Introduction into Real Estate Agency
Simply speaking “agency” is a relationship where one party gives the other party a certain authority/permission to act on his/her behalf. Typically in real estate transactions there is at least one agent involved who may be acting on behalf of the seller, buyer, or sometimes both parties. Further, there are some instances where the agent involved is merely facilitating a transaction and not actually representing either party. Below are the common types of agency allowed in real estate transactions in the state of Missouri, as well as a general explanation of each.
Types of Agency in Real Estate
- Limited Agent (Seller/Landlord’s or Buyer/Tenant’s)
- A real estate licensee acting as a limited agent for either party in a transaction owes a fiduciary duty to that party. This means the limited agent is obligated to “exercise reasonable skill and care for the client” and to “promote the interests of the client with the utmost good faith, loyalty, and fidelity.” A limited agent typically represents only one party in the transaction and owes no duty to a “customer” (meaning an unrepresented party in a transaction) except to disclose “any adverse material facts actually known or that should have been known by the licensee.” The limited agent also has a duty of confidentiality when it comes to information the represented party relays to him/her. All the limited agent’s duties and obligations can be found in the Missouri Revised Statutes at §339.730 RSMo (for Seller/Landlord’s Agent) and §339.740 RSMo (for Buyer/Tenant’s Agent).
- Designated Agency
- Designated agency is a policy a brokerage may adopt which allows the designated broker (broker in charge of the brokerage) to appoint specific affiliated agents to represent a party (or parties) to the exclusion of all other agents in the office. (§339.820 RSMo). A “designated agent” is “a licensee named by a designated broker as the limited agent of a client.” (§339.710(11) RSMo). Designated agency is one of the ways the same brokerage could potentially represent both parties in a transaction, but allows the client to retain the benefit of the agent (s)he hired without “sharing” him/her with the other party in the transaction by creating a sort of “wall” around the client’s information where only certain agents in the brokerage are able to access it. A designated agent owes the same duties to his/her client as a limited agent does. (§339.830 RSMo).
- Dual Agency
- A real estate licensee acting as a limited agent for BOTH parties in the same transaction is called a dual agent. A dual agent owes all the duties of a limited agent to both the Seller and Buyer simultaneously within the transaction. The dual agent may disclose any information (s)he obtains from one of the parties to the other party, unless the information is deemed “confidential” or falls into one of the enumerated exceptions in §339.750 RSMo. Like designated agency, dual agency is another way a brokerage may be able to facilitate an “in-house” transaction (both parties are represented by the same brokerage).
- Transaction Brokerage
- Transaction brokerage is a slightly different animal than the other types of agency mentioned above. As previously noted, an agent “represents” a party’s interests in a transaction. However, a transaction broker only “assists” a party (or parties) to a transaction without an agency or fiduciary relationship to that party (or parties). §339.755 RSMo sets forth the duties and obligations of a transaction broker (which are notably similar to those of a limited agent) with the specific difference noted in the statute that the transaction broker is acting “without an agency or fiduciary relationship” to the party or parties.
Whether you’re a party to a real estate transaction who needs a little extra advice or guidance, or a real estate professional who needs a refresher on license law; RS Campbell Law, LLC is here to help. Don’t hesitate to contact us today to set up a consultation.