What is the most common type of agency relationship between brokers and their affiliated licensees?

Neb. Rev. Stat. Section 76-2420 of the Agency Relationships Statute requires every designated broker to adopt a written policy which identifies and describes the relationships in which the designated broker and his or her affiliated licensees may engage with any seller, landlord, buyer, or tenant as part of any real estate brokerage activities. The State Real Estate Commission has prepared these guidelines as an aid to designated brokers as they implement policies which meet the requirements of the law. In these guidelines, the Commission has used the words "must" or "shall" to indicate those steps which the statute makes mandatory. The Commission has used the words "may" or "should" to convey Commission suggestions.

The designated broker must first identify which of the allowed agency relationships his or her firm will offer. The designated broker must offer at least one type of agency relationship, but may offer all or any combination of the allowed relationships.

Those relationships allowed under the Statute are:

a) Buyer limited agency - A licensee working with a buyer in a particular transaction is considered a buyer's limited agent unless he or she has a written agreement as an agent under c), d), e), or f) OR has been appointed by the designated broker as an agent under c), d), e), or f) OR the designated broker of the licensee has accepted subagency under c) or d). A written agreement may also be entered into for buyer limited agency, if it is set out in the designated broker's policy. Subagency can only be offered with the written consent of the buyer.

b) Tenant limited agency - A licensee working with a tenant in a particular transaction is considered a tenant's limited agent unless he or she has a written agreement as an agent under c), d), e), or f) OR has been appointed by the designated broker as an agent under c), d), e), or f) OR the designated broker of the licensee has accepted subagency under c) or d). A written agreement may also be entered into for tenant limited agency if it is set out in the designated broker's policy. Subagency can only be offered with the written consent of the tenant.

c) Seller limited agency - A designated broker must have a written agreement with seller or have accepted subagency in accordance with the designated broker's policy.

d) Landlord limited agency - A designated broker must have a written agreement with landlord or have accepted subagency in accordance with the designated broker's policy.

e) Dual limited agency - A designated broker must have the written informed consent of all parties to a real estate transaction in accordance with the designated broker's policy.

f) Common law agency - A designated broker must have a written agreement with the client in accordance with the designated broker's policy.

Only the designated broker can enter into written agreements or consents with the client, unless the designated broker has authorized in writing some or all affiliated licensees to do so. The designated broker may want to state in the policy that no affiliated licensees have the authority to enter into written agreements and consents on the designated broker's behalf, or the designated broker may want to place written authorizations in the written policy, with such conditions or restrictions as the designated broker chooses. For example, the designated broker may want to state that affiliated licensees do not have authority to enter into consent to dual agency or common law agency agreements without the designated broker's direct approval.

The designated broker may indicate in the written policy whether he or she will accept subagency offered by another designated broker on a client's behalf, and if so, whether the designated broker will accept it only by a written agreement with the other designated broker or whether a unilateral offer of subagency from another designated broker may be accepted by disclosing to the customer that he or she is a subagent of the other designated broker.

Another issue the designated broker may want to set out in his or her policy also deals with subagency, that is, whether or not subagency will be offered by the designated broker on behalf of his or her clients. If so, then the client on whose behalf the subagency is offered MUST AGREE IN WRITING to offer subagency and to allow the designated broker to compensate other designated brokers who accept the offer of subagency.

Neb. Rev. Stat. Section 76-2427 authorizes a designated broker to appoint in writing one or more affiliated licensees to act as a limited agent of a client to the exclusion of all other affiliated licensees. The designated broker may want to make some or all of those appointments in the written policy. For example, the designated broker could decide that since both seller and buyer, or landlord and tenant, limited agency relationships are being offered to consumers by his or her company, that only the affiliated licensee who, on behalf of the designated broker, entered into the listing agreement with the seller, or the leasing agreement with the landlord, will represent the seller or landlord as that client's limited agent. All other affiliated licensees with the designated broker will represent buyers, or tenants, as their limited agents in any transaction dealing with the subject property.

The statute only requires that the designated broker adopt a written policy which responds to the requirements of the statute. In performance of the designated broker's duty to supervise his or her affiliated licensees, the written policy should be made generally available to all affiliated licensees and should be used as a basis for inservice training.

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

About Agency Di​sclosure

Family and Real Estate: Should Agents Disclose That They’re Related to a Client? (realtor®.com, May 19, 2022)

“Article 4 of the NAR Code of Ethics states the following: “REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative.”

Dual vs. Single Agency Relationships in Real Estate (The Balance, Mar. 18, 2022)

“Many states require that agents give buyers and sellers an agency disclosure form to sign, which clears up these questions. The form used in California, for example, is not a contract between two parties but rather a disclosure from one to the other. It clarifies the many types of agency functions that may come up when buying or selling a home and specifies the rules agents must adhere to. All parties must read it so they know what to expect from each other; the form also allows them to select the type of agency relationship they prefer”

Not only there different types of agency – think single vs. dual – but there are also different ways to disclose and express your agency. Express agency is explicitly state in a written or oral contract, while implied agency is exactly that, implied by actions but not words. No matter what, sure you explicitly disclose if you are a dual agent.

Disclosure Rec​ordkeeping

Buyer’s Broker Agreements and Contracts (The Balance, Sep. 25, 2021)

Before writing a purchase agreement, homebuyers usually sign a contract with their agent known as “buyer representation agreements.” The three most common types of buyer representation agreements are; non-exclusive/not-for-compensation agreement, the non-exclusive/right to represent agreement, and the exclusive right to represent agreement. Non-exclusive agreements usually last a few months, while exclusive agreements sometimes last up to a year.

Broker Denied Commission for Lack of Written Agreement (National Association of REALTORS®, Aug. 6, 2021)

“A New York federal district court granted summary judgment in favor of a seller, ruling against a business broker’s breach of contract and commission claim because New Jersey law requires business brokers to adhere to the Statute of Frauds and to explicitly stipulate if a broker is to receive commissions for a sale they did not cause.”

Creating a Records Retention Program for Brokerages (National Association of REALTORS®)

“So, how do you create a document retention program? First, understand that a record retention policy pertains to “business records”. A business record is something that has operational, legal, fiscal, or historical value to the business. A business record is not limited to just paper files, but it could be something in any format- a data file, voicemail, or video recording.”

Dual​ Agency

The law is a living and breathing organism that is always changing, so be sure to check with your state or territory’s statutory code for the most up-to-date information on agency laws in your state. Or, if you are a REALTOR®, contact your state association of REALTORS®’ legal hotline. To find your state association, please visit this page and select your state from the list.

Dual Agency in Real Estate (Forbes, Jan. 11,2022)

According to a report published in 2019 by the Consumer Federation of America, more than half of homebuyers and sellers in America are unaware that there are different types of agencies for real estate agents. Dual agency is regulated by law and is illegal in some states, but often comes down to what the homebuyer or seller is comfortable with, after the real estate agent has disclosed their agency type.

The Do’s and Don’ts of Dual Agency (Chicago Association of REALTORS®, Jun. 30, 2021)

“Illinois has three different types of agency relationships with consumers: No Agency, Designated Agency and Dual Agency. It is important to know that no matter which agency relationship you have with a client or consumer, all of them have a requirement of written disclosure or notice. Further, while we will discuss this from a for sale transaction scenario, everything being mentioned also pertains to rental transactions. The License Act and agency disclosure requirements make no distinction between the two.”

The Dual Agency Controversy: Why Some States Ban Agents from Representing Both Buyer and Seller (Homelight, Apr. 29, 2021)

“Opponents of dual agency don’t believe an agent can represent both the seller and the buyer without compromising the best interests of one, or both parties. Among those opponents are the eight states that have made dual agency illegal: Alaska, Colorado, Florida, Kansas, Maryland, Texas, Wyoming, and Vermont. Proponents do not believe that dual agency inherently compromises consumers’ interests. They even argue that dual agency can make a transaction more efficient.”

Disclosure Materials From Your State

The laws and regulations for agency disclosure may vary from state to state. As a member of the National Association of REALTORS®, you can contact your State Association of REALTORS® for specific details on your state's disclosure requirements. The National Association of REALTORS® collects information on state specific legal issues in the State Issues Tracker:

Who Does Your Agent Represent? (The CS Realty Team, Oct. 31, 2022)

What Are You Required to Disclose When You Sell Your Home? (Homelight, Apr. 18, 2022)

The Disclosure Regarding Real Estate Agency Relationship – The California-Required Disclosure Before Hiring an Agent (Globella Buyers Realty, Mar. 14, 2022)

National Association of REALTOR®'s State Issues Tracker (See: Agency)

Dual Agency Laws for Real Estate Agents in Arizona (MacQueen & Gottlieb, PLC, Jan. 15, 2020)

South Carolina Disclosure of Real Estate Brokerage Relationships (The Hoffman Group, May 8, 2019)

Redesigned “The Consumer’s Guide to Real Estate Agency in Illinois” Now Available to Order (Illinois Association of REALTORS®, Mar. 20, 2019)

Some state real estate commissions have included helpful materials on their websites regarding agency disclosure. A few examples:

Commonwealth of Virginia Division of Real Estate and Professional Licensing Forms and Agency Disclosure Statement

State of Ohio Department of Commerce Division of Real Estate and Professional Licensing Forms

Agency Legal C​ases

The below cases all address agency issues in some way, often dealing with the breach of fiduciary duty and/or buyer representation.

Case Interpretations Related to Article 16 (National Association of REALTORS®, Jan. 1, 2021)

Agency Highlights: 1Q 2020 – Legal Pulse (National Association of REALTORS®, Aug. 28, 2020)

The Best of the Legal Hotline: Agency Revisited (Wisconsin REALTORS® Association, May 13, 2019)

Broker Can’t Limit Statutory Duties (National Association of REALTORS®, Apr. 24, 2019)

Agency Highlights: 4Q 2018 – Legal Pulse (National Association of REALTORS®, Apr. 16, 2019)

eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

Real Estate Salespeople, Beware! (eBook)

Get It Together (eBook)

The Real Estate Entrepreneur (eBook)

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

Digest of Real Estate License Laws and Current Issues (Lake City, UT: Arello (published annually) HD 1383 N21d

Have an idea for a real estate topic? Send us your suggestions.

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