer informally has not become the buyer's agent. A subagent represents the seller even when introduced by a buyer's broker. Rule of thumb: if you would not want your principal to read the email, do not write it. Worked example: a listing agent learns the seller must relocate in 30 days. A buyer asks why the sale is so fast. The agent may not reveal the seller's motivation to improve the buyer's bargaining position, but must still disclose known defects and may not lie.