Agency Relationships and Fiduciary Duties
Creating the relationship
Agency arises by express agreement, implication, ratification, or estoppel. Oregon licensees act as a seller's agent, a buyer's agent, or a disclosed limited agent (Oregon's term for dual agency). The Oregon Real Estate Agency's Initial Agency Disclosure Pamphlet must be delivered at first substantive contact, and representation agreements must be in writing.
The duties
Fiduciary duties are loyalty, obedience to lawful instructions, disclosure, confidentiality, accounting, and reasonable care and diligence. Statutory duties sit alongside them: honesty and fair dealing, prompt presentation of all offers, disclosure of known material facts about the property, and disclosure of compensation and any conflict. Confidentiality survives termination of the agency relationship; loyalty and advocacy do not.
Client versus customer
A client is represented and gets advocacy, confidentiality, and advice. A customer is unrepresented and is owed honesty, fairness, and disclosure of material facts, but not confidentiality. Ministerial acts performed for a customer, such as handing over a disclosure form, do not create an agency.
Traps
- Dual representation without the informed written consent of all parties.
- Revealing a seller's motivation or bottom line to a buyer.
- Accidentally creating an agency by performing services or holding out.
- Assuming confidentiality ends at closing.
- Offering a personal opinion of value that sounds like an appraisal.
Rule of thumb: if a broker represents both sides, assume anything the broker learns on one side could be used against that side; when the conflict is real, refer the party elsewhere.